“NATIONAL BANK FOR

AGRICULTURE AND
RURAL DEVELOPMENT
(NABARD)"
A project report submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Management Studies
Under The Faculty of Commerce

By
MS. SAPANA S. BARDADE

Under the guidance of

PROF: SABNOOR FATIMA KHAN

SANPADA COLLEGE OF COMMERCE & TECHNOLOGY

Plot no: 3, 4 & 5, sector-2, Sanpada (West)
Navi Mumbai – 400 703

FEBRUARY, 2020
 SANPADA COLLEGE OF COMMERCE & TECHNOLOGY
PLOT NO. 3, 4, 5, SECTOR 2, SANPADA, NAVI MUMBAI 4007053

CERTIFICATE
This is to certify that Ms./Mr. SAPANA S. BARDADE has worked and duly completed
her / his Project work for the degree of bachelor of management studied under the faculty
of commerce in the subject of finance and her/ his project is entitled, “NATIONAL BANK
FOR AGRICULTURE AND RURAL DEVELOPMENT ”under my supervision.

I further certify that the entire work has been done by learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is her/ his own work and facts reported by her / his personal findings and investigations.

PROF. SABNOOR FATIMA KHAN

Date of Submission:
 DECLARATION

I SAPANA SAYAJI BARDADE Student of TYBAF, SANPADA

COLLAGE OF COMMERCE AND TECHNOLOGY, hereby declare that
I have completed the project On “NATIONAL BANK FOR AGRICULTURE
AND RURAL DEVELOPMENT (NABARD)” in academic year 2019-20

The information submitted by me is true and original to the best of my

knowledge.

Date:

Signature
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance
to do this project.

I would like to thank my Principal, Prof. Raosaheb Shinde for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Prof. Sabnoor Fatima Khan,
for his moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
Sabnoor Fatima Khan whose guidance and care made the project successful.

I would like to thank my College library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my parents and peers who
supported me throughout my project.
 EXECUTIVE SUMMERY
This study focus on the working of NABARD. It tells us about the main purpose of
establishment, major challenges faced by NABARD, strength and weakness of NABARD. It
guides us about the various programs run by NABARD in rural areas. It shows the
contribution of NABARD in the Indian economy. It guides us the major problems of the
Indian economy which leads to the development of NABARD.

This study is about the role of NABARD (National Bank for Agriculture and Rural
Development). National Bank for Agriculture & Rural Development (NABARD) is set up as
an apex Development Bank by the Government of India with a mandate for facilitating credit
flow for promotion and development of agriculture, cottage and village industries. NABARD
is the most important institution in the country which looks after the development of the
cottage industry, small scale industry and village industry, and other rural industries The
major functions of NABARD include promotion and development, refinancing, financing,
planning, monitoring and supervision.

NABARD’s activities are governed by a Board of Directors. The Board of Directors are
appointed by the Government of India in harmony with NABARD Act 1981. It has its
headquarters in Mumbai. Government of India holds 99% stake and RBI holds 1% (initially
72.5%) stake in NABARD.
 INDEX
NO. SUBJECT PAGE
NO.
1 ➢ INTRODUCTION TO STUDY 1-8
➢ DEFINITION
➢ HISTORY
➢ OBJECTIVES
➢ VISION AND MISSION
➢ REVIEW OF LITERATURE
➢ RESEARCH METHODOLOGY
2 ➢ ORGANISATION PROFILE 9-13
3 ➢ ROLE OF NABARD 14-15
4 ➢ FUNCTION OF NABARD 16
5 ➢ WORKING OF NABARD 17-21
6 ➢ CONTRIBUTION TOWARDS INDIAN ECONOMY 22-23
7 ➢ KEY CHALLENGES FACED BY NABARD 24-26
8 ➢ NABARD INITIATIVES 27-42
9 ➢ GOVERNMENT REGULATIONS 43-44
10 ➢ FINDING AND CONCLUSION 45-47
➢ BIBLIOGRAPHY
 1
CHAPTER 1:
“NATIONAL BANK FOR AGRICULTURE AND RURAL
DEVELOPMENT” (NABARD)
INTRODUCTION TO STUDY
NABARD was established on the recommendations of B.Sivaramman Committee,
(by Act 61, 1981 of Parliament) on 12 July 1982 to implement the National Bank for
Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department
(ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and
Agricultural Refinance and Development Corporation (ARDC). It is one of the premier
agencies providing developmental credit in rural areas. NABARD is India's specialized bank
for Agriculture and Rural Development in India. NABARD has been instrumental in
grounding rural, social innovations and social enterprises in the rural hinterlands.

NABARD has its head office at Mumbai, India.

NABARD also has a portfolio of Natural Resource Management Programmes involving

diverse fields like Watershed Development, Tribal Development and Farm Innovation
through dedicated funds set up for the purpose.

It transferred the:

✓ Agricultural credit functions of RBI.

✓ Refinance functions of the then Agricultural Refinance and Development Corporation
(ARDC).

DEFINITION:-

The Bank has been entrusted with “matters concerning Policy Planning and
Operations in the field of credit for Agriculture and other Economic activities in Rural
areas in India”.
 2

WHAT IS NABARD

National Bank for Agriculture & Rural Development (NABARD) is set up as an apex
Development Bank by the Government of India with a mandate for facilitating credit flow for
promotion and development of agriculture, cottage and village industries. NABARD is the
most important institution in the country which looks after the development of the cottage
industry, small scale industry and village industry, and other rural industries The major
functions of NABARD include promotion and development, refinancing, financing, planning,
monitoring and supervision.

