-nabard
DESCRIPTION
Strategic ManagementTRANSCRIPT
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Introduction
NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for
promotion and development of agriculture, small-scale industries, cottage and village industries,
handicrafts and other rural crafts. It also 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. In discharging its role as a facilitator for rural prosperity NABARD is
entrusted with
1. Providing refinance to lending institutions in rural areas
2. Bringing about or promoting institutional development and
3. Evaluating, monitoring and inspecting the client banks
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
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
Acts as regulator for cooperative banks and RRBs
Some of the milestones in NABARD's activities are:
Total production credit disbursed at end March 2011 was 34196 crore.
Refinance disbursement under Investment Credit to commercial banks, state cooperative
banks, state cooperative agriculture and rural development banks, RRBs and other eligible
financial institutions during 2010-11 aggregated 13485.87 crore.
Through the Rural Infrastructure Development Fund (RIDF) 12060.04 crores were disbursed
during 2010-11. A cumulative amount of 121488.40 crore has been sanctioned for 444162
projects as on 31 March 2011 covering irrigation, rural roads and bridges, health and education,
soil conservation, drinking water schemes, flood protection, forest management etc.
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Under Watershed Development Fund which has a balance of 1847.69 crore as on 31
March 2011, 579 projects in districts of 14 states have benefited.
Farmers now enjoy hassle free access to credit and security through 1009.30 lakh Kisan
Credit Cards that have been issued through a vast rural banking network. During 2010-11, 72.6
lakh KCC were issued by banks with a sanctioned limit of 43370 crore.
Under the Farmers' Club Programme, during the year 21903 clubs were launched, taking
the total to 76708 clubs as on 31 March 2011 helping farmers get access to credit, technology
and extension services.
Village Development Programme (VDP) is being implemented in 801 villages across 25
states.
Under Tribal Development Fund, cumulative sanction amounted to 917.60 crore for 317
projects covering 2.5 lakh families. During 2010-11 financial assistance of 373.97 crore was
sanctioned for 126 projects benefiting 94,163 tribal families.
Under Farm Innovation and Promotion Fund (FIPF), cumulatively 123 projects in various
states, involving financial support of 11.65 crore were sanctioned as on 31 March 2011.
Farmers Technology Transfer Fund (FTTF) 512 innovative projects in 27 states with
grant assistance of 44.97 crore were sanctioned during 2010-11.
There were more than 69.53 lakh savings linked SHGs and more than 48.51 lakh credit
linked SHGs covering 9.7 crore poor households as on 31 March 2011, under the microfinance
programme.
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Objectives
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. 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.
Overview
NABARD is set up by the Government of India as a development bank with the mandate of
facilitating credit flow for promotion and development of agriculture and integrated rural
development. The mandate also covers supporting all other allied economic activities in rural
areas, promoting sustainable rural development and ushering in prosperity in the rural areas.
With a capital base of Rs 2,000 crore provided by the Government of India and Reserve Bank of
India , it operates through its head office at Mumbai, 28 regional offices situated in state capitals
and 391 district offices at districts.
Contact NABARD
It is an apex institution handling matters concerning policy, planning and operations in the field
of credit for agriculture and for other economic and developmental activities in rural areas.
Essentially, it is a refinancing agency for financial institutions offering production credit and
investment credit for promoting agriculture and developmental activities in rural areas.
NABARD today
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Initiates measures toward 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.
Coordinates the rural financing activities of all the institutions engaged in developmental
work at the field level and maintains liaison with the government of India , State governments,
the Reserve Bank of India and other national level institutions concerned with policy formulation
Prepares, on annual basis, rural credit plans for all the districts in the country. These plans
form the base for annual credit plans of all rural financial institutions
Undertakes monitoring and evaluation of projects refinanced by it
Promotes research in the fields of rural banking, agriculture and rural development
Functions as a regulatory authority, supervising, monitoring and guiding cooperative
banks and regional rural banks
NABARD's Roles and Functions are summarized below:
NABARD's Roles and Functions are summarized below:
Credit Functions
Developmental and Promotional Functions
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Supervisory Functions
Institutional and Capacity building
Role in Training
Credit Functions
Introduction
NABARD's 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
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Preparation of potential-linked credit plans annually for all districts for identification of
credit potential
Monitoring the flow of ground level rural credit
Developmental and Promotional Functions
Credit is a critical factor in development of agriculture and rural sector as it enables investment
in capital formation and technological upgradation. Hence strengthening of rural financial
institutions, which deliver credit to the sector, has been identified by NABARD as a thrust area.
