How NABARD was Established

On July 12, 1982, NABARD was established by transferring the agricultural credit functions of the RBI and the refinancing functions of the former Agricultural Refinance and Development Corporation (ARDC). Smt. Indira Gandhi, the late Prime Minister of India, dedicated it to the nation’s service on November 5, 1982. “Promote sustainable and equitable agriculture and rural prosperity through effective credit support, associated services, institution development, and innovative initiatives,” the organization’s mission states.

NABARD’s primary responsibilities include addressing policy issues as well as planning and managing loan operations in agricultural and other economic sectors.

NABARD Headquarters

NABARD has 31 Regional Offices in States and Union Territories, a cell in Srinagar, 04 Training Establishments in the Northern, Eastern, and Southern areas of India, and 414 District Development Managers at the district level, with its headquarters in Mumbai.

It also has 336 District Offices, six training centres, and a special cell in Srinagar. The Chief General Manager (CGMs) of NABARD Regional Office (RO) is in charge, and the head office has a number of top executives, including:

• The Executive Directors (ED)
• Managing Directors (MD) and
• The Chairperson.

OBJECTIVES

NABARD is responsible for overseeing and regulating the activities of RRBs, or Regional Rural Banks and Cooperative Banks, which account for 50% of rural lending. NABARD commits to ensuring that a solid credit distribution mechanism is in place to deliver rural credit that is

adequate and diverse enough to meet the expanding and diversified credit needs for agricultural and rural development.

Several functions are performed by NABARD through its activities and services.

Activities to discharge credit functions

• NABARD develops rules for the operation of financial institutions in rural India.

• It provides credit to these financial entities.

• At the ground level, supervises the flow of rural finance.
• In order to determine credit potential, it creates annual credit plans for different districts.

Activities to discharge developmental functions

• It aids rural credit institutions such as RRBs and cooperative banks in developing their own development action plans.
• NABARD aids Regional Rural Banks in establishing Memorandums of Understanding with governments and cooperative banks in order to improve their operations.
• NABARD also monitors if banks’ development action plans are being adequately implemented.
• It also provides financial assistance to commercial banks, RRBs, and cooperative banks’ training institutes.
• NABARD provides financial assistance for the improvement of management information systems, the development of human resources, and the computerization of cooperative bank operations.

Activities to discharge supervisory functions

• NABARD inspects RRBs and Cooperative Banks in accordance with the Banking Regulation Act of 1949.
• It offers to inspect non-credit cooperative societies and State Cooperative Agriculture and Rural Development Banks as volunteers (SCARDBs).
• It makes recommendations and proposals to the Reserve Bank on cooperative bank licencing and the establishment of new RRB and State Cooperative Bank branches.
• It conducts portfolio inspections of RRBs and Cooperative Banks in addition to off-site surveillance.

New business initiatives

1. NABARD Infrastructure Development Assistance (NIDA):

NABARD has established NIDA, a new line of credit support for rural infrastructure project financing. The total amount sanctioned by NIDA in 2012-13 was 2,818.46 crore, with a distribution of 859.70 crores.

2. Direct refinance assistance to CCBs for short term multipurpose credit:

In light of the recommendations of the “Task Force on Revival of Short Term Rural Cooperative Credit Structure,” direct refinance support to CCBs was designed as an additional line of credit for CCBs, allowing them to raise financial resources other than through StCBs ( State Cooperative Banks). Refinance assistance totalling 3,385 crores was sanctioned to 42 CCBs in 2012-13, with a payout of 2,363.45 crores. Now it can be concluded that agricultural and rural development are completely reliant on the effectiveness of the NABARD, which is performing its duties in accordance with the needs of the economy.

CONCLUSION

In a nutshell, NABARD is tasked with funding credit institutions in rural areas, fostering institutional development, and evaluating and inspecting customer banks in order to fulfil its function as a facilitator of rural prosperity.

In 2007-2008, NABARD launched an innovative direct lending facility under the ‘Umbrella Programme for Natural Resource Management.’ This program provides loans at affordable interest rates to fund natural resource management initiatives. Already, 35 projects have received loans totalling almost Rs 1000 crore. Some of the projects that have been approved include I tribal honey collection in Maharashtra; (ii) the Tussar value chain by a women producer company (‘MASUTA’); and (iii) eco-tourism in Karnataka.

In terms of rural development, NABARD has made a significant contribution. NABARD, the main Development Bank mandated by the Government of India to facilitate loan flow for upgrading and boosting agriculture and other local industries, sanctioned agricultural credit flow of Rs 1,57,480 crore in 2005-2006. The GDP is predicted to rise at an annual rate of 8.4 percent. The Indian economy as a whole is poised for quicker and greater development in the coming years. The significance of NABARD in the overall development of India, and particularly in rural and agricultural development, is critical.