PROJECT REPORT

(Submitted for the Degree of Bachelor of Commerce Honors in

Accounting and Finance/Marketing under the University of Calcutta.)

Credit for Growth:

NABARD’s Role in Financing Rural and
Agricultural Development in India

Submitted By

Name of the Candidate:-ASHWINI GOUR

CU Registration No:-434-1111-0115-22
CU Roll No:-221434-21-0019
College Roll No:-221539
Name of the College:-SHREE AGRASAIN COLLEGE

Supervised by

Kakali Bhattacharya
Assistant Professor,
Department of commerce.

Month&Yearof Submission
May, 2025
 ANNEXURE- I
SUPERVISOR'SCERTIFICATE

This is to certify that Mr ASHWINI GOUR a student of B.Com Honours in Accounting

&financeofSHREEAGRASAIN COLLEGE under the University of Calcutta has worked

under the supervision and guidance for his Project Work and prepared a Project Report

withthetitle“CreditforGrowth:NABARD’sRoleinFinancingRuralandAgricultural

Developmentin India”

This Project report, which he is submitting, is his genuine and original work to the best

of my knowledge.

Signature:
Place: Name:ProfKAKALIBHATTACHARYA
Date Designation:AssistantProfessor,
DepartmentofCommerce
 Annexure-II
Student’sDeclaration

I hereby declare that the Project Work with the title “The Impact Of Agricutural
Banking ” submitted by me for the partial fulfilment of the degree of B.Com. Honoursin
Accounting & Finance under the University of Calcutta is my original work and has not
been submitted earlier to any other University / Institution for the fulfilment of the
requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others by me However
extracts of any literature which has been used for this report has been duly
acknowledged providing details of such literature in the references.

Signature:
Place: Name:ASHWINIGOUR
Date: Address:20DrpkBanerjeeRoadHowrah
C.U.RegistrationNo.:434-1111-0115-22
C.U.RollNo:221434-21-0019
 ACKNOWLEDGEMENT

I take this opportunity to thank our respected Teacher In Charge Prof Sovonita dutta for
giving me an opportunity to work on this field.

IamverythankfultomySupervisorMrsKAKALIBHATTACHARYA for his/her full support in

completing this project work.

Finally, I am grateful to acknowledge my family and friends and all teachers who filled the
questionnaire providing me full support and coordination without this project wouldn’t be
possible.
Ch No Chapter Page No

1 Introduction 1-3

2 Bankprofile

3 IntroductiontoAgriculturalloan

4 ObjectiveofStudy

5 DataAnalysisAndInterpretation

6 Conclusion

7 Bibliography

8 Annexure
 CHAPTER1IN
TRODUCTION
BACKGROUNDOFSTUDY:

Agriculture remains the backbone of the Indian economy, contributing significantly

to employment and rural livelihood. However, the sector continues to face

challenges related to access to affordable and timely institutional credit. To address

this gap and support the development of rural infrastructure, the Government of

India established the National Bank for Agriculture and Rural Development

(NABARD) in 1982. As the apex development bank, NABARD plays a pivotal role

in refinancing rural credit institutions such as cooperative banks, regional ruralbanks

(RRBs), and commercial banks, therebyensuring the smooth flow of credit to the

agricultural and rural sectors.

NABARD also administers various government-sponsored schemes, such as the

Rural Infrastructure Development Fund (RIDF), and supports Self-HelpGroups

(SHGs), Farmer Producer Organizations (FPOs), and the Kisan Credit Card

(KCC) scheme. These interventions aim to promote inclusive, equitable, and

sustainable development in rural India.

This study seeks to analyze the contribution of NABARD in financing rural and

agricultural development in India. By using ratio analysis and secondary data, it

evaluates how NABARD’s financial mechanisms enhance credit flow and impact

rural livelihoods. The study also identifies areas for policy improvements to make

rural credit systems more efficient and farmer-friendly.

SIGNIFICANCEOFTHESTUDY:

This study is significant as it examines the critical role of NABARD in addressing

the credit needs of India's rural and agricultural sectors. By evaluating NABARD’s

refinance operations and support for rural financial institutions, the study highlights

itsimpactonagriculturalproductivity,ruralinfrastructure,andfinancialinclusion.It also

provides insights into the effectiveness of government-backed credit schemes. The

findings can guide policymakers, banking institutions, and development planners in

strengthening institutional credit delivery, ensuring that farmers andrural

entrepreneurs receive adequate and timely support to sustain their livelihoods and

contribute to the nation’s food and economic security.

