State opposes decision to hike rate of RIDF loans

Bhubaneswar: Opposing increase in interest on Rural Infrastructure Development Fund (RIDF) loans by NABARD, state government asked the Centre not to implement the new rates on loans sanctioned prior to April 2012.

"I understand that the rate of interest chargeable by NABARD to all RIDF loans disbursed on or after April 2012 has been enhanced to 8 per cent in accordance with the decision of the RBI," Chief Minister Naveen Patnaik wrote to Union Finance Minister Pranab Mukherjee.

Terming the hike in the rate of interest on RIDF loans from 6.5 per cent to 8 per cent by RBI as "arbitrary", Patnaik said "this decision constitutes a breach of the terms and conditions of the loans sanctioned under RIDF prior to April 2012."

Patnaik said that NABARD has sanctioned Rs 12634.12 lakh for four irrigation projects in Odisha under RIDF-XVII on July 26, 2011. The tenure of this loan was seven years including the grace period of two years.

As regard to the rate of interest, it has been clearly and unambiguously mentioned in the sanction letter that the loan will carry interest rate of 6.5 per cent.

"I would urge you to persuade the RBI and NABARD to review the issue urgently and to ensure that the revised rate of interest of 8 per cent is not made applicable to RIDF loans sanctioned prior to April 2012," Patnaik told Mukherjee in the letter.