This article is written by Akash R. Goswami of the faculty of law, Aligarh Muslim University. In this article, he has discussed the role, functions, duties and other sustainable works undertaken by NABARD. 

Introduction

India is a country where the contribution of the agriculture sector to the economy is much higher than the world’s average. 60% of the population depends on the agricultural products but still, the condition of farmers and rural area people, who indulge in small production or starts their petty work, is still lacking behind. To raise their living, rural people either require credit or the right direction to do a particular thing but they are lacking in both ways.

Government of India in order to resolve the problems faced by the rural area peoples Established NABARD, to give credit assurance to these people for the agricultural loan, social innovation, and other works.

What is NABARD?

NABARD stands for the “National Bank for Agriculture and Rural Development”. One of the institutions owned by the government, which only aims to provides developmental credit in rural areas and rely on the mission to “promote sustainable and equitable agriculture and rural prosperity with effective credit support related to institution development, innovative initiative, and service”. 

NABARD is an apex financial development institution in India. NABARD headquarter is located at Mumbai and it possesses 336 district offices, having six training centres and a special cell at Srinagar in India. The main work of NABARD is concerned with the planning and operation, in the field of credit giving to the agriculture sector and with economic activity goes in rural areas. Also, it performs the work for developing financial inclusion policy. The head of the Nabard regional office is the Chief General Manager. And the other executives in the head office are :

1. Executive Directors
2. Managing Directors
3. And Chairperson

Background 

After India got independence, in order to improve rural section credit, the Government of India and the Reserve Bank of India set up a committee. The committee was called the All India Rural Credit Survey Committee and it was headed by Mr Gorewalla. With the increasing role of RBI, it was difficult to concentrate on agricultural finance. 

In 1981 a committee was set up to review arrangements for institutional Credit for Agriculture and Rural Development under the chairmanship of Mr. Sivaraman. NABARD was formed on the recommendation of the B. Sivaraman Committee and it was established on 12 July 1982 to regulate National Bank for Agriculture and Rural Development Act 1981. The existing organization was displaced by other institutions like:

• The Agricultural Credit Department and Rural Planning and Credit Cell of Reserve Bank of India
• The Agricultural Refinance and Development Corporation

The authorized capital collection of NABARD was 500 crore and later it was increased by the bill introduced in Parliament which is six times more than today’s collection i.e. 30,000 crores. Government-owned 100% paid-up capital share in NABARD, which is 6,700 crore. International recognition of NABARD is with World Bank related organizations and with Global Development Agencies. 

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These organizations and agencies help NABARD in giving financial aid and advice to the people living in rural areas, to optimizing the agricultural process. The bank was formed not only for agricultural finance but also for the development of the rural area.

Role

1. It is the most superior institution that has the power to handle all the matters concerning policy, planning, and operation in giving credit for agriculture and other economic activities that take place in rural areas.
2. It is based on the pattern on refinancing agency for those institutions that provide production and investment credit for promoting the numerous developmental programs and initiatives for rural development. These institutions are as follows :
   1. Regional rural banks (RRBs),
   2. Commercial banks (CBs)
   3. Other financial institutions approved by RBI.
   4. State co-operative agriculture and rural development banks (SCARDBs),
   5. State co-operative banks (SCBs)
3. It is improving by enlarging its capacity of the credit giving system in India which includes, supervision, formulation of rehabilitation schemes, restructuring of credit institutions, and training of employees.
4. It correlates the rural credit financing planning of all sorts of institutions that indulge in developmental work at the field level while maintaining communication with the State Government, and Central Government and also with RBI and other national level institutions that are concerned with policy formulation and credit giving system
5. It also circulates and prepares rural credit plans, annually as required, for all districts in the country.
6. It also helps to promote research and training program in rural banking, and in the field of agriculture and rural development.

In addition to this NABARD also undertake some natural resource management program like tribal development and watershed development program.

Objective of NABARD

Approximately 50% of the rural credit is paid out by the Co-operative Banks and Regional Banks of those areas. NABARD is responsible for mandating and supervising the functions of Co-operative banks and RRBs. NABARD works mainly in the direction of providing a strong and efficient base for the rural credit delivery system and enables it to take care of the expanding and diverse credit needs of agriculture and rural development.

