Letter of Transmittal

Preliminary.p65 1 7/14/2009, 5:45 PM

 Board of Directors
Umesh Chandra Sarangi
Chairman

Directors appointed
under Section 6(1)(b) of the
NABARD Act, 1981

Dr. Ram S. Tarneja Dr. Anup Kumar

Sinha

Directors appointed
under Section 6(1)(c) of the
NABARD Act, 1981

Usha Thorat Lakshmi Chand Shashi Rekha

Rajagopalan

Directors appointed
under Section 6(1)(d) of the
NABARD Act, 1981

T. Nandakumar Dr. Rita Sharma Amitabh Verma

Directors appointed
under Section 6(1)(e) of the
NABARD Act, 1981

Shakuntala Jakhu O. Nabakishore Dr. S. Chellappa Amarendra

Singh Pratap Singh

Dr. K. G. Karmakar
Managing Director

Preliminary.p65 3 7/14/2009, 5:45 PM

 Contents
Page No.
NABARD at a Glance

Key References

Principal Officers

Highlights .................................................................................................................................................................................. 1

I. Rural Economic Environment ...................................................................................................................................... 16

 Global Economy ........................................................................................................................................................ 16
 Indian Economy ......................................................................................................................................................... 17

II. Development Initiatives ................................................................................................................................................ 29

 Farm Sector ................................................................................................................................................................ 29
 Rural Non-Farm Sector .............................................................................................................................................. 36
 Financial Inclusion ..................................................................................................................................................... 39
 micro-Finance ............................................................................................................................................................ 40
 Research and Development Activities ........................................................................................................................ 46
 Training Personnel of RFIs ......................................................................................................................................... 48

III. Business Operations ...................................................................................................................................................... 50

 Production Credit ....................................................................................................................................................... 50
 Investment Credit ....................................................................................................................................................... 55
 Loans under Rural Infrastructure Development Fund ................................................................................................ 64
 NABARD Consultancy Services ................................................................................................................................. 72
 Management of Resources ......................................................................................................................................... 73

IV. Capacity Building of Client Institutions .................................................................................................................... 77

 Institutional Development .......................................................................................................................................... 77
 Supervision over Banks ............................................................................................................................................. 91

V. Organisation and Management ................................................................................................................................... 95

Auditors’ Report .................................................................................................................................................................... 102
Balance Sheet ....................................................................................................................................................................... 103
Profit and Loss Account 2008-09 ...................................................................................................................................... 104
Consolidated Financial Statements 2008-09 .................................................................................................................. 127
Regional Offices/Sub-Office/Training Establishments .................................................................................................... 133
Abbreviations ....................................................................................................................................................................... 135

Boxes

1.1 National Mission on Sustainable Agriculture ............ 28
2.1 Financial Inclusion Projects
sanctioned during 2008-09 ..................................... 39
2.2 Rating Support tp MFIs: Salient Features ................. 44
2.3 Capital Support to Start-up
MFIs: Salient Features .............................................. 45
3.1 Agricultural Debt Waiver and Debt Relief Scheme,
2008: Salient Features ............................................. 53
3.2 Cold Chain Infrastructure for Apples in HP ............. 60
3.3 Accretion to Rural Infrastructure and
Employment ............................................................. 67
3.4 Public Private Partnership for Rural
Infrastructure Projects ............................................. 68
4.1 Special Package for NER: Highlights ........................ 86
4.2 Asset-Liability Management ..................................... 92

Preliminary.p65 4 7/14/2009, 5:45 PM

 NABARD AT A GLANCE
(Rs. crore)

Sources of Fund 2009 2008 Net Uses of Funds 2009 2008 Net
Accretion Utilisation

Capital 2000 2000 0 Cash and Bank Balances 13842 9850 3992

Reserve & Surplus 9535 8603 932 Collateralised Borrowing

and Lending Obligation 133 464 -331

NRC (LTO) Fund 14016 13615 401 Investment in

a) GOI Securities 1555 1422 133

NRC (Stabilisation) Fund 1555 1544 11 b) ADFC Equity 16 16 0

c) AFC Equity 1 1 0
Deposits 482 106 376
d) SIDBI Equity 48 48 0

e) AICI Ltd. 60 60 0
Bonds and Debentures 23704 28700 -4996
f) NCDEX Ltd. & MCX Ltd. 6 6 0

g) Nabcons 5 5 0
Borrowings from GOI 354 370 -16
h) Mutual Fund/VCF 1005 764 241

Borrowings from i) Treasury Bills 157 260 -103

Commercial Banks 500 2500 -2000 j) Commercial Paper 143 0 143

Foreign Currency Loan 498 508 -10 Loans and Advances

a) Production &
Certificate of Deposits 1816 1422 394 Marketing Credit 16896 17381 -485

b) Conversion of Production
Commercial Paper 181 0 181 Credit into MT Loans 20 118 -98

c) Liquidity Support 2591 1940 651

Term Money Borrowings 244 0 244 d) MT & LT Project Loans 33335 32401 934

e) LT Non Project Loans 252 290 -38

RIDF Deposits 47023 30593 16430 f) Other Loans 48 27 21

g) RIDF Loans 45616 30649 14967

STCRC Fund 4622 0 4622
h) Co-finance
(Net of Provision) 94 66 28
Other Liabilities 4279 3089 1190
Fixed Assets 247 257 -10