National Bank for Agriculture and Rural Development (NABARD) is an Apex

Development Financial Institution in India.
The Bank has been entrusted with "matters concerning Policy Planning and Operations in the
field of credit for Agriculture and other Economic activities in rural areas in India".
NABARD is active in developing Financial Inclusion policy. NABARD also reaches out to
allied economies and supports and promotes integrated development.
 3

HISTORY

Reserve Bank of India (RBI), constituted a committee

(Shivaraman committee) to review the arrangements
for institutional credit for agriculture and rural
development (CRAFICARD) on 30 March 1979,
under the Chairmanship of Shri B.Sivaraman, former
member of Planning Commission, Government of
India to review the arrangements for institutional
credit for agriculture and rural development.
NABARD was established with an initial capital of
100 cr., on 12 July 1982 by a special act of parliament
1981, by transferring the agricultural credit functions
of RBI and refinance functions of the then
Agricultural Refinance and Development
Corporation (ARDC). NABARD replaced the
Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve
Bank of India, and Agricultural Refinance and Development Corporation (ARDC)

NABARD’s activities are governed by a Board of Directors. The Board of Directors are
appointed by the Government of India in harmony with NABARD Act 1981. It has its
headquarters in Mumbai. Government of India holds 99% stake and RBI holds 1% (initially
72.5%) stake in NABARD.
 4

OBJECTIVES :

❖ To know about NABARD.

❖ To give a glance at the working of NABARD.

❖ To find out the role of NABARD in Indian economy.

❖ To check the contribution of NABARD in economic growth.

❖ To know the program concluded b them.

❖ To give financial assistance for increasing the agriculture production.

❖ To supply the long term` needs of the rural areas

❖ To supply loans by way of refinance

❖ To help small industries , cottage industries and also artisans

❖ To achieve overall rural development

 5

VISION AND MISSION

VISION

To facilitate sustained access to financial services for the unreached poor in rural areas through
various micro Finance innovations in a cost effective and sustainable manner.

MISSION

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

➢ NABARD recorded high levels of performance in purveying rural credit during 2014-
15.

➢ The aggregate assets held by NABARD rose to 213170 crore as on 31 march 2015, an
increase of 30,700 crore (17%) compared to the position as on 31 march 2014.
 6

REVIEW OF LITERATURE:

1. Bansal and Agarwal (1991) say that the NABARD is now the single integrated agency for
meeting the credit needs of all types of agricultural and rural development activities in the
country. It also contemplates undertaking of all works relating to the establishment of RRBs
and administration of refinance scheme and monitoring of the performance of RRBs. Ever
since the NABARD came into being, it has been playing an important role in strengthening
and re-organising the cooperative structure in the National Economy. It has actively taken
over the responsibilities of the Reserve Bank of India in relation to rural financing and rural
reconstruction.

2. Nanda (2000) observed that NABARD has been directing its parties and programs to
support the rural credit institutions towards achieving the goal of providing adequate and
timely credit support for on farm, off-farm and non-farm operations in the rural sectors.
Various schemes have been formulated and implemented by NABARD for policy and
refinance support to banks, in different fields like creation of aggregation facilities, farm
mechanization, plantation horticulture animal husbandry, watershed, development, and agro-
processing infrastructure in rural areas. NABARD is supporting large scale investment in
rural infrastructure that includes a wide range of support services like irrigation, food control,
soil conservation, watershed development, roads bridges, marketing in rural areas. These
efforts will go a long way towards improving the productivity and profitability of agriculture
and the quality of life in the rural areas. This should also lead to increased credit absorption
capacity in the rural areas.

3.NABARD (2000) is a unique development finance institution committed to rural

development15. It provides refinance to banks and the state Governments, takes development
and promotional initiatives to improve the September 2017, Volume 4, Issue 09 JETIR
(ISSN-2349-5162) JETIR1709030 Journal of Emerging Technologies and Innovative
 7

Research (JETIR) www.jetir.org 155 impact of credit on development and attempts to bring
about equity and justice in such development. It also supervises the operations of rural
financial institutions like co-operative banks and RRBs. The year 1999-2000, gives high
degree of satisfaction to NABARD. New heights have been achieved in all its areas of
operations. Innovations were introduced and new strategies chalked out for better
achievement in future.

4. Das Gupta (2001) says that NABARD will definitely encourage the bankers to lend more
in rural areas. Refinance to the states by NABARD should be with held if the repayment
performance of rural loans at state level falls below 75 percent. NABARD can consider
giving grants to states for better repayments.

5. Arjun Sengupta28 (2001) says that NABARD will have to take on huge responsibilities,
take a lot of risks, become an active operator in the field and would need large funds. The
state governments were very hesitant to draw long-term loans from NABARD up to the
available limits. This could not be explained by the refinance rates of NABARD , which were
substantially lower than the market rates, especially for loans below Rs. 2 lakhs. 6. Hitesh
and Viramgami (2003) view that NABARD has a dual role to play as an apex institution and
a refinance institution. NABARD services as a refinancing institution for all kinds of
production and investment
 8

RESEARCH METHODOLOGY

Data collection: To fulfill the objectives of study , both primary and secondary data have
been taken into consideration.

