NABARD

What is NABARD?

NABARD is the National Bank for Agriculture and Rural Development, which has been recently declared independent from RBI. NABARD, established in the year 1982, holds the purpose of bringing about economic and social prosperity in rural India. It is one of the most crucial rural credit systems in the country. It fell under the programmes to fulfil the RBI’s duty to hone country-wide holistic development. Previously, it was regulated by the RBI as a proponent of the Union Government of India.

The rural bank receives its funding from various government sources and disperses it to the rural population in need. NABARD has been responsible for many sections of developmental growth in smaller villages and towns. It aims to empower the country from the grassroots level by providing easy credit and various other forms of microfinance. It primarily helps grow SSIs (small-scale industries), cottage industries, handicrafts and handloom industries, and more.

What does NABARD do?

NABARD is the body that regulates all rural finance in India. In the way that the Reserve Bank of India controls all financial institutions in the country, NABARD is the apex body for rural finance. Alongside providing credit to rural businesses and individuals, all programmes for upliftment in the more remote areas in the country go through this institution. As the NABARD full form suggests, it carries out all kinds of banking facilities such as providing low-interest loans and regulatory functions for other credit and financial institutions for rural development.

Here is a list of its functions:

• Regulatory functions: all the banks that exist specifically for the rural population fall under the supervision and regulation of NABARD. It is the apex institution in the rural credit system responsible for overseeing all the others.
• Economic development: through its bank structure, NABARD provides loans and financial aid to rural businesses to help the rural economy thrive.
• Institutional development: the apex rural bank is responsible for helping to set up various institutions, including:
  • Regional Rural Banks (RRBs)
  • District Central Cooperative Banks (DCCBs)
  • State Cooperative Agriculture and Rural Development Banks (SCARDBs)
• Banking facilities to businesses and banks: it acts as a banker to the above-mentioned rural banking institutions to provide them with lending credit and accepting deposits.
• It facilitates and assists other developmental groups and institutions such as:
  • Non-governmental organisations and nonprofits
  • Self-help groups
  • Farmers’ groups, collectives, and unions
• Grievance redressal for the rural financial system.

How does NABARD work?

NABARD works out schemes sponsored by the government in the agricultural and allied sectors and non-farm activities. The government fully funds these programmes and schemes for the betterment of the rural economy. There are various departments under NABARD that carry out its functions listed in the previous section.

To put it in simple words, NABARD formulates policies and plans operations for agricultural development and other aspects mentioned before. It does so through its various subsidiaries, which include:

• NABKISAN Finance Limited: to provide credit for sustainable development in agriculture and allied activities and non-agricultural activities in rural areas.
• NABSAMRUDDHI Finance Limited: related to microfinance for developmental indicators, non-banking financial companies, trusts, NGOs and more.
• NABFINS Limited: provision of microfinance for the betterment of minority and disadvantaged sections of society.
• NABARD Consultancy Services: facilitating business projects across India in various verticals.
• NAB VENTURES Limited: an investment fund for agriculture, food and rural business development.
• NABSanrakshan Trustee Company Private Limited: this works upon the basis of guaranteed credit to those eligible.