Other Funds 7367 5656 1711 Other Assets 2106 2681 -575

Total 118176 98706 19470 Total 118176 98706 19470

Preliminary.p65 5 7/14/2009, 5:45 PM

 KEY DATA REFERENCES
Page Particulars Unit Numerical Value Amount (Rs. crore)
No. 2007-08 2008-09 2007-08 2008-09
Economic Indicators
17 Overall GDP1 % Growth 9.0 Q
6.7 RE
- -
17 Agri GDP1+ % Growth 4.9 Q 1.6 R E - -
18 Share of Agri GDP in total GDP % 18Q 17 R E - -
21 Foodgrains production million tonnes 231 230 - -
21 Oilseeds production million tonnes 30 28 - -
21 Sugarcane production million tonnes 348 289 - -
21 Cotton production million bales++ 26 23 - -
2
20 South-west Monsoon % deviation from normal 5 -2 - -
20 North-east Monsoon2 -32 -31 - -
24 GLC % increase 11 13 2,54,658 2,87,149
25 KCC Issued lakh 85 68 - 38,245 CL
Development Initiatives
29 Watersheds No. 63 S 38 S 28 D 58 D
33 NABARD-KfW Projects No. 8 8 242 D 32 D
31 FIPF- projects No. 29 S 14 S 2G 2
30 Tribal development projects No. 16 S 74 S 49 G 203 G
31 FTTF No. of projects - 12 S - 2S
32 Farmers’ Club No. of clubs 5,277 9,989 - -
36 RIF- promotional programmes No. of projects 29 S 65 S 8S 12 S
36 DRIP - Units set up lakh 0.7 1 1,178 GLC 1,378 GLC
36 - Employment generated lakh persons 1.5 2 275 RF 133 RF
38 REDP No. 1,422 2,083 8G 13 G
38 SCC Issued lakh 1.6 1.5 679 CL 628 CL
39 FITF & FIF No. of projects - 9 - -
40 SHG Credit Linked lakh 5.52 10.81 2,542 BL 11,132 BL
46 R&D Fund- Sanction No. of projects 10 S 12 S 2S 0.87 S
46 - Disbursement 7C 10 C 7D 9D
Business Operations
50 Financial Support by NABARD - - - 38,767 50,577
Refinance - ST Credit
51 ST (SAO) - SCB No. 18 20 14,826 S 15,448 S
52 - RRB No. 75 72 2,940 S 3,547 S
52 ST (OSAO) - RRB - - - 151 S 191 S
51 Weavers’ - SCB No. 8 5 332 S 266 S
56 Refinance - Investment Credit 9,046 D 10,535 D
58 Farm Sector - - - 3,777 D 4,172 D
58 NFS - - - 2,748 D 2,707 D
58 SHG - - - 1,616 D 2,620 D
59 Co-financing projects No. 12 S 12 S 27 D 37 D
65 RIDF Loans - Sanction No. of projects 36,964 S 85,527 S 12,795 S 14,719 S
65 - Disbursement - - 8,035 D 10,459 D
69 ERR on rural bridge projects
under RIDF % 44 38 - -
72 Consultancy Assignments - Contracted No. of projects 321 109 9 17
72 - Completed 366 122 8 10
74 Market Borrowings - - - 33,606 27,779
74 Total Working Funds - - - 98,706 1,18,176
Performance of RFI
ST Co-operatives
78 & 79 SCB in profit @ No. 27 26 p 548 $ 466 $P
78 & 79 DCCB in profit @ No. 271 261 P -32 $ -28 $P
LT Co-operatives
78 & 80 SCARDB in profit @ No. 9 9P 239 $ 99 $P
78 & 80 PCARDB in profit @ No. 371 350 P -69 $ -184 $P
ST Co-operatives - NPA Position
79 SCB- NPA @ % to loan O/S 14 12 P 6,704 6,169 P
79 DCCB - NPA @ % to loan O/S 18 18 P 16,374 18,741 P
LT Co-operatives - NPA Position
80 SCARDB - NPA@ % to loan O/S 30 33 P 5,643 6,125 P
80 PCARDB - NPA @ % to loan O/S 36 44 P 4,316 5,140 P
RRB
89 RRB in profit No. 82 * 81 * 1,384 $ 1,746 $P
89 & 90 RRB- NPA Position % to loan O/S 6.0 5.6 P 3,566 -
91 Inspection of banks^@@ No. 385 343 - -
91 Co-operative banks@@ No. 292 273 - -
91 RRB@@ No. 74 51 - -
Q : Quick Estimate RE : Revised Estimate P : Provisional S : Sanction D : Disbursement RF : Refinance 1 : At Factor Cost at 1999-2000 prices
BL : Bank Limit + : Includes agriculture, forestry and fishing ‘++: Of 170 kgs each 2: During calendar year ^: Voluntary inspections
‘@@: Statutory Inspections CL : Credit Limit *: After amalgamation G: Grant assistance sanctioned
‘-’ : indicates loss @ : Data pertains to financial years 2006-07 & 2007-08 C: Completed $ : Net amount

Preliminary.p65 6 7/14/2009, 5:45 PM

 PRINCIPAL OFFICERS
(31 March 2009)
EXECUTIVE DIRECTORS

S. K. Mitra Amaresh Kumar P. L. Behera Dr. Prakash Bakshi

CHIEF GENERAL MANAGERS

(Rural Development Banking Service)

D. B. Gore K. V. Raghavulu V. Ramakrishna Rao Sukhbir Singh Madan Mohan@ Bhawar Puri J. R. Sarangal
(Karnataka) (Tamil Nadu) Maharashtra (Kerala) (Punjab & Haryana)

B.B.Mohanty A. K. Mathur C. R. Patnaik B. S. Shekhawat G. S. Menon S. G. Rathod R. Narayan

(Jammu & Kashmir) (Orissa) (Rajasthan)

A. K. Jain S. Mohapatra C. K. Gopalakrishna P. Satish K. C. Shashidhar Pankaj Pandit Dr. Venkatesh Tagat
(Assam) (Madhya Pradesh) (Jharkhand)

S. K. Chatterjee* S.C.Kaushik P. Mohanaiah S. T. Raghuraman P. Das B. K. Mahunta Suraj Bhan

(West Bengal) (Himachal Pradesh) (Uttarakhand)

J. C. Mishra J. K. Kanojia D. P. Mishra M. V. Ashok V. Sreenarayanan G. C. Panigrahi S. G. Siddesh

(Uttar Pradesh) (NBSC) (Gujarat)

@ Chief Executive Officer, Nabcons

* Officer on Special Duty, Bankers Institute of Rural Development

Preliminary.p65 7 7/14/2009, 5:45 PM

 K. K. Gupta T. Moharana S. Akbar A. K. Srivastava B. B. Nayak
(Chhattisgarh) (Andhra Pradesh)

CHIEF GENERAL MANAGERS

(Economic / Legal / Technical Service)

Dr. A. K. Bandyopadhyay U. N. Srivastava Dr. K. Ravindra Rao R. B. Haranal Dr. Sandip Ghosh
(Economic) (Legal) (Technical) (Technical) (Technical) (Bihar)

GENERAL MANAGERS IN-CHARGE OF REGIONAL OFFICES/

TRAINING INSTITUTIONS

Arvind Mohan P. C. Mohanty S. Chakrabarty P. C. Sahoo K. Jindal

(Meghalaya) (RTC, Mangalore) (RTC, Bolpur) (Mizoram) (Tripura)

H. R. Dave A. P. Sandilya B. G. Mukhopadhyay

(New Delhi) (Goa) (Arunachal Pradesh)

DEPUTY GENERAL MANAGERS IN-CHARGE OF

REGIONAL OFFICES/SUB-OFFICE

Subrata Gupta K. C. Panda A. B. Das R. Nithyanandan

(Sikkim) (Nagaland) (Manipur) (Port Blair Sub-Office)

ASST. GENERAL MANAGER IN-CHARGE OF SRINAGAR CELL

P. L. Negi

Preliminary.p65 8 7/14/2009, 5:45 PM

 Highlights

Rural Economic Environment

1. The international financial sector witnessed a commodities during the year was Rs.6,27,303 crore,
major collapse during 2008-09, brought about by the registering a decline of 33 per cent compared to the
sub-prime crisis in USA. The tremors of the global previous year. The Forward Market Commission,
economic crisis were felt in India too, though with permitted NCDEX to accredit the warehouses of
lower intensity. The contribution of agriculture and producers/processors and similar participants, within 50
allied sectors to the growth rate of the GDP during km of the municipal limits of the delivery centres to
2008-09 was 1.6 per cent as compared to 4.9 per cent enable such participants to deliver their goods on the
during 2007-08. exchange platform.

