Study Notes: Banking and Finance

(National Bank for Agriculture and Rural Development) 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 etc.

Dr. Harsh Kumar Bhanwala, Chairman, NABARD, is a Post
Graduate in Management from IIM, Ahmedabad

HEAD OFFICE-

NABARD has its head office at Mumbai, India.

HISTORY

At the instance of Government of India and Reserve Bank of India
(RBI), constituted a 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.

The Committee, in its interim report, submitted on 28
November 1979, felt the need for a new organisational device for providing
undivided attention, forceful direction and pointed focus to the credit
problems arising out of integrated rural development and recommended the
formation of National Bank for Agriculture and Rural Development(NABARD).

The Parliament, through Act,61 of 1981, approved the setting
up of NABARD. The bank came into existence on 12 July 1982 by transferring the
agricultural credit functions of RBI and refinance functions of the then
Agricultural Refinance and Development Corporation (ARDC). NABARD was dedicated
to the service of the nation by the late Prime Minister Smt. Indira Gandhi on
05 November 1982.

NABARD was set up with an initial capital of  100 crore. Consequent to the revision in the
composition of share capital between Government of India and RBI, the paid up
capital as on 31 March 2015, stood at 
5000 crore with Government of India holding  4,980 crore (99.60%) and Reserve Bank of
India 20.00 crore (0.40%).

It has 336 District Offices across the country, one special
cell at Srinagar. It also has 6 training establishments.

MISSION

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

  

ROLE

It works as an institution which looks after the development of the
cottage industry, small industry and village industry, and other rural
industries.

NABARD Refinance Available to-

– State co-operative agriculture and rural development banks
(SCARDBs),

– State co-operative banks (SCBs),

– Regional rural banks (RRBs),

– Commercial banks (CBs) and other financial institutions approved by RBI.

 

While the ultimate beneficiaries of investment credit can be individuals,
partnership concerns, companies, State-owned corporations or co-operative
societies, production credit is generally given to individuals.

NABARD is also known for its ‘SHG Bank Linkage Programme’
which encourages India’s banks to lend to self-help groups (SHGs). Largely
because SHGs are composed mainly of poor women, this has evolved into an
important Indian tool for microfinance. By March 2006, 22 lakh SHGs
representing 3.3 core members had to be linked to credit through this programme.

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

IMPORTANT SCHEME Under NABARD

 -Solar Scheme

-Capital Subsidy
Schemes for Promoting Solar Photovoltaic Water Pumping Systems for Irrigation Purpose

–Capital Subsidy/Refinance Scheme for Installation of Solar
Off Grid under Jawaharlal Nehru-National Solar Mission (JNNSM) of the Ministry
of New and Renewable Energy

–Solar Water Heating System

-Agricultural Marketing Infrastructure, Grading and
Standardization scheme

-Rural Godowns Scheme

-Dairy Enterpreneurship Development Scheme.