LITERATURE REVIEW

NationalBankforAgricultureandRural Development"

 InternationalJournalof NovelResearchand Development(IJNRD),April2025

 Summary: This paper explores NABARD's multifaceted role in rural development,
highlighting its contributions to agricultural productivity, rural credit, and climate-
resilient agriculture. It emphasizes NABARD's support for grassroots innovations and
its position as a key implementing entity for climate finance in India. IJNRD

"PerformanceofNABARDinRuralandAgricultureDevelopmentinIndia"

 TheInternationalJournalofEngineeringandResearch(TIJER),August2023
 Summary: This study analyzes NABARD's functions in rural development, focusing onits
rolein policyplanningand providingrefinancefacilitiesto rural financial institutions. It
 discussestheimpactofNABARD'sschemesonruralentrepreneursandfarmers, emphasizing its
significance in micro-credit through Self-Help Groups (SHGs). Tijer



"Role of NABARD in Farmer Empowerment Through Training and
Institutional Support"

 InternationalJournalfor MultidisciplinaryResearch(IJFMR),May-June2025
 Summary: This research examines NABARD's initiatives in empowering farmers through
training and institutional mechanisms, with a case study in the Sagar Division of Madhya
Pradesh. It identifies key training areas like organic farming and rural entrepreneurship,
highlighting their impact on farmers' technical skills and confidence. IJFMR

"TheImpactoftheNABARDRefinanceSchemeontheSocio-Economic Conditions of
the Farmers"

 ResearchGate,April2025
 Summary: This study assesses how NABARD's refinance schemes influence the socio-
economic conditions of farmers. It provides insights into the effectiveness of theseschemes
in improving farmers' livelihoods and access to credit. ResearchGate

"ACaseStudyoftheFinancialPerformanceoftheNationalBankfor Agriculture and

Rural Development"

 InternationalJournalofResearchPublicationand Reviews(IJRPR),January2024
 Summary: This paper analyzes NABARD's financial performance from 2013 to 2023
using the CAMEL rating model. It evaluates aspects like capital adequacy, asset quality,
and management efficiency, providing a comprehensive overview of NABARD's financial
health over a decade
 OBJECTIVESOFTHESTUDY:
1. ToexaminetheroleofNABARDintheruralcreditdeliverysystemin India.

2. ToanalyzethefinancialassistanceprovidedbyNABARDtotheruraland

agricultural sectors.

3. ToevaluatethetrendsinruralcreditdisbursalsupportedbyNABARD.

METHODOLOGYOFSTUDY
The present study adopts a descriptive and analytical research design, primarily
based on secondary data to examine the role of NABARD in financing rural and
agricultural development in India. The data has been sourced from authentic and
credible publications such as NABARD Annual Reports, RBI Bulletins, Economic
Surveys, Ministry of Agriculture and Farmers’ Welfare reports, and other
government andinstitutionaldocuments.Thestudycoversatimeperiodofthelast5 to 10
financial years, depending on data availability, to identify trends and evaluate the
consistency and impact of NABARD’s financial interventions. Various financial
ratios such as the Credit-Deposit Ratio, Refinance-to-Advance Ratio, RIDF
Utilization Ratio, and Loan Recovery Ratio are used to assess the performance and
outreach of NABARD-supported rural credit. These ratios help in understanding the
effectiveness of credit flow, utilization of funds, and the institutional strength of
rural financial bodies. Trend analysis and year-wise comparisons are also employed
to observe changes in rural lending patterns over time. The study aims to provide a
comprehensive view of how NABARD has facilitated agricultural growth and
financial inclusion through its credit and development initiatives, and where further
improvements may be necessary.
LIMITATIONOFSTUDY