Indian Economy 6. In spite of the ‘near normal’ precipitation during

2. The Indian economy registered a GDP growth southwest monsoon 2008, the erratic temporal as
of 6.7 per cent (at 1999-2000 prices) during well as spatial distribution of rainfall affected the
2008-09 due to consistent high growth trend of the farmer community. The cumulative rainfall recorded
services sector (9.7%). during the entire southwest monsoon season (June-
September) was 2 per cent lower than the normal
3. The share of the agriculture and the industry Long Period Average rainfall. The northeast monsoon
sector in total GDP, however, declined to 17 and was subdued, resulting in the cumulative rainfall
26 per cent, respectively, while that of the services being 31 per cent below normal. Of the
sector increased to 57 per cent during 2008-09. The 36 meteorological sub-divisions, 30 received normal
savings and investments ratios during the Tenth Plan rainfall, while 2 recorded excess and 4 deficient
stood substantially higher at 31.4 per cent each rainfall.
compared to the Ninth Plan. Annual inflation (y-o-y),
7. The crop coverage during kharif 2008 at
measured in terms of variation in wholesale price index
101.5 million ha. showed a drop of 2.4 million ha. In
(WPI) was 0.26 per cent, as at end-March 2009, owing
spite of shortfall in northeast monsoon, sown area
to fall in commodity prices reflecting global trends.
under rabi crops increased by 1.8 million ha. Overall
4. The relative share of private consumption and foodgrains production during 2008-09 is estimated at
GFCF in GDP during the Tenth Plan stood at 61 and 230 million tonnes as against the target of 233 million
27 per cent, respectively. Gross domestic savings and tonnes and the previous year’s production of
investments, as proportion to GDP at 38 and 39 per 231 million tonnes. During the year, production of all
cent, respectively, during 2008-09, improved by crops, except rice, is expected to be lower compared to
2 percentage points over 2007-08. last year, the reduction being largest in the case of
sugarcane (17%).
5. The share of agriculture in total exports of the
country improved from 10 per cent in 2006-07 to 8. Tea production in the country rose to
11 per cent in 2007-08. However, both total exports 9.81 lakh tonnes during 2008-09. To fund re-plantation
and imports registered a growth of 3.4 and 14.3 per and rejuvenation activities aimed at improving
cent, respectively, during 2008-09 over the previous productivity of plantation crops, GoI during 2008-09
year. Cumulative value of trade in agricultural has set up Special Purpose Funds for tea, rubber,

Highlight.p65 1 7/15/2009, 10:36 AM

 coffee and cardamom. The Funds shall be operational Rs.36,762 crore and Rs.26,724 crore achieving
till the end of the Eleventh Plan. The contribution of around 115, 67 and 89 per cent of the targets,
the livestock and poultry sector to agriculture and total respectively.
GDP during 2006-07 was 32 and 5 per cent,
10. The Kisan Credit Card (KCC) Scheme has
respectively.
facilitated in augmenting the GLC flow for crop loans.
In addition to ST credit and term loans for agriculture
9. As against the target of Rs.2,80,000 crore and allied activities, a certain component of loan
of credit flow to agriculture for 2008-09, the banking through KCC also covers consumption needs. During
system disbursed Rs.2,87,149 crore achieving 102 per the year, 67.95 lakh cards were issued with a credit
cent of the target. Commercial banks, co-operative limit of Rs.38,245 crore, taking the cumulative to
banks and RRB disbursed Rs.2,23,663 crore, 828.70 lakh cards as on 31 March 2009.

Development Initiatives
Farm Sector aimed at enabling integrated development through
credit and convergence of development programmes in
11. The corpus of the Watershed Development
these blocks. As on 31 March 2009, PPID was being
Fund (WDF) was augmented by Rs.561 crore during
implemented in 40 blocks across 6 states. Keeping in
2008-09, taking the cumulative amount to
view the identical nature of interventions under PPID
Rs.1,125 crore as on 31 March 2009. During the year,
and Village Development Programme (VDP), it was
38 watershed projects were sanctioned taking the
decided to restrict the duration of PPID to three years
cumulative number to 454, spread over 94 districts in
only, except wherever it was felt necessary to merge
14 States. With a total commitment (loan and grant)
with VDP. NABARD through ‘Capacity Building for
of Rs.257 crore under these projects, an area of
Adoption of Technology’ (CAT) scheme undertakes
4.54 lakh ha. is expected to be covered. Under the
sensitisation of farmers to facilitate them in adopting
Prime Minister’s Relief Package for 31 districts in four
new/innovative methods of farming through exposure
States, 1.90 lakh ha. has been taken up for
visits and training. During the year, 116 exposure visits
implementation during the year, taking the cumulative
involving 3,048 farmers were conducted under CAT on
area covered to 5.88 lakh ha., involving total financial
vermi-culture, organic farming, poly-house technology,
commitment of Rs.706 crore. During 2008-09, an
cultivation of medicinal and aromatic crops, etc., in
amount of Rs.49.83 crore and Rs.8.10 crore were
collaboration with research institutes, KVK and
disbursed as grant and loan, respectively.
Agriculture Universities.
12. NABARD is implementing the participatory
watershed development programme under the Special 14. Assistance under NABARD’s Tribal Development
Plan for Bihar component of Rashtriya Sam Vikas Fund (TDF), created in 2004 with an initial corpus of
Yojana (RSVY) to develop 80,000 ha. of wasteland in Rs.50 crore, is provided for developing the tribal
eight districts of south Bihar with an allocation of dominated areas through the wadi concept. It also
Rs.60 crore. During 2008-09, 18 watershed projects includes taking-up micro-enterprises by the landless,
with grant assistance of Rs.21.60 crore were sanctioned women empowerment, community health, training and
and Rs.3.61 crore disbursed. capacity building and building people’s organisations.
As on 31 March 2009, the balance outstanding in the
13. The pilot project for integrated development fund was Rs.575 crore. During 2008-09, assistance of
(PPID) of backward blocks launched in 2003 was Rs.203 crore was sanctioned for 74 projects benefiting
expanded to 139 blocks across 16 states. The project 61,924 tribal families in 14 States.

