Nabard aman

NABARD
BY
AMAN SHARMA (4152013)
Dept. of Business Administration
National Institute of Kurukshetra

GENESIS
OF NABARD
 The importance of institutional credit in boosting
rural economy has been clear to the Government of
India right from its early stages of planning.
 Therefore, the Reserve Bank of India (RBI) at the
insistence of the Government of India, constituted a
Committee to Review the Arrangements For
Institutional Credit for Agriculture and Rural
Development (CRAFICARD) to look into these very
critical aspects.
 The Committee was formed on 30 March 1979,
under the Chairmanship of Shri B. Sivaraman,
former member of Planning Commission,
Government of India.
https://www.nabard.org/

 The Committee’s interim report,
submitted on 28 November 1979,
outlined the need for a new
organisational device for providing
undivided focus to credit related
issues linked with rural development.
 Its recommendation was formation of
National Bank for Agriculture and
Rural Development (NABARD) was
approved by the Parliament through
Act 61 of 1981.

 NABARD 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). It was dedicated to the
service of the nation by the late Prime Minister
Smt. Indira Gandhi on 05 November 1982.
 Set up with an initial capital of Rs.100 crore, its’
paid up capital stood at Rs. 5,000 crore as on
31 March 2016. Consequent to the revision in
the composition of share capital between
Government of India and RBI, the Government of
India today holds Rs. 4,980 crore (99.60%) while
Reserve Bank of India holds Rs. 20.00 crore
(0.40%).

MISSION
 "Promote sustainable and equitable
agriculture and rural prosperity through
effective credit support, related
services, institution development and
other innovative initiatives."

HEAD OFFICE DEPARTMENTS
1. Accounts Department
2. Business Initiatives Department
3. Central Vigilance Cell
4. Corporate Communications Department
5. Corporate Planning Department
6. Department of Economic Analysis & Research
7. Department of Financial Inclusion and Banking
Technology
8. Department of Information Technology
9. Department of Premises, Security and Procurement

Cont…
10. Department of Refinance
11. Department of Storage and Marketing
12. Department of Subsidiaries and Strategic
Investments
13. Department of Supervision
14. Farm Sector Development Department
15. Finance Department
16. Human Resource Management Department

17. Risk Management Department
18. Secretary’s Department
19. State Project Department
20. Institutional Development Department
21. Inspection Department
22. Farm Sector Policy Department
23. Law Department
24. Micro Credit Innovations Department
25. Off Farm Development Department
26. Rajbhasha Prabhag

MAIN FUNCTIONS OF NABARD

FINANCIAL
Direct Finance
 Direct finance to agriculture shall include short, medium and long
term loans given for agriculture and allied activities directly to
individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups
(JLGs) of individual farmers without limit and to others (such as
corporate, partnership firms and institutions) up to Rs. 20 lakh.
SCHEMES OF DIRECT FINANCE
a) Loans to Warehouses, Cold Storage and
Cold Chain Infrastructure
b) Credit Facilities to Marketing Federations
c) Rural Infrastructure Development Fund
d) Financing and Supporting Producer
Organisations
e) Loans for Food Parks and Food Processing

A) Loans for Food Parks and Food
Processing Units in Designated
Food Parks
 Taking this agenda further, the Finance Ministry, in
2014, announced setting up of a Special Fund of
Rs. 2,000 crore in NABARD for providing direct
term loans at affordable rates of interest to
Designated Food Parks (DFPs) and food
processing units in the DFPs.
 The objectives of the Fund are:
 To provide impetus to development of the food
processing sector on a cluster basis in the country
 To reduce wastage of agricultural produce
 To create employment opportunities especially in
rural areas.

CONT.
 The Fund provides Term loans for:
 Development/establishment of all infrastructure
required in the DFPs
 Augmentation/modernization/creation of
additional infrastructure in the DFPs
 Setting up of individual food processing units or
any other unit that is established for supporting
the operations of the food processing units within
the DFPs; and
 Modernization of existing processing units in the
DFPs resulting in process technology up-
gradation, automation, increased efficiency,
improvement in product quality, reduction in
costs, etc.