Thus, the objects of NABARD can be brought under three major heads:

• Credit Function
• Development Function
• Promotional Function

Duties

NABARD works towards uplifting the rural and agricultural sectors and prepares grounds for rural and social innovations. It plays an important role in framing development initiatives for our country’s rural sector industry, cottage industry, and small-scale industries. It re-invests the profits earned through developmental spending towards research activities to frame better development initiatives for rural and agricultural fields. 

This has helped NABARD to gain trust among rural communities. For rural and agricultural development, NABARD has entered into the partnership with many National and International organizations and has over 4000 partner organizations which assist it to plan and execute rural and social innovation. Some of the initiatives of NABARD include:

• SHG Bank Linkage program, an initiative to improve the living standard of tree-based tribal communities, 
• Forming farmer clubs to educate and motivate farmers to incorporate crop productivity initiatives, programs for soil and water conservation,

NABARD has been consistently maintaining its position of the highest taxpayer, and figures among the top 50 taxpayers to the exchequer. Together with its associated economies, NABARD carries out and supports integrated development for the rural sector.

Functions of NABARD

1. NABARD provides refinancing services to Central Co-operative banks, Regional rural banks, and Land Development banks. Commercial banks, State co-operative banks.
2. It provides refinancing to agriculture, small scale industries, and other village and cottage industries by way of lending money to commercial banks.
3. It promotes small scale, cottage industries and rural industries, including tiny and petty sectors by providing credit loans to commercial and co-operative banks.
4. Special assistance is given by the bank for the development of the small scale, cottage and village industries under service area methodology.
5. The bills and checks of co-operative banks and commercial are discounted to enable them to finance for agricultural inputs.
6. The bank also provides funds to the State governments for the operation of developmental and promotional activities in rural areas. In order to propagate rural development and to help the weaker unstable sections, the bank refinances especially regional rural banks which are being set up in backward areas in most of the States.
7. In a matter of long-term loans, the bank is sanctioned loans to institutions involved in long-term agricultural loan collaborate with the guarantee of State government.
8. The bank also gives credit financing in the research and development of agricultural and rural industries.
9. The bank formulates the policy of the Central Government and the RBI concerning agricultural credit.
10. It provides finance for promoting non-farming activities and employment in non-farming sectors with the purpose of reducing the rate of rural unemployment.
11. It empowers the co-operative structure in the States by providing credit loans to the State co-operative banks and also to Land Development Banks.
12. It also promotes some irrigation projects by credit through State Government’s sponsored irrigation projects.
13. The bank also regulated the inspection work of Co-operative banks and Regional rural banks.
14. The bank has opened branches regional offices at all District headquarters through which bank co-ordinates the District development programs along with the district employees.
15. The bank additionally helps in the yearly credit plan of the business banks and co-ordinates the exercises of business and co-usable banks at the area level. 
16. During normal catastrophes, for example, dry spells, crop disappointment, and floods, the bank helps by renegotiating business and agreeable banks so the ranchers tide over their troublesome period. 

Therefore, the bank at the present moment is giving, medium-term and long haul credits for agribusiness and for the advancement of a country. As in the initial time, during NABARD was set up, there has been an impressive increase in the conveyance of horticultural credit both by business and co-usable banks. NABARD has likewise reinforced up to the working of Regional country banks. 

Therefore, we find that the role of RBI in the farming sector has been taken over by NABARD as well as it has been releasing it to the utmost fulfilment of the considerable number of gatherings concerned.

Other categorial functions of NABARD

Credit Functions

• Surrounding approach and rules for rustic money related establishments. 
• Giving credit offices to issuing associations 
• Observing the progression of ground-level rustic credit. 
• Arrangement of credit designs every year for all regions to recognize proof of credit potential. 

Improvement Functions

• Help banks and Regional Rural Banks to get ready advancement activities plans for themselves. 
• Help Regional Rural Banks and the support banks to go into MoUs with State governments and agreeable banks to improve the undertakings of the Regional Rural Banks. 
• Screen execution of the advancement activity plans of banks. 
• Give monetary help to the preparation organizations of agreeable banks, business banks, and Regional Rural Banks. 
• Give budgetary help to agreeable banks for structure improved administration data framework, computerization of activities and advancement of HR. 

