NABARD

Introduction

The National Bank for Agriculture and Rural Development (NABARD) is one of the prime financial
institutions in India which provides developmental credit in rural areas. Its mission is to “promote
sustainable and equitable agriculture and rural prosperity through effective credit support, related
services, institution development and innovative initiative.” NABARD has a total of 336 District Offices
and six training centres in India and a special cell at Srinagar. It has many branches across India with its
headquarters at Mumbai. The head of NABARD Regional Office (RO) is the Chief General Manager
(CGMs) and there are various top executives at the head office which include:

1. The Executive Directors (ED)

2. Managing Directors (MD) and

3. The Chairperson.
The main responsibilities of NABARD comprise resolving matters concerning policy and to plan and
manage operations for credit in the field of agriculture and other economic activities.

NABARD was set up on July 12, 1982, to execute the National Bank for Agriculture and Rural
Development Act 1981. Its establishment was based on the recommendations of B. Sivaraman
Committee. It replaced:

 The Agricultural Credit Department and Rural Planning and Credit Cell of Reserve Bank of
India

 The Agricultural Refinance and Development Corporation

The authorized capital of NABARD was raised six times; it initially maintained only INR 100 crores
which was revised to INR 30,000 crore. The Government of India owns 100% share in the paid-up
capital, which stands at Rs.6,700 crore.

The International affiliates also advise and provide monetary aid to NABARD. Organizations such as
World Bank associated organizations and other rural and agricultural developmental agencies work with
it for the upliftment of the rural people.
Duties

NABARD works towards uplifting the rural and agricultural sector and prepares grounds for rural and
social innovations. It plays a prime role in framing development initiatives for our country’s rural sector
industry, cottage industry, and small-scale industries. It reinvests the profits earned through
developmental spending towards research activities to frame better development initiatives for rural and
agricultural fields. This has helped NABARD gain trust among rural communities.

For rural and agricultural development, NABARD has partnered with many national and international
organizations and has over 4000 partner organisations which assist it to plan and execute rural and social
innovation. Some of the initiatives of NABARD include – SHG Bank Linkage program, initiative to
improve the living standard of tree-based tribal communities, forming farmer clubs to educate and
motivate farmers to incorporate crop productivity initiatives, programs for soil and water conservation,

NABARD has been consistently maintaining its position of the highest taxpayer, and figures among top
50 taxpayers to the exchequer. Together with its associated economies, NABARD carries out and
supports integrated development for the rural sector.

Role of NABARD

One of the most important funding agencies to finance the institutions that provide credits for the purpose
of investment and production to promote various development activities in rural India is NABARD. Its
role is to coordinate rural finance actions of all agencies engaged in developmental work at the field level
and maintaining a constant contact with the Government of India, State Governments, the Reserve Bank
of India (RBI) and other national institutions interested in policy formulation and refinancing the
institutions that finance the rural sector. It adopts measures like framing rehabilitation plans, restricting
the credit institutions, etc, for the creation of institutions that improve the absorption capacity of the credit
system. It regulates the institutions that financially aid the rural economy and controls its client institutes.
Furthermore, training services for the institutions working in the field of rural elevation are also provided
by NABARD. It also regulates cooperative banks and RRBs and manages talent acquisition via IBPS
CWE.

NABARD undertakes to refinance the following:

 1.
1. State co-operative agriculture and rural development banks (SCARDBs),

2. State co-operative banks (SCBs),

3. Regional rural banks (RRBs),

4. Commercial banks (CBs)

5. Other financial institutions approved by RBI.

Even though individuals, partnership concerns, companies, State-owned corporations or co-operative
societies can be the beneficiaries of investment credit, production credit is more often than not, given to
individuals.

NABARD has to its credit and important initiative, which is the ‘SHG Bank Linkage Program’. The
purpose of this initiative is to encourage banks to lend funds to self-help groups. Since these self-help
groups mainly constitute women, they have become an essential Indian tool for microfinance. Under this
program, 3.3 crore members of 22 lakh self-help groups were linked to the credit in March 2006.

In addition to this, NABARD has also undertaken various Natural Resource Management programs
which cover several avenues such as watershed development, tribal development and agricultural
innovation through dedicated funds created for this purpose.

Objectives

NABARD is required to supervise and regulate the functions of RRBs, i.e. the Regional Rural Banks and
the cooperative banks which account for 50% of the rural credit. NABARD undertakes to make sure that
a strong credit distribution system is in place to provide rural credit that can suffice and support the
growing and diversifying credit requirements for agriculture and rural development.

Activities and services undertaken by NABARD to perform various functions

Activities to discharge Credit Functions

 NABARD formulates the guidelines for the functioning of the financial institutions in rural
India.
  It issues credit facilities to these financial institutions

 Supervises the flow of rural credit at the ground level.

 It devises annual credit plans for several districts in order to identify credit potential.

Activities to discharge Developmental Functions

 It assists the rural credit institutions like RRBs and cooperative banks to formulate
development actions schemes for themselves.

 To better the affairs of the Regional Rural Banks, NABARD assists them in signing
Memorandums of Understanding with the Governments and cooperative banks.

 NABARD also keeps a check to ensure that development action plans of banks are being
implemented properly.

 It also extends its support financially to aid the training institutes of commercial banks,
RRBs and cooperative banks.

 For the improvisation of the management information system, development of human

resource and to computerize the operations of cooperative banks, NABARD extends its
financial support.

Activities to discharge Supervisory Functions

 As per the provisions of Banking Regulation Act, 1949, NABARD, inspects RRBs and
Cooperative Banks.

 It volunteers to carry out inspections of the non- credit cooperative societies and the State
Cooperative Agriculture and Rural Development Banks (SCARDBs).

 It gives its recommendations and suggestions to the Reserve Bank with regards to licensing of
Cooperative Banks and setting up of new branches of RBBs and State Cooperative Banks.

 Apart from off-site surveillance, it undertakes portfolio inspections of RBBs and Cooperative
Banks.

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.

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.