While this study provides valuable insights into the role of NABARD in financing
rural and agricultural development in India, it is subject to certain limitations.
Firstly, the research is based entirely on secondary data sourced from annual
reports, government publications, and research articles. As such, the analysis may
not capture the most recent developments or the ground-level challenges faced by
beneficiaries of NABARD's schemes. Secondly, the study focuses primarily on
macro-level financial trends and institutional performance, and does not include
primary data from farmers or rural banking officials, which could have provided
more nuanced insights into the real-time effectiveness of credit schemes. Thirdly,the
time period covered in the study is limited to data available over the last 5–10
years, and hence, long-term structural changes may not be fully accounted for.
Furthermore, the study does not focus on regional disparities or state-level
variations in the implementation and utilization of NABARD-financed projects.
Lastly, whileratio analysis helps in understanding financial performance, it does not
measure social impact or qualitative benefits such as improved livelihoods,
capacity building, or environmental outcomes. Despite these limitations, the study
serves as a useful foundation for understanding NABARD’s financial interventions
and their broader implications.
 CHAPTER 2
CONCEPTUALFRAMEWORK
INTRODUCTIONTOAGRICULTURALLOAN
Agriculture:-

Agricultureis most important enterprise in India. It is a verybroad termcomprisingall aspect of

production. It provides food for population, fodder for livestock & fulfils needs like Fiber,
Fuel, timbre, wood & Raw Material to various industries.

AgriculturalFinance:-

The funds are required for the agriculture & for its allied activities. It Provided financial
assistance to various purposes or agriculture operation for short & medium periods like minor
irrigation, and development, soil conservation, farm mechanization, plantation & horticulture,
cold storage & other allied activities.

DirectAgricultureloans:-

It means short term production & investment loans provided directly to farmers for agriculture
purposes. This would also include such loans provided directly to farmers for agriculture
purposes.

Needofagriculturefinance:-

2/3rd population depends on agriculture. Low growth in agriculture output results in rise in food
prices. Majority of the poor are farmers, a labour & casual labour therefore for reduction
ultimately & elimination of poverty. Agriculture has a significant share in GDP. If GDP is low
then overall GDP is fall down credit. Money Enders are main sources of credit. They were most
convenient and easiest source. his administration as simple and flexible. The Indian government
launched the three- tier banking structure in India. At the apex is
NABARD at the middle level are the urban co-operative banks (UCBS) and a fewpublic sector
banks (PSBS); and at the base are Primary Agriculture credit societies (PACS).
Financein villagesisoftwo types:-

1. Agriculturalfinance(credit)

2. Non-Agriculturalfinance

Agriculturalcreditisoftwotypes:-

1. Productioncredit

2. Consumptioncredit

(1) ProductionCredit:-

(a) Shortterm:-

• Loansfor15to18months

• Loansformeetdailyworkingrequirements

• cashcomponents

• kindcomponent:co-operativemarketingsocieties.

(b) Mediumterm:-

• Loansfor15monthsto5years.

• NABARDgivesloanfor18to7years.

• Creatingcapitalasset

• Purchaselivestock,machinery,equipment’s
(c) LongTerm:-

• 5-7YEARS

• Landfencingmechanizationconstructionoffarmhouse,storagefacilitie
3)ConsumptionCredit:-

It is basicallyfor survival of farmfamilies SBI

Bank gives revised margin & security norms
for agriculture.
 SrNo Typesofcredit Loanamount Margin
A Cropsloans&other i. UptoRs50000/- NoMargin
short-Term loans ii. OverRs50000/- 15 to 20%
(dependsquantum of
finance)
B TermLoans i. UptoRs50000/- NoMargin
ii. OverRs50000/- 15to 20%

2 Security norms

C Croploans&othershort- i. UptoRs50000/- Hypothecationofcrops.

Term loans ii. OverRs 50000 Mortgageofland&
third-party guarantee.
D Termloans i. UptoRs50000/-
ii. OverRs50000/-

The agriculture loans offered by SBI Bank. can be categorized into

the following types:

1) Kisan Credit Card

2) AgricultureGold Loan
3) MinorIrrigationforAgriculturists
4) FarmMechanizationfor Agriculturists
5) AnimalHusbandry
6) Horticulture
7) FinancingFarmersforLandPurchase
8) FinancingTwoWheelersto Farmers
9) Vermicompost
10) Layerpoultry
11) Sprayer
12) ShadenetFarming
13) Solarpump
14) Dairy
15) Farmhouseconstruction
 KisanCreditCard