PRIMARY DATA The primary data has been collected by questionnaire. Sample of 50
people were taken for the study Sampling techniques: to study the project , a simple random
sample technique is used Data analysis and interpretation: data analysis and interpretation is
done by using different techniques and pie diagram and graphs etc.

SECONDARY DATA There was extensive use of secondary information in the form of
websites , circulars , report of RBI etc.
 9

CHAPTER 2:
ORGANISATION PROFILE

ORGANISATIONAL STRUCTURE

SHAREHOLDING AND MANAGEMENT

Initially, RBI held 72.5 per cent of equity in NABARD amounting to Rs. 1450 crore. The
remaining shareholding of Rs. 550 crore was with the Government of India. The Union
Cabinet in May 2008 approved the Reserve Bank’s proposal to transfer its share holding in
NABARD to the Government of India. Accordingly, the Government of India issued a
notification on September 16, 2010 prescribing the proportion of subscription/ownership of
Government of India and Reserve Bank in NABARD as 99 per cent and 1 per cent
respectively. In terms of RBI circular dated 14th October, 2010, RBI had divested its stake
amounting to Rs. 1430 crore (Rupees one thousand four hundred and thirty crore) in National
Bank for Agriculture and Rural Development (NABARD) on October 13,2010. With this, the
Reserve Bank’s holding in NABARD came down to one per cent of shareholding in
NABARD. In September, 2013. Government of India gave an amount of Rs.700 crore
towards Share Capital Consequent to this the shareholding of Government of India and RBI
in the Paid up capital of NABARD as on 31 March 2014 was at 99.57:0.43.
 10

PROGRAMMES AND SERVICES OFFERED

Automatic Refinance Scheme (ARF)

Schemes formulated over the years have been categorized into distinct and compact schemes.

Composite Loan Scheme (CLS)

Under this scheme refinance is given to meet the block and /or working capital requirements
of small / micro enterprises. Max. refinance of 10 lakh per unit.

❖ Integrated Loan Scheme (ILS)

Under this scheme refinance is given to block capital and working capital for one operating
cycle. Max. Refinance of 15 lakh per borrower.

Self Employment Scheme for Ex-Servicemen (SEMFEX)

From 15 January 1988

Designed to provide a comprehensive package of credit for encouraging ex-servicemen to

undertake agricultural and allied activities or to set up non-farm units in rural areas to earn
their livelihood for leading a dignified life encouraging ex-servicemen to undertake
agriculture and allied activities or to set up non-farm units in rural areas to earn livelihood for
leading a dignified life.

NABARD provide refinance assistance under ARF to eligible banks for a wide spectrum of
manufacturing, processing and service sector activities under RNFS (Investment Credit).
 11

❖ Soft Loan Assistance for Margin Money (SLAMM)

To provide financial assistance to the prospective entrepreneurs who have the
requisite talent and skill of entrepreneurship but lack necessary monetary resources to
meet the margin requirement.

❖ Small Road and Water Transport Operators (SRWTO)

To provide the facilitate for acquisition of transport vehicles, which are to be used for
transportation of farm produce /industrial products to rural/ urban marketing centres
including passenger transport vehicle and water transport units.
Margin money assistance will be extended on a very selective basis up to 10% of the
of the vehicle

❖ Soft Loan Assistance for Margin Money (SLAMM)

To provide financial assistance to the prospective entrepreneurs who have the
requisite talent and skill of entrepreneurship but lack necessary monetary resources to
meet the margin requirement.

❖ Small Road and Water Transport Operators (SRWTO)

To provide the facilitate for acquisition of transport vehicles, which are to be used for
transportation of farm produce /industrial products to rural/ urban marketing centres
including passenger transport vehicle and water transport units.
Margin money assistance will be extended on a very selective basis up to 10% of the
of the vehicle
 12

AWARDS AND ACHIEVEMENTS

After the setting up of NABARD, there has been considerable increase in the rural finance
and development of small scale and cottage industries. By way of short-term credit, nearly
Rs. 4,000 crores has been distributed during 90’s compared to Rs. 1,200 crores during 80’s.

By way of medium term finance, nearly Rs. 400 crores have been provided and they have
been utilized mainly by States affected by natural calamities. In long-0term loan, more than
Rs. 240 crores have been sanctioned for contributing to the share capital of co-operative
institutions.

NABARD has also played a significant role in improving storage facilities for agricultural
commodities in the country. It has also promoted the export of agricultural commodities
which include vegetable and fruits. It has supplementarv role in sustaining Green Revolution
in the country.

White Revolution and Blue Revolution in the form of increased milk production and fisheries
have also been contributed by the sustained efforts of NABARD. India stands the top most
country in the world in production of dairy milk
 13

CHAPTER 3:
ROLE OF NABARD

1. It is an apex institution which has power to deal with all matters concerning policy,
planning as well as operations in giving credit for agriculture and other economic activities in
the rural areas.

2. It is a refinancing agency for those institutions that provide investment and production
credit for promoting the several developmental programs for rural development.

3. It is improving the absorptive capacity of the credit delivery system in India, including
monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and
training of personnel.