Highlight.p65 2 7/15/2009, 10:36 AM

 15. During the year, 14 projects involving grant During the year, 65 projects with financial support of
assistance of Rs.1.81 crore in six States were Rs.12.37 crore were sanctioned.
sanctioned from the Farm Innovation and Promotion
Fund (FIPF). Projects financed included commodity 19. The District Rural Industries Project (DRIP),
exchange, rainfed rabi cropping, ultra high density, introduced as a pilot project during 1993-94, was
orcharding in guava, village farm development, extended in phases to cover 106 districts by end-March
protected vegetable cultivation in villages and efficient 2007. During 2006-2009, the project was phased out
use of carbon and plant nutrients under dryland in 43 districts. NABARD would however, continue to
agriculture. support various deserving developmental interventions
in these districts. During 2008-09, GLC flow in
16. The Farmers Technology Transfer Fund (FTTF)
63 DRIP districts covered under various phases reached
was operationalised from 1 April 2008 with a corpus of
Rs.1,378 crore and refinance availed was Rs.133 crore.
Rs.25 crore with the aim of promoting technology
In all, 1.05 lakh units were set up, generating
transfer for enhancing production and productivity
employment for 2 lakh persons.
in agriculture and farm related activities. During
2008-09, 12 proposals involving a grant assistance of
20. The ‘Scheme for Strengthening of Rural Haats’
Rs.233 lakh in 6 states were sanctioned for activities
introduced in 1999 in DRIP districts, was extended to
like oil-production, turmeric processing, information and
all district, Village Bazaar Boards, SHG, NGO and to
commodity trading center, technology transfer for seed
PRI/PACS during the year. Under the scheme, the
production, establishment of Outreach Center for North
ceiling was raised from Rs.3 lakh to Rs.5 lakh and
and Middle Andamans districts, etc. Further, grant
coverage extended to include permanent structures.
assistance of Rs.80.20 lakh was sanctioned for
During 2008-09, grant support of Rs.186 lakh was
22 Farmers’ Training and Rural Development Centres.
During the year 9,989 Farmers’ Clubs (FC) were sanctioned for infrastructure in 46 haats in 14 states.
launched, taking the total number of clubs to 38,215
covering 87,724 villages in 581 districts as on 21. To promote rural industrialisation through the
31 March 2009. NABARD reviewed its policy for cluster approach, NABARD had decided to
supporting FC through various agencies and decided to develop 55 clusters within a period of 3-5 years.
extend uniform support of Rs.10,000 for three years to During 2008-09, 37 participatory, 1 intensive and 1
all commercial banks, RRB and co-operative banks eco-tourism clusters were sanctioned involving grant
and grassroot level institutions like NGO, PRI, KVK, assistance of Rs.311 lakh. In view of GoI’s special
Post Offices, etc. emphasis on developing the handloom sector,
NABARD decided to develop 50 handloom clusters in
17. Under externally aided projects supported by partnership with other developmental agencies. As on
KfW, which are at various stages of implementation, 31 March 2009, 59 handloom clusters in 16 states
an amount of Rs.32.01 crore was disbursed and were approved.
Rs.37.25 crore was received as grant assistance during
the year. 22. NABARD has been supporting the Rural
Entrepreneurship Development Programme (REDP) and
the Skill Development Programme (SDP) as a proven
Rural Non-Farm Sector model for generating employment opportunities in rural
18. Under the Rural Innovation Fund (RIF) areas. During 2008-09, grant support of Rs.1,304 lakh
constituted in 2005, support is provided for innovative was provided for 2,083 REDP/SDP covering 50,264
projects in farm, non-farm and micro-Finance sectors rural youth. Further, an amount of Rs.88 lakh was
with potential to generate employment opportunities. sanctioned to RUDSETI for capital expenditure. During

Highlight.p65 3 7/15/2009, 10:36 AM

 the year, 1.50 lakh Swarozgar Credit Cards (SCC) Financial Inclusion Technology Fund (FITF). While the
involving credit limits of Rs.628 crore were issued. As FIF is responsible for supporting developmental and
on 31 March 2009, the banking sector had issued 9.84 promotional activities to secure greater financial
lakh SCC involving an aggregate credit limit of inclusion, the FITF will focus on enhancing investment
Rs.4,007 crore. in information and communication technology with the
objective of promoting Financial Inclusion. Both the
23. NABARD continued to support gender Funds have been set up with a corpus of Rs.500 crore
development programmes through its various schemes each. During 2008-09, four and five projects were
like Marketing of Non-Farm Products of Rural sanctioned under FIF and FITF, respectively.
Women (MAHIMA) and Assistance to Rural Women in
Non-Farm Development (ARWIND) programme. During micro-Finance*
the year, grant assistance of Rs.6 lakh and Rs.7 lakh
27. During 2008-09, 10.81 lakh new SHG were
were released under MAHIMA and ARWIND,
credit linked and bank loan of Rs.11,132 crore
respectively. During 2008-09, the scheme for setting-up
disbursed. The programme has covered more than
Women Development Cells (WDC) was modified. As
7.01 crore poor households, making it the largest
on 31 March 2009, 102 WDC in 56 RRB, 43 DCCB
micro-Finance (mF) programme in the world. As on
and 3 SCARDB were sanctioned.
31 March 2008, 50.09 lakh SHG maintained savings

24. NABARD supported 213 marketing events/ worth Rs.3,785 crore with the banking sector. During

exhibitions across the country involving grant assistance 2007-08, bank credit of Rs.8,849 crore and

of Rs.111 lakh. The pilot scheme for setting-up rural Rs.1,970 crore was disbursed to 12.27 lakh SHG

marts launched by NABARD in 2005 was extended to (including 2.46 lakh under SGSY) and 518 MFI,

all States. During the year, 73 rural marts were respectively.

sanctioned involving grant support of Rs.73 lakh. The

28. During 2008-09, grant assistance of
provision of ‘Product Gallery’ in Post Offices for
Rs.1,769 lakh was sanctioned to various agencies for
displaying SHG products was extended to all states.
promoting 59,359 groups, taking the cumulative

25. NABARD continued to provide financial assistance sanctioned to Rs.7,888 lakh for

support to BIRD - Lucknow, RTC at Mangalore and 4.36 lakh groups.

Bolpur, NIRB - Bangalore, MDMI - Shillong and

29. Under NABARD’s capacity building programmes
IIBM-Guwahati for imparting training to participants in
for its partner institutions, 25 exposure/field visits
various aspects of rural credit. Further, 45 programmes
for bank/NGO officials to SHG and pioneering
covering 1,050 officers of client banks were conducted,
institutions, 324 awareness-cum-refresher programmes
involving expenditure of Rs.118 lakh.
for participants from banks and NGO, 45 sensitisation
programmes were arranged during the year. NABARD
Financial Inclusion
also extended support for conducting 3,122 awareness
26. The Committee on Financial Inclusion, headed creation and capacity building programmes covering
by Dr. C. Rangarajan, suggested measures to bring the 1,41,984 SHG members.
excluded population into the ambit of the financial
system. Based on the Committee’s recommendations, 30. To motivate and assist members of matured
GoI entrusted NABARD with the setting-up of two SHG to take up income generating activities on a
funds, viz., Financial Inclusion Fund (FIF) and sustainable basis, NABARD continued to promote

* Due to change in data and MIS, the reporting is for the position as on 31 March 2008.

