The government is considering enhancing the authorised capital of National Bank for Agriculture and Rural Development (NABARD) to Rs 20,000 crore from Rs 5,000 crore and expanding the lender's scope of operations.
The proposal for enhancing the capital base of the NABARD is likely to be taken up by the Cabinet tomorrow, sources said.
The increase in authorised capital in aimed at augmenting the operations and broadening the activities of NABARD. Besides other things, the government will also take a call on merging the post of chairman and managing director in the financial institution.
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Following the changes, which would b carried out through amendment to the NABRAD Act, 1981, the institution will be able to introduce new credit products, forge new linkages and develop new clients.
Once the changes are made in the Act, NABARD, which is the apex rural and farm development bank and whose role is to promote credit growth in these areas, would be able to undertake short term lending operations.
The transfer of RBI's equity to government would end the conflict of interest between the regulator and regulated entity.
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