Objective
To provide timely and adequate credit to farmers to meet their production credit needs
(cultivation expenses) besides meeting contingency expenses and expenses related to
ancillary activities through simplified procedure, facilitating the borrowers for availing
loans as and when they need.
Purpose
Cultivation of crops Meeting theshort-termcredit needs of farmers for crop production and
allied activities etc. Maintenance of farm equipment’s etc.
Eligibility
Agricultureborrowershavinggoodtrackrecordforthelast2year(i.e.maintaining standard loan
accounts)Creditworthy new borrowers can also be financed.
InterestRate
Asapplicablefromtimetotime.
Amount
AsdecidedbyDistrictTechnicalcommittee&limitworkedoutforthepurpose.
Security
Mortgageofland.Hypothecationofcrop/Assets.

Repayment
Revolvingcreditfacilityfor3years.
Coincidingwithharvestingofcrops-season/marketingofproduce.
AgricultureGoldLoans

Objective
To enables farmers to meet their short-term agricultural credit needs i.e. both for
cropproduction needs and also for meeting investment needs
Purpose
Agri gold loan availed has to be invested by the borrowers either for meeting crop
productionexpenses and/orforcreationofassetstobeusedInhisfarmingoperation or
allied agricultural activities like dairy, Poultry, fisheries etc.
Eligibility
Any person engaged in agriculture or allied activities as well as persons engaged in
activities permitted by RBI to be classed under agriculture. It is not necessary to insist for
land record extract or physical inspection of the farm before sanction of gold loans.
Margin
30% onprice of gold(18,22 &24 caratpurity) less margin.Theprice of thegoldis advised by
LHO at monthly interval.
Repayment
CashCredit / Overdraft : LikeKCC, it isarunningaccount for a periodof 3years,subject to review
(outstanding Vis-à-vis advance value of the ornaments pledged) at annual interval.
 MinorirrigationforAgriculturist

Purpose
Diggingofnewwells,revitalizationofexistingwell, purchaseofoilengine, electricmotor, pump
set installation of pipe line, sprinkler, irrigation, drip irrigation, tube well, bore well, etc.
Eligibility
Agriculturistwhoowns agricultural land.
Amount
FornewdugwellsaspertheNABARDUnitcostsforequipment’s/estimates.
Security
Mortgageofland,
Hypothecationofmovableassetsandguarantors.
Repayment
Dependingupontherepayingcapacity7to11years
OtherTerms&Conditions
Proposedwellshouldbeinwhitewatershedarea.Itshouldnotbeindarkwatershed area
 FarmmechanizationforAgriculturist

Purpose

Purchase of Tractors/Powertillers Purchase of Harvesters Purchase of Threshers & other

farm implements

Eligibility
Agriculturist who owns at least 8 acres of Irrigated land.TheTractor should get at least 1500
hours of work in a year.
Amount
Aspercostofmachinery
Security
HypothecationofTractor/trolleyandaccessories,Mortgageofland.
Repayment
7to9 years.
OtherTerms&Conditions
Comprehensive insurance of machinery with bank clause
Horticulture

Purpose
Cultivationoffruitcrops-mango,Pomegranate,Grapesetc.

Eligibility
Agriculturistwithadequateprovision ofirrigation
Amount
AsperNABARDUnitcosts/Project
Security
Mortgageofland.Hypothecationofcrops.
Repayment
Within15years
Financingfarmerforlandpurchase

Purpose
Forthecultivationofagriculturecropandproducingfood

Eligibility
Apersonshouldbeafarmer,dairyowneretc.

Amountsecurity
AsperNABARDUnitcosts/Project

Repayment
Within15years.

Termsandconditions
Applicant farmer may encourage to purchase the land at one place and not in fragment
holdins to step up productivity and save production expenses
Vermicompost

Purpose
Itenhancessoilfertilityphysically,chemicallyand biologically

Eligibility
Smallfarmer,marginalfarmer,associationofpersonetc.aredesirousoftakingupthe activity on
commercial basis Amount Up to 1.60 lakh
Repayment
Loan to berepaidin monthly/quarterly/half yearly/yearly instalment in max 7 year with moratorium
period of maximum 12 months
 CHAPTER 3
DATAANALYSISANDI
NTERPRETATION
Table:NABARD’sRefinanceSupporttoBanks(Amountin₹Crores)
Year Cooperative RegionalRural Commercial Total
Banks Banks (RRBs) Banks Refinance

2019-20 25,000 15,000 8,000 48,000

2020-21 26,500 16,200 8,500 51,200

2021-22 28,000 17,500 9,000 54,500

2022-23 30,000 18,500 10,000 58,500

2023-24 32,500 20,000 11,000 63,500

Interpretation:
From2019-20to2023-24,NABARD’stotalrefinancesupportincreasedfrom₹48,000croresto
₹63,500 crores, representing a 32.29% increase over five years. The annual average growth rate
is approximately 7.2%.