Highlight.p65 4 7/15/2009, 10:36 AM

 micro-enterprise development by SHG members. Under Rs.33.66 lakh to Essomi Foundation Trust for
the Micro-Enterprise Development Programme (MEDP), setting-up Resource Centre at Itanagar. The ‘State
564 such programmes covering 41,030 SHG members Support Project on SHG’ in Tripura aims to promote
were conducted during the year. The pilot project livelihood activities, credit link 11,500 existing SHG
launched during 2005-06 for promotion of micro- and form and credit link 35,000 new SHG.
enterprises among members of matured SHG, is being
implemented in nine districts across nine States, 34. NABARD introduced a scheme for supporting
involving 14 NGO acting as ‘Micro-Enterprise small-scale Activity Based Groups (ABG) with the
Promotion Agency (MEPA)’. Cumulatively 6,107 objective of capacity building, production/investment
micro-enterprises were established under the project, credit and market related support. Groups engaged in
involving bank credit of Rs.535 lakh, as on homogenous economic activities would be formed to
31 March 2009. improve production efficiency and achieve better
returns through economies of scale. It has both grant
31. NABARD selectively extends Revolving Fund and loan components.
Assistance (RFA) to MFI for experimenting with
various mF models. During the year, RFA of 35. Recognising the growing role of SHG federations
Rs.6.35 crore was sanctioned to four agencies taking and their value addition to SHG functioning,
the aggregate support to Rs.43 crore. In addition, NABARD, during the year, decided to support such
NABARD provides financial assistance to commercial federations on a ‘model neutral’ basis. Broad norms
banks and RRB to avail the services of credit rating for deciding grant of financial assistance were
agencies for the purpose of rating of MFI and formulated. Support would be extended to federations
empowering them to intermediate between the lending by way of grant assistance for training, capacity
banks and the clients. During the year, support building, exposure visits of SHG members, etc. During
of Rs.3.40 lakh was extended to four agencies for the year, grant assistance of Rs.11.54 lakh was
availing credit rating services. The Scheme to provide sanctioned to one federation.
capital/equity support to MFI was introduced by
NABARD to enable them to leverage capital/equity for 36. During the year, Rs.35 crore was utilised from

accessing funds from banks, providing financial services the Micro-Finance Development and Equity Fund

at an affordable cost to the poor, and achieve (MFDEF) for mF related activities. The North-Eastern

sustainability in their credit operations over a period of Council (NEC), Shillong parked a fund of Rs.80 lakh

3-5 years. During 2008-09, capital/equity support of with NABARD during the year for facilitating

Rs.11.75 crore was sanctioned to 13 agencies. miscellaneous training interventions of government/

bank officials, NGO, SHG from States in NER and
32. NABARD in collaboration with the Rajiv Gandhi Sikkim. As on 31 March 2009, the Fund was utilised
Charitable Trust (RGCT) has designed the Rajiv to the extent of Rs.72 lakh.
Gandhi Mahila Vikas Pariyojana (RGMVP), to
promote, credit link and form SHG Federations in 37. Under the ‘NABARD-GTZ Rural Finance

select districts of Uttar Pradesh. Till date 7,808 SHG Programme’, training modules were developed to

were promoted and 3,972 credit linked in 3 districts of sensitise bank branch managers and SHG members

Uttar Pradesh as at end-March 2009. for minimising risks in lending through early warning
system and circulated to training institutions involved
33. NABARD sanctioned Rs.39.15 lakh for in mF. A ‘High Level Policy Conference on
implementing the project ‘micro-Finance Vision 2011’ micro-Finance in India’ was conducted with GTZ
to Government of Arunachal Pradesh and support for mF practitioners from India and abroad to

Highlight.p65 5 7/15/2009, 10:36 AM

 share their best practices. A study was undertaken to on agriculture and rural development, allied sector,
assess the transaction cost of various agencies and MFI agri-business and social development, were received
in purveying mF through SHG or other types of groups. from 34 students, involving financial outlay of
The NABARD-KfW programme, ‘Financial Cooperation Rs.10.48.
with India-Capitalization Program SEWA Bank’ aims
at sustainable improvement in access of poor women
Other Development Initiatives
to micro-credit, both in rural and urban areas. During 40. During the year, NABARD conducted 434
the year, KfW released grant assistance of Rs.3 crore to training programmes through its training establishments
SEWA bank under the project. for the benefit of 10,949 personnel of RFI and
supplemented the efforts of other training institutions in
Research and Development Activities this area by providing technical and financial support.
38. During the year, an amount of Rs.876 lakh was A Centre for Micro-Finance Research (CMR) was set up
utilised from the R&D Fund as grant assistance for at BIRD, Lucknow and four sub-centres of CMR were
research projects/studies, training and other activities set up in Guwahati, Chennai, Patna and Jaipur to
like conduct of seminars, preparation of occasional provide focused attention on mF related issues.
papers, etc., taking the cumulative disbursement to Financial support of Rs.331 lakh from CDF was
Rs.109 crore. During 2008-09, 12 research projects/ extended to JLTC, ACSTI and ITI for conducting 303
studies involving grant assistance of Rs.87 lakh were programmes covering 6,146 participants. National
sanctioned while 10 projects/studies sanctioned earlier Institute of Rural Banking (NIRB), Bangalore was
were completed. provided Rs.5.82 lakh for conducting 25 training
programmes. BIRD conducted specially designed
39. Grant assistance of Rs.78 lakh was sanctioned training programmes for the newly constituted RRB on
during the year to various universities and research subjects like Core Banking Solutions (CBS), CRAR
institutes for conducting 103 conferences, seminars and norms, prevention of frauds and leakages and winning
workshops. Two Occasional Papers were brought out trust. BIRD has been identified for setting-up a
during the year. In addition, Rs.727 lakh was utilised ‘National Training Certification Centre for CCS’ to
from the Fund during the year for capacity building of address the training requirements of the staff of
the staff of Rural Financial Institutions (RFI) in the co-operative credit institutions after implementation of
NER. Under the Summer Placement Scheme, reports the Revival Package.

