National Bank for Agriculture and Rural Development (NABARD) is the apexinstitution in the country which looks after the development of the cottageindustry, small industry and village industry, and other rural industries. It is an apex development bank in India having headquarters based inMumbai (Maharashtra) and other branches are all over the country. It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector.
It completed its 30 years on 12 July 2012.In discharging its role as a facilitator for rural prosperity NABARD isentrusted with 1. Providing refinance to lending institutions in rural areas2. Bringing about or promoting institutional development3. Evaluating, monitoring and inspecting the client banks
History NABARD was established on the recommendations of Shivaraman Committee, by an act 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 premiere agencies to provide credit in rural areas.
Rural Financial IntermediationOriginal tribal finance system
Major Activities:Preparing of Potential Linked Credit Plans for identification of exploitable potentials underagriculture and other activities available for development through bank credit.• Refinancing banks for extending loans for investment and production purpose inrural areas.• Providing loans to State Government/Non Government Organizations(NGOs)/Panchayati Raj Institutions (PRIs) for developing rural infrastructure.• Supporting credit innovations of Non Government Organizations (NGOs) and othernon-formal agencies.• Extending formal banking services to the unreached rural poor by evolving asupplementary credit delivery strategy in a cost effective manner by promoting Self HelpGroups (SHGs)• Promoting participatory watershed development for enhancing productivity andprofitability of rainfed agriculture in a sustainable manner.• On-site inspection of cooperative banks and Regional Rural Banks (RRBs) andsurveillance over health of cooperatives andRRBs.
MissionPromoting sustainable and equitable agriculture and rural developmentthrough effective credit support, related services, institutionbuilding and other innovative initiatives.In pursuing this mission, NABARD focuses its activities on:Credit functions, involving preparation of potential-linked credit plansannually for all districts of the country for identification of creditpotential, monitoring the flow of ground level rural credit, issuing policyand operational guidelines to rural financing institutions and providingcredit facilities to eligible institutions under various programesDevelopment functions, concerning reinforcement of the creditfunctions and making credit more productiveSupervisory functions, ensuring the proper functioning of cooperativebanks and regional rural banks
Roles and FunctionsNABARD is set up by the Government of India as a development bank withthe mandate of facilitating credit flow for promotion and development ofagriculture and integrated rural development. The mandate also coverssupporting all other allied economic activities in rural areas, promotingsustainable rural development and ushering in prosperity in the rural areas. 1. Credit Functions : NABARDs credit functions cover planning, dispensation and monitoring of credit. This activity involves: • Framing policy and guidelines for rural financial institutions • Providing credit facilities to issuing organizations • Preparation of potential-linked credit plans annually for all districts for identification of credit potential • Monitoring the flow of ground level rural credit.
2.Developmental and Promotional FunctionsCredit is a critical factor in development of agriculture and rural sector as it enablesinvestment in capital formation and technological up gradation. Hence strengtheningof rural financial institutions, which deliver credit to the sector, has been identified byNABARD as a thrust• area. Various initiatives have been taken to strengthen thecooperative credit structure and the regional rural banks, so that adequate and timelycredit is made available to the needy.In order to reinforce the credit functions and to make credit more productive,NABARD has been undertaking a number of developmental and promotionalactivities such as:-Help cooperative banks and Regional Rural Banks to prepare development actionplans for themselves.Enter into MoU with state governments and cooperative banks specifying theirrespective obligations to improve the affairs of the banks in a stipulated timeframe.Help Regional Rural Banks and the sponsor banks to enter into MoUs specifying theirrespective obligations to improve the affairs of the Regional Rural Banks in a stipulatedtimeframe.Monitor implementation of development action plans of banks and fulfillment of obligationsunder MoUs.Provide financial assistance to cooperatives and Regional Rural Banks for establishment oftechnical, monitoring and evaluations cells
Provide organisation development intervention (ODI) through reputed traininginstitutes like Bankers Institute of Rural Development (BIRD), Lucknowwww.birdindia.org.in, National Bank Staff College, Lucknow www.nbsc.in andCollege of Agriculture Banking, Pune, etc.Provide financial support for the training institutes of cooperative banks.Provide training for senior and middle level executives of commercial banks,Regional Rural Banks and cooperative banks.Create awareness among the borrowers on ethics of repayment through VikasVolunteer Vahini and Farmer’s clubs.Provide financial assistance to cooperative banks for building improvedmanagement information system, computerisation of operations and developmentof human resources
Supervisory FunctionsAs an apex bank involved in refinancing credit needs of major financial institutions in the countryengaged in offering financial assistance to agriculture and rural development operations andprogrammes, NABARD has been sharing with the Reserve Bank of India certain supervisoryfunctions in respect of cooperative banks and Regional Rural Banks (RRBs). As part of thesefunctions, it• 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• Undertakes portfolio inspections, systems study, besides off-site surveillance of CooperativeBanks and Regional Rural Banks (RRBs) • Provides recommendations to Reserve Bank of India on issue of licenses to CooperativeBanks, opening of new branches by State Cooperative Banks and Regional Rural Banks(RRBs)• Administering Credit Monitoring Arrangements (CMA) in SCBs..