CONT…
Eligible Borrowers
• State Governments
• Entities promoted by State
Governments or Government of India
• Joint Ventures
• Special Purpose Vehicles (SPVs)
• Cooperatives
• Federations of Cooperatives
• Farmers’ Producer Organizations
• Entrepreneurs etc

B) Credit Facilities to Marketing
Federations
Marketing federations and cooperatives are playing a ver
important role in agribusiness and value/supply chain
management of the various agricultural commodities.
Major activities undertaken by these institutions are:
• Procurement of agricultural commodities including milk
• Aggregation, storage and value addition in few select
commodities like milk, etc.
• Marketing
The marketing operations by these federations and
cooperatives require seasonal and timely short-term
credit facility to support their day-to-day operations.

Eligible Institutions
The following institutions will be eligible for
funding under Credit Facility to
Federations (CFF)
I. State/Central Govt. Agricultural
Marketing Federations, Corporations
II. Dairy Co-operatives/Federations
III. Agriculture Marketing Co-
operatives/Federations
IV. Registered Companies

Eligibility Criteria
I. State/Central Govt. Agricultural Marketing
Federations, Corporations
It must have been established or
constituted by or under any Central Act, or
State Acts and major share of the paid up
capital is held or controlled by the Central /
State Government
Earned profit during the last three years and
not having accumulated losses
Entities with poor financials will be
considered based on the merit of the
proposal and if backed with Government
Guarantee

Cont..
 II. Dairy and Agriculture Co-operatives
and Federations
 It must be a registered body
 Earned profit during the last three years
and not having accumulated losses
 Professional Management and
democratic setup
 Audit of accounts is regular
 No history of defaults in repayment of
loans

Cont….
 III. Registered Companies
 It must be a registered body under
Companies Act
 Earned profit during the last three years
and not having accumulated losses
 Professional Management
 The minimum credit rating of the
promoting company should be at 'AA' by
CRISIL or CARE
 Should not have a history of defaults in
repayment of loans

CONT..
 Nature of Loan
Short-term credit facility (less than 12 months) for
meeting working capital requirement. The limit can
be operated for 12 months and the outstanding at
the end of 12th month is required to be repaid.
 Eligible Activities
 Procurement and marketing of agricultural
commodities
 Processing and marketing of agricultural
commodities
 Procurement, processing and marketing of milk
 Supply of Agricultural inputs including animal feed

Cont…
 Quantum of Loan and Margin/ borrower contribution
Loan and Margin/Borrower's contribution will be as per the
guidelines issued by RBI from time to time. The quantum of
loan depends upon the type of beneficiary and nature of loan
as given below:
I. State/Central Govt. Agri Marketing Federations, Corporations
100% for the procurement operations under decentralised
procurement operations of food grains and Minimum Support
Price (MSP) Scheme
90% for other marketing interventions

CONT…
II. Dairy Co-operatives/Federations/ Agri.
Marketing Co-operatives/Federations
and Registered Companies
Maximum of 75% of the working capital
assessment. The following method will
be adopted for assessing the working
capital :
WC = Total Current Assets - Current
liabilities other than bank borrowings and
finance *75%. Borrower will bring in
minimum of 25% margin.

Cont..
Rate of interest
The rate of interest will be as per the rate decided by the
Asset-Liability Management Committee (ALCO) of NABARD.
Further, interest is dependent upon the type of borrower, type
of security offered, availability of guarantee, type of project,
credit rating of the entity and the prevailing market conditions.
Interest will be due and paid at monthly rests for short term
loans. Interest rate is linked to the risk rating.
Security for Loan
The security requirement will depend upon the rating of the
borrowing entity, type of operations etc., and as per
requirements/stipulations laid down by RBI from time to time.
The primary security would be hypothecation of assets,
stocks, receivables, and book debts. Additional collaterals in
the form of unencumbered assets, fixed deposits, guarantees
etc., will be insisted depending on the borrowing entity and
purpose of limit.

Cont..
 Appraisal Fee
Appraisal fee/upfront fee charged
from the promoter will be specific to
the proposal and the maximum fee
would be restricted to 1% of the
project cost.