Business Operations
41. NABARD through its refinance operations has Production Credit
been facilitating the banking sector to augment credit
42. Short-term (ST) refinance support for SCARDB
support for production and investment purposes in the
was continued during 2008-09 and made available at
rural and agriculture sectors, in addition to its
4.5 per cent for lending to ultimate borrowers at
continued involvement in developing rural infrastructure
7 per cent p.a. During the year, Rs.64 crore was
by providing loans under RIDF to State Governments
disbursed to Kerala and Rajasthan SCARDB for ST-
for such projects. The total financial support extended
SAO purposes.
by NABARD increased by 30 per cent and stood at
Rs.50,577 crore during 2008-09 as against Rs.38,767 43. The quantum of refinance support for
crore during 2007-08. co-operative banks for ST-SAO continued to be linked

Highlight.p65 6 7/15/2009, 10:36 AM

 to their net NPA levels for profit-making SCB with no credit institutions which were overdue as on
accumulated losses and with gross NPA for others. The 31 December 2007 and remained unpaid till
ST credit limits sanctioned during 2008-09 29 February 2008 and (ii) before 31 March 1997 but
(April-March) for SCB and RRB were Rs.15,448 crore were rescheduled/restructured in 2004 and 2006
and Rs.3,547 crore, against which they have reached through GoI’s special package/s and in the normal
the maximum outstanding levels of Rs.13,935 crore course upto 31 March 1997, as per RBI guidelines on
and Rs.2,869 crore, respectively. A consolidated ST account of natural calamity. NABARD is the nodal
(others) limit was sanctioned to SCB on behalf of implementing agency for co-operative banks/RRB. As
eligible DCCB for lending to agriculture/allied and against claims for Rs.29,724 crore, an amount of
marketing activities. During 2008-09, Rs.176 crore was Rs.16,615 crore was disbursed to SCB (63%),
sanctioned under this line of credit against which SCARDB (14%) and RRB (23%). To enable
utilisation was Rs.64 crore. co-operative banks and RRB tide over the temporary
liquidity crunch owing to the ADWDR Scheme,
44. During the year, ST (Weavers’) credit limits
NABARD provided liquidity support of Rs.1,551 crore
aggregating Rs.266 crore were sanctioned to Andhra
and Rs.302 crore to SCB and RRB, respectively, at
Pradesh, Orissa, Puducherry, Tamil Nadu and West
9 per cent p.a. during kharif 2008. During rabi
Bengal SCB for financing production/procurement and
2008-09, liquidity support of Rs.2,993 crore was
marketing activities of Weavers’ Co-operative Societies
sanctioned at 4.5 and 5.5 per cent to SCB and RRB,
and maximum utilisation was Rs.167 crore. With a
respectively, against which Rs.2,415 crore was utilised.
view to reviving the handloom sector, NABARD has
attempted to finance weavers’ outside the co-operative
fold by forming Handloom Weavers’ Groups (HWG) 47. The Union Budget 2008-09 announced the
and financing Master Weavers. As at end-March 2009, continuance of interest subvention to enable banks to
of the 2,968 HWG formed 1,781 were credit linked. provide crop loans upto Rs.3 lakh to farmers at an
interest of 7 per cent p.a., envisaging suitable interest
45. NABARD continued to provide long-term loans subvention to NABARD and 3 per cent interest
to State Governments for contributing to the share subvention on own involvement of co-operative
capital of co-operative credit institutions. However, banks and RRB. As on 31 March 2009, against the
as per revised policy, loans will be provided on a
aggregate receipt of Rs.3,109 crore from GoI,
reimbursement basis. During 2008-09, profit earning
aggregate utilisation stood at Rs.2,539 crore. Interest
SCB/DCCB with no accumulated losses or net NPA
subvention payable for 2008-09 is estimated at
not > 10 per cent as on 31 March 2007 or 2008
Rs.2,565 crore.
(whichever was lower) were considered eligible. No loan
was sanctioned during the year, though an amount of
Rs.18 crore was drawn by governments of Haryana, 48. NABARD is the nodal agency for implementing
Kerala and Orissa against previous year’s sanctions. the ‘Package for Restructuring of Term Loans of
Co-operative Sugar Mills’ for co-operative banks. As
46. The Union Budget 2008-09 had announced the against Rs.139 crore received from GoI under the
Agricultural Debt Waiver and Debt Relief (ADWDR) package, interest subvention of Rs.116 crore was
Scheme, 2008, to address the indebtedness of farmers, released to co-operative banks in respect of
especially small and marginal farmers. The Scheme 75 co-operative sugar mills. NABARD is also the nodal
covered all direct agricultural loans disbursed, (i) to agency for routing claims of co-operative banks under
farmers between 31 March 1997 and 2007 by the scheme for ‘Providing Financial Assistance to Sugar
Scheduled Commercial Banks, RRB and co-operative Undertakings–2007’.

Highlight.p65 7 7/15/2009, 10:36 AM

 Investment Credit This requirement was waived off for category ‘A’ and
profit making SCB/DCCB.
49. Consequent to the Government’s announcement
of ADWDR Scheme, 2008, NABARD agreed to 51. During 2008-09, refinance disbursement to
reschedule instalments of principal amount from commercial banks, SCB, SCARDB and RRB
SCARDB falling due during June-December 2008 to aggregated Rs.10,535 crore as against Rs.9,046 crore
31 January 2009 or any other earlier date preferred during the previous year. Commercial banks continued
by the SCARDB, subject to certain conditionalities. to be the single largest group availing refinance (56%),
During the year, NABARD rescheduled an amount of while the share of RRB (18%) and that of
Rs.1,061 crore. Further, to enable SCARDB tide over co-operative banks (26%) declined considerably during
the liquidity crunch in the wake of the scheme, the the year.
Bank decided to extend interim finance, subject to
conditionalities, even if they had defaulted to 52. The flow of refinance varied widely across
NABARD. During the year, Rs.70 crore was sanctioned regions. Southern, northern and central regions
to Madhya Pradesh SCARDB. accounted for 41, 25 and 14 per cent, respectively, of
the total refinance disbursed during the year. The share
50. During 2008-09, (i) restrictions on ceilings for of southern and northern regions increased while that
total financial outlay (TFO) and refinance under of central region declined by around 5 percentage
Automatic Refinance Facility (ARF) for commercial points during 2008-09. The share of NER declined
banks, RRB, SCB and PUCB were completely further. Sector-wise, non-farm sector, including rural
removed, (ii) ceiling on TFO for SCARDB was raised housing, accounted for 26 per cent followed by
to Rs.50 lakh; cent per cent refinance was made SHG (25%). While the share of farm mechanisation
available for thrust areas and for all purposes in hilly (14%) declined, that of land development (9%)
States, NER & Sikkim and Andaman & Nicobar and minor irrigation (5%) registered increase during the
Islands, and (iii) refinance extended to Section 11 year.
non-compliant SCB/DCCB in States that executed
53. Under the scheme for financing purchase of land
MoU for implementing the recommendations of the
for agriculture purposes, bank loan of Rs.20 crore and
Task Force on Revival of STCCS. The relaxations in
refinance support of Rs.17 crore was made available to
eligibility criteria in respect of recovery, gross/net NPA,
607 and 548 borrowers, respectively, in eight states
hitherto available to NER, were extended to other hilly
during the year.
States. SCB, SCARDB and RRB continued to be
classified under A/B/C/D categories based on their 54. Of the total refinance disbursed under NFS
gross/net NPA, recovery position, net worth and during the year, Rs.268 crore was towards rural
profitability. However, (i) SCB with gross NPA > 20 housing (10%). Agency-wise, commercial banks
per cent, (ii) SCARDB with recovery < 30 per cent, accounted for the major share (57%), followed by
(iii) commercial banks/PUCB/ADFC/NEDFi with net co-operative banks (33%) and RRB (10%). As on
NPA > 3 per cent, and (iv) RRB with deposit erosion 31 March 2009, the cumulative refinance support
> 30 per cent were considered ineligible for availing under NFS stood at Rs.24,061 crore.
refinance during the year. Release of refinance to
SCARDB/SCB, eligible Section 11 non-compliant SCB/ 55. During 2008-09, NABARD extended refinance of
DCCB and non-scheduled SCB (for farm sector) was Rs.2,620 crore under the SHG-bank linkage
only against government guarantee (if not forthcoming, programme. As on 31 March 2008, 36.26 lakh SHG
alternative security like pledge of government securities accounts had loans outstanding worth Rs.17,000 crore
or fixed deposit receipts issued by scheduled banks). from all agencies. The recovery position of banks