Various initiatives have been taken to strengthen the cooperative credit structure and the regional
rural banks, so that adequate and timely credit 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 promotional activities such as:-
Help cooperative banks and Regional Rural Banks to prepare development actionsplans for
themselves
Enter into MoU with state governments and cooperative banks specifying their respective
obligations to improve the affairs of the banks in a stipulated timeframe
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Help Regional Rural Banks and the sponsor banks to enter into MoUs specifying their
respective obligations to improve the affairs of the Regional Rural Banks in a stipulated
timeframe
Monitor implementation of development action plans of banks and fulfillment of obligations
under MoUs
Provide financial assistance to cooperatives and Regional Rural Banks for establishment of
technical, monitoring and evaluations cells
Provide organisation development intervention (ODI) through reputed training institutes like
Bankers Institute of Rural Development (BIRD), Lucknow www.birdindia.org.in, National Bank
Staff College, Lucknow www.nbsc.in and College 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
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Create awareness among the borrowers on ethics of repayment through Vikas Volunteer Vahini
and Farmers clubs
Provide financial assistance to cooperative banks for building improved management
information system, computerisation of operations and development of human resources
Supervisory Functions
Overview
As an apex bank involved in refinancing credit needs of major financial institutions in the
country engaged in offering financial assistance to agriculture and rural development operations
and programmes, NABARD has been sharing with the Reserve Bank of India certain supervisory
functions in respect of cooperative banks and Regional Rural Banks (RRBs).
As part of these functions, 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 Cooperative
Banks and Regional Rural Banks (RRBs)
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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)
Administering Credit Monitoring Arrangements (CMA) in SCBs and CCBs.
Core Functions
NABARD has been entrusted with the statutory responsibility of conducting inspections of State
Cooperative Banks (SCBs), District Central Cooperative Banks (DCCBs) and Regional Rural
Banks (RRBs) under the provisions of Section 35(6) of the Banking Regulation Act (BR Act),
1949. 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 Inspection
To protect the interest of the 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, etc
To ensure observance of rules, guidelines, etc., formulated and issued by
NABARD/RBI/Government
To examine the financial soundness of the banks
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To suggest ways and means for strengthening the institutions so as to enable them to play more
efficient role in rural credit
Instruments of Supervision
Periodic on-site inspection of SCBs, DCCBs, SCARDBs and RRBs and other Apex level
Cooperative institutions
Supplementary Appraisal
Off-site Surveillance System ( OSS )
Portfolio inspection/System study
Monitoring through returns including CMA and Frauds
Attending to complaints in respect of Cooperative Banks (excluding Urban Cooperative
Banks) and RRBs
Supervisory Strategy
In the wake of the banking sector reforms, new set of international norms/practices were made
applicable to Commercial Banks (CBs) to make them more competitive and sustainable in the
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changing scenario. The co-operative banks and RRBs were also to function in the general
banking environment, emerging out of the financial sector reforms, introduced by the GOI/RBI.
Accordingly, the prudential norms were extended to them in phases. While the capital adequacy
norm has not yet been made applicable to these banks, the other prudential norms viz. income
recognition, asset classification and provisioning, which were made applicable by RBI to the
commercial banking sector had been extended to cover RRBs in 1995-96, SCBs and DCCBs in
1996-97 and by NABARD to SCARDBs in 1997-98. NABARD, through a concrete and time-
bound supervision strategy, facilitate these banks to adjust to the new financial discipline so as to
internalize prudential norms stipulated.
Current Focus
Under the revised strategy, a sharper focus of the NABARDs inspection was given on the core
areas of the functioning of banks pertaining to Capital Adequacy, Asset Quality, Management,
Earnings, Liquidity, Systems and Compliance (CAMELSC). Thus, NABARDs focus in its
statutory on-site inspections is on core assessments leaving the collateral appraisals to banks.
The micro level aspects are to be taken care of by the banks themselves by way of internal
inspections or by other agencies such as auditors. In this direction, through a series of workshops
and meetings held with the Chief Executives and the Chief Auditors of cooperative banks,
NABARD has been attempting to ensure that the other areas, particularly relating to the internal
checks and controls, revenue and income realization by way of interest on loans and advances,
investments and other routine features of carrying out general banking transactions were suitably
taken care of by the banks and their concurrent/statutory audit systems.
Off-site Surveillance
As a part of the new strategy of supervision, a system of `Off-site Surveillance' has been
introduced as a supplementary tool to the on-site inspection. Its objectives are to obtain and
analyse critical data on a continuous basis, to identify areas of supervisory concern and to
identify early warning signals and risky areas requiring further probe. The system basically
envisages desk scrutiny of operations of cooperative banks and RRBs through a set of statutory
and non-statutory returns. While the periodical statutory on-site inspections attempt an overall
evaluation of the performance of the banks with a stipulated period, off-site surveillance
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envisages continuous supervision supplementing the on-site inspections with additional
instruments of supervision.
Board of Supervision (for SCBs, DCCBs and RRBs)
Board of Supervision (for SCBs, 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 :
Giving directions and guidance in respect of policies and on matters relating to supervision and
inspection, reviewing the inspection findings, 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 NPAs recovery, investment portfolio, credit monitoring system, management practices,
frauds, etc.
