NABARD to allocate Rs 1,000 Cr Fund For Climate Solutions In Rural Finance
The second phase of the NabVentures Fund will fund businesses that address climate change concerns and foster innovation in the agriculture and rural sectors
Following the successful launch of its first fund, NabVentures, a subsidiary of the National Bank for Agriculture and Rural Development (NABARD), plans to announce a second round of funding in the coming fiscal year. According to NABARD Chairman Shaji K.V., this new effort, termed NavVentures Fund 2, will have a corpus of Rs 1,000 crore and will focus on companies that address climate change concerns in the rural financial ecosystem.
The bank’s first fund, launched last July under the name ‘Agri-Sure,’ had an initial corpus of Rs 750 crore, with NABARD and the Ministry of Agriculture contributing Rs 250 crore each, as well as Rs 250 crore from other institutions. The fund was established to encourage investments in innovative, technology-driven, high-risk, high-impact initiatives in agriculture and related fields.
Shaji K.V. stated that the next round of funding would prioritize ideas to increase agricultural productivity and address rural development concerns. “We believe that the next wave of productivity growth will come through innovations, and venture capital is essential to support these breakthroughs,” he told me. “NabVentures Fund 1 focused on agriculture and rural activities, but Fund 2 will integrate a strong climate component to help address environmental issues in rural India.”
The focus of NavVentures Fund 2 will concentrate on area-based pilot projects that attempt to demonstrate solutions capable of minimizing the effects of climate change. “As a development financing institution, we must establish use cases that demonstrate the potential of such efforts to address climate-related challenges. These solutions would be developed in India and tailored to the country’s specific requirements,” Shaji K.V. stated. He also stated that NABARD is in talks with international institutions such as the Asian Development Bank (ADB) and the United Nations Food and Agriculture Organization (FAO) about bringing in external expertise for the project.
In addition to climate-related initiatives, NABARD is trying to increase the registration of fishery farmers. “We are urging state governments to enhance the registration process for fish producers. “Once these farmers are registered and linked to the activity, we can encourage banks to lend,” Shaji K.V. explained.
As of August 7, 2024, 426,666 Kisan Credit Cards (KCCs) had been distributed to fishermen and fisheries farmers. 75 million KCCs worth Rs 9.4 trillion have been granted to farmers in diverse sectors. NABARD also ensures that agricultural financing is available at fair rates, including an interest-subvention scheme for short-term crop loans. Under this initiative, farmers earn a 2 per cent interest subsidy on loans up to Rs 3 lakh. Farmers who repay their loans on or before the due date are entitled for an additional 3 per cent interest subsidy.
With the launch of the NavVentures Fund 2, NABARD seeks to not only stimulate agricultural innovation but also address growing climate concerns in rural regions, hence promoting the development of sustainable solutions specific to India.
The second phase of the NabVentures Fund
