Faculty of GA&GS in Delhi Since 2010.Selected in LIC(ADO),BankPO,CGL,2 Times Mains in CSE,Founder:-GovtJobsAcademy @Youtube/Telegram/FB/Web.

Vikas Kumar Singh Tomar

In this course we are going to discuss All About NABARD,RRBs,PSL,LEAD BANK SCHEME,KCC etc for UPSC/SSC/BANKS etc. in a very simple approach you can easily understand all the information related to these all concepts.

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(Hindi) All About NABARD, RRBs, PSL, LEAD BANK SCHEME, KCC etc for BANKS/SSC etc.

Financial Awareness

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It is the apex banking institution to provide finance for Agriculture and rural development.  National Bank for Agriculture and Rural Development (NABARD) was established on July 12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and Reserve bank of India. It is an apex institution in rural credit structure for providing credit for promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.
Functions of NABARD:

NABARD was established as a development bank to perform the following functions:

1. To serve as an apex financing agency for the institutions providing investment and production credit for promoting various developmental activities in rural areas;

2. To take measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work at the field level and liaison with the Government of India, the State Governments, the Reserve Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development Programme (IRDP).

6. It arranges refinance for IRDP accounts in order to give highest share for the support for poverty allevia­tion programs run by Integrated Rural Development Programme.

7. NABARD also gives guidelines for promotion of group activities under its programs and provides 100% refinance support for them.

8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary agencies for poor and needy in rural areas.

9. It refinances to the complete extent for those projects which are operated under the ‘National Watershed Development Programme‘and the ‘National Mission of Wasteland Development‘.

10. It also has a system of District Oriented Monitor­ing Studies, under which, study is conducted for a cross section of schemes that are sanctioned in a district to various banks, to ascertain their performance and to identify the constraints in their implemen­tation, it also initiates appropriate action to correct them.

11. It also supports “Vikas Vahini” volunteer programs which offer credit and development activities to poor farmers.

12. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the development of the rural financing and farmers’ welfare.

13. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.

14. NABARD gives assistance for the training and development of the staff of various other credit insti¬tutions which are engaged in credit distributions.

15. It also runs programs for agriculture and rural development in the whole country.

16. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their talent acquisition through IBPS CWE conducted across the country.

Role of NABARD:

1. It is an apex institution which has power to deal with all matters concerning policy, planning as well as operations in giving credit for agriculture and other economic activities in the rural areas.

2. It is a refinancing agency for those institutions that provide investment and production credit for promoting the several developmental programs for rural development.

3. It is improving the absorptive capacity of the credit delivery system in India, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.

4. It co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental work at the field level while maintaining liaison with Government of India, and State Governments, and also RBI and other national level institutions that are concerned with policy formulation.

5. It prepares rural credit plans, annually, for all districts in the country.

6. It also promotes research in rural banking, and the field of agriculture and rural development.

Some of the milestones in NABARD's activities are:

Business Operations:

1. Production Credit: NABARD sanctioned aggregating of 66,418 crore short term loans to Cooperative Banks and Regional Rural Banks (RRBs) during 2012-13, against which, the maximum outstanding was 65,176 crore.

2. Investment Credit: Investment Credit for capital formation in agriculture & allied sectors, non-farm sector activities and services sector to commercial banks, RRBs and co-operative banks reached a level of 17,674.29 crore as on 31 March 2013 registering an increase of 14.6 per cent, over the previous year.

3. Rural Infrastructure Development Fund (RIDF)

Through the Rural Infrastructure Development Fund (RIDF) 16,292.26 crore was disbursed during 2012-13. A cumulative amount of 1,62,083 crore has been sanctioned for 5.08 lakh projects as on 31 March 2013 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc.

New Business Initiatives:

1. NABARD Infrastructure Development Assistance (NIDA): 
NABARD has set up NIDA, a new line of credit support for funding of rural infrastructure projects. The sanctions under NIDA during the year 2012-13 was 2,818.46 crore and disbursement was 859.70 crore.

2. Direct refinance assistance to CCBs for short term multipurpose credit: 
Direct refinance assistance to CCBs was conceived and additional line of finance for CCBs in the light of recommendations of the “Task Force on Revival of Short Term Rural Cooperative Credit Structutre, which enables the latter to raise financial resources other than from StCBs. During 2012-13, refinance assistance aggregating 3,385 crore was sanctioned to 42 CCBs and disbursement stood at 2,363.45 crore.

Now it can be conclude that the Agricultural & rural development is totally dependent on the efficiency of the NABARD, which is doing its job as per the requirements of the economy.

