NABARD

HISTORY

National Bank for Agriculture and Rural Development (NABARD) is an

apex regulatory body for overall regulation of regional rural banks and apex
cooperative banks in India. It is under the jurisdiction of Ministry of
Finance , Government of India. NABARD was established on (by Act 61, 1981
of Parliament) on 12 July 1982 to implement the National Bank for Agriculture
and Rural Development Act 1981. It 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). It is one of the premier agencies providing d Rs.14080 crore (100%
share). The authorized share capital is Rs.30,000 crore.
VISION
○ For providing of agriculture, small scale industries and village industries
○ Promote sustainable and equitable agriculture and rural development
through participative financial and non-financial interventions,
innovations, technology
MISSION
○ Planned to link nearly 9.2 crore households which would ensure coverage
of more than 50% women through SHG (Self-Help Group) Bank linkage
program.

OBJECTIVES

1.NABARD is an apex Development Bank authorized for providing and

regulating credit and other facilities for the promotion and development of
agriculture, small-scale industries, cottage and village industries, handicrafts
and other rural crafts and other allied economic activities in rural areas with a
view to promoting integrated rural development and prosperity and for matters
connected therewith.

2. NABARD provides refinance assistance for agriculture, promoting rural

development activities. It also provides all necessary finance and assistance to
small scale industries.

3.It improves small and minor irrigation by way of promoting agricultural

activities.

4.NABARD promotes various organizations involved in agricultural production

by contributing to their capital.

Thus, the objects of NABARD can be brought under three major heads:

Credit function.
Development function.
Promotional function.

5.To coordinate the working of different agencies engaged in development work

in rural areas at the regional level, and to have liaison with Government of
India, RBI, State Governments and other policy making institutions at the
national level.

6.To arrange for investment credit to small industries, village and cottage
industries, handicrafts and other rural crafts, artisans, and farmers.

ROLE OF NABARD
1. 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.

2. It is a refinancing agency for those institutions that provide investment and

production credit for promoting the several developmental programs for rural
development.

3. 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.

4. Its 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.

5. It prepares rural credit plans, annually, for all districts in the country.

6. It also promotes research in rural banking, and the field of agriculture and
rural development.

BANKING SERVICES

1- Production Credit
NABARD provides medium-term credit limits for conversion of short-term
crop loans advanced for financing seasonal agricultural operations (SAO) to
State Co-operative Banks and Regional Rural Banks for providing relief to the
farmers whose crops have been damaged due to natural calamities.
2.Kisan Credit Card: -
GOI introduced Kisan Credit Card Scheme during 1998-99 to meet the
production credit requirement of farmers in a timely and hassle-free manner.
The scheme was further extended for the investment credit requirements of
farmers viz. allied and non-farm activities in the year 2004.

The Kisan Credit Card scheme, as revised in 2013, aims at providing adequate
and timely credit support from the banking system under a single window with
flexible and simplified procedure to the farmers for their cultivation and other
needs as indicated below:

a. To meet the short-term credit requirements for cultivation of crops

b. post-harvest expenses
c. Produce marketing loan
d. Consumption requirements of farmer household
e. Working capital for maintenance of farm assets and activities allied to
agriculture
f. Investment credit requirement for agriculture and allied activities

3.Tribal Development Program: -

A program NABARD is closely related to and which focuses on development of
tribal groups in India. A corpus of Rs.50 crore was created for the same.
4. Special Liquidity Facility (SLF): -
NABARD has disbursed ₹ 25,500 crore of Special Liquidity Assistance to
Cooperative Banks (₹ 16,800 crore), RRBs (₹ 6,700 crore) and MFIs (₹ 2,000
crore) sanctioned by RBI to enable unhindered flow of credit to banks and
thereby farmers in the wake of the COVID-19 pandemic
Additional SLF of ₹ 1,567 crore has been disbursed to 23 NBFC-MFIs and 7
NBFCs with asset size less than ₹ 500 crore, out of allocation made by RBI, to
help the smaller players to withstand the pressure of liquidity crunch