Highlight.p65 8 7/15/2009, 10:36 AM

 with respect to SHG portfolios revealed that (out of local governments for filling gaps in flagship
329 reporting banks) 68 per cent banks reported high programmes. NABARD, in association with the
recovery (> 80%) and only 9 per cent reported very Planning Commission, prepared the Manual of
low recovery (< 50%). Guidelines and conducted regional workshops to orient
state/district level officials for preparing IDP. The Bank
56. During the year, interest rates on refinance for is also involved as a Technical Support Institution
investment credit were revised six times depending on (TSI) in IDP preparation in 17 districts from
the money market conditions and cost of incremental Andhra Pradesh, Jharkhand, Maharashtra, Tripura and
market borrowings of NABARD. The rate of interest Uttar Pradesh.
on refinance for commercial banks and for
co-operative banks/RRB/PUCB/ADFC/NEDFi was fixed 60. NABARD continued its policy of facilitating
at 9 and 8.5 per cent p.a., respectively, for all eligible larger credit flow to the NER and Sikkim by granting
activities and at 8.5 per cent for all activities and relaxations to co-operative banks and RRB operating in
agencies in the NER & Sikkim, hilly states and these areas in respect of eligibility criteria for refinance,
Andaman & Nicobar Islands. The rate of interest on rate of refinance, etc. The interest rate on refinance
interim finance provided to SCARDB was enhanced to for commercial banks and RRB on loans to MFI
9.75 per cent p.a. from 22 September 2008. was 3 percentage points lesser than that charged by
banks subject to a minimum of 8.5 per cent.
57. NABARD sanctioned 12 projects involving TFO
of Rs.95 crore, bank loan of Rs.64 crore and the Rural Infrastructure Development
Bank’s share of Rs.31 crore under the co-financing 61. The allocation under XIV tranche of RIDF was
arrangement and Rs.37 crore was disbursed during raised to Rs.14,000 crore for 2008-09 and
the year. As a nodal agency, NABARD continued Rs.4,000 crore allocated under a separate window for
to oversee implementation of the various Capital funding rural roads component of Bharat Nirman
Investment Subsidy (CIS) schemes of GoI. Programme. During the year 85,527 projects involving
a loan amount of Rs.14,719 crore were sanctioned
58. During the year, 37 investment and 5 scheme under RIDF XIV, taking the cumulative number of
specific studies under farm sector, rural housing and projects to 3,65,003 and amount sanctioned to
cold storage projects were conducted in association Rs.88,359 crore. An amount of Rs.7,500 crore, was
with banks and nodal departments of State disbursed under the Bharat Nirman Component during
Governments to identify factors adversely affecting 2008-09. Of the total amount sanctioned during the
schemes and ensuring prompt corrective measures. year, rural roads and bridges accounted for 46 per
Major findings and recommendations of 28 investment cent, irrigation projects 28 per cent, social sector
specific studies were published as a booklet for wider projects 18 per cent and others 8 per cent. The share
dissemination. of irrigation sector in the amount sanctioned during the
year as also the cumulative sanction (RIDF I to XIII)
59. NABARD continued to review and refine its declined, while that of rural roads and bridges and
district level Potential Linked Credit Plans (PLP). A social sector projects improved.
new chapter on ‘Financial Inclusion’ was included to
make it more contemporary. The Government 62. As per the phasing of projects, the total amount
introduced Integrated Development Plan (IDP) process phased (RIDF I-XIV) was Rs.73,734 crore against
for the 250 poorer districts under the Backward which disbursements aggregated Rs.56,052 crore (76%
Regions Grants Fund (BRGF), to embed the achievement). However, the slow pace of actual
participative planning process and provide funds to utilisation of loans under RIDF in some states was due

Highlight.p65 9 7/15/2009, 10:36 AM

 mainly to delay in administrative and technical new Directors inducted vice two, who superannuated.
approval by the State Governments, land acquisition The total number of Directors remained unchanged.
problems, inadequate budgetary support, etc. During the year, Nabcons acquired ISO 9001:2008
certification and also earned foreign exchange valued
63. During the year, disbursements increased by at $1.10 lakh. During 2008-09, Nabcons contracted
30 per cent to Rs.10,459 crore. Deposits of 109 assignments involving a consultancy fee of
Rs.18,805 crore (including Rs.6,647 crore under Bharat Rs.17 crore and completed 122 assignments for a fee
Nirman) were received from commercial banks and of Rs.10 crore. The income and profits earned by the
repayment amounting to Rs.2,998 crore was received company stood at Rs.11 crore and Rs.4 crore,
from the State Governments. respectively, during 2008-09.

64. During the year 5,290 projects were monitored Management of Resources
through field visits. Major observations/issues were
68. The financial resources of NABARD increased
taken up with the implementing department/s and
by Rs.19,470 crore during 2008-09 as against an
Finance Department of the concerned State
increase of Rs.17,486 crore during 2007-08. The
Governments for improving the pace and quality of
resources were augmented by the issue of Corporate
project execution.
Bonds (Rs.1,464 crore), Bhavishya Nirman Bonds
65. To strengthen the implementing apparatus of (Rs.2,767 crore), NABARD Rural Bonds (Rs.21 crore),
infrastructure deficient state, NABARD organised RIDF Deposits (Rs.18,805) crore, Term Deposits
awareness workshops for stakeholders to address (Rs.422 crore), Certificate of Deposits (Rs.1,816 crore),
mutual concerns. Further, to leverage private resources Commercial Paper (Rs.181 crore) and Term Money
and implementing capacity for rural infrastructure Borrowings (Rs.244 crore). The total working funds
development, NABARD entered into a Memorandum increased by 20 per cent to Rs.1,18,176 crore,
of Agreement with IL&FS to develop products/services as on 31 March 2009, from Rs.98,706 crore as on
and fine-tune the design of innovative delivery 31 March 2008. The outstanding market borrowings of
mechanism/s. the Bank constituted 23 per cent of working funds as
on 31 March 2009.
Impact Evaluation of Investments
69. The funds raised have been utilised for
66. NABARD continued its efforts to obtain schematic lending, ST/MT/MT (Conversion) loan
feedback on the performance of various investment assistance and loans to State Governments under
activities through evaluation studies. These studies were RIDF and non-project loans. The outstandings
undertaken to assess the impact of investments on under schematic lending, ST loan advanced for
income, employment generation and their viability. financing ST-SAO together with loans under
During 2008-09, one ex-post evaluation study on NABARD line of credit/other ST loans and loans
projects supported under RIDF, two studies on to State Governments under RIDF were at
micro-entrepreneurship among SHG members and Rs.33,335 crore, Rs.16,896 crore and Rs.45,616 crore,
three commodity specific studies on groundnut, mango respectively, as on 31 March 2009.
and sugarcane were completed.
70. The total income of the Bank during the
NABARD Consultancy Services year was Rs.7,051 crore (Rs.5,509 crore during the
67. The Board of NABARD Consultancy Services previous year). After making provision for Income
Pvt. Ltd (Nabcons), a wholly owned subsidiary of Tax (Rs.597 crore), contribution to Special Reserves
NABARD, was reconstituted during the year with two (Rs.340 crore), transferring to NRC (LTO) Fund

