NABARD is an apex institution, accredited with all matters concerning

policy, planning and operations in the field of credit for agriculture and
other economic activities in rural areas in India.

Genesis and Historical Background:

National Bank for Agriculture and Rural Development (NABARD) is an apex
development bank in India. It has been accredited with "matters concerning policy,
planning and operations in the field of credit for agriculture and other economic
activities in rural areas in India".

NABARD was established by an act of Parliament on 12 July 1982 to implement the

National Bank for Agriculture and Rural Development Act 1981. It replaced the
Agricultural Credit Department (ACD) and Rural Planning and Credit Cell
(RPCC) of Reserve Bank of India, and Agricultural Refinance and Development
Corporation (ARDC). It is one of the premiere agency to provide credit in rural
areas.It was set up with an initial capital of Rs 100 crore, which was enhanced to Rs
2,000 crore, fully subscribed by the Government of India and the RBI.

The Committee to Review Arrangements for Institutional Credit for Agriculture

and Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI)
under the Chairmanship of Shri B. Sivaraman, conceived and recommended the
establishment of the National Bank for Agriculture and Rural Development
(NABARD). The Indian Parliament through the Act 61 of 1981, approved the
setting up of NABARD. The Bank which came into existence on 12 July, 1982, was
dedicated to the service of the Nation by the Hon’ble Prime Minister, Smt. Indira
Gandhi on 5 November, 1982.

NABARD is established as a development Bank, in terms of the Preamble of the Act,

"for providing and regulating Credit and other facilities for the promotion and
development of agriculture, small scale industries, cottage and village industries,
handicrafts and other rural crafts and other allied economic activities in rural areas
with a view to promoting integrated rural development and securing prosperity of
rural areas and for matters connected therewith or incidental thereto."

NABARD’s refinance is 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 operates throughout the country through its 28 Regional Offices and one
Sub-office, located in the capitals of all the states/union territories.It has 336 District
Offices across the country, one Sub-office at Port Blair and one special Cell at
Srinagar. It also has 6 training establishments.

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 ORGAINZATION STRUCTURE
BOARD OF DIRECTORS
CHAIRMAN
MANAGING DIRECTOR
EXECUTIVE DIRECTORS (5)
HEAD OFFICE REGIONAL TRAINING
DEPARTMENTS (22) OFFICES (28) ESTABLISHMENTS (5)

SUB-OFFICE (1) & SPECIAL CELL(Srinagar)

DISTRICT DEVELOPMENT
OFFICES (360)

STAFF

NABARD has suitably qualified and experienced staff in the areas of:
 General Banking
 Agriculture and related Sciences such as Irrigation, Plantation and
Horticulture, Land Development, Animal Husbandry and Dairy Technology,
Agricultural Engineering, Bio-technology, Fisheries, Forestry, etc.
 Agricultural Economics
 Accounts and Finance
 Information Technology
Appropriate training and skills are imparted to the staff on an ongoing basis within
and outside the country. NABARD's own training establishment as also outside
agencies are utilized for the purpose.

Staff Structure
CHAIRMAN
MANAGING DIRECTOR
EXECUTIVE DIRECTORS
CHIEF GENERAL MANAGERS
GENERAL MANAGERS
DEPUTY GENERAL MANAGERS
ASSISTANT GENERAL MANAGERS / MANAGERS / ASSISTANT MANAGERS
CLERKS / STENOGRAPHERS / TYPISTS

Total Staff: Officers: 2973 (including 50 officers on deputation)

Others: 2257

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Mission:
Promoting sustainable and equitable agriculture and rural development through
effective credit support, related services, institution building and other innovative
initiatives.

In pursuing this mission, NABARD focuses its activities on:

Credit functions, involving preparation of potential-linked credit plans annually for

all districts of the country for identification of credit potential, monitoring the flow
of ground level rural credit, issuing policy and operational guidelines to rural
financing institutions and providing credit facilities to eligible institutions under
various programmes

Development functions, concerning reinforcement of the credit functions and

making credit more productive

Supervisory functions, ensuring the proper functioning of cooperative banks and

regional rural banks

Objectives:
NABARD was established in terms of the Preamble to the Act, "for providing credit
for the promotion of agriculture, small scale industries, cottage and village
industries, handicrafts and other rural crafts and other allied economic activities in
rural areas with a view to promoting IRDP and securing prosperity of rural areas
and for matters connected therewith in incidental thereto".