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,
RRBs or Scheduled commercial banks or any other financial institution,
approved by RBI as defined under Section 25 of NABARD Act.

Eligible schemes for Refinance
under Off-Farm Sector
 Automatic Refinance Scheme (ARF)
The various schemes formulated over the years have
been categorized into five distinct and compact
schemes.
A. Composite Loan Scheme (CLS)
Under this scheme, refinance is given to meet the
block and /or working capital requirements of
small/micro enterprises. Maximum refinance available is
Rs. 10 lacs per unit.
B. Integrated Loan Scheme (ILS)
Under this scheme, refinance is given to block capital
and working capital for one operating cycle. Maximum
refinance available is Rs. 15 lacs per borrower.

CONT…
C. Self-Employment Scheme for Ex-servicemen (SEMFEX)
The scheme has been in operation since 15 January 1988.
SEMFEX is specially designed to provide a comprehensive package
of credit for encouraging ex-servicemen to undertake agricultural
and allied activities or to set up off-farm units in rural areas to earn
their livelihood and lead a dignified life. NABARD provides
refinance assistance under Automatic Refinance Facility (ARF) to
eligible banks for a wide spectrum of manufacturing, processing
and service sector activities under RNFS (Investment Credit).
D. Soft Loan Assistance for Margin Money (SLAMM)
The scheme is to provide financial assistance to prospective
entrepreneurs who have the requisite talent and skill of
entrepreneurship but lack necessary monetary resources to meet
the margin requirements stipulated under relevant refinance
schemes of NABARD.

CONT…
E. Small Road and Water Transport Operators
(SRWTO)
Under this scheme, financial assistance is provided for
acquisition of transport vehicles, which are to be used
for transportation of farm produce/industrial products to
rural/urban marketing centers, including passenger
transport vehicle and water transport units. Margin
money assistance will be extended on a very selective
basis, up to 10% of the cost of the vehicle.
 Rural Housing
Housing in the rural areas, for both agriculturists and
non-agriculturists, serves both business as well as
dwelling needs, thereby leading to overall rural
development. NABARD is giving refinance (investment
credit) to eligible banks to support rural housing.

CONT…
 Renewable Energy
The Ministry of New and Renewable Energy
(MNRE), Government of India and the
Jawaharlal Nehru National Solar Mission
(JNNSM) are working earnestly to address
India’s energy security challenges. In order to
achieve this objective, the MNRE has launched a
capital cum interest subsidy scheme for creation
of off-grid, decentralised solar powered energy
harvesting devices through application of photo
voltaic technology. These devices will be used for
purposes of lighting, heating, etc. at the level of
domestic and mini commercial applications.
NABARD is the nodal agency for assessing
feasibility and providing refinance for eligible
projects.

DEVELOPMENTAL
Institutional Development
Farm Sector
i. Farm Sector Development Department
(FSDD)
ii. Farm Sector Policy Department (FSPD)
Off Farm Sector
Financial Inclusion
Micro Credit Innovation
Research & Development
CBS To Co-Operative Banks

A) Institutional Development
 More than 50% of the rural credit is disbursed by the Co-
operative Banks and RRBs. NABARD is responsible for
regulating and supervising the functions of Co-operative banks
and RRBs. 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.
Who is it for ?
• Rural Credit Cooperatives
• State Cooperative Banks (StCBs)
• Central Cooperative Banks (CCBs)
• Primary Agricultural Credit Societies (PACS)
• State Cooperative Agriculture and Rural Development Banks
(SCARDBs)
• Primary Cooperative Agriculture and Rural Development Banks
(PCARD

B) Financial Inclusion
 the Government of India constituted a
“Committee on Financial Inclusion” under the
Chairmanship of Dr. C. Rangarajan. The
Committee submitted its final report to
Hon'ble Union Finance Minister on 04
January 2008.
 The Committee recommended setting up of
two funds - Financial Inclusion Fund (FIF)
and Financial Inclusion Technology Fund
(FITF). Both these Funds have since been
merged into a single Fund, the Financial
inclusion Fund (FIF). The FIF is administered
by an Advisory Board constituted by Govt. of
India and maintained by NABARD.https://www.nabard.org/