4. It co-ordinates the rural credit financing activities of all sorts of institutions engaged in
developmental work at the field level while maintaining liaison with Government of India,
and State Governments, and also RBI and other national level institutions that are concerned
with policy formulation.

5. It prepares rural credit plans, annually, for all districts in the country.

6. It also promotes research in rural banking, and the field of agriculture and rural
development.
 14

STATUTORY ROLE OF NABARD:

The statutory role of National Bank for Agriculture and Rural Development
(NABARD) has been clearly spelt out as Credit Function, Developmental and Promotional
Function, Supervisory Function, Institutional and Capacity Building and Training. This Bank
serves as a Refinancing institution for institutional credit such as long term as well as short
term for the promotion of activities in rural areas. NABARD provides refinance support to
Bank to the extent of 100% of the bank loans disbursed to Self Help Groups (SHGs). The
present study is restricted to the role of NABARD in capacity building and refinancing for
various commercial banks, rural banks and co-operative banks which are financing SHGs in
India in the year financial year 2012 - 13.
 15

CHAPTER 4:
FUNCTIONS OF NABARD:

Credit Functions:

• Framing policy and guidelines for rural financial institutions.

• Providing credit facilities to issuing organizations
• Monitoring the flow of ground level rural credit.
• Preparation of credit plans annually for all districts for identification of credit potential.

Development Functions:

• Help cooperative banks and Regional Rural Banks to prepare development actions
plans for themselves.
• Help Regional Rural Banks and the sponsor banks to enter into MoUs with state
governments and cooperative banks to improve the affairs of the Regional Rural Banks.
• Monitor implementation of development action plans of banks.
• Provide financial support for the training institutes of cooperative banks, commercial
banks and Regional Rural Banks.
• Provide financial assistance to cooperative banks for building improved management
information system, computerisation of operations and development of human
resources.

Supervisory Functions:

• 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.
• 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).
 16

CHAPTER 5:
WORKING OF NABARD

NABARD is playing an
important role in augmenting the
flow of credit for the promotion
of agriculture, small scale and
cottage industries, handicrafts and
other rural crafts and various
other allied activities in rural
areas of the country.

NABARD does not help the farmers and other rural people directly rather it flows the credit
to these people through co-operative banks, commercial banks, RRBs, etc. It is thus working
as an apex body dealing with policy, planning and other operational aspects of rural credit for
the all-round development of rural economy.

During the last ten years, NABARD played an important role in developing the rural
economy and performed all its various functions smoothly and efficiently. Accordingly, the
Bank sanctioned short-term credit limits to the extent of Rs 3,020 crore in 1990-91 for
financing seasonal agricultural operations (at 3 per cent below the bank rate) as against Rs
2,807 crore in 1989-90.

NABARD also sanctioned medium-term credit limits to the extent of Rs 46 crore in 1989.
During 1990-91, the bank advanced medium term and long term credit to the extent of Rs
210 crore. NABARD also pursued its policy for the promotion of investment in agricultural
sector in the less developed and under banked states.

In 1989-90 Rs 737 crore was disbursed in these states. The Bank also provided refinance
assistance for different purposes.
 17

REVAMPING OF CO-OPERATIVE CREDIT STRUCTURE OF

NABARD

In order to revamp the co-operative credit structure, the Government announced a package in
January 2006 for revival of Short-term Rural Co-operation Credit Structure involving
financial assistance of Rs 13,596 crore. NABARD has been designated as the implementing
agency for the purpose. A Department for Cooperative Revival and Reforms has been set up
in NABARD for facilitating the implementation process.

States are required to sign a MoU with NABARD committing to implement the legal,
institutional and other reforms as envisaged in the revival package. So far 25 states and 3 UTs
have agreed to implement the package; out of which 17 states have signed MoU with the
Government of India and NABARD.

A total sum of Rs 1,073 crore has been released by NABARD as Government of India’s
share under the package to Andhra Pradesh, Madhya Pradesh and Haryana. The Task Force
has also submitted its report for revival of Long Term Cooperatives Credit Structure. Steps
have been initiative for implementing the suggestion given in this report.

This package covers 96 per cent of the primary agricultural cooperative societies (PACS) and
96 per cent of the central cooperative banks (CCBs) in the country. As of November 2010, an
amount of Rs 8009.75 crore has been released by NABARD as Government of India share
for recapitalization of 49,983 PACS.
 18

AGRICULTURE DEBT WAIVER AND DEBT RELIEF

(ADWDR) SCHEME 2008:

NABARD is the nodal agency for the implementation of the Agriculture Debt Waiver and
Relief (ADWDR) Scheme 2008 in respect of cooperative credit institutions and Regional
Rural Banks. NABARD has already released Rs 25,113.92 crore towards debt waiver and Rs
3,986.02 crore towards Debt Relief Claims as on 31st December 2011.

Thus the total amount of release of fund by NABARD under ADWDR Scheme as on 31st
December 2011 was Rs 29,099.94 crore.

AGRI-CLINIC AND AGRI-BUSINESS SCHEMES OF

NABARD:

In the mean time, NABARD has already decided to launch its agri-clinic and agribusiness
centre scheme with an aim to strengthen the transfer of technology for generating
employment in agri and allied sector. The concept of agri-clinic is envisaged to provide
export services and counseling to farmers on cropping practices, technology dissemination,
crop protection from pests and prices of crops in the market.

