The document summarizes the genesis and functions of the National Bank for Agriculture and Rural Development (NABARD) in India. Key points:
- NABARD was established in 1982 to provide credit and other support services to promote rural development and uplift agriculture.
- It provides refinancing to banks and cooperatives for lending to the farm and non-farm sectors. It also directly finances food processing and rural infrastructure projects.
- In addition to financial functions, NABARD works on development programs related to agriculture, non-farm livelihoods, financial inclusion, and strengthening cooperatives. It also regulates and supervises rural banks.
National Bank for Agriculture and Rural Development (NABARD): Functions and Role in Rural Development
1. National Bank for Agriculture
and Rural Development
NABARD
BY ALOK SINGH(KANPUR)
2. Genesis
• Reserve Bank of India (RBI), constituted a
committee to review the arrangements for
institutional credit for agriculture and rural
development on 30 March 1979.
• Purpose was to review the arrangements for
institutional credit for agriculture and rural
development.
3. • The Committee felt the need for a new
organisational device for providing undivided
attention and focus to the credit problems
arising out of integrated rural development.
• It recommended the formation of National
Bank for Agriculture and Rural
Development(NABARD).
4. • The Parliament, through Act,61 of 1981,
approved the setting up of NABARD.
• The bank came into existence on 12 July 1982
by transferring the agricultural credit
functions of RBI and refinance functions of the
then Agricultural Refinance and Development
Corporation (ARDC)
7. Refinance
• NABARD refinancing is a way for banks to get
funding in respect of term loan for both Farm
Sector and Non - Farm Sector activities for a
period of 3-15 years
• and is released to only eligible institutions viz.
SCARDBs, SCBs, Regional Rural Banks or
Scheduled commercial banks or any other
financial institution, approved by Reserve Bank of
India (RBI) as defined under Section 25 of
NABARD Act.
8. Refinance
• Department of Refinance provides refinance
in respect of term loan for both Farm Sector
and Non - Farm Sector activities.
• Short term loans available for a period of 12
months
• Long term loans are available for a period of 3-
15 years.
• It is released to only eligible institutions
9. Institutions Eligible for Refinance
• State Co-operative Agriculture & Rural Development
Banks (SCARDBs)
• Regional Rural Banks (RRBs)
• State Co-operative Banks (SCBs)
• Commercial Banks (CBs)
• State Agricultural Development Finance Companies
(ADFCs)
• Scheduled Primary Urban Co-operative Banks (PUCBs)
• North East Development Finance Corporation (NEDFC)
• Non-Banking Financial Companies (NBFCs)
10. Activities covered by NABARD
Refinance
• Minor Irrigation, Land Development, Dry Land
Farming, Watershed Development, Farm
Mechanisation, Plantation & Horticulture,
Poultry / Dairy / Other Animal Husbandry
Activities, Fisheries, Bio-gas, Forestry,
Storage/Market Yard, Non - Farm Sector (Small
& Micro Enterprises), Self Help Groups,
Financing in Agri Export Zones etc
11. NABARD Direct Finances
• Loans for Food Processing Parks and Units
• NABARD had been granted Rs. 2000 crore as a
special fund by RBI for providing credit to
Food Parks, also known as agro-processing
units.
• The fund is referred to as the Food Processing
Fund – 2014-15.
12. • The fund is provided either directly or through
other financing agencies via consortium
arrangements.
• The purpose of this fund is to aid in the
development of the food processing sector in
the country, create job opportunities and
reduce wastage of agricultural produce.
13. • Loans for Warehouses, Cold Storage and Cold
Chain Infrastructure
• NABARD was allocated Rs. 5000 crore in 2014-15
to aid in building an infrastructure for the storage
of agricultural commodities.
• The fund was labelled as the Warehouse
Infrastructure Fund of 2014-15.
• The fund gives loans to private and public sectors
for construction of cold storages, silos,
warehouses and other cold chain infrastructure
15. • The rural financial system in the country calls for
a strong and efficient credit delivery system,
capable of taking care of the expanding and
diverse credit needs of agriculture and rural
development.
• More than 50% of the rural credit is disbursed by
the Co-operative Banks and Regional Rural Banks.
• NABARD is responsible for regulating and
supervising the functions of Co-operative banks
and RRBs.
16. • In this direction NABARD has been taking
various initiatives in association with
Government of India and RBI to improve the
health of Co-operative banks and Regional
Rural Banks.
17. Following are the developmental
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.
18. • 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.