 CooperativeBanks:Supportgrewfrom₹25,000croresto₹32,500crores,a30% increase,
underscoring their continued dominance in rural credit.
 RegionalRuralBanks (RRBs):Fundsincreasedby 33.33%,from₹15,000to₹20,000 crores,
reflecting their expanding role in semi-urban and rural credit markets.
 Commercial Banks: Though the smallest share, the amount grew by 37.5%, from ₹8,000
to ₹11,000 crores, indicating increased involvement in rural credit.

This steady growth in refinance indicates NABARD’s commitment to scaling institutional credit
flow, supporting agricultural productivity and rural development. The rising refinance amounts
suggest increasing credit demand and the capacity of rural banks to lend effectively, which is
crucial for inclusive growth in the agricultural sector.
GrowthofRuralCreditDisbursementbyBanks(₹Crores)

Year TotalRuralCredit Disbursed

2019-20 15,00,000
2020-21 16,50,000
2021-22 17,75,000
2022-23 19,00,000
2023-24 20,50,000

Interpretation:

The total rural credit disbursed increased from ₹15 lakh crores in 2019-20 to ₹20.5 lakh crores in
2023-24, marking a substantial 36.67% growth over five years, averaging roughly 6.4% annual
growth.

This growth reflects an improved credit ecosystem facilitated byNABARD’s refinance and policy
frameworks. Increasing credit disbursement is vital for enhancing agricultural inputs, technology
adoption, and rural enterprise development. The consistent growth trend underscores expanding
access to institutional credit among rural borrowers, crucial for improving agriculturalproductivity
and rural livelihoods.
 LoanRecoveryRate of Agricultural Loans(%)

Year Cooperative RRBs Commercial OverallRural

Banks Banks Banks
2019-20 82 85 78 80
2020-21 84 86 79 81
2021-22 85 87 80 82
2022-23 87 88 81 83
2023-24 88 89 83 85

Interpretation:
Theloanrecoveryrateimproved from80% to85%overall,a6.25%increase overfiveyears.

 CooperativeBankssaw a7.32%increase(82%to88%)
 RRBs increased by4.71%(85%to89%)
 CommercialBanks had the lowest recoverybut improvedby6.41%(78%to83%)

An increasing recovery rate signals strengthened credit discipline and effective recovery
mechanisms, which enhances the sustainability of rural lending. This progress can be attributed to
NABARD’s rigorous monitoring and capacity-building efforts. Higher recovery rates ensure the
continued availabilityof credit, reducing risks for lenders and enabling the extension of new loans
to more farmers.
 Credit-Deposit(CD)Ratioof RuralBanks(%)

Cooperative RRBs Commercial OverallRural

Year
Banks Banks Banks
2019-
56 62 50 55
20
2020-
58 64 52 57
21
2021-
60 66 54 59
22
2022-
62 67 55 60
23
2023-
64 69 57 62
24

Interpretation:
The overall CD ratio improved from 55% in 2019-20 to 62% in 2023-24, a 12.73% increase,
indicating more efficient credit deployment relative to deposits.

 CooperativeBanks:Improvedby 14.29%(56%to64%),suggestingenhancedlending activity

and better utilization of rural deposits.
 RRBs: Increased by 11.29% (62% to 69%), reflecting stronger credit mobilization aligned
with rural needs.
 CommercialBanks:Increasedby 14%(50%to57%),thoughstillthelowest,showing growing
but comparatively cautious rural lending.

