FIN318 – CA2

Submitted To

Dr. Swaty

Submitted By

SOUVIK GHOSAL

REG.NO. - 11903286

ROLL NO. - RKO106A48

Topic - NABARD financing pattern analysis for the last

10 years and segregation of agri sector
Introduction : 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.[5] The bank has
been entrusted with "matters concerning policy, planning, and operations in the field of credit
for agriculture and other economic activities in rural areas in India". NABARD is active in
developing and implementing financial inclusion. NABARD is a development bank focussing
primarily on the rural sector of the country. It is the apex banking institution to provide finance
for Agriculture and rural development. Its headquarter is located in Mumbai, the country’s
financial capital.

It is responsible for the development of the small industries, cottage industries, and any other
such village or rural projects.It is a statutory body established in 1982 under Parliamentary
act-National Bank for Agriculture and Rural Development Act, 1981.

Background :

NABARD Head Office at Mumbai, Maharashtra, India

NABARD was established on the recommendations of B.Sivaramman Committee (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 dRs.14080 crore (100% share). The authorized share capital is Rs.30,000 crore..
International associates of NABARD include World Bank-affiliated organisations and global developmental
agencies working in the field of agriculture and rural development. These organisations help NABARD by
advising and giving monetary aid for the upliftment of the people in the rural areas and optimising the
agricultural process.

Role : NABARD has been instrumental in grounding rural, social innovations and social
enterprises in the rural hinterlands. As of May 2020, NABARD operates at 32 Regional Offices in
the country.[9] It has in the process partnered with about 4000 partner organisations in
grounding many of the interventions be it, SHG-Bank Linkage programme, tree-based tribal
communities’ livelihoods initiative, watershed approach in soil and water conservation,
increasing crop productivity initiatives through lead crop initiative or dissemination of
information flow to agrarian communities through Farmer clubs. Despite all this, it pays huge
taxes too, to the exchequer – figuring in the top 50 tax payers consistently. NABARD virtually
ploughs back all the profits for development spending, in their unending search for solutions
and answers. Thus the organisation had developed a huge amount of trust capital in its 3
decades of work with rural communities.
1.NABARD is the most important institution in the country which looks after the development
of the cottage industry, small scale industry and village industry, and other rural industries.
2.NABARD also reaches out to allied economies and supports and promotes integrated
development.
3.NABARD discharge its duty by undertaking the following roles:

1. Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas
2. Takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc.
3. Co-ordinates the rural financing activities of all institutions engaged in developmental
work at the field level and maintains liaison with Government of India, state
governments, Reserve Bank of India (RBI) and other national level institutions
concerned with policy formulation
4. Undertakes monitoring and evaluation of projects refinanced by it.
5. NABARD refinances the financial institutions which finances the rural sector.
6. NABARD partakes in development of institutions which help the rural economy.
7. NABARD also keeps a check on its client institutes.
8. It regulates the institutions which provide financial help to the rural economy.
9. It provides training facilities to the institutions working in the field of rural upliftment.
10. It regulates and supervise the cooperative banks and the RRB's, throughout entire India.
NABARD has its head office at Mumbai, India and regional offices in all states and one special
cell at Srinagar J&K. The Regional Office[RO] is headed by a Chief General Manager [CGMs] as
Officer Incharge, and the Head office has several top executives viz the Directors, Deputy
Managing Directors[DMD], and the Chairperson. The Board of Directors are appointed by the
Government of India in consonance with NABARD Act. It has 336 District Offices across the
country which are staffed by District Development Managers (DDMs). It also has six training
establishments.
NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to
lend to self-help groups (SHGs). Largely because SHGs are composed mainly of poor women,
this has evolved into an important Indian tool for microfinance. By March 2006, 22 lakh SHGs
representing 3.3 crore members had to be linked to credit through this programme.
NABARD also has a portfolio of Natural Resource Management Programmes involving diverse
fields like Watershed Development, Tribal Development and Farm Innovation through
dedicated funds set up for the purpose.
Financial Contribution :
 Refinance - Short Term Loans: Crop loans are extended to farmers for crop production by
financial institutions, which support in ensuring food security in the country.
 Long Term Loans: NABARD's long-term refinance provides credit to financial
institutions for a wide gamut of activities encompassing farm and non-farm activities with
tenors of 18 months to more than 5 years.
 Rural Infrastructure Development Fund (RIDF): It was set up with NABARD in 1995-96 by
the RBI out of the shortfall in lending to priority sector by scheduled commercial banks for
supporting rural infrastructure projects.
 Long-Term Irrigation Fund (LTIF): The LTIF in NABARD was setup with an initial corpus of
Rs 20,000 crore for funding 99 irrigation projects during 2016-17 following announcement
in the Union Budget.
 Pradhan Mantri Awaas Yojana - Grameen (PMAY-G).
 NABARD Infrastructure Development Assistance (NIDA): NIDA has been designed to
complement RIDF.
 Warehouse Infrastructure Fund (WIF): Union government created WIF in the year 2013-
14 with NABARD with a corpus of Rs 5,000 crore for providing loans to meet the
requirements for scientific warehousing infrastructure for agricultural commodities in the
country.
 Food Processing Fund
 Direct Lending to Cooperative Banks
 Credit Facility to Marketing Federations (CFF):
 Producer Organizations Development Fund (PODF) for POs & PACS:

o NABARD set up Producer Organizations Development Fund (PODF) with an initial

corpus of Rs 50 crore to support and finance Producer Organizations (POs)
and Primary Agriculture Credit Societies (PACS) to operate as Multi Service Centres.

 Producer Organisation (PO): it is a legal entity formed by primary producers,

viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen. A
PO can be a producer company, a cooperative society or any other legal form
which provides for sharing of profits/benefits among the members.
 Primary Agricultural Credit Society (PACS) is a basic unit and smallest co-
operative credit institution in India. It works on the grassroots level (gram
panchayat and village level). It provides credit to farmers in the form of term
loans and recovers the amount after harvesting of crop from the cultivator.
Developmental Contribution :
 Kisan Credit Card Scheme for Farmers: The Kisan Credit Card (KCC) scheme was designed
by NABARD in association with the RBI in August 1998 for providing crop loans.
 RuPayKisan Cards (RKCs): NABARD has been at the forefront of technology revolution by
helping rural financial institutions in providing RuPayKisan Cards (RKCs) to all their farmer
clients.
 Tribal Development: the Tribal Development Programme
 Climate Resilient Agriculture
 Umbrella Programme on Natural Resource Management (UPNRM):
o The UPNRM started in 2007, works at enhancing investments in rural areas, creating
business opportunities and enabling rural communities to sustainably utilise their
natural resources.
 Microfinance Sector:
o NABARD had launched the Self Help Group-Bank Linkage Programme (SHG-BLP) in
1992. Over 23 lakh SHGs were credit-linked during 2017-18 financial year.
 EShakti: In a bid to digitise SHGs, project EShakti was launched on 15 March 2015.
 Skill Development: Promoting an entrepreneurial culture among the rural youth and
encouraging them to start enterprises in the rural off-farm sector has been NABARD’s
strategy for over three decades.
 Marketing Initiatives: For providing marketing opportunities to rural artisans and
producers, NABARD has traditionally facilitated their participation in exhibitions across the
country.
Incubation Centres

 To commercialise innovations and to shape agricultural entrepreneurship in the country,

NABARD extended support to Chaudhary Charan Singh Haryana Agricultural
University, Hisar and Tamil Nadu Agricultural University, Madurai for establishing Agri
Incubation Centres with a total financial commitment of Rs 23.99 crore.
NABARD financing pattern analysis for the last 10 years
:
Conclusion : In a nutshell, NABARD for fulfilling its role as a facilitator of rural prosperity
and is entrusted with the refinancing of credit institutions in rural areas, stimulating
institutional development and evaluation and inspection of customer banks. NABARD
introduced a novel direct lending facility under ‘Umbrella Programme for Natural Resource
Management’ in 2007-2008. This Programme offers loans at reasonable rates of interest to
provide financial aid for natural resource management projects. Already loan amount of about
Rs 1000 crore has been granted to 35 projects. Some of the projects that have been sanctioned
are: (i) Collection of honey in Maharashtra by the tribal community (ii) Tussar value chain by a
women producer company (‘MASUTA’) (iii) eco-tourism in Karnataka etc. With regards to rural
developments, the contribution of NABARD has been exceptional. NABARD, having been set up
as the apex Development Bank mandating the facilitation of credit flow by the Government of
India for improving and promoting agriculture and other village industries, sanctioned
agricultural credit flow of Rs 1,57,480 crore in 2005-2006. It is expected that the GDP will grow
at 8.4%. The Indian economy in its entirety is ready for stronger and faster growth in the
coming years. NABARD’s role in the overall development of India in general and rural and
agricultural in particular is very vital.

Reference :
1.
https://www.nabard.org/auth/writereaddata/tender/0609160847NABARD%20A%20R%202013-
14%20Eng_1.pdf
2. https://www.drishtiias.com/important-institutions/drishti-specials-important-
institutions-national-institutions/national-bank-for-agriculture-and-rural-development-nabard