Objectives of Inspection• To protect the interest of the present and future depositors • To ensure that the business conducted by these banks is in conformity withthe provisions of the relevant Acts/Rules, regulations/Bye-Laws, etc• To ensure observance of rules, guidelines, etc., formulated and issued byNABARD/RBI/Government• To examine the financial soundness of the banks • To suggest ways and means for strengthening the institutions so as toenable them to play more efficient role in rural credit
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Role in Training The role of training in NABARD and the role played by it for capacity building in client institutions, partner agencies and other developmental agencies is important. The Bank provides training facilities for the RFIs and agencies involved in rural development through BIRD.• National Bank Staff College, Lucknow• National Bank Training Centre, Lucknow• Zonal Training Centre, Hyderabad• Bankers Institute of Rural Development (BIRD), Mangalore• Bankers Institute of Rural Development (BIRD), Bolpur• Bankers Institute of Rural Development (BIRD), Lucknow
• As NABARD primarily functions through other agencies, the needs of the client institutions largely determine the knowledge and skill requirements of NABARD officers.• Efforts are also made to blend the study findings with the outcome from training to periodically measure the overall impact of the investments made in the training efforts.
What does the NABARD do?1. Serves as an apex financing agency for the institutions providing investment andproduction credit for promoting the various developmental activities in rural areas 2. Takes measures towards institution building for improving absorptive capacity of thecredit 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 developmentalwork at the field level and maintains liaison with Government of India, StateGovernments, Reserve Bank of India (RBI) and other national level institutionsconcerned 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. The institutions which help the rural economy, NABARD helps develop. 7. NABARD also keeps a check on its client institutes. 8. It regulates the institution which provides financial help to the rural economy. 9. It provides training facilities to the institutions working the field of rural upliftment. 10. It regulates the cooperative banks and the RRB’s.11. Promotes research in the fields of rural banking, agriculture and rural development12. Functions as a regulatory authority, supervising, monitoring and guiding cooperativebanks and regional rural banks.13. It supports State Governments in creation of infrastructure.
Financial Inclusion DepartmentThe Committee on Financial Inclusion has defined Financial Inclusion as"the process of ensuring access to financial services and timely andadequate credit where needed by vulnerable groups such as weakersections and low income groups at an affordable cost.” It is argued that as banking services are in the nature of public good; theavailability of banking and payment services to the entire population withoutdiscrimination is the prime objective of this public policyOn the recommendation of the committee on financial inclusion headed bycurrent PMEAC’s chairmanThe two funds have been established with NABARD.NABARD is the coordinating agency of Financial Inclusion initiatives withFinancial Inclusion Department (FID) as the nodal department.1. Financial Inclusion Fund (FIF)2. Financial Inclusion Technology Fund (FITF).
UNDP-NABARD Collaboration for Financial Inclusion NABARD and UNDP signed an agreement to address the challenge of financial inclusion in the UNDP focus States viz. Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh through a new paradigm which goes beyond mere access to the affordable delivery of a range of financial products and services that reduce the vulnerability of the poor and provide new opportunities to diversify their livelihoods• NABARD and UNDP will link up with regulators, financial institutions, civil society and the private sector to pilot doorstep delivery of Banking services; provide customized financial literacy to poor women and men and attempt to link them to the formal financial sector and facilitate knowledge sharing between actors of the financial services sector to share experiences related to design and delivery of pro-poor financial products. The project will also build capacities of project staff in project implementation and management through a range of inputs.
