The National Bank for Agriculture and Rural Development (NABARD), on August 5, 2026, issued operational guidelines for Long-Term (LT) Refinance to State Cooperative Banks (StCBs). The refinance is intended to support capital formation in agriculture and allied sectors, thrust activities of the Government of India and NABARD, credit requirements of JLGs/SHGs, off-farm activities such as MSMEs and rural housing, climate adaptation/mitigation projects, and credit-linked capital subsidy schemes. Refinance is available through Pre-Sanction and Automatic Refinance Facility (ARF) windows, with ARF available without an upper ceiling for eligible Farm Sector and Off-Farm Sector projects.
The guidelines provide revised eligibility and risk-assessment criteria for StCBs. The preliminary eligibility requirements relating to CRAR, Net NPA and Net Profit have been waived for StCBs falling within NABARD’s internal risk-rating categories NBD3 to NBD7, although StCBs with negative net worth are not eligible. StCBs/CCBs must have an ‘A’ or ‘B’ audit classification. The quantum of refinance varies according to the risk category, with NBD3-NBD4 eligible for unrestricted refinance subject to State/Bank allocation, while NBD5-NBD6 and NBD7 are subject to specified limits based on previous-year refinance drawn and ground-level credit. Higher refinance support of up to 95% of eligible bank loans is available for specified regions and thrust activities.
The guidelines further prescribe provisions relating to interest rates, penal charges, pre-payment charges, repayment, security, government-guarantee waiver, audit, monitoring and supervision. Interest rates are determined by NABARD based on tenor, prevailing market rates and risk perception, with applicable risk premium; defaults attract penal charges of 2% p.a. plus applicable taxes, while pre-payment facilitation charges are 2.5% p.a. plus applicable taxes, subject to the prescribed conditions. Refinance applications are to be submitted to the concerned Regional Office of NABARD, and eligible loan pools are subject to due diligence, including KYC and verification of maturity and disbursement details.
[Circular No. 187/DOR-51/2026]