Supervisory Functions

• Attempts examination of Regional Rural Banks (RRBs) and Cooperative Banks (other than urban/essential helpful banks) under the arrangements of Banking Regulation Act, 1949. 
• Attempts examination of State Cooperative Agriculture and Rural Development Banks (SCARDBs) and summit non-credit helpful social orders on an intentional premise. 
• Gives proposals to Reserve Bank of India on the issue of licenses to Cooperative Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks (RRBs). 
• Embraces portfolio investigations other than off-site reconnaissance of Cooperative Banks and Regional Rural Banks (RRBs).

NABARD Schemes

Features of NABARD scheme 

There are numerous features of the NABARD scheme some of these are as follows:

• Providing by way of refinancing
• Help in Building infrastructure in rural areas
• Preparing credit plans annually at the district level
• Guiding the banking sector in completing their credit targets
• Regulates regional rural banks (RRBs) and cooperative banks
• Initiates new projects for rural development work
• Work on the principles of the Government’s development schemes
• Give support to training handicraft artisans

Refinance– Short Term Loans

Short-term loans or cash crop loans are provided by various financial institutions to farmers for the purpose of increasing crop production. By providing this loan, one can stable about food security in the country. For seasonal agricultural inputs, NABARD has provided short-term credit loan of amount Rs. 55,000 crores to several financial institutions in the financial years of 2017-18.

Long Term Loans

Long-term loans are provided to credit-based financial institutions for various farming and non-farming related activities. The duration of the long-term loan is from 18 months to 5 years. NABARD has provided refinance facilities around Rs. 65,240 cr for financial institutions in the FY 2017-18 which also include discounted refinance of Rs. 15,000 cr to Cooperative Banks and Regional Rural Banks (RRBs).

Rural Infrastructure Development Fund (RIDF)

Rural Infrastructure Development Fund was sponsored by RBI evaluating the shortfall in lending to the priority sector for supporting rural infrastructure projects. The main focus of this fund is on the rural infrastructure development in India and the amount distributed was Rs. 24,993 cr in FY 2017-18.

Long-Term Irrigation Fund (LTIF)

This fund was launched mainly to provide funding for around 99 irrigation projects by sanctioned an amount of Rs. 20,000 cr. There were two new adding projects introduced under this fund named- as ‘North Koel Reservoir Project’ from Bihar and Jharkhand and ‘Polavaram National Project’ from Andhra Pradesh.

NABARD Infrastructure Development Assistance (NIDA)

NABARD Infrastructure Development Assistance is a growing program initiated to provide credit for financially well-to-do state-owned institutions and corporations.

Warehouse Infrastructure Fund

Warehouse Infrastructure Fund helps in scientific warehousing infrastructure for agricultural commodities and products. Prior loan of the amount of Rs. 5000 was given by NABARD in the FY 2013-14. As on 31st March 2018, the amount dispensed is Rs. 4778 cr.

Food Processing Fund

Under this fund, the Government of India has given a loan commitment of Rs. 541 cr for 11 big food park projects, 3 food processing unit and 1 coordinated food park project on 31 March 2018.

Direct Lending to Cooperative Banks

NABARD has provided help to 58 CCBs and four STCBs spread across 14 states and also sanctioned the amount of Rs 4,849 cr.

Credit Facility to Marketing Federations (CFF)

This federation aims to work in the direction of marketing of farming activities and agricultural produce; also it promotes and enables to boost marketing federations and cooperatives. Amount disbursed in Mar 2018 was Rs. 25436 cr.

Credit to Producer Organizations & PACS

NABARD started Producer Organizations Development Fund (PODF) to support and credit finance to producer organizations (POs) and primary agriculture credit societies (PACS). These institutions are formed to operate as Multi-Service Centres.

Below given are the interest rates charged by NABARD for the purpose of refinancing to banks and NBFCs under various schemes:

NABARD Interest Rate 2019
NBFCs	9.60% onwards
RRBs/ StCBs/SCARDBs	8.90% onwards
Long Term refinance assistance	8.50% onwards
PUCBs	9.20% onwards
Short Term refinance assistance	4.50% onwards

Note: Above-stated rates are subject to change according to regulating authority.

