CASIRJ Volume 6 Issue 10 [Year - 2015] ISSN 2319 – 9202

THE ROLE OF NABARD IN AGRICULTURE AND RURAL DEVELOPMENT: AN

OVERVIEW

Parvesh Kumar Goyal

Assistant Professor, Department of Commerce,

Dayanand Post Graduate College, Hisar

ABSTRACT

“Growth with Social Justice" has been the basic objective of the Development
Planning in India since independence. Since the beginning of planned development,
the Government made significant strides in developing rural India through Five
Years Plans. The National Bank for Agriculture and Rural Development
(NABARD) was set up in July 1982. It became the apex institution to play a pivotal
role in the sphere of policy planning and providing refinance facilities to rural
financial institutions and for augmenting their resource base. The paper analyses
the role and function of NABARD in agriculture and rural development. It also
throws a light on NABARD's past and present performance and its schemes for
rural development.

Keywords: NABARD, Rural Development, Agriculture, Finance, Agriculture Credit,

Introduction

Agricultural credit is considered as one of the most basic input for conducting all agricultural
development programmes. In India there is an immense need for proper agricultural credit as the
economic condition of Indian farmers are very poor. From the very beginning the prime source
of agricultural credit in India was money lenders. After independence the Govt. adopted the
institutional credit approach through various agencies like co-operatives, commercial banks,
regional rural banks etc. to provide adequate credit to farmers, at a cheaper rate of interest.
Moreover with growing modernization of agriculture during post-green revolution period the
requirement of agricultural credit has increased further in recent years.

NABARD: A Brief Profile

NABARD was established on the recommendations of Shivaraman Committee (Committee to

Review Arrangements for Institutional Credit for Agriculture and Rural Development) on 12
July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It is
set up as an apex Development Bank with a mandate for facilitating credit flow for promotion

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and development of agriculture, small-scale industries, cottage and village industries, handicrafts
and other rural crafts. The headquarter of the Bank is situated in Mumbai (Maharashtra) and it
has branches are all over the country. NABARD Regional Office [RO] has a Chief General
Manager [CGMs] as its head, and the Head office has several Top executives like the Executive
Directors[ED], Managing Directors [MD], and the Chairperson. It has 336 District Offices across
the country, one special cell at Srinagar. It also has 6 training establishments. The Bank has the
mandate to support all other allied economic activities in rural areas, promote integrated and
sustainable rural development and secure prosperity of rural areas. NABARD also administers
the Rural Infrastructure Development Fund (RIDF), which was set up in 1995-96. NABARD has
also been playing a catalytic role in micro-credit through the channel of Self-Help Groups
(SHGs). The bank provides refinance to various banks for their term lending operations for the
purposes of agriculture and rural development.

The initial capital of NABARD was Rs. 100 crore. Consequent to the revision in the
composition of share capital between Government of India and RBI, the paid up capital as on 31
March 2013, stood at 4000 crore with Government of India holding 3,980 crore (99.50%) and
Reserve Bank of India 20.00 crore (0.50%). As on 31 March 2014, paid up capital of NABARD
stood at Rs. 4700 crore (Rs. 4680 Crore of GoI and Rs. 20 Crore of RBI).

Functions of NABARD

NABARD was set up essentially as a development bank for promoting agriculture and rural
development. Its main function is to provide refinance for rural credit disbursed by the State Co-
operative Banks, the Regional Rural Banks and other financial institutions as may be approved
by the RBI.

The important functions of NABARD are as follows:

 Providing finance and also refinance for production and marketing in the rural areas.
 Coordinating and advising the operations of institutions engaged in rural credit.
 Promoting research in agriculture and rural development.

Besides this pivotal role, NABARD also:

 Acts as a coordinator in the operations of rural credit institutions

 Extends assistance to the government, the Reserve Bank of India and other organizations
in matters relating to rural development
 Offers training and research facilities for banks, cooperatives and organizations working
in the field of rural development
 Helps the state governments in reaching their targets of providing assistance to eligible
institutions in agriculture and rural development

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 Acts as regulator for cooperative banks and RRBs identification of exploitable potentials
under agriculture and other activities available for development through bank credit.
 Refinancing banks for extending loans for investment and production purpose in rural
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 other non-
formal agencies.
 Extending formal banking services to the unreached rural poor by evolving a
supplementary credit delivery strategy in a cost effective manner by promoting Self Help
Groups (SHGs)
 Promoting participatory watershed development for enhancing productivity and
profitability of rain fed agriculture in a sustainable manner.
 On-site inspection of cooperative banks and Regional Rural Banks (RRBs) and off-site
surveillance over health of cooperatives and RRBs. (www.nabard.org)
Role of NABARD

NABARD is the apex institution in the country which looks after the development of the cottage
industry, small industry and village industry, and other rural industries. NABARD also reaches
out to allied economies and supports and promotes integrated development. Now days the long
term and short term credit needs of these institutions are also being met by National Bank for
Agricultural and Rural Development (NABARD). The scope of the operations of NABARD is
large indeed. Besides providing finance to credit institutions, it is providing innovations in regard
to formulation of schemes, monitoring of implementation, evaluation of results and evolution of
suitable supporting structures of all kinds of agricultural activities. It is performing the various
functions assumed by it smoothly and efficiently and to help NABARD discharge its duty, it has
been given certain roles as follows:

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. The Bank refinances the financial institutions which finances the rural sector.
6. It also keeps a check on its client institutes.