The objectives of both agri-clinic and agri-business centres are to supplement the efforts of
the government’s extension services to make available supplementary sources of input supply
and services to needy farmers.

The scheme has been aimed at providing gainful employment to agriculture graduates (those
youths acquiring knowledge in agriculture and on the lookout for scope) in new emerging
areas in agriculture and allied sectors. The scheme is open to all agricultural graduates in
subjects like horticulture, animal husbandry, fishery, dairy, veterinary, poultry farming,
pisciculture and other allied activities.
 19

According to NABARD, the salient feature of the agri-clinic and agribusiness centres include
100 per cent refinance support to banks and automatic refinance facility up-to Rs 15 lakh.

If in case, the prospective borrowers are not able to provide the required money, the same can
be supported out of the soft loan “margin money assistance fund” of the NABARD, subject to
maximum cap of 50 per cent of the margin prescribed by banks.

Such loans to banks will be interest free, but banks may charge service charges at three per
cent per annum. The project can be taken up by the agriculture graduates either individually
or on group basis and the ceiling for the cost of the project by individual is Rs 10 lakh and by
group is Rs 50 lakh, as fixed by NABARD.

OTHER PLANS OF NABARD

In order to reduce the farmers’ distress, NABARD has designed a Rs 2,000 crore plan aimed
at helping them earn a supplementary income. As part of the Strategy, a National Milk Plan
has been launched in 325 districts across the country with help from National Dairy
Development Board to ensure that every farmer gets a regular daily subsidiary income to
overcome distress during crop failures.

NABARD has also launched an innovative village adoption scheme in July 2007 for
integrated and holistic development of villages. Initially, NABARD proposes to adopt 400
villages which would become a model for development and also rope in the lead banks to
expand this initiative. It is expected that every year 1,200 villages are expected to be
developed by NABARD and lead banks once this scheme works successfully.

In order to give support to the development of micro finance, NABARD would be setting up
an institution with a corpus of Rs 500 crore in 3 years. These measures are aimed at
alleviating the suffering of debt ridden farmers, some of whom even resort to suicide and
ensure a regular income during adverse situations besides attaining overall development of
villages.
 20

CURRENT ASSISTANCE BY NABARD

In recent years, the amount of assistance sanctioned by NABARD has been increasing. The
amount of loan sanctioned by NABARD increased from Rs 1,68,67.2 crore in 2004-05 to Rs
29,596 crore in 2005-06 and then to Rs 35,243 crore in 2006-07. Against which the amount
of loan disbursed by NABARD was Rs 12,894 crore in 2004-05, Rs 25,345 crore in 2005-06
and Rs 28,139 crore in 2006-07.
 21

CHAPTER 6:

CONTRIBUTION TOWARDS INDIAN ECONOMY

NABARD has been instrumental in grounding rural, social innovations and social enterprises
in the rural hinterlands. It has in the process partnered with about 4000 partner organisations
in grounding many of the interventions be it. SHG-Bank Linkage programme, tree-based
tribal communities’ livelihoods initiative, watershed approach -in soil and water
conservation, increasing crop productivity initiatives through lead crop initiative or
dissemination of information flow to agrarian communities through farmer clubs. Despite all
this, it pays huge taxes too, to the exchequer – figuring in the top 50 tax payers consistently.
NABARD virtually plough back all the profits for developments spending a huge amount of
trust capital in its 3 decades of work with rural communities.

1 NABARD is the most important institution in the country which looks after the
development of the cottage industry, small industry and village industry, and other rural
industries.

2 NABARD alsp reaches out to allied economies and suppots and promotes integrated
development.

3 NABARD discharge its duty by undertaking the following roles:

➢ Serves as an apex financing agency for the institutions providing investment and

production credit for promoting the various development activities in rural areas.

➢ 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.

➢ Co-ordinates the rural financing activities of all institutions engaged in developmental

 22

work at the field level with Government of India, state governments, Reserve Bank of

India (RBI) and other national level institutions concerned with policy formulation

➢ Undertakes monitoring and evaluation of project refinanced by it.

➢ NABARD refinance the financial institutions which finance the rural sectors.

➢ NABARD partakes in development of institutions which help to the rural economy

➢ NABARD also keeps a check on its client institution.

➢ It regulates the institutions which provide financial help to the rural economy.

➢ It provide training facilitate to the institutions working in the field of rural upliftment.

➢ It regulates the cooperative banks and the RRB’s and manages talent acquisition

through IBPS CWE.

 23

CHAPTER 7:

KEY CHALLENGES FACED BY NABARD

1. NABARD is facing the problem of inadequate finance. They are dependent on

NABARD to collect finance for their further operation. Poor rural people are unable
to save anything due to poverty and low per capita income. The low level of saving of
these customer create obstacle for NABARD to collect sufficient deposits.

2. High over dues and poor recovery of loan is one of the biggest concern affecting the
functioning of NABARD. Reasons being poor access of granting, loan, insufficient
and untrained staff, unproductive or less productive use of credit, inadequate
production, poor marketing facilities and improper channel of recovery system.

3. There is also a creating this problem by concentrating their branches in some specific
states and districts and loose other prospective group of customers.

