What is the Full Form of RIDF in Banking?

Thе Full Form of RIDF in Banking is Rural Infrastructure Development Fund. The Government of India set up the Rural Infrastructure Development Fund in 1995–96 with an initial outlay of Rs. 2,000 crores. NABARD manages it, and under RIDF, financing is made available for only those projects that improve rural infrastructure and the fulfilment of needs relating to social sectors, agriculture, and connectivity. Under RIDF XXIX, the RBI has sanctioned Rs 40,475 crore for 2023-24, taking the cumulative allocation to Rs 4,98,411 crore. Other eligible entities include panchayat raj institutions, state governments, and state-owned undertakings.

Eligible Activities and Institutions

Under NABARD’s repayments-based lending programme, North Eastern and Hilly States get initial advances of 30%, while other States get 20%. The prevailing bank rate determines interest rates on deposits as well as loans. The loan has to be repaid within seven years from the date of sanction, including a two-year grace period, in equal annual installments. Penal interest is charged on the dues, and interest is paid quarterly. Security devices include irrevocable authority letters, time promissory notes, and state government guarantees. The duration of the phases for execution of the project varies between two to five years.

Financial Terms and Repayment

RIDF funds 39 eligible activities classified under agriculture and allied activities, social sectors, and rural connectivity. These loans would be made available for 80–95% of the project cost; cost escalation is allowed for justifiable reasons within a period of two years from the date of loan sanction. The eligible institutions under RIDF are state governments, state-owned undertakings, organizations sponsored by the state government, and panchayat raj institutions. The NGOs and SHGs can also get financing if their projects are routed through the nodal department of the state government.