NABARD

The National Bank for Agriculture and Rural Development (NABARD) is the country’s chief regulator for all rural banks and bigger cooperative banks. On July 12, 1982, the Government of India founded this bank, taking into account all of the provisions of the National Bank for Agriculture and Development Act of 1981.

NABARD is governed by the Ministry of Finance of the Government of India.It is the nation’s highest rural growth finance body, with the goal of supplying and managing loans to rural regions as a first step in improving the country’s rural livelihoods.

NABARD has been endowed with a wide range of duties in agriculture and economic deepening, including policy formation, operations and planning. NABARD effectively fulfils these obligations by boosting and working to develop varied industries in rural places, such as agriculture, cottage industries, some small industries and handicrafts, in order to improve infrastructure and work prospects for the locals who live in such areas.

THE ROLE OF NABARD

NABARD, being the primary governmental agency for agricultural and rural welfare, has a variety of responsibilities.

• NABARD or the National Bank for Agriculture and Rural Development gives production and investment loans for a variety of advancement projects and programs in rural regions, assisting in rural progress and growth. Because this bank serves as the focal point or primary funding source for all of these improvement programmes, it is the bank’s obligation to verify that the initiatives are properly funded and promoted.

• The NABARD is in charge of managing all of the funding operations in rural regions with all of the organisations taking part in the growth initiatives.  It must maintain contact with all important organisations, such as the Indian government, the RBI, the governments of all the states and every other powerful body involved in existing agriculture or rural improvement operations.

• NABARD works to strengthen the credit supply structure’s adsorption ability and develop a robust institution through observing, developing strategies for rehabilitation programs, reorganising credit agencies, and training employees, among other things.

• The National Bank finances all banking institutions that fund rural economic development initiatives for Agricultural and Rural Development (NABARD), which is the country’s designated bank for agriculture and rural advancement.

• Following the bank’s re-financing of a rural development program or initiative, NABARD is responsible for supervising and assessing the project or operation.

NABARD’S FUNCTIONS

NABARD performs four primary functions in order to stay up with its responsibilities. Credit functions, monetary functions, regulatory roles, and growth operations are the four main functions conducted by NABARD. Now let us take a look at each of the NABARD’s four functions one by one to better comprehend them.

• Credit functions: Credit functions are carried out by the National Bank for Agriculture and Rural Development, as NABARD is the primary supplier of credit services in rural regions. The bank performs these tasks by delivering, managing, and supervising the flow of credit in rural areas of the country.

• Monetary functions: NABARD has a number of partner banks and organisations that assist and support rural development. NABARD lends money to these various client banks and organisations, such as the handicraft industries, food centres, processing facilities, craftsmen, and others, by fulfilling the monetary functions.

• Regulatory roles: NABARD, as previously said, is the main agency in charge of agriculture and rural improvement. As a result, this body is responsible for supervising and managing all developmental operations and projects. As part of this responsibility, NABARD executes regulatory tasks, which include keeping an eye on all customer banks, organisations, credit and non-credit groups that are involved in rural development projects.

• Growth operations: NABARD’s duty is to emphasise creating sustainable agriculture and supporting rural advancement, and the bank fulfils the development responsibilities in order to remain faithful to this mission. The NABARD’s growth functions include assisting rural banks in developing plans of action for development initiatives.

SOME FARMING SECTOR SCHEMES OF NABARD

NABARD, an agricultural financier, offers particularly designed programs for farmers, like the Dairy Entrepreneurship Development Scheme. This programme seeks to provide dairy entrepreneurs with business support in order to help them establish dairy farms and expand their operations.

Other Farming Initiatives Launched by NABARD –

• Agri-clinic and Agribusiness Centres Scheme
• National Livestock Mission
• GSS – Ensuring End-Use of Subsidy
• Interest Subvention Scheme
• Credit-Linked Capital Subsidy Scheme (CLCSS)  
• Natural or biological materials Capital Investment Subsidy Scheme for commercialised manufacturing units.

Another initiative, the Credit-Linked Subsidy Scheme, was created in 2000 to help small-scale industry (SSI) facilities upgrade. Through constant support, NABARD has made a significant contribution to the agriculture sector and village growth in India. The assistance is supplied through both financial and non-financial methods, with rural cooperative banks and regional rural banks commonly delivering the initiatives. Agricultural producers, fish farmers, cattle farmers, and others are among the business areas that can benefit from these perks.

NABARD’S ANNUAL INTEREST RATE

As of 2022, the following is a list of the rates of interest imposed by NABARD on refunding banks and other NBFCs under various schemes:

Please keep in mind that the below-referred rates of interest are liable to alter at NABARD’s and RBI’s discretion. GST and service tax are not included in the listed rates.

1. Short-Term Refinance Assistance – 4.50% onwards
2. Long-Term Refinance Assistance – 8.50% onwards
3. Regional Rural Banks (RRBs) – 8.35% onwards
4. State Cooperative Banks (StCBs) – 8.35% onwards
5. State Cooperative Agriculture and Rural Development Banks (SCARDBs) – 8.35% onwards

CONCLUSION

The B. Sivaraman Committee proposed the establishment of NABARD (by Act 61, 1981 of Parliament). It took the position of the Reserve Bank of India’s (RBI) Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC), as well as the Agricultural Refinance and Development Corporation (ARDC). 

NABARD’s global partners comprise World Bank-affiliated agencies and international agriculture sector and rural advancement agencies. These institutions assist NABARD by providing advice and financial assistance for the improvement of rural folks and the optimisation of farming practices.