4. NABARD is suffering from the problem of heavy loans because of low repaying
capacity of their customer, untrained staff, low level of deposits and heavy sanction of
loan without checking the creditworthiness of their customers.

5. These banks have still not played a significant role in poverty alleviation of the
country. Although various efforts have been made in this regard but lack of economic
infrastructure, poor marketing strategies, poor knowledge of customers, low
production, low awareness about saving have created many hurdles for NABARD.
6. Lack of proper co-ordination between NABARD and other financial institution like
commercial banks, NABARD and other co-operative bank has badly affected the
performance of these banks.
 24

SOME OF THE MILESTONES IN NABARD'S ACTIVITIES

ARE:
BUSINESS OPERATIONS:

1. PRODUCTION CREDIT: NABARD sanctioned aggregating of 66,418 crore short term

loans to Cooperative Banks and Regional Rural Banks (RRBs) during 2012-13, against
which, the maximum outstanding was 65,176 crore.

2. INVESTMENT CREDIT: Investment Credit for capital formation in agriculture & allied
sectors, non-farm sector activities and services sector to commercial banks, RRBs and co-
operative banks reached a level of 17,674.29 crore as on 31 March 2013 registering an
increase of 14.6 per cent, over the previous year.

3. RURAL INFRASTRUCTURE DEVELOPMENT FUND (RIDF)

Through the Rural Infrastructure Development Fund (RIDF) 16,292.26 crore was disbursed
during 2012-13. A cumulative amount of 1,62,083 crore has been sanctioned for 5.08 lakh
projects as on 31 March 2013 covering irrigation, rural roads and bridges, health and
education, soil conservation, drinking water schemes, flood protection, forest management
etc.

Now it can be conclude that the Agricultural & rural development is totally dependent on the
efficiency of the NABARD, which is doing its job as per the requirements of the economy.
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NEW BUSINESS INITIATIVES:

1. NABARD INFRASTRUCTURE DEVELOPMENT ASSISTANCE (NIDA):

NABARD has set up NIDA, a new line of credit support for funding of rural infrastructure
projects. The sanctions under NIDA during the year 2012-13 was 2,818.46 crore and
disbursement was 859.70 crore.

2. DIRECT REFINANCE ASSISTANCE TO CCBS FOR SHORT TERM

MULTIPURPOSE CREDIT:
Direct refinance assistance to CCBs was conceived and additional line of finance for CCBs in
the light of recommendations of the “Task Force on Revival of Short Term Rural Cooperative
Credit Structutre, which enables the latter to raise financial resources other than from StCBs.
During 2012-13, refinance assistance aggregating 3,385 crore was
sanctioned to 42 CCBs and disbursement stood at 2,363.45 crore.
 26

CHAPTER 8:

NABARD’S INITIATIVES – A QUICK LOOK

1 Rupee To Rupay
❖ NABARD supported cooperative banks and RRBs for issuing RuPay Kisan Credit
Cards (KCC) to farmers and
❖ Provided point-of-sale terminals to agri-input suppliers
❖ To allow farming community to benefit from the fynamics of a cashless system.

The first RuPay KCC card

❖ Launched by Dr. Prakash Bakshi , Chairman , NABARD
❖ Issued by : Raigad District Central Co-operative Bank at Alibag, Maharashtra
❖ On: May, 2013.
❖ In 2013-14 , 15 lakh RuPay debit and 6 lakh RuPay Kisan cards were issued by RRBs
while 6 cooperative banks began issuing Rupay issuing RuPay kisan cards.
 27

2 Cellphone Extension
➢ SMS-based crop advisory, weather forecasts and mandi prices

➢ Under the Farmers ‘Technology Transfer Fund (FTTP), NABARD in co-ordination

with the Reuters Markets Light

➢ To enhance farm productivity

➢ To members of Farmers Clubs in 13 states.

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3 Empowering Rural Women

❖ Self Help Group Bank Linkage Programme

❖ Rural households -> Self Help Group -> Banking System

❖ World’s largest micro-credit programme

o 103 million rural households

o 7.96 million Self – Help Groups (SHGs).

❖ Next level – SHG 2 will focus on livelihoods Rxtremism- affected districts.

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4 Rural Infrastructure Key To Rural Development

➢ Under Rural Infrastructure Development Fund (RIDF), NABARD financial 5.08 lakh
projects in 29 states with a loan assistance of Rs.162083 crore.
➢ Result:
• + 3.56 lakh kms of rural roads
• + 8.10 lakh meters of rural bridges
• + 200 lakh hectare of additional irrigated area.
• + 28699 anganwadi centers
• + 19986 primary schools
• + 12912 public health facility centers
• + launching of 12170 drinking water schemes in rural India
 30

5 Financial Inclusion for Promoting Inclusive Growth

❖ Financial Inclusion Fund (FIF) promoting financial literacy through

• Audio-visual medium,
• Folk arts
• Setting up of Financial Literacy Centers by RRBs & Co-operative Banks

❖ Financial Inclusion Technology Fund (FITF)

• Helped RRBs migrate to Core Banking Solutions (CBS) platform
• Supported ICT-based Business Correspondent model
 31

6 Promoting Farm Productivity

Farm Innovation and Promotion Fund (FIPF)

❖ Systematic Rice Intensification (SRI) method of cultivation of paddy and lead crops
❖ Enhancing farm productivity and reducing the cost of cultivation through a pilot
project involving 1.42 lakh farmers in 13 states.
 32

