The flow of Nabard refinance in Jharkhand has been declining over the last three years, according to the Jharkhand Economic Survey 2010-11.

As indicated in the National Bank for Agriculture and Rural Development's (Nabard's) Jharkhand State Focus Paper 2010-11, disbursement of refinance has come down from Rs 77.47 crore in 2006-07 to Rs 67.94 crore in 2007-08 followed by Rs 61.68 crore in 2008-09, the survey said.

An allocation of a moderately higher amount of Rs 96 crore was made for the year 2009-10, it said, adding, full information on the 2009-10 allocation was awaited.

The survey further said a disbursement of Rs 14.53 crore only made up to December 31, 2009.

"A point to note in this connection is that the entire amount of refinance by Nabard over the four years was channelled to the commercial banks and Regional Rural Banks only, and no fund could be availed of by Cooperative Credit Institutions (CCI)," the survey report said.

The CCI had failed to draw funds by way of refinance from Nabard primarily because of non-establishment of the apex cooperative bank in the state, it said.

"It is usually the apex bank in a state which avails of refinance from Nabard on behalf of the rural cooperative credit system as a whole," the survey added.

"Admittedly, in terms of the amended provisions of Nabard Act, the District Central Cooperative Banks (DCCBs) can in certain circumstances draw refinance directly from Nabard without the intermediation of the Apex Cooperative Bank of the state. ...however, none of the eight DCCBs currently functioning in Jharkhand is in a state capable of availing refinance from Nabard," the survey said.

Five of the eight DCCBs, it added, did not have the minimum paid-up capital as enjoined by Section 11 of the Banking Regulation, as applicable to Cooperative Societies Act, 1949.

Refinance helps primary lending institutions like commercial banks, regional rural banks and cooperative credit agencies to augment their resources, which in turn, facilitates flow of credit from their end on a scale larger than otherwise feasible, the survey said.