Microfinance and NABARD• For a better reach of microfinance program a continuous check of the status, progress, trends, qualitative and quantitative performance comprehensively is required. Thus the Reserve Bank of INDIA and NABARD has laid out certain guidelines in 06-07 for the commercial banks, Regional Rural Banks and Cooperative Banks to provide the data to RBI and NABARD about the progress of the microfinance program. There are three aspects on which the data was collected, savings of self-help groups with banks, loan disbursed by banks to self-help groups default by self-help group’s repayment of the loans taken from banks. Banks also provides data regarding loans given by banks to the microfinance institutions.
COOPERATIVE DEVELOPMENT FUND (CDF)• In pursuance with the recommendations of the Parliamentary Committee on Agriculture, Cooperative Development Fund was constituted by NABARD in the year 1992-93 under the provisions of Section 45 of NABARD Act, 1981 with a view to strengthen and providing assistance to Co-operative Credit Institutions for improving their infrastructural facilities
Objective of the Fund:• Supporting the efforts of grass root level institutions to mobilize resources etc.• Human Resource Development aimed at achieving better working results and improvements in viability and also for improvement in systems in cooperative credit institutions.• Building of better MIS and• Conduct of special studies for improving functional efficiency and on subjects referred to above.
Mode of Assistance• Assistance is provided by way of:1. Grant,2. Soft loan3. Grant-cum-soft loan
Rural Infrastructure Development Fund(RIDF)• Established as dedicated Fund for rural infrastructure in NABARD in 1995- 1996.• The RIDF is created out of commercial banks’ shortfall in lending to agriculture priority sectors• Started with Rs. 2000 cr in 1995.• . .• The purpose of RIDF is to promote innovation in rural & agricultural sector through viable means. Effectiveness of the program depends upon many factors, but the type of organization to which the assistance is extended is crucial one in generating, executing ideas in optimum commercial way. Cooperative is member driven formal organization for socio-economic purpose, while SHG is informal one. NGO have more of social color while that of PRI is political one. Does the legal status of an institute influences effectiveness of the program? How & to what an extent? Cooperative type of organization is better (Financial efficiency & effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs.
NABARD has achieved the milestone of disbursing more than 1,00,000 crorefrom Rural Infrastructure Development Fund. As at the end of September 2011,NABARD has disbursed 1,02,844 crore to 28 States and Union Territory ofPuduchery.This include 18,500 crore disbursed to National Rural Roads DevelopmentAgency (NRRDA), New Delhi.Andhra Pradesh (9,711 cr.),Uttar Pradesh (7984 cr.), Gujarat (7,324 cr.),Tamil Nadu (6,523 cr.), Madhya Pradesh (5,464 cr.),Maharashtra (5,493 cr,),Rajasthan (5,406 cr.)West Bengal (4,694 cr.)Karnataka (4,406 cr.) topped the list of States which have availed maximumloan from RIDF.The loan is presently available to the State Govts. at 6.5% interest p.a.
For the current year (under RIDF XVII), an amount of 2,000 crore has beenearmarked specifically for creation of warehousing infrastructure in differentstates.This, besides streamlining the management of food grains across allStates, will take the growth trajectory of RIDF to a new high during thisyear.The fund has touched the lives of rural population in more than one way bycreating infrastructure in 31 approved activities during the last seventeenyears.
RIDF impact assessment• Irrigation 92.48 lakh ha.• Rural connectivity 1.78 lakh km roads,3.31 lakh meters of bridge• Rural drinking water 538 lakh people• Public health 160 lakh people• Schools 15.62 lakhs students
Umbrella Programme for NaturalResource Management (UPNRM)• NABARD has started a new direct lending facility under Umbrella Programme for Natural Resource Management (UPNRM).• Under this facility financial support for natural resource management activities can be provided as a loan at reasonable rate of interest.• Already 35 projects have been sanctioned involving loan amount of about Rs 1000 million.• The sanctioned projects include honey collection by tribals in Maharashtra, tussar value chain by a women producer company (MASUTA), eco-tourism in Karnataka.
Subsidiaries of NABARD• Nabcons• NABARD Consultancy Services (Nabcons) is a wholly owned subsidiary promoted by National Bank for Agriculture and Rural Development (NABARD) and is engaged in providing consultancy in all spheres of agriculture, rural development and allied areas.• Nabcons leverages on the core competence of the NABARD in the areas of agricultural and rural development, especially multidisciplinary projects, banking, institutional development, infrastructure, training, etc., internalized for more than two decades.