7. TECH-SAVVY CO-OPERATIVE BANKS

Working towards a fully tech-enabled environment for Co-operative Banks by helping them
adopt the CBS platform on par with commercial banks and RRBs.
 33

8 THE POWER OF GREEN

❖ NABARD’s green initiative range from
o Financial India’s first IMW canal-top solar-power project under NABARD
Infrastructure Development Assistance (NIDA) in Gujrat to
o Installing rooftop solar-power units for energy generation and conservation at
its head office.
❖ Promoted use of solar energy in rural areas under
o Umbrella programme for Natural Resources Management (UPNRM)
o Jawaharlal Nehru National Solar Mission (JNNSM)
 34

9 FRUITS OF DEVELOPMENT FOR TRIBALS

✓ To provide sustainable livelihood to marginalized tribal families

✓ Implemented a horticulture-based “Wadi” programme.
✓ Covered 3.63 lakh acres benefiting 4.15 lakh tribal families
living in hills and forests in 26 states.
 35

10. GOVERNMENT-SPONSORED PROGRAMMES

➢ A big Draw NABARD has implemented several government sponsored subsidy
programmes that include
o Rural godowns,
o Agri-market infrastructure ,
o Dairy, poultry, piggery,
o Rural slaughter houses, etc.,
➢ Helping the beneficiaries in a big way.
 36

11 SKILL DEVELOPMENT FOR EMPLOYMENTR

GENERATION:
❖ Rural Entrepreneurship Development Programmes(REDPs) supported by NABARD
through
✓ Community Based Organization (CBOs),
✓ Rural Self-employment ‘Training Institutes (R- SETIs)
❖ Helped the unemployed rural youth develop skills, enabling them to
✓ Set up their own enterprises or
✓ Find wage employment.
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12 WATERSHED DEVELOPMENT IN DISTRESSED

DISTRICTS:
✓ implemented 1,712 watershed programmes

✓ in 31 distresses districts across four states- A.P. Gujarat, Maharashtra and Rajasthan.

✓ Treatment of 1.78 million hectares of land

✓ Estimated cost: Rs. 1690 crore.

 38

13 ONE-STEP SHOP FOR FARMERS

The Primary Agriculture Credit Societies (PACs) are grassroots-level organizations catering
to the needs of villagers and farmers.

✓ To increase their profitability and viability

✓ NABARD introduced a new scheme for converting PACS into multi-service conters.
✓ Apart from disbursement of crop loans, PACS now offer services, including

+ supply of seeds, fertilizers, pesticides,

+ agri-equipment for hire,

+ storage facilities

+ marketing support to farmers.

OF THE FARMERS, BY THE FARMERS, FOR THE FARMERS

✓ Supported 1.27 lakh

➢ Farmers’ Clubs &
➢ Voluntary and informal associations of farmers
✓ Helping
➢ Transfer of technology,
➢ Credit facilitation,
➢ Timely repayment,
➢ Market advocacy

For the farming community.

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NABARD PROVIDE BANKING SERVICES

❖ Production credits
❖ Kisan Credit Cards
❖ Farmers’ Club Program
❖ Tribal Development Fund
❖ Microfinance Program
❖ Village Development Program
❖ Farm Innovation and Promotion Fund
❖ Rural Infrastructure Development Fund
 40

NABARD RECENT DEVELOPMENTS

❖ REFINANCE TO BANKS

❖ RIDF to state govt.

❖ Special scheme for warehouse projects

❖ NABARD infrastructure development assistance (NIDA)

❖ Direct lending to cooperative banks

❖ Direct lending to procedures organization

❖ Subsidy schemes & revival packages

❖ SHG-bank linkage programme

❖ Joint liability groups

❖ Farmers club

❖ Watershed developments

❖ Tribal developments

❖ Promotional development

❖ Institution development-short & long term cooperatives

❖ Core banking solutions (CBS0 for cooperatives.

 41

ELIGIBLE SCHEMES FOR REFINANCE UNDER NON-FARM

SECTOR

Automatic Refinance Scheme (ARF)

Schemes formulated over the years have been categorized into distinct and compact schemes.

Composite Loan Scheme (CLS)

Under this scheme refinance is given to meet the block and /or working capital requirements
of small / micro enterprises. Max. refinance of 10 lakh per unit.

❖ Integrated Loan Scheme (ILS)

Under this scheme refinance is given to block capital and working capital for one operating
cycle. Max. Refinance of 15 lakh per borrower.

Self Employment Scheme for Ex-Servicemen (SEMFEX)

From 15 January 1988

Designed to provide a comprehensive package of credit for encouraging ex-servicemen to

undertake agricultural and allied activities or to set up non-farm units in rural areas to earn
their livelihood for leading a dignified life encouraging ex-servicemen to undertake
agriculture and allied activities or to set up non-farm units in rural areas to earn livelihood for
leading a dignified life.

NABARD provide refinance assistance under ARF to eligible banks for a wide spectrum of
manufacturing, processing and service sector activities under RNFS (Investment Credit).
 42

❖ Soft Loan Assistance for Margin Money (SLAMM)

To provide financial assistance to the prospective entrepreneurs who have the
requisite talent and skill of entrepreneurship but lack necessary monetary resources to
meet the margin requirement.