Introduction of NABARD and Functions of NABARD (in Hindi)

Associate Body and Subsidiaries of NABARD (in Hindi)

Funds Managed By NABARD {RIDF,LTIF} (in Hindi)

Regional Rural Banks {RRB} (in Hindi)

Lead Bank Scheme and Kisan Credit Card (in Hindi)

Priority sector was first properly defined in 1972, after the National Credit Council emphasized that there should be a larger involvement of the commercial banks in the priority sector. The sector was then defined by Dr. K S Krishnaswamy Committee.
Objective of Priority Sector Targets
The overall objective of priority sector lending programme is to ensure that adequate institutional credit flows into some of the vulnerable sectors of the economy, which may not be attractive for the banks from the point of view of profitability.
Priority Sector Targets
In 1974, the banks were given a target of 33.33 % as share of the priority sector in the total bank credit. On the basis of Dr. K S Krishnaswamy committee, the target was raised to 40%. The current Priority sector targets are as follows:
Categories	Domestic Scheduled Commercial Banks and Foreign banks with 20 branches and above	Foreign banks with less than 20 branches
Total Priority Sector	40 percent of Adjusted Net Bank Credit (ANBC)$	34% for 2016-17 and  36% for 2017-18*
Agriculture	18 percent of ANBC	Not applicable
Micro Enterprises	7.5 percent of ANBC	Not Applicable
Advances to Weaker Sections	10 percent of ANBC	Not Applicable
* Total Priority Sector target of 40 percent for foreign banks with less than 20 branches has to be achieved in a phased manner as below:

$It can be either ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.
Current Priority Sector Categories
As per the RBI circular dates July 7, 2016, there are eight broad categories of the Priority Sector Lending viz. (1) Agriculture (2) Micro, Small and Medium Enterprises (3) Export Credit (4) Education (5) Housing (6) Social Infrastructure (7) Renewable Energy (8) Others. They have been discussed below:
Agriculture
The agriculture category includes three sub-categories viz. farm credit, agriculture infrastructure and ancillary activities.
Farm Credit
Loans to individual farmers, Self Help Groups and Joint Liability Groups for agriculture and allied activities viz. dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture. This includes loans for crops, purchase of farm inputs, loan for pre and post harvest activities, loan up to Rs. 50 Lakh against pledge of farm produce; Loans under Kisan Credit Card Scheme; Loan for purchase of farm land.
Loan to corporate farmers, farmers producer organizations and companies, Farm cooperatives up to Rs. 2 Crore.
Agriculture Infrastructure
Construction of storage facilities such as warehouses, market yards, godowns, silos, cold storage units and chains for farm produce.
Soil conservation and watershed development projects.
Plant tissue culture and agri-biotechnology, seed production, production of bio-pesticides, bio-fertilizer, and vermi composting.
Ancillary Activities
Loans up to ₹5 crore to co-operative societies of farmers for disposing of the produce of members.
Loans for setting up of Agriclinics and Agribusiness Centres.
Loans for Food and Agro-processing up to an aggregate sanctioned limit of ₹100 crore per borrower from the banking system.
Loans to Custom Service Units managed by individuals, institutions or organizations who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers, combines, etc., and undertake farm work for farmers on contract basis.
Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi-Purpose Societies (LAMPS) for on-lending to agriculture.
Loans sanctioned by banks to MFIs for on-lending to agriculture sector as per the conditions specified in paragraph 19 of these Master Directions.
Outstanding deposits under RIDF and other eligible funds with NABARD on account of priority sector shortfall.
Micro, Small and Medium Enterprises (MSMEs)
Any loan to MSME industries for their business purposes comes under priority sector. MSMEs have been defined by Ministry of Micro, Small and Medium Enterprises in 2006 as per investment limit in plant & machinery as follows:
Manufacturing Sector
    Enterprises	 Investment in plant & machinery
    Micro Enterprises	 Does not exceed twenty five lakh rupees
    Small Enterprises	 More than twenty five lakh rupees but does not exceed five crore rupees
    Medium Enterprises	 More than five crore rupees but does not exceed ten  crore rupees
Service Sector
    Enterprises	 Investment in equipments
    Micro Enterprises	 Does not exceed ten lakh rupees:
    Small Enterprises	 More than  ten lakh rupees but does not exceed two crore rupees
    Medium Enterprises	 More than two crore rupees but does not exceed five core rupees
For service sector the Bank loans up to Rs. 5 crore per unit to Micro and Small Enterprises and Rs. 10 crore to Medium Enterprises engaged in providing or rendering of services are eligible. This includes all types of services including restaurants, hotels, travel agents, software companies etc.
Further, the following loans are also counted as priority sector loans under MSME:
Loans to Khadi and Village Industries Sector (KVI)
Loans to entities which provide inputs to artisans / village / cottage industries and their cooperatives
Loans to Micro-finance Institutions, which in turn use this loan to disburse to MSME
Loans under various schemes related to MSME scheme
Overdraft under Pradhan Mantri Jan-dhan Yojana up to Rs. 5000.
Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority sector shortfall.
Export Credit
Export credit is a part of priority sector loan subject to 2% cap for domestic banks and foreign banks with >20 branches. However, for foreign banks with <20 branches, the export credit limit is up to 32% of the ANBC.
Education
This includes loans to individuals for educational purposes including vocational courses up to Rs. 10 lakh irrespective of the sanctioned amount will be considered as eligible for priority sector.
Housing
For housing loans to individuals, limit to be counted as priority sector loans is Rs. 28 Lakh in Metros and Rs. 20 Lakh in other cities, towns and villages.
For repairing of house, limit is Rs. 5 Lakh in metros and Rs. 2 lakh in others.
Loans to any government agency for construction of houses subject to ceiling of Rs. 10 Lakh per house / dwelling unit for weaker sections or slum clearing.
Outstanding deposits with NHB on account of priority sector shortfall.
Social infrastructure
This includes loans up to ₹5 crore per borrower for building social infrastructure for activities viz. schools, health care facilities, drinking water facilities and sanitation facilities including construction/ refurbishment of household toilets and household level water improvements in Tier II to Tier VI centres.
It also includes loan to Micro-finance Institutions (MFIs) for on-lending to SHGs and JLGs for water and sanitation facilities.
Renewable Energy
This includes loan up to Rs. 15 crore to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities Viz. Street lighting systems, and remote village electrification.
For individual households, the loan limit will be ₹10 lakh per borrower.
Others
Personal loans to weaker sections up to Rs. 50,000 per borrower.
Loans to distressed persons with a limit to Rs. 1,00,000/- per borrower to prepay their debt to non-institutional lenders
Loans to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs and/or the marketing of the outputs of the beneficiaries of these organisations.
Important Questions
Who is a small / marginal farmer?
For computation of targets, RBI defines marginal farmer as one with less than 1 hectare of land {1 hectare=11959 Yards}, and small farmers as one with 1-2 hectare of land.
Who are included in weaker sections?
Priority sector loans to the following borrowers will be considered under Weaker Sections category:-
No.	Category
(i)	Small and Marginal Farmers
(ii)	Artisans, village and cottage industries where individual credit limits do not exceed ₹1 lakh
(iii)	Beneficiaries under Government Sponsored Schemes such as National Rural Livelihood Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)
(iv)	Scheduled Castes and Scheduled Tribes
(v)	Beneficiaries of Differential Rate of Interest (DRI) scheme
(vi)	Self Help Groups
(vii)	Distressed farmers indebted to non-institutional lenders
(viii)	Distressed persons other than farmers, with loan amount not exceeding ₹1 lakh per borrower to prepay their debt to non-institutional lenders
(ix)	Individual women beneficiaries up to ₹1 lakh per borrower
(x)	Persons with disabilities
(xi)	Overdrafts upto ₹5,000/- under Pradhan Mantri Jan-DhanYojana (PMJDY) accounts, provided the borrower’s household annual income does not exceed ₹100,000/- for rural areas and ₹1,60,000/- for non-rural areas
(xii)	Minority communities as may be notified by Government of India from time to time.
In States, where one of the minority communities notified is, in fact, in majority, item (xii) will cover only the other notified minorities. These States/ Union Territories are Jammu & Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep.
How Priority Sector Lending is linked to so called Double Financial Repression?
Priority Sector lending in India has been made a salient feature of the banking in India mainly due to the social and economic objectives that underlie PSL. However, banks are also required to keep certain amount to maintain Statutory Liquidity Ratio (SLR) and from the remaining disposable amount, 40 per cent is dedicated for the priority sector. Thus, large fraction of banks’ resources cause the so called “Double Repression” on the banking system. The economic survey has brought this issue to the forefront and has recommended the government to re-structure SLR and Priority Sector Lending.

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Lessons

6 lessons • 57m

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Introduction of NABARD and Functions of NABARD (in Hindi)

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Associate Body and Subsidiaries of NABARD (in Hindi)

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Funds Managed By NABARD {RIDF,LTIF} (in Hindi)

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Regional Rural Banks {RRB} (in Hindi)

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Lead Bank Scheme and Kisan Credit Card (in Hindi)

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Priority Sector Lending Scheme {PSL} (in Hindi)