A higher CD ratio is generally positive, reflecting that banks are effectively converting deposits
into productive rural loans. This is a key indicator of credit flow health, implying NABARD’s
refinancing helps rural banks mobilize resources more efficiently, ultimately boosting agricultural
growth.
 CHAPTER -
4FINDINGS
AND
CONCLUSION
 Findings
1. SteadyIncreaseinRefinance Support

The study found that NABARD’s refinance support to cooperative banks, Regional Rural Banks
(RRBs), and commercial banks has steadily increased over the last five years. From ₹48,000crores
in 2019-20 to ₹63,500 crores in 2023-24, this reflects a compound annual growth rate of
approximately 7.2%. This steady growth indicates NABARD’s expanding role in strengthening
rural financial institutions, thereby enhancing credit availability to the agricultural sector.

2. ExpansionofRuralCreditDisbursement

Total rural credit disbursed by banks showed a remarkable increase of 36.67% over five years,
reaching ₹20.5 lakh crores by 2023-24. This growth trend highlights the effective channeling of
credit resources to rural borrowers, enabling increased investment in agricultural inputs,
technology, and infrastructure

3. ImprovedCredit-Deposit(CD) Ratios

The CD ratio of rural banks improved from 55% to 62%, indicating better mobilization and
utilization of deposits for lending purposes. Cooperative banks and RRBs, in particular, showed
significant improvements, which demonstrate enhanced lending efficiency and capacity-building
facilitated by NABARD’s refinance schemes.

4. HighUtilizationofRIDF Funds

NABARD’s Rural Infrastructure Development Fund (RIDF) saw utilization rates consistently
close to 95% of allocation, suggesting efficient deployment of funds towards critical rural
infrastructure projects. These investments play a vital role in enhancing agricultural productivity
through improved irrigation, roads, and storage facilities.

5. RisingLoanRecoveryRates

The recovery rate of agricultural loans improved from 80% to 85% over five years, indicating
stronger credit discipline and effective recovery mechanisms. The highest increase was observedin
cooperative banks, which is crucial for the sustainability of rural credit systems.
6. FocusedSupportforCooperativeBanks

Cooperative banks remain the largest beneficiaries of NABARD’s refinance, reflecting their
pivotal role in rural credit delivery. The consistent increase in refinance and improving financial
health of these banks signals NABARD’s success in reinforcing these institutions

7. GrowingRoleof RegionalRuralBanks (RRBs)

RRBs have witnessed a significant increase in refinance and CD ratios, highlighting their
increasingimportancein providingcredit to small and marginal farmers, especiallyin underserved
rural regions. NABARD’s support has enhanced their operational efficiency and outreach.

Conclusion
NABARD plays a central and dynamic role in financing rural and agricultural development in
India. The findings clearly indicate that through its refinance schemes, Rural Infrastructure
Development Fund, and policy support, NABARD has significantly contributed to strengthening
rural financial institutions and increasing the flow of credit to the agricultural sector.

The consistent increase in refinance support to cooperative banks, RRBs, and commercial banks
over the past five years demonstrates NABARD’s role as a key financial intermediary. The rising
rural credit disbursement shows improved credit access for farmers and rural entrepreneurs,
facilitating investment in farm inputs, technologyadoption, and rural enterprises. Improved credit-
deposit ratios across rural banks signifymore efficient use of deposits for productive lending, thus
boosting the sustainability of rural credit markets.

Efficient utilization of RIDF funds reflects NABARD’s commitment to developing rural

infrastructure, which is vital for increasing agricultural productivity and reducing post-harvest
losses. The improvement in loan recovery rates highlights strengthened credit monitoring and
enforcement mechanisms, which are essential for maintaining the health of rural credit systemsand
ensuring continued flow of credit
Despite these positive developments, the study highlights some limitations such as the lack of
detailed regional analysis and qualitative assessments of the social impacts of NABARD’s
financial interventions. There is also a need for primary research to capture on-ground realities,
farmers’ experiences, and institutional challenges. Understanding these aspects will help refine
NABARD’s strategies and ensure that credit delivery effectively translates into improved
livelihoods and rural prosperity.

In summary, NABARD’s role as a catalyst in rural finance has been instrumental in shaping
India’s agricultural credit landscape. The organization’s continued efforts towards expandingcredit
access, improving institutional capacity, and fostering rural infrastructure development are critical
for sustaining agricultural growth and rural development. Future research and policyefforts should
focus on enhancing data transparency, incorporating social impact evaluations, and addressing
regional imbalances to maximize the developmental benefits of NABARD’s interventions.