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7. It regulates the institution which provides financial help to the rural economy.
8. It provides training facilities to the institutions working in the field of rural upliftment.

NABARD's refinance is available to State Co-operative Agriculture and Rural Development

Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs),
Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate
beneficiaries of investment credit can be individuals, partnership concerns, companies, State-
owned corporations or co-operative societies, production credit is generally given to individuals.
NABARD is also known for its 'SHG Bank Linkage Programme which encourages India's banks
to lend to self-help groups (SHGs). 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 core members had to be linked to credit through this programme.

Credit Facilities Offered by NABARD

NABARD also offers various credit facilities like:

 Rural Infrastructure Development Fund (RIDF) RIDF is a fund to promote the

investment in infrastructure for agriculture. State Governments as well as Panchayati Raj
Institutions (PRIs), Non- Governmental Organisations, Self-Help Groups, etc. are eligible
to borrow out of RIDF for their schemes like ongoing Irrigation, Flood Protection,
Watershed Management projects, rural Road & Bridge projects, Primary and Secondary
Schools, Primary Health Centres, Village Haats, Joint Forest Management, Terminal and
Rural Market/Godowns, Rain Water Harvesting, Watershed development, flood
protection, drainage, Cold Storage, Riverine Fisheries, Fishing Harbour & Jetties,
Mini/Small Hydel Projects in Power Sector, Rural Drinking Water Supply Schemes,
Citizen Information Centres, Modern abottoir, Seed/Agri./Hori. Farms, etc.
 Kisan Credit Cards: NABARD has formulated a Model scheme for issue of Kisan
Credit Cards to farmers, on the basis of their land holdings, for uniform adoption by
banks, so that the farmers may use them to readily purchase agricultural inputs such as
seeds, fertilisers, pesticides, etc. and also draw cash for their production needs. Farmers
have to get in touch with Researcherised banks to use this facility
 Micro Credit Innovation scheme, Under the MCIS, NABARD facilitates sustained
access to financial services for the unreached poor in rural areas through various
microfinance innovations in a cost effective and sustainable manner.
 Refinance for Rural Housing Facilities scheme RRHFS provides Credit to the
Individuals, Cooperative Housing Societies, Public Bodies, Housing Boards/
Improvement, Trusts, Local Bodies, Voluntary agencies and NGOs, Housing Finance
Companies registered, with NHB for finance extended by them to housing projects in the
'rural' areas only. The finance is provides for Construction of New Houses as well as

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Repairs/Renovation of existing houses in rural areas/ Rainwater Harvesting Structures/

Sanitary Latrines, etc.
 A Research and Development Fund has been established by the bank with the objective
of acquiring new insights into the problems of agricultural and rural development through
in-depth studies and applied research and trying out innovative approaches backed up by
technical and economic studies. It includes facilities for training, dissemination of
information and promotion of research by undertaking studies techno-economic and other
surveys in the fields of agriculture, rural banking and rural development. The eligible
Institutes for the fund are Approved research institutions, organisations and other
agencies which are engaged in action-oriented, applied research, Individuals or groups of
individuals would also be extended assistance provided they are sponsored by suitable
organisations which would certify the proper use and accounting of funds, Private and
commercial organisations are not normally eligible for assistance under the this fund.
 Swarojgar Credit Card Scheme: It aims at providing adequate and timely credit i.e.
Working capital or block capital or both to small artisans, handloom weavers, service
sector, fishermen, self employed persons, rickshaw owners, other microentrepreneures,
SHGs, etc from the banking system in a flexible, hassle free and cost effective manner.
Borrowers in urban areas can be covered under SCC Scheme. Small business covered
under priority sector is also eligible under SCC Scheme. Any scheme/project that is
income generating/ employment generating may be covered under the scheme. The
facility may also include a reasonable component for consumption needs. Farm sector
activities like fisheries, dairy, etc. can also be covered under the scheme. Generally such
of the self-employment activities which have regular turn over/income stream on short-
interval basis can be covered under SCC scheme. SCC is a credit delivery mode and not a
purpose. Coverage of SCC will not make a unit ineligible for subsidy. Banks can issue
SCCs to target borrowers of SCC scheme for disbursing credit under any schemes
whether they are covered under subsidy or not.
 Farmers' Club Programme is a grassroots level informal forum. Such Clubs are
organised by rural branches of banks with the support and financial assistance of
NABARD for the mutual benefit of the banks concerned and rural people. The broad
functions being to coordinate with banks to ensure credit flow among its members and
better bank borrower relationship interface with subject matter.
CONCLUSION

From the above discussion it shows that NABARD is working for the 360 degree development
of rural India. Every year the financial assistance received by NABARD and the disbursement
made out of it are increasing. In short we can say that NABARD is providing rural India all
round assistance and proved to be an institution where "Growth with Social Justice" exists. It is,
in brief, an institution for the purpose of refinance; with the complementary work of directing,
inspecting and supervising the credit- flows for agricultural and rural development.

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REFERENCES

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2010.pdf
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5. https://en.wikipedia.org/wiki/National_Bank_for_Agriculture_and_Rural_Development
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