❖ Small Road and Water Transport Operators (SRWTO)

To provide the facilitate for acquisition of transport vehicles, which are to be used for
transportation of farm produce /industrial products to rural/ urban marketing centres
including passenger transport vehicle and water transport units.
Margin money assistance will be extended on a very selective basis up to 10% of the
of the vehicle

❖ Soft Loan Assistance for Margin Money (SLAMM)

To provide financial assistance to the prospective entrepreneurs who have the
requisite talent and skill of entrepreneurship but lack necessary monetary resources to
meet the margin requirement.

❖ Small Road and Water Transport Operators (SRWTO)

To provide the facilitate for acquisition of transport vehicles, which are to be used for
transportation of farm produce /industrial products to rural/ urban marketing centres
including passenger transport vehicle and water transport units.
Margin money assistance will be extended on a very selective basis up to 10% of the
of the vehicle
 43

CHAPTER 9:

GOVERNMENT REGULATIONS

The Indian government is considering giving National Bank for Agriculture and Rural
Development (NABARD) a bank that formulates the credit and banking policy for the rural
sector , more supervisory power over microfinance institution (MFIs) in India.

The Micro Financial Sector Development and Regulation bill, which was first raised in 2007
is to be passed in the upcoming parliament session as the Indian Finance Ministry is putting
the bill on a fast track under the proposed bill all non profit MFIs will be brought under the
jurisdiction of NABARD The Finance Ministry is also Considering bringing non- banking
finance corporations (NBFCs), a structure used by MFIs, under NABARD.

“The state governments are not equipped to handle supervision and a sector superior is the
need of the hour,” says Matthew Titus, executive director of MFI Sa-dhan, an Indian
microfinance industry association. Citing an unspecified source within the Indian
government, an article on the Economic Times newspaper website claims that the Finance
Ministry would not include a 24 -percent cap on internet rates in bill. According to the
website of the Reserve Bank of India (RBI) UNDER THE Companies Act. While
microfinance cooperatives and NBFCs are under the supervision of state governments and
RBI respectively.

The Indian MFIs reporting data for 2009 to the Microfinance Information Exchange (MIX),
the microfinance information clearinghouse, have an aggregate loan portfolio of USD 4.6
billion, total assets of USD 5.1 billion and 26.4 million active borrowers.
 44

About the National Bank for Agriculture and Rural Development (NABARD):

The National Bank for Agriculture and Rural Development (NABARD) is a development
bank in India that formulate the credit and banking policy for the rural sector, supervises and
conducts on-site inspections of cooperatives and regional rural banks and promotes the
development of microfinance activities in the rural sector. NABARD is charged with the
oversight of the Microenterprises Development Programme (MEDI), which focuses
exclusively on the development of microenterprises. In 2010, NABARD set a fiscal year
target of INR 3750 billion (USD 80.3 billion) for credit disbursement via commercial banks,
state cooperative banks, state cooperative agriculture and rural development banks and other
eligible financial institution up from INR 3250 billion (USD 69.6 billion) the previous year.
 45

CHAPTER 10:
FINDING AND CONCLUSION

The parliament created the NABARD act and the Apex bank in order to aid the rural Farmers
that had long been neglected by the Government. There was such an imitative to Uplift
industries and capital market that these agricultural sectors were being grossly Neglected.
Even the apex bank of the country the Reserve Bank of India was so know deep In order
responsibilities and duties that it could not give adequate assistance to the rural Farmer and
their population which mostly comprised of artisans, small business owners And small other
small enterprises.

There was a need of adequate funding to these sectors in order for them develop and
flourish like the other sectors that the Indian Government was giving undivided attention to.
Thus this led to the formation of the Rural Apex bank now known as NABARD. The apex
rural bank was able to form the relation between credit deliverance and the agricultural
sector.

The rural bank has been successful in creating multiple funds and scheme in a order to aid the
rural farmer. The essential point to note here is that the bank not only facilitates the funding
to the farmer but also makes them self sufficient by training personnel in order to better
understand modern techniques of farming which only propagates the growth band
development relating to rural economies. With the help of the RBI the apex rural bank is also
responsible for formulating policies to further benefit the agricultural farmers and the rural
poor.

The bank realizes the potential of the agricultural sector and terms non credit worthy farmers
as credit worthy ones, these farmers were long rejected by other financial institutions due to
the lack of guarantee on their credit. But recent statistics will show that the farmers have
lived up to the confidence instilled in them and are actually creating profit and are now
operating hassle free when it comes to financing their activities.

Various schemes and funds allow farmers to innovate and create new methods and inventions
that help them in their field and this is solely because of the investments done by the rural
bank.
 46

The bank not only helps in credit delivery to the farmers but also to the state government and
NGOs and cooperative banks as well, this proves that when given the opportunity the rural
bank can diversity in other sectors.

Recent development shows that NABARD is all for modern and hi tech technology to
enhance the productivity of the farmer such as genetic modification techniques. The static
will only show that the Rural Bank is doing much better and is far more efficient to its
clientele than most Cooperate and other Financial Institutions hence proving not everything
“rural” is backward.
 47

BIBLIOGRAPHY

For completing this project report, I have taken help from the following site:

www.nabard.com

www.google.com/nabard

www.wikipedia.com
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