The main objectives of the NABARD as stated in the statement of objectives while
placing the bill before the Lok Sabha were categorized as under :

1.The National Bank will be an apex organisation in respect of all matters relating
to policy, planning operational aspects in the field of credit for promotion of
Agriculture, Small Scale Industries, Cottage and Village Industries, Handicrafts
and other rural crafts and other allied economic activities in rural areas.

2.The Bank will serve as a refinancing institution for institutional credit such as
long-term, short-term for the promotion of activities in the rural areas.

3.The Bank will also provide direct lending to any institution as may approved by
the Central Government.

4.The Bank will have organic links with the Reserve Bank and maintain a close link
with in.

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 Major Activities:
 Preparing of Potential Linked Credit Plans for identification of exploitable
potentials under agriculture and other activities available for development
through bank credit.
 Refinancing banks for extending loans for investment and production
purpose in rural areas.
 Providing loans to State Government/Non Government Organizations
(NGOs)/Panchayati Raj Institutions (PRIs) for developing rural
infrastructure.
 Supporting credit innovations of Non Government Organizations (NGOs)
and other non-formal agencies.
 Extending formal banking services to the unreached rural poor by evolving a
supplementary credit delivery strategy in a cost effective manner by
promoting Self Help Groups (SHGs)
 Promoting participatory watershed development for enhancing productivity
and profitability of rainfed agriculture in a sustainable manner.
 On-site inspection of cooperative banks and Regional Rural Banks (RRBs)
and iff-site surveillance over health of cooperatives and RRBs.

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 Other Activities:
NABARD provides finance to State Governments for completion of rural
infrastructure development projects such as major and minor irrigation projects,
soil conservation, rural roads and bridges, SHGs (Self Help Groups) through PRls
(Panchayati Raj Institutions) etc., from the "Rural Infrastructure Development
Fund" (RIDF) created for the purpose. In the district of Birbhum, NABARD has
sanctioned Rs.13534.52 Crores for Rural Roads, Rural Bridges, Flood Protection
structures, Minor Irrigation, Major Irrigation, Power sector, Watershed
Management and PHC (Anganwadi centres).Out of the total sanction, Rs 8715.23
Crores has been drawn by the State Government. ( Figures as obtaining on 10
January 2005)

NABARD also provides loans to State Governments to enable them to contribute

to the share capital of co-operative credit institutions. NABARD works in co-
ordination with various central/ state government agencies, and NGOs to implement
projects like, watershed development, dry land farming, waste land development,
forestry, Swarnjayanti Gram Swarozgar Yojana (SGSY) and other poverty
alleviation programmes.

NABARD has raised a cadre of volunteers under its programme of Vikas

Volunteer Vahini (VVV) to spread the message of "Development through Credit"
to farmers and non-farm rural entrepreneurs.

NABARD has also been providing promotional grants to VAs/ NGOs for various
programmes such as mother units, ancillarisation, common facility centres, training
including skill up gradation and entrepreneurship development, marketing, etc.,
under exclusive women and other schemes from its "Rural Promotion Corpus
Fund". In the district of Birbhum, till date three Rural Entreprenuership
development Programme (REDP) have been conducted and few more are in the
pipeline. A one month long, special training programme to rural artisans (mostly
women ), engaged in Sola Pith and Kantha Stitch works have been conducted in
collaboration with National Institute of Fashion Technology, Kolkata.

NABARD has established Research and Development (R&D) Fund to gain insights
into the problems of agriculture and rural development through in-depth studies
and applied research and experimenting innovative approaches backed by technical
and economic studies. In Birbhum, to mention a few, studies on the functioning of
Self Help Groups and Farmers Clubs were undertaken. Also, an exclusive study on
development of various loan products was conducted for obtaining an insight into
the product requirement of the rural populace.

NABARD has set up Soft Loan Assistance Fund for Margin Money to provide
support to rural entrepreneurs with the required skills and aptitude but unable to
provide margin money for availing bank loan.

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NABARD has set up Co-operative Development Fund (CDF) to improve
management systems and skills in co-operative banks.

NABARD has constituted a "Credit and Financial Services Fund" to support

credit innovations to improve the outreach of credit to the unreached rural poor.
The Mayurakshi Gramin Bank and seven NGOs in the district, has been identified
as a Self Help Promoting Institution. This has helped in augmenting the flow of
credit as well as in formation of more groups.

