Bank for Agriculture and Rural Development

NABARD

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.

• 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).

• 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)

Functions of NABARD

I. FinancialII. DevelopmentIII. Supervisory

I Financial Function of NABARD

• Refinance• Direct Finance

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

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)

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

Direct Finance

• Direct Investment of NABARD in projects.• Example –1. Punjab State Grain Procurement Corporation

(Construction of Steel silos and related works at Rampura Phul )

2. Rajasthan State Warehousing Corporation.

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

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.

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

• 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.

• Areas covered were:• Precision farming• High-tech agriculture• Banana tissue culture• Fodder development• Organic farming• Drum seeding• Sustainable agriculture practices, cattle

management, vegetable seed multiplication

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

• 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

• 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.

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.

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.

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.

• 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.

• 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.

• 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.

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.

• 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.

Microfinance

• The SHG-Bank Linkage Programme launched by NABARD in 1992 continues to be the predominant Micro-Finance (MF) model in the country.

• It is a proven method of financial inclusion, providing unbanked rural clientele with access to formal financial services from the existing banking infrastructure.

SUDHA

• A SHG Bank linkage Program• ‘Help the women to help themselves’.

• 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

• In India, many SHGs are ‘linked’ to banks for the delivery of micro-credit.