19. Supervisory Functions
• Undertakes inspection of Regional Rural Banks
(RRBs) and Cooperative Banks under the
provisions of Banking Regulation Act, 1949.
• Undertakes inspection of State Cooperative
Agriculture and Rural Development Banks
(SCARDBs).
20. • 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).
21. II Developmental Function
• Farm Sector
• Non-Farm Sector
• Financial Inclusion
• Micro Credit Innovations
• Research and Development
• Core Banking Solutions to Cooperative Banks
• Climate change
• Institutional Development
22. Farm Sector
• Farm Sector Development Department (FSDD)
• Conservation and management of natural
resources
• Accelerating ground level credit flow by Rural
Financial Institutions
• Incremental agricultural production and
productivity
• Generating rural employment and raising the
standard of living of rural poor through credit and
grant.
23. Projects
• Support to Farmers' Training and Rural
Development Centres
• Grant support is provided to Farmers' Training
and Rural Development Centres set up by
major Commercial Banks / other agencies
24. • Support for Capacity Building for Adoption of
Technology (CAT)
• Under Capacity Building for Adoption of
Technology (CAT), during 2013-14, 392
exposure visits were arranged in collaboration
with select research institutes to build the
capacity of around 11736 farmers for
adopting new / innovative methods of
farming.
26. Village Development Programme
• Holistic Development of villages.
• VDPs are implemented by partnering with NGOs
or other agencies.
• Activities such as-
• Comprehensive soil testing and recommended
crop specific package of practices.
• Integrated Nutrient Management (INM) /
Integrated Pest Management (IPM), Organic
Farming, use of certified seeds, Nursery
Development etc
27. • Improved seed replacement, use of low cost
compost/ vermi compost led to reduction in
cost of cultivation from 10 to 20%.
• Pilot Project on Augmenting Productivity of
Lead Crops
28. • Pilot Project on System of Rice Intensification - a
combination of simple agronomic and
management practices to improve productivity.
• Average increase in grain productivity reported at
30%
• In condition of poor rainfall, this method did
comparatively well.
• Cost of cultivation was observed to be reduced
while income level of small and marginal farmers
have increased.
29. Rural Non-Farm Sector Development
• Promotion of Rural Non-Farm Sector to reduce
over dependence on agriculture of our rural
population and to provide alternate livelihood
options.
• Helps in reducing large-scale migration of small
and marginal farmers and agricultural labourers
to urban areas in search of livelihood
opportunities on account of
unemployment/disguised employment in the
agriculture sector.
30. Priority Area
• The focus has been on greater credit flow for
small, cottage and village industries,
handloom, handicrafts and other rural crafts
and service sector rural areas.
• Building an entrepreneurial culture and
necessary skills among the rural youth and
women.
• Developing markets for the rural non-farm
sector.
31. Marketing Initiative
• To enable the artisans to sell the products in
marketing events.
• To market their artistry to the consumers and
benefit directly from the market feedback for
better value realization in future.
• Financial assistance by way of grant is
provided on selective basis.
32. • Example -
• The Bank co-sponsored SARAS-Mahalaxmi
Fair at Mumbai wherein 100 artisans from 27
States participated in the 11 day long
exhibition-cum-sale event.
33. • Participation in marketing events/exhibitions
provided them necessary exposure to interact
directly with the consumers.
• Interface with management students,
professional designers and representatives of
promotional agencies like KVIC/KVIB, etc., at
such events enabled the artisans to fine tune
their product range to suit consumer
preferences.
34. • Example –
• Confederation of Indian Industry (CII) was
sanctioned Rs.9 lakh for experimenting with
marketing of handloom and handicraft
products from the north-eastern States
through organised retail outlets in Metro
Cities.
35. Women Empowerment
• Assistance to Rural Women for Non-Farm
Development (ARWIND) scheme was
introduced in 1993 for meeting promotional
and other credit needs of women
entrepreneurs supported by NGOs, co-
operatives and other registered institutions.
36. • The scheme of Marketing of Non-Farm
Products of Rural Women (MAHIMA) aimed at
supporting agencies engaged in marketing
products manufactured by rural women was
introduced in 1997.
37. SUDHA
• A SHG Bank linkage Program
• ‘Help the women to help themselves’.
38. • A Self-Help Group (SHG) is a village-based
financial intermediary usually composed of
10-20 local women.
• Members make small regular savings
contributions over a few months until there is
enough capital in the group to begin lending.
• Funds may then be lent back to the members
or to others in the village for any purpose
39. • In India, many SHGs are ‘linked’ to banks for
the delivery of micro-credit.