Cont…
 Sources of Funds
The contribution to FIF is from the interest
differential excess of 0.5% in respect of
deposits placed by banks under RIDF and
STCRC, which is credited to FIF w.e.f. 01
April 2012.
 Additional Information
Monthly Update
 Formats
Guidelines on FIF

SUPERVISORY
 Objectives of Supervision
 Supervisory Process
 Credit Monitoring Arrangements (CMA)
 Board of Supervision (for SCBs, DCCBs and RRBs)
 Other Initiatives
 Penalties imposed on supervised entities
 Latest Updates

A) Supervision
 Section 35(6) of the Banking Regulation Act, 1949,
empowers NABARD to conduct inspection of State
Cooperative Banks (StCBs), Central Cooperative Banks
(DCCBs) and Regional Rural Banks (RRBs).
 In addition, NABARD has also been conducting periodic
inspections of state level cooperative institutions such as
State Cooperative Agriculture and Rural Development Banks
(SCARDBs), Apex Weavers Societies, Marketing
Federations etc., on a voluntary basis.
 Objectives of Supervision
 To protect the interest of present and future depositors
 To ensure that the business conducted by these banks is in
conformity with the
 provisions of the relevant Acts/Rules, regulations/Bye-Laws
 To ensure observance of rules, guidelines, etc., formulated
and issued by NABARD/RBI/Government
 To examine the financial soundness of the banks and

B) Board of Supervision (BoS)
(for SCBs, CCBs and
RRBs) The Board of Supervision (BoS) (for StCBs, DCCBs and
RRBs) has been constituted by NABARD under Section 13(3)
of NABARD Act, 1981 as an Internal Committee to the Board
of Directors of NABARD. The broad powers and functions of
the Board of Supervision are as under:
 Giving directions and guidance in respect of policies and on
matters relating to supervision and inspection, reviewing the
inspection findings and suggesting appropriate measures
 Reviewing the follow-up action taken by Department of
Supervision (DoS) on matters of frauds and internal checks
and control
 Identifying the emerging supervisory issues in the functioning
of cooperative banks / RRBs such as recovery, investment
portfolio, credit monitoring system, management practices,
frauds, etc.
 Suggesting necessary follow-up measures for improving the
functioning of supervised banks
 Suggest measures for strengthening supervisory mechanismhttps://www.nabard.org/

GOVT. SPONSORED
SCHEMES
FARM SECTOR
OFF FARM SECTOR

FARM SECTOR
SCHEMES
Dairy Entrepreneurship Development
Scheme
Rural Godowns
Solar Schemes
National Livestock Mission

A) Dairy Entrepreneurship
Development Scheme
 (DAHD&F), GoI launched a pilot scheme
titled “Venture Capital Scheme for Dairy and
Poultry” in the year 2005-06.
 The main objective of the scheme was to
extend assistance for setting up small dairy
farms and other components to bring
structural changes in the dairy sector.
 During a mid-term evaluation of the scheme,
DAHD&F decided to make some key
changes to the scheme, including changing
its name to Dairy Entrepreneurship
Development Scheme (DEDS).
 The revised scheme has come into operation
with effect from 1 September 2010.

Objectives of the scheme
 To promote setting up of modern dairy farms
for production of clean milk
 To encourage heifer calf rearing, thereby
conserving good breeding stock
 To bring structural changes in the
unorganised sector so that initial processing
of milk can be taken up at the village level
itself
 To upgrade the quality and traditional
technology to handle milk on a commercial
scale
 To generate self-employment and provide
infrastructure mainly for unorganised sector

Who can benefit from this
scheme?
 Farmers, individual entrepreneurs, NGOs,
companies, groups of organised
and unorganised sectors, etc. Groups of
organised sector include Self-help Groups
(SHGs), dairy cooperative societies, milk unions,
milk federations, etc.
 An individual will be eligible to avail assistance
for all the components under the scheme but
only once for each component
 More than one member of a family can be
assisted under the scheme provided they set up
separate units with separate infrastructure at
different locations.
 The distance between the boundaries of two
such farms should be at least 500 metres.