• In tune with NABARDs mission to bring about rural prosperity, Nabcons has more than just commercial interest in the assignments it undertakes.• The Company is registered under the Companys Act, 1956, with an authorized capital of Rs 250 million (US $5.75 million) and paid up capital of Rs 50 million (US $1.15 million).•
NABARD Financial Services LimitedNABFINSNABARD Financial Services Limited, [NABFINS] is a subsidiary of NationalBank for Agriculture and Rural Development (NABARD) with equityparticipation from NABARD, Government of Karnataka, Canara Bank, UnionBank of India, Dhanalakshmi Bank and Federal Bank.
It is a non-deposit taking NBFC registered with the Reserve Bank ofIndia and shall operate throughout India. The main objectives of theCompany are to provide financial services in two broad areas ofagriculture and microfinance. NABFINS provides credit and other facilities for promotion, expansion,commercialization and modernization of agriculture and allied activities.NABFINS shall engage in the business of providing micro financeservices (with or without thrift) and other facilities to needy anddisadvantageous sections of the society for securing their prosperity inboth rural and urban areas
NABARD, which is the world renowned apexdevelopment bank of our country and pioneered theworld’s largest microfinance movement, while promotingNABFINS has envisaged that NABFINS shall evolve intoa Model Microfinance Institution to set standards ofgovernance among the MFIs, operate with exemplarylevels of transparency and operate at reasonable /moderate rates of interest
Agri Business Finance (AP) Limited (ABFL)• Agri Business Finance (AP) Limited (ABFL) was incorporated under Companies Act, 1956 on 17 February 1997. It is a state specific financial institution registered as Non Banking Finance Company. ABFL was promoted with equity participation from National Bank for Agriculture and Rural Development (NABARD), Andhra Bank, Canara Bank, Govt of Andhra Pradesh, Andhra Pradesh State Cooperative Bank and a few Industrial Houses / individuals from the State.• It operates in the state of Andhra Pradesh with its registered office at Hyderabad.
NABARD Highlights 2011-2012• The aggregate assets hold by NABARD rose to 182 thousand crores on 31st march 2012.• Refinance assistance provided by NABARD to disburse crop loan to farmers touched an all time high of 48000 cr.• RIDF disbursed to state government was 14970 cr. , 24% higher than last year’s allocation.• Special scheme for warehouse project: first time Rs 2000 allocation has been made in 2011-2012 annual financial statement by F.M. under RIDF.• NABARD infrastructure development assistance (NIDA) designed to assist state Gov’s and other state owned org’s/corp’s both on budget as well as off- budget funding on flexible terms outside RIDF for creation of rural infrastructure
• Direct lending to cooperative banks• Direct lending to producers organization• Special thrust to eastern India and north eastern regionDEVELOPMENTAL INTERVENTION1. SHG-bank linkage programme (82 lakh SHG promoted)2. Joint liability groups(JLG): In order to augment the flow to small and other micro enterpreneurs3. Farmers club:101946 clubs4. Financial inclusion:more than 100 percent growth in disbursement of FIF and FITF
Pilot project launched during 2011-2012• Watershed development: covers an area of 1.78 lakh ha.• Tribal development(TDF-tribal development fund)• Promotional activity: marketing events like exhibitions and melas for rural artisans. Rural innovations• NABARD support rural innovation from out of its rural Innovation Fund(RIF) to promote innovations across the country having the rural poor in the focus.• Institutional development Regional Rural Banks(RRBs):NABARD has facilitated 100% core banking solution in 80 RRBsto integrate them with NEFT AND RTGS. It is also coordinatingwith Institute of Banking Personnel selection(IBPS) forrecruitment of staffs and officers in RRBs.
• Core banking solution for cooperativesNABARD helped the cooperative banks to move toCBS(Core banking solution) platformmajor objectives:Wider and more flexible product portfolioImprove profitabilityCompliance with all regulatory requirementsAll government funds to be remitted through e-paymentmodeFacilitate financial inclusion
• NABCONS: it helped promote private investment and financing incommercial agricultural projects by preparation of detailedproject report, techno economic feasibility reports andappraisal studies.NABCONS has been entrusted by GOI with theresponsibility of establishing Indo- African Institute ofAgriculture and Rural development in AFRICA.