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NABARD : All You Need To Know

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NABARD : All You Need To Know

NABARD

Apex Development Bank of India
Headquarter- Mumbai
Establishment- 12th July 1982
Chairman- Dr. Harsh Kumar Bhanwala
Website- www.nabard.org
Subsidiaries – Agri Business Finance Limited, Nabcons, National Financial Services Limited, Nabkisan Finance Limited


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Mission-- "Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives."

History

Reserve Bank of India (RBI), constituted a committee (Shivaraman committee) to review the arrangements for institutional credit for agriculture and rural development (CRAFICARD) on 30 March 1979, under the Chairmanship of Shri B.Sivaraman, former member of Planning Commission, Government of India to review the arrangements for institutional credit for agriculture and rural development. NABARD was established with an initial capital of 100 cr., on 12 July 1982 by a special act of parliament 1981, by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC). NABARD replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC)

NABARD’s activities are governed by a Board of Directors. The Board of Directors are appointed by the Government of India in harmony with NABARD Act 1981. It has its headquarters in Mumbai. Government of India holds 99% stake and RBI holds 1% (initially 72.5%) stake in NABARD.

Objectives

The main objects of NABARD are as follows:
1. NABARD provides refinance assistance for agriculture, promoting rural development activities. It also provides all necessary finance and assistance to small scale industries.
3. NABARD in coordination with the State Governments, provides agriculture.
4. It improves small and minor irrigation by way of promoting agricultural activities.
5. It undertakes R&D in agriculture, rural industries.
6. NABARD promotes various organizations involved in agricultural production by contributing to their capital.

Capital source for NABARD

The existing organizations such as Agricultural Credit Department, Rural Planning Credit Cell of RBI, and Agricultural Refinance and Development Corporation were taken over by NABARD. The authorized capital of NABARD was Rs. 500 crores. The subscribed and paid up capital as of March 2015 is Rs. 5000 crores out of which Central Government has contributed 4980 Crores and RBI 20 Crores (source).

In addition to this a loan of Rs. 1,200 crores was granted by RBI. All the loans granted by RBI to various State Governments and State Cooperative banks for agriculture were transferred to NABARD. The NABARD has been recognized as the apex institution for agricultural finance. As the name suggests, the bank has been set up not only for agricultural finance, but also for the development of rural areas.

Role and Functions of NABARD

It is basically concerned with “matters concerning policy, as well as planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”. It is worth noting with reference to NABARD that RBI has sold its own stake to the Government of India. Therefore, Government of India holds 99% stake in NABARD.
•    It is an apex institution which has power to deal with all matters concerning policy, planning as well as operations in giving credit for agriculture and other economic activities in the rural areas.
•    It is a refinancing agency for those institutions that provide investment and production credit for promoting the several developmental programs for rural development.
•    It is improving the absorptive capacity of the credit delivery system in India, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.
•    It co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental work at the field level while maintaining liaison with Government of India, and State Governments, and also RBI and other national level institutions that are concerned with policy formulation.
•    It prepares rural credit plans, annually, for all districts in the country.
•    It also promotes research in rural banking, and the field of agriculture and rural development.

Functions of NABARD

1. NABARD provides refinancing facilities to Commercial banks, State co-operative banks, Central Co-operative banks, Regional rural banks and Land Development banks.
2. It provides refinancing to agriculture, small scale industries and other village and cottage industries by lending to commercial banks.
3. It promotes rural industries, small scale and cottage industries including tiny sectors by providing loans to commercial and co-operative banks.
4. Special assistance is given by the bank for the promotion of small scale, cottage and village industries under service area approach.
5. The bills of commercial and co-operative banks are discounted to enable them to finance for agricultural operations.
6. The bank provides funds to State governments for undertaking developmental and promotional activities in rural areas. In order to promote rural development and to help the weaker sections, the bank refinances especially regional rural banks which are set up in backward areas in most of the States.
7. Towards long-term loan, the bank is providing loans to institutions involved in long-term agricultural loan against guarantee of State government.
8. The bank is also financing research and development of  agricultural and rural industries.
9. The bank implements the policy of the Central Government and the RBI with regard to agricultural credit.
10. Provides finance for promoting non-form activities and employment in non-farm sectors for the purpose of reducing rural unemployment.
11. It strengthens the co-operative structure in the States by providing loans to both State co-operative banks and also to Land Development Banks.
12.It promotes minor irrigation projects by financing State Government’s sponsored irrigation projects.
13. The bank is undertaking inspection work of Co-operative banks and Regional rural banks.
14. The bank has opened branches at all District headquarters by which it co-ordinates the District development programmes along with the district officials.
15. The bank also helps in the annual credit plan of the commercial banks and co-ordinates the activities of commercial and co-operative banks at the district level.
16. During natural calamities, such as droughts, crop failure and floods, the bank helps by refinancing commercial and cooperative banks so that the farmers tide over their difficult period.
Thus, the bank is providing short-term, medium term and long-term loans for agriculture and rural development
Ever since the setting up of NABARD, there has been a considerable increase in the distribution of agricultural credit both by commercial and co-operative banks. NABARD has also strengthened up the working of Regional rural banks.
Thus, we find that the role of RBI in agricultural finance has been not only taken over by NABARD but it has been discharging it to the atmost satisfaction of all the parties concerned.

