News: ADB plans $1 b rural finance project for India

(BL 28/11/2006) New Delhi - Manila-based Asian Development Bank is likely to finalise a $1 billion rural finance project early next month to strengthen co-operatives to make credit accessible to India's poor, who often resort to suicides due to financial difficulties.

"We are looking at a $1 billion rural finance project, the largest such project ever by ADB, which goes to the Board on December 8 for approval," said Rajat Nag, Managing Director General (designate) Special Advisor to ADB President.

The project to be implemented with the help of National Bank for Agriculture and Rural Development (Nabard), aimed at strengthening the finances of ailing rural co-operatives in three years.

The project will sort out issues like access to credit and make the rural financial sector more efficient, he said.

Earlier, ADB had held negotiations with the Finance Ministry for the ambitious project and has already done due diligence of the proposal. The idea was to enable these financially stressed co-operatives turn-around and give succour to small and marginal farmers and other low-income rural population.

State and district co-operative banks and primary co-operative societies in the country are in shambles due to lack of sound financial practices.

ADB's assistance will be conditional and it will be obligatory for state governments to put in place good accounting practices and adoption of greater disclosure norms to be eligible for recapitalisation.