Government-sponsored scheme

Dairy Entrepreneurship Development Scheme

The Department of Animal Husbandry, Dairying, and Fisheries (DAHD&F), the Government of India launched a scheme “Venture Capital Scheme for Dairy and Poultry” in the year 2005-06. The main aim of the scheme was to extend grievances by setting up small dairy farms and other elements to bring structural changes in the dairy sector. 

During a mid-term calculation of the scheme, certain recommendations were made to increase the pace of implementation of this scheme. Taking into consideration the recommendations of the evaluation study and the representations provided from various quarters including the farmers, State Governments and banks with DAHD&F decided to make some modifications and changes in the scheme, including changing its name to Dairy Entrepreneurship Development Scheme (DEDS). The modified scheme has come into operation with dates from 1 September 2010.

Objectives of this scheme include

• Establishing of modern-day dairy for the production of farm milk
• Boost the technology to modulate milk on a commercial scale
• Generating self-employment and improve infrastructure for rural areas and unorganized sector
• Encouraging good quality calf rearing and conserving good breeding stock

Pradhan Mantri Awaas Yojana – Grameen (PMAY-G)

Under this scheme, the National Rural Infrastructure Development Agency (NRIDA) sanctioned an amount of Rs. 9000 cr that aims to build a pakka house, with all the basic amenities, to needy households by the year 2022.

National Livestock Mission 

National Livestock Mission is an initiative initiated by the Ministry of Agriculture and Farmers’ Welfare. The mission, which commenced from 2014-15, has the objective of sustainable development of the livestock sector.

NABARD also provides the subsidy channelizing agency under the Entrepreneurship Development & Employment Generation (EDEG) element of National Livestock Mission. This includes:

• Poultry Venture Capital Fund (PVCF) 
• Coordinated Development of Small Ruminants and Rabbit (IDSRR) 
• Pig Development (PD) 
• Rescuing and Rearing of Male Buffalo Calves (SRMBC) 

Interest Subvention Scheme

The Hon’ble Finance Minister while presenting his budget speech for 2006-07 announced that the Government of India had decided to ensure that farmers provide short term credit at 7% with a maximum limit of Rs. 3.00 lakh on the principal amount. The policy came into existence with effect from Kharif 2006-07. The amount of subvention was to be calculated on the amount of loan provided starts from the date of disbursement up to the actual date of repayment of the crop loan by the farmer or up to the date reminder of the loan fixed by the banks, whichever is earlier, subject to within a period of one year.

In relation to this announcement, the Government of India sanctioned interest subvention of 2% to Regional Rural Banks (RRBs) and Cooperative Banks Public Sector Banks, in way of short term production credit up to Rs. 3.00 lakh provided to farmers out of their own resources, also provided that they make available short term credit @ 7% p.a. at the lower level. Private Sector Banks (in way of loans given by their semi-urban branches rural) are also covered under the scheme from the year 2013-14 with subject to similar terms and conditions.

The scheme, introduced in 2006-07, is still running in the following years with certain modifications and changes as per requirement in the rate of subvention.

Various other schemes that are offered by NABARD are as follows:

• Capital Investment Subsidy Scheme for Commercial Production Units for natural/organic Inputs 
• Agri-facility and Agribusiness Centers Scheme 
• National Livestock Mission 
• GSS – Ensuring End Use of Subsidy Released 
• Intrigue Subvention Scheme

Credit Linked Capital Subsidy Scheme (CLCSS) under NABARD

NABARD also provides an important off-farming scheme endorsed by the Government of India. In 2000 with the Credit Linked Capital Subsidy Scheme was introduced for technology aggrandize for Small Enterprises Micro and also makes effort to provide technology up-gradation of SSI units in the organized products or sub-sectors. Hence, NABARD has promoted immensely in the agriculture and rural development through credit-based financial and non-financial support to increase the prosperity and growth of agriculture and rural sectors. 