Credit Functions:
•    Framing policy and guidelines for rural financial institutions.
•    Providing credit facilities to issuing organizations
•    Monitoring the flow of ground level rural credit.
•    Preparation of credit plans annually for all districts for identification of credit potential.

Development Functions:
•    Help cooperative banks and Regional Rural Banks to prepare development actions plans for themselves.
•    Help Regional Rural Banks and the sponsor banks to enter into MoUs with state governments and cooperative banks to improve the affairs of the Regional Rural Banks.
•    Monitor implementation of development action plans of banks.
•    Provide financial support for the training institutes of cooperative banks, commercial banks and Regional Rural Banks.
•    Provide financial assistance to cooperative banks for building improved management information system, computerisation of operations and development of human resources.

Supervisory Functions:
•    Undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks (other than urban/primary cooperative banks) under the provisions of Banking Regulation Act, 1949.
•    Undertakes inspection of State Cooperative Agriculture and Rural Development Banks (SCARDBs) and apex non- credit cooperative societies on a voluntary basis.
•    Provides recommendations to Reserve Bank of India on issue of licenses to Cooperative Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks (RRBs).
•    Undertakes portfolio inspections besides off-site surveillance of Cooperative Banks and Regional Rural Banks (RRBs).
Government Sponsored Subsidy Schemes in NABARD

The Government of India encourages farmers in taking up projects in select areas by subsidizing a portion of the total project cost.  All these projects aim at enhancing capital investment, sustained income flow and employment areas of national importance.

1.    Centrally Sponsored Scheme – Integrated Development of Small Ruminants and Rabbits
2.    Centrally Sponsored Scheme – Establishment/ Modernisation of Rural Slaughter Houses
3.    Centrally Sponsored Scheme for Establishing “Poultry Estates” and Mother Units For Rural Backyard Poultry
4.    Capital Investment Subsidy Scheme for Commercial Production Units of Organic Inputs
5.    Capital Investment Subsidy Scheme for Cold Storage and Onion godowns
6.    Capital Investment Subsidy Scheme for Rural godowns
7.    Scheme for Development / Strengthening of Agricultural Marketing Infrastructure, Grading and Standardization
8.    Central Sector Scheme – Establishing Agri Clinics and Agri Business Centres (ACABCs) by Agriculture Graduates
9.    Scheme for Salvaging and Rearing of Male Buffalo Calves
10.    Scheme for Pig development
11.    Scheme for Utilization of Fallen Animals
12.    Capital Subsidy-cum-Refinance Scheme for Installation of Solar Off-grid
13.    GoI Scheme – DAIRY ENTREPRENEURSHIP DEVELOPMENT SCHEME

Achievements of NABARD

After the setting up of NABARD, there has been considerable increase in the rural finance and development of small scale and cottage industries. By way of short-term credit, nearly Rs. 4,000 crores has been distributed during 90’s compared to Rs. 1,200 crores during 80’s.
By way of medium term finance, nearly Rs. 400 crores have been provided and they have been utilized mainly by States affected by natural calamities. In long-term loan, more than Rs. 240 crores have been sanctioned for contributing to the share capital of co-operative institutions.

NABARD has also played a significant role in improving storage facilities for agricultural commodities in the country. It has also promoted the export of agricultural commodities which include vegetables and fruits. It has played a supplementary role in sustaining Green Revolution in the country.

White Revolution and Blue Revolution in the form of increased milk production and fisheries have also been contributed by the sustained efforts of NABARD. India stands the top most country in the world in production of dairy milk.