B) Solar Schemes
At present, to promote the use of solar energy, two capital linked
subsidy schemes of Ministry of New and Renewable Energy
(MNRE), GoI, ie. Solar Photovoltaic Water Pumping systems and
MNRE Lighting Scheme 2016 are operated through NABARD.
A. MNRE Lighting Scheme 2016
MNRE,GoI has launched the MNRE Lighting Scheme -2016 to
support LED based systems w. e. f. 29.2.2016 . Loan
sanctioned from 29 February 2016 and upto 31 March 2017
can be considered eligible for subsidy under the scheme.
Under the scheme, subsidy support will be available only for 6
models of LED based lighting systems and 6 models of Solar
Home Systems (Solar Power Packs-DC/AC models).Subsidy
under the scheme is available only for solar systems that are
procured from empanelled manufacturers/entrepreneurs
by MNRE,GoI .
 Who can benefit from the scheme
Individuals, group of individuals, SHGs, JLGs, NGOs,
Trusts,Farmers’ Clubs, Registered Farmers Producer
Organisations. Private/Public Limited Companies/Corporates
will not be eligible.

CONT….
B. Capital Subsidy Scheme for promoting Solar Photovoltaic
Water Pumping systems for Irrigation and other purposes
MNRE,GoI has launched a new scheme to support 30000 solar
pumping units per year with revised parameters which is
effective from 3 November 2014. Main objective of the scheme
is to replace diesel pumpsets with solar pumpsets as also to
reduce dependence on grid power. The solar pumpsets are
environment-friendly and offer tremendous benefits to
farmers. They involve very low operating cost and provide
uninterrupted power supply to farmers enabling increase in
agriculture production and income. Subsidy under the scheme is
available only for solar systems that are procured from
empanelled manufacturers/entrepreneurs by MNRE,GoI for
solar water pumping programme.
Who can benefit from the scheme
Individuals, group of individuals, SHGs, JLGs, NGOs, Farmers’
Clubs, Farmers Producer Organisation, Farmers Producer
Company. Private/Public Limited Companies/Corporates are not
eligible.

C) Rural Godowns
 A network of rural godowns will enable small farmers
to enhance their holding capacity in order to sell their
produce at fair prices and avoid distress sales.
Accordingly, Grameen Bhandaran Yojana, a Capital
Investment Subsidy Scheme for
Construction/Renovation of Rural Godowns was
introduced in 2001-2002.
 Objectives of the Scheme
 Creation of scientific storage capacity with allied
facilities in rural areas to meet the requirements of
farmers for storing farm produce, processed farm
produce and agricultural inputs
 Promotion of grading, standardisation and quality
control of agricultural produce to improve
marketability
 Prevention of distress sale immediately after harvesthttps://www.nabard.org/

Cont….
Who can benefit from this scheme?
 Individuals
 Farmers/Group of farmers/growers
 Partnership/Proprietary firms
 Non-Governmental Organisations (NGOs)
 Self-Help Groups (SHGs)
 Companies & Corporations
 Co-operatives
 Local Bodies other than Municipal
Corporations
 Federations

D) National Livestock Mission
 National Livestock Mission is an initiative of the
Ministry of Agriculture and Farmers Welfare. The
mission, which commenced from 2014-15, has
been designed with the objective of sustainable
development of the livestock sector.
 NABARD is the subsidy channelizing agency
under Entrepreneurship Development &
Employment Generation (EDEG) component of
National Livestock Mission. This includes:
 Poultry Venture Capital Fund (PVCF)
 Integrated Development of Small Ruminants and
Rabbit (IDSRR)
 Pig Development (PD)
 Salvaging and Rearing of Male Buffalo Calves
(SRMBC) https://www.nabard.org/

Cont…
Eligible financial institutions:
 Commercial Banks
 Regional Rural Banks
 State Cooperative Banks
 State Cooperative Agriculture and
Rural Development Banks
 Other institutions eligible for refinance
from NABARD

OFF FARM SECTOR
 Credit Linked Capital Subsidy Scheme
 Weavers Package

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