Milestones in NABARD’s activities

Business Operations

Production Credit 

NABARD provides aggregating around 66,418 crores in way of short term loans to Regional Rural Banks (RRBs) and Cooperative Banks during 2012-13, against which, the maximum outstanding was 65,176 crore.

Investment Credit

Investment Credit for capital stimulation in the field of agriculture & allied sectors, non-farming sector services and activities related to commercial banks, co-operative banks, RRBs which completes a level of 17,674.29 crores as on 30 March 2013 organized increase of 14.6% over the previous year.

Rural Infrastructure Development Fund (RIDF)

In relation to the Rural Infrastructure Development Fund (RIDF) 16,292.26 crore was sanctioned during 2012-13. An increased amount of 1,62,083 crore has been provided for 5.08 lakh projects on March 31, 2013, covering subjects like irrigation, rural roads, and bridges, education, and health, soil conservation, drinking water sanitation schemes, flood protection, forest management system, etc.

New Business Initiatives

NABARD Infrastructure Development Assistance (NIDA) 

NABARD has made NIDA, a new line of credit support to provide funding of rural infrastructure projects and initiatives. The loan provided under NIDA during the year 2012-13 was 2,818.46 crore and the amount of money released was 859.70 crore.

Direct refinance assistance to CCBs for short term multipurpose credit 

Direct refinance help is provided to CCBs was conceived an additional way of finance for CCBs by way of recommendations of the “Task Force on pre-existence of Short Term Rural Cooperative Credit Structure, which empowers the latter to raise financial resources other than from STCBs. During 2012-13, refinance assistance approximately 3,385 crores were provided to 42 CCBs and actual cash dispensed stood at 2,363.45 crores.

Achievements of NABARD

After the establishment of NABARD, there has been a remarkable increase in the rural finance and development of cottage industry and small scale industry as well. By way of providing short-term credit, nearly Rs. 4,000 crores have been given during the ’90s as compared to Rs. 1,200 crores during the ‘80s.

With the help of medium-term finance, nearly Rs. 400 crores have been distributed and they have been optimized mainly by States affected by natural disasters. In ways of a long-term loan, more than Rs. 240 crores have been sanctioned for promotion to the share capital of co-operative institutions.

NABARD has also played a meticulous role in stabling storage facilities for agricultural products in the country. It has also played a scientific role in the export of agricultural commodities which include vegetables and fruits. It has played a supplementary role in maintaining the Green Revolution in the country.

Blue revolution and white revolution in the form of increased fisheries production and milk have also been contributed by the efforts of NABARD. India ranked the top most country in the world in the production of dairy milk.

Conclusion

More or less, NABARD for satisfying its job as a facilitator of provincial thriving and is endowed with the renegotiating of credit establishments in country territories, invigorating institutional improvement and assessment and investigation of client banks. NABARD presented a novel direct loaning office under the ‘Umbrella Program for Natural Resource Management’ in 2007-2008. This program offers advances at sensible rates important to give a budgetary guide to regular asset the executives ventures. As of now credit measure of about Rs 1000 crore has been conceded to 35 ventures. A portion of the tasks that have been endorsed is:

• Collection of nectar in Maharashtra by the innate network 
• Tussar worth chain by a ladies maker organization (‘MASUTA’) 
• the eco-travel industry in Karnataka and so on. 

With respect to rustic advancements, the commitment of NABARD has been excellent. NABARD, been set up as the summit Development Bank ordering the assistance of credit stream by the Government of India for improving and advancing agribusiness and other town ventures, endorsed a horticultural credit stream of Rs 1,57,480 crore in 2005-2006. 

It is normal that the GDP will develop at a rate of 8.4%. The Indian economy completely is prepared for more grounded and quicker development in the coming years. NABARD’s job in the general advancement of India when all is said in done and provincial and rural specifically is exceptionally crucial. 

Although horticultural and country improvement is absolutely reliant on the productivity of NABARD, which is carrying out its responsibility according to the prerequisites of the economy of the country.

References

1. https://www.jagranjosh.com/general-knowledge/nabard-functions-roles-achievements-1448347985-1
2. http://www.papertyari.com/general-awareness/banking/objectives-functions-nabard/
3. https://blog.ipleaders.in/nabard-and-its-functions/