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 Role & Functions of NABARD

 NABARD is an apex institution accredited with all matters concerning

policy, planning and operations in the field of credit for agriculture and
other economic activities in rural areas.
 It is an apex refinancing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural
areas
 It takes measures towards institution building for improving absorptive
capacity of the credit delivery system, including monitoring, formulation of
rehabilitation schemes, restructuring of credit institutions, training of
personnel, etc.
 It co-ordinates the rural financing activities of all the institutions engaged in
developmental work at the field level and maintains liaison with Government
of India, State Governments, Reserve Bank of India and other national level
institutions concerned with policy formulation.
 It prepares, on annual basis, rural credit plans for all districts in the country;
these plans form the base for annual credit plans of all rural financial
institutions
 It undertakes monitoring and evaluation of projects refinanced by it.
 It promotes research in the fields of rural banking, agriculture and rural
development
 It co-ordinates operations of rural credit institutions.
 It ensures institution building.
 It develops expertise to deal with agricultural and rural problems
 It assists Government RBI and other institutions in rural development
efforts.
 It acts as agent to Government and R.B.I. in transaction of business in
relevant areas.
 It provides facilities for training and research and dissemination of
information in rural banking and development etc.
 It supports Farmers Club and promotes credit linkage for SHGs.
 It Acts as a coordinator in the operations of rural credit institutions
 It Extends assistance to the government, the Reserve Bank of India and other
organizations in matters relating to rural development
 It Offers training and research facilities for banks, cooperatives and
organizations working in the field of rural development
 It Helps the state governments in reaching their targets of providing
assistance to eligible institutions in agriculture and rural development
 It Acts as regulator for cooperative banks and RRBs.

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 Institution Building Objectives:
The rural financial system in the country calls for a strong and efficient credit
delivery system, capable of taking care of the expanding and diverse credit needs of
agriculture and rural development. More than 50% of the rural credit is disbursed
by the Co-operative Banks and Regional Rural Banks. NABARD is responsible for
regulating and supervising the functions of Co-operative banks and RRBs. In this
direction NABARD has been taking various initiatives in association with
Government of India and RBI to improve the health of Co-operative banks and
Regional Rural Banks.

COOPERATIVE DEVELOPMENT FUND (CDF):

In pursuance with the recommendations of the Parliamentary Committee on

Agriculture, NABARD had created Co-operative Development Fund for providing
assistance to Co-operative Credit Institutions for improving their infrastructural
facilities for growth. The Fund, which started with an initial corpus of Rs.10.00
crore from the surplus contributed by NABARD, has a balance of Rs.215.68 crore
as on 31 March, 2009. The assistance sanctioned to various cooperative institutions
from the Fund till 31 March, 2009 aggregated to Rs.162.18 crore against which an
amount of Rs.150.87 crore has been disbursed. The Objectives and Purposes of the
fund are given below:

(a) Objective of the Fund:

 Supporting the efforts of grass root level institutions (PACS) to mobilize

resources etc.
 Human Resource Development aimed at achieving better working results
and improvements in viability and also for improvement in systems in
cooperative credit institutions.
 Building of better MIS and
 Conduct of special studies for improving functional efficiency and on
subjects referred to above.

(b) Purposes eligible for assistance:

 Provision of infrastructural facilities to PACS for deposit mobilization.

Staff training and faculty support.
 Computerization support for building of MIS in cooperative banks.
Conduct of special studies.

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 Creation of a conducive recovery climate through meeting the cost of
publicity, media, etc.
 Providing mobility to the field staff for improving recovery.
 Reimbursement of training expenditure to ACSTIs and JLTCs
 Best Performance Awards to Cooperative Banks
 Establishment of Business Development Department (BDD) in Cooperative
 Banks Publicity of Kisan Credit Cards (KCC)

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 Promotional Activities:

KISAN CREDIT CARD SCHEME

1. Genesis

 Hon'ble Union Finance Minister announced in his budget speech for 1998-99
that NABARD would formulate a Model scheme for issue of Kisan Credit
Cards to farmers, on the basis of their land holdings, for uniform adoption
by banks, so that the farmers may use them to readily purchase agricultural
inputs such as seeds, fertilizers, pesticides, etc. and also draw cash for their
production needs'.
 NABARD formulated a Model Kisan Credit Card Scheme in consultation
with major banks.
 Model Scheme circulated by RBI to commercial banks and by NABARD to
Cooperative banks and RRBswith instructions to introduce the same in their
respective area of operation.