Suggesting necessary follow-up measures
Recommending appropriate training for Inspecting Officers of NABARD for imparting
necessary skills and knowledge
Suggest measures for strengthening of DoS
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Recommend issue of directions by RBI
Oversee the quality of inspections carried out and the reports issued
Review the information generated through off-site surveillance and other supplementary
vehicles, action taken thereon
Undertake any other functions entrusted from time to time by the Board of Directors of
NABARD
The Board of Supervision reviews the financial position of Cooperative Banks and RRBs based
on the inspections of these banks by NABARD. Based on the observations of BoS, authorities
concerned are apprised of the weaknesses of the banks.
Other Initiatives
The day-to-day functioning of the supervised banks is being monitored through various statutory
returns prescribed by the RBI/NABARD including OSS returns
State level groups comprising RCS, Apex bank, Cooperation and Finance Department, State
Government, Director of Audit and non-compliant banks have been constituted/convened for
preparing/discussing suitable strategy for banks not complying with the provisions of Section
11(1) of BR Act, 1949 [ as applicable to Cooperative Societies (AACS)] and monitoring the
progress of Action Plan prepared by them to facilitate recompliance with the provisions.
Periodic discussions are held with the MD, Apex Banks, RCS, State Government, etc., to discuss
the supervisory concerns.
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RO set up
Suitable and adequate officers are placed in DoS units at RO level to undertake inspection of
banks, issue inspection reports and take other follow up measures including review, monitoring
of compliance, OSS, etc., in conformity with DoS, HO guidelines.
Institutional and Capacity building
Help cooperative banks and RRBs to prepare development actions plans for themselves
Enter into MoU with state governments and cooperative banks specifying their respective
obligations to improve the affairs of the banks in a stipulated timeframe
Help RRBs and the sponsor banks to enter into MoUs specifying their respective
obligations to improve the affairs of the RRBs in a stipulated timeframe
Monitor implementation of development action plans of banks and fulfillment of
obligations under MoUs.
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Provide financial assistance to cooperatives and RRBs for establishment of technical,
monitoring and evaluations cells.
Provide organisation development intervention (ODI) through reputed training institutes
like Bankers Institute of Rural Development (BIRD), Lucknow, National Bank Staff College,
Lucknow, College 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, RRBs and
cooperative banks
Create awareness among the borrowers on ethics of repayment through Vikas Volunteer
Vahini/farmer's clubs
Provide financial assistance to cooperative banks for building improved management
information system, computerisation of operations, development of human resources, etc.
Role in Training
NABARD and its Role in Training
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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
The provisions of the Act as stated below very clearly indicate the nature and scope of the
developmental mandate of the Bank and its role in training and capacity building with the
underlying belief that the process of development cannot be accomplished by credit/refinance
alone.
Section 38 of the NABARD Act provides that the Bank shall:
maintain expert staff to study all problems relating to agriculture and rural development
and be available for consultation to the Central Government, the Reserve Bank, the State
Governments and the other institutions engaged in the field of rural development.
provide facilities for training, for dissemination of information and the promotion of
research including the undertaking of studies, researches, techno-economic and other surveys in
the field of rural banking, agriculture and rural development.
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provide technical, legal, financial, marketing and administrative assistance to any person
engaged in agriculture and rural development activities;
may provide consultancy services in the field of agriculture and rural development and
other related matters in or outside India, on such terms and against such remuneration, as may be
agreed upon;
In this context, 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.
For maintaining 'Expert Staff', the bank needs to provide continuous exposure to its officers and
staff for upscaling their knowledge and skills in core areas. However, in the initial years the
Bank had recruited expert staff from various technical disciplines and created a separate cadre of
officers. These officers were involved in formulating, appraising, monitoring and evaluating
different agricultural projects implemented by different credit agencies.These officers,
irrespective of their academic background, were imparted similar type of training as all other
officers. Their placements and the regular job rotations helped in grooming them to take up
assorted assignments, get involved in a variety of roles and functions including credit,
developmental, promotional, supervisory and necessary support and information for decision
making. The Bank also had access to their specialised skills which were utilised whenever
needed.
In pursuance of the Bank's mandate as stated in the Act, the Bank provides training facilities for
the RFIs and agencies involved in rural development through BIRD and the two RTCs. With a
view to broadbase the training and capacity building efforts, the Bank encourages the RFIs to set
up their own training systems and provides these training institutes the necessary support to
conduct meaningful and quality training. Options and avenues for strengthening the training
interventions at the client level are continuously examined so that the human resources in these
institutions are developed to take on the challenges, reckon with the competition, improve
customer service, expand outreach, develop suitable products and thereby contribute to rural
development.
As NABARD primarily functions through other agencies, the needs of the client institutions
largely determine the knowledge and skill requirements of NABARD officers.
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NABARD endeavours to blend the experiences of client bank training with the training for
NABARD officers so as to make training meaningful and relevant to their roles. 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.