Taking into account the liquidity crunch faced by the SCARDBs in the wake of
COVID-19 pandemic, NABARD made available SLF to SCARDBs from its
owned funds as front ended liquidity support for eligible SCARDBs to ensure
unhindered flow of credit from banks to farmers and continuing their lending
operations in the rural areas.
As on 31.03.2021, Rs 908.16 cr. have been disbursed to SCARDBs in Himachal
Pradesh, Karnataka, Punjab, Rajasthan and Uttar Pradesh under this line of
credit.
5. Pradhan Mantri Aawas Yojana: -
Grameen (PMAY-G) - By the year 2022, the PMAY-G program aims at setting
up pucca houses for all families that are currently staying in kutcha houses. This
is an undertaking of the Ministry of Rural Development (MoRD). Out of the
complete financial requirement for the construction of these houses, a specific
amount is expected to be met from budgetary sources. The remaining amount
will be funded by NABARD.

6. Watershed Development Program: -

The Watershed Development Program was created in NABARD with the
objective of unifying and multiplying watershed development programs into a
single national initiative by involving village level institutions and Project
Facilitating Agencies (PFAs).

Ministry of Agriculture, Government of India and NABARD contributed

Rs.100 crore each to create this program.
ACTIVITIES
1.  Refinance disbursement under ST-Agri & Others and MT-
Conversion/Liquidity-

NABARD provides Co-operative Banks and Regional Rural Banks loans

and advances, repayable on demand or on the expiry of fixed periods not
 exceeding 12 months, by way of refinance for production, marketing and
procurement activities. The basic objective of short-term refinance
provision is to supplement the resources of banks and to improve credit
flow at the ground level.

2. Refinance disbursement under Investment Credit to Banks

NABARD’s long-term refinance lays emphasis on investment credit

which leads to capital formation through asset creation and promotes
alternate employment opportunities in rural and semi urban areas by
supporting to farm and off-farm sector activities.

3. Through the Rural Infrastructure Development Fund (RIDF)

Government of India created the RIDF in NABARD in 1995-96, with an
initial corpus of Rs.2,000 crore. With the allocation of Rs.29,763 crore for
2020-21 under RIDF XXVI, the cumulative allocation has reached
Rs.3,78,022 crore, including Rs. 18,500 crores under Bharat Nirman.
4. Watershed Development Fund 
The Union Government has established a Watershed Development Fund
(WDF) during 2000 with total cost of Rs.200 crore which includes Rs.100
crore by DAC and Rs.100 crore by NABARD as matching contribution.
Objective of WDF is to promote participatory watershed development
involving Watershed Community, State Government Departments, Banks
and NGOs
5. Under the Farmers' Club Program
The programme is being implemented for the mutual benefit of the banks
and the farmers. ... The major objective is to promote “Development through
credit, technology transfer, awareness and capacity building” of the farmers

Functions of NABARD
1. 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.

2. 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 memorandum of
understanding 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, computerization of operations and
development of human resources.

3. 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).

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 have 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.

Future plans and approaches: -

While much has been done, the road to full reconstruction still needs to be
attained by walking extra miles ahead. Thus, many programs and policies need
to be reinvigorated further. Thus, under the recently announced Atmanirbhar
Bharat program or Self-Reliant India Scheme, the Government of India,
NABARD will be providing hefty financial aid, as mentioned above as an
encouraging step towards the agricultural sector

How is NABARD going to help under the AtmaNirbhar Bharat program?

NABARD will be giving an additional assistance to the tune of around Rs.
30000 crores to Indian farmers over and above the usual Rs. 90000 crores to be
provided through the refinance route. The primary source of credit will be the
Regional Rural Banks and the Rural Cooperative Banks. It is expected to
benefit approximately 3 crore farmers across India

CONCLUSION
As we analyze the data is shows that NABARD is working for
the 360-degree development of rural India. Every year the financial assistance
received by NABARD and the disbursement made out of it are increasing. In
short, we can say that NABARD is providing rural area all round assistance &
proved to be an institution where “Growth with Social Justice” exist. It is in
brief, an institution for the purpose of re-finance with complimentary work of
directing, inspecting, and supervising the credit flows for agricultural and rural
development.