2. Objectives

As a pioneering credit delivery innovation, Kisan Credit Card Scheme aims

at provision of adequate and timely support from the banking system to the
farmers for their cultivation needs including purchase of inputs in a flexible
and cost effective manner.

3. Contents of Credit Card

 Beneficiaries covered under the Scheme are issued with a credit card and
a pass book or a credit card cum pass book incorporating the name, address,
particulars of land holding, borrowing limit, validity period, a passport size
photograph of holder etc., which may serve both as an identity card and
facilitate recording of transactions on an ongoing basis.
 Borrower is required to produce the card cum pass book whenever he/she
operates the account.

4. Salient features of the Kisan Credit Card (KCC) Scheme

Eligible farmers to be provided with a Kisan Credit Card and a pass book or
card-cum-pass book.

Revolving cash credit facility involving any number of drawals and

repayments within the limit.

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 Limit to be fixed on the basis of operational land holding, cropping pattern
and scale of finance. Entire production credit needs for full year plus
ancillary activities related to crop production to be considered while fixing
limit.

Sub-limits may be fixed at the discretion of banks.

Card valid for 3 years subject to annual review. As incentive for good
performance, credit limits could be enhanced to take care of increase in costs,
change in cropping pattern, etc.

Each drawal to be repaid within a maximum period of 12 months

Conversion of loans also permissible in case of damage to crops due to

natural calamities

Security, margin, rate of interest, etc. as per RBI norms

Operations may be through issuing branch (and also PACS in the case of
Cooperative Banks) through other designated branches at the discretion of
bank.

Withdrawals through slips/cheques accompanied by card and passbook.

5. Advantages of the Kisan Credit Card Scheme

5.1 Advantages to farmers

Access to adequate and timely credit to farmers

Full year's credit requirement of the borrower taken care of

Minimum paper work and simplification of documentation for drawal of

funds from the bank.

Flexibility to draw cash and buy inputs

Assured availability of credit at any time enabling reduced interest burden

for the farmer

Sanction of the facility for 3 years subject to annual review and satisfactory
operations and provision for enhancement.

Flexibility of drawals from a branch other than the issuing branch at the
discretion of the bank

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 5.2 Benefits of the Scheme to the Banks

Reduction in work load for branch staff by avoidance of repeat appraisal

and processing of loan papers under Kisan Credit Card Scheme.

Minimum paper work and simplification of documentation for drawal of

funds from the bank.

Improvement in recycling of funds and better recovery of loans

Reduction in transaction cost to the banks.

Better Banker - Client relationships

6. Major Steps taken by NABARD:

 A Brochure on KCC Scheme highlighting the salient features, advantages

and other relevant information about the Scheme was brought out by
Head Office and ROs were asked to circulate the brochure to State govt.
departments, Commercial Banks, Cooperative Banks, RRBs and other
concerned agencies/officers so as to generate wider awareness about the
Scheme.
 Floor limit of Rs.5000/- for issue of KC Cards stands withdrawn.
 Studies on KCC Scheme have been entrusted to BIRD and NABARD
Staff College to facilitate feed back on the ground level issues/problems so
that changes, where necessary, could be considered.
 Studies on the implementation of the Scheme undertaken by NABARD
periodically.
 On the lines of instructions of RBI to Commercial Banks, Cooperative
Banks and RRBs have been advised that they may, at their discretion,
pay interest at a rate based on their perception and other relevant factors
on the minimum credit balances in the cash credit accounts under the
Kisan Credit Cards of farmers during the period from 10th to the last
day of each calendar month.
 NABARD has prepared a Model Scheme for providing financial
assistance for publicity campaign activities of Cooperative Banks under
KCC Scheme under CDF with a view to speed up the pace of
implementation of KCC Scheme.
 7. Progress in implementation of the Scheme

 Since launching in August 1998, around 8.38 crore Kisan Credit Cards
issued upto 31 March 2009 by Cooperative Banks, Regional Rural Banks
and Commercial Banks put together.

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  Scheme implemented in all States and Union Territories (except
Chandigarh, Daman & Diu and Dadra & Nagar Haveli) with all
Cooperative Banks, RRBs and Commercial Banks participating.

Supervisory Role of NABARD:

NABARD has been entrusted with the statutory responsibility of conducting

inspections of State Cooperative Banks (SCBs), District Central Cooperative Banks
(DCCBs) and Regional Rural Banks (RRBs) under the provision of the Banking
Regulation Act, 1949. In addition, NABARD has also been conducting periodic
inspections of state level cooperative institutions such as State Cooperative
Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies,
Marketing Federations, etc. on a voluntary basis. Although the prime objective of
the statutory inspections is to ensure general safety of public deposits, NABARD,
through these statutory inspections, has been simultaneously endeavoring for
further developing and strengthening the above institutions to enable them to play a
far more effective and efficient role in meeting the rural credit requirements.

The general banking environment emerging out of the financial sector reforms
introduced by GOI/ RBI has also since been extended to cover cooperative banks
and RRBs. While the capital adequacy norm has not yet been made applicable to
these banks, the other prudential norms viz., income recognition, asset classification
and provisioning, which were made applicable by Reserve Bank of India to the
commercial banking sector have been extended to cover SCBs and DCCBs to
SCARDBs. These norms had already been extended to RRBs. The exposure of these
institutions to the prudential norms also called for a suitable strategy to be adopted
by the NABARD to help these banks to adjust to the new financial discipline.

The changes mentioned above necessitated a review and revision of the strategy
adopted by the NABARD for the inspection and supervision of the cooperative
banks and RRBs. Under the revised strategy, a sharper focus of the NABARD's
inspection was given on the core areas of the functioning of banks pertaining to
Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Systems
Compliance(CAMELSC). Thus NABARD's focus in its statutory `on-site'
inspections is on core assessments leaving the collateral appraisals to supplementary
inspections. The micro level aspects are to be taken care of by the banks themselves
by way of internal inspections or by other agencies such as auditors. In this
direction, through a series of workshops and meetings held with the Chief
Executives and the Chief Auditors of cooperative banks, NABARD attempted to
ensure that the other areas, particularly relating to the internal checks and controls,
revenue and income realisation by way of interest on loans and deposits and other
routine features of carrying out general banking transactions were suitably taken
care of by the respective banks and their concurrent/ statutory audit systems.

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Board of Supervision (for SCBs, DCCBs and
RRBs) has been constituted by NABARD under Section 13(3) of NABARD Act,
1981 as an Internal Committee to the Board of Directors of NABARD. The broad
powers and functions of the Board of Supervision are : giving directions and
guidance in respect of policies and on matters relating to supervision and inspection,
reviewing the inspection findings, suggesting appropriate measures, reviewing the
follow-up action taken by Department of Supervision (DoS) on matters of frauds
and internal checks and control, identifying the emerging supervisory issues in the
functioning of cooperative banks/RRBs such as NPAs recovery, investment
portfolio, credit monitoring system, management practices, frauds, etc., and
suggesting necessary follow-up measures. It can also recommend appropriate
training for Inspecting Officers of NABARD for imparting necessary skills and
knowledge, suggest measures for strengthening of DoS, recommend issue of
directions by RBI, oversee the quality of inspections carried out and the reports
issued, review the information generated through off-site surveillance and other
supplementary vehicles, action taken thereon, and undertake any other functions
entrusted from time to time by the Board of Directors of NABARD.

The Board of Supervision, since its formation on 20 November 1999, has held 44
meetings till 30 June 2009 and reviewed the financial position of Cooperative Banks
and RRBs. Based on the observations of BoS, authorities concerned have been
apprised of the weaknesses.

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 Critical evaluation of NABARD:

• Income tax exemption:- NABARD was exempted for IT all these years, but
has lost that status from the year 2004 onwards and paid Rs.390 Cr by way
of IT for the year 2004-05 & Rs.400 Cr for the year 2005-06 and so on.
• Non-Performing Assets: - NABARD has the lowest non-performing assets
which is around 0.96%
• Stagnant Labour: - The number of employees working for NABARD is
almost stagnant from the last 10 years. The total numbers of employee’s are
5400
• KCC: - Till 31st March 2006 just 582.50 lakh Kisan Credit Card where issued

Two very important programs undertaken by NABARD are Watershed

Development & Wadi

1. Water-shed Development has been undertaken in Ahmednagar district of

Maharashtra and is replicated in other districts.
2. The other project is Wadi which is in Gujarat, around 10000 families in 200
villages are working like a family to develop 1 acre of Wadi in which they
would be growing Trees

Conclusion:

After studying the role and various refinancing activities of NABARD one can say
that there is a lot of scope for improvement, as the actual scenario is completely
different. All the functions of NABARD are adequate, but it is the execution of these
functions which is not happening correctly. Hope NABARD will improve its
execution plans and improve its performance in refinancing RURAL INDIA.

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