10

Highlight.p65 10 7/15/2009, 10:36 AM

 (Rs.400 crore) and NRC (Stabilisation) Fund (includes withdrawals of Rs.48 crore from funds
(Rs.10 crore), the balance income left over was against expenditure debited to P&L Account) which
Rs.5,703 crore. After meeting an expenditure of was transferred to various funds maintained by
Rs.5,063 crore, the surplus amounted to Rs.640 crore the Bank.

Capacity Building of Client Institutions

71. The financial health and growth of Co-operative 74. As on 31 March 2008, of the reporting banks,
Banks and Regional Rural Banks (RRB) continue to be 5 SCB, 108 DCCB, 9 SCARDB and 347 PCARDB
an area of concern to NABARD. In view of their role incurred losses, which together amounted to
in credit dispensation and the changing economic Rs.1,617 crore. The poor recovery of loans/high NPA
environment, NABARD has been striving towards to loans and advances outstanding ratio in co-operative
improving these institutions. banks continued to be an area of concern. NPA level
of all co-operative banks (ST and LT) registered an
increase during 2007-08 over the previous year.
Institutional Development
72. During 2007-08, loans issued by SCB and 75. In view of the persisting weakness in the
DCCB increased by 9 and 10 per cent, respectively, co-operative credit structure, the revised/modified
while those issued by SCARDB and PCARDB declined Phase IV of preparing institution specific DAP by
by 9 and 8 per cent, respectively, over the previous co-operative banks and entering into MoU for ST and
year. The overall profit earned by 31 SCB was LT structures is operational during the period
Rs.466 crore. The profit earned by 26 SCB, which 2007-2012. Further, to enable effective monitoring of
were in profit during 2007-08, was Rs.515 crore. Out performance of co-operative banks, it was decided to
of 370 DCCB, 261 earned profit of Rs.874 crore. set up ‘State Level Task Force’ from 1 April 2008. As
However, at the aggregate level, DCCB incurred a net on 31 March 2009, 22 RO have formed SLTF in their
loss of Rs.28 crore during 2007-08, an increase of States. Accounting for the changes in the environment
12 per cent over the previous year. SCARDB generated of RRB and co-operative banks, ODI for co-operative
a net profit of Rs.99 crore, while PCARDB as a whole banks is now known as ‘Business Revitalisation and
continued to incur losses, aggregating Rs.184 crore Managing Human Aspirations’ (BRAMHA). During
during 2007-08. 2008-09, 10 ODI for RRB and 5 BRAMHA for
co-operative banks were conducted.
73. There were wide variations across the regions in
76. Financial support through the Co-operative
the performance of co-operative credit institutions.
Development Fund (CDF) is provided for supporting
During 2007-08, profits of SCB declined in all regions,
developmental initiatives of co-operative credit
except the eastern and southern regions. Losses of
institutions. During 2008-09, Rs.5.95 crore was
SCB in the NER increased substantially during 2007-08
sanctioned and Rs.3.81 crore was disbursed, including
over the previous year. In the case of DCCB,
earlier sanctions, taking the cumulative sanctions
profit improved across all regions during 2007-08. The
and disbursements under CDF to Rs.88 crore and
DCCB as a group, however, incurred a net loss. During
Rs.78 crore, respectively, as on 31 March 2009.
2007-08, SCARDB across all regions, except central
and northern, incurred losses. During 2007-08, in 77. The Revival Package for Short-Term Rural
the case of PCARDB, aggregate losses increased by Co-operative Credit Structure (STCCS) with an outlay
167 per cent. of Rs.13,596 crore, aims to redevelop the STCCS

11

Highlight.p65 11 7/15/2009, 10:36 AM

 into a well managed and vibrant channel of credit 81. The revival package proposed by the Task
delivery through integrated measures of financial Force (Chairman: Prof. A. Vaidyanathan) on
management, legal/institutional reforms and capacity Long-Term Co-operative Credit Structure (LTCCS)
building. During 2008-09, seven States executed MoU has been approved by the Union Cabinet.
with GoI and NABARD, taking the total number of
states to 25, covering 96 per cent of the units under 82. A Working Group on Human Resource Policy
STCCS as at end-March 2009. for Co-operative Banks (Chairman: Shri S. K. Mitra,
ED, NABARD) was constituted to study norms
78. The special audit of the STCCS as on of recruitment/promotion/training/computerisation in
31 March 2004 was completed in 78,391 (out of co-operative banks and suggest a rationalised policy.
84,726) PACS across 25 States, and for DCCB in 8
83. Following amalgamation (2005-06 onwards),
states as at end-March 2009. During 2008-09, four
the number of RRB was reduced from 196 to 86
States (Bihar, Maharashtra, Meghalaya and Tamil
(15,235 branches) as on 31 March 2009. In all, 81
Nadu) have passed bills to amend their Co-operative
RRB improved their performance and reported gross
Societies Acts (CSA), proposed amendments of nine
profit of Rs.1,746 crore during 2008-09, an increase
states is under scrutiny by NABARD and amendments
of 26 per cent over 2007-08. The net worth of RRB
are being drafted in the case of the remaining six
increased to Rs.6,750 crore (10%) and accumulated
states.
losses declined by 3 per cent during 2008-09 over the
previous year. The performance of RRB varied widely
79. Emphasising on training of PACS’
across regions. While all RRB were in profit in the
functionaries, training modules, trainers’ manual and
southern and western regions, 28 in central, 14 in
guide, etc., have been developed. Training was
northern, 11 in eastern and 5 in north-eastern regions
imparted to 227 Master Trainers from 16 States who
were in profit.
in turn trained 1,687 district level trainers. As at end-
March 2009, training was imparted to 63,789
84. The recovery performance of 87 RRB as on
secretaries/staff from 13 states and 89,242 elected
30 June 2008 declined to 78 per cent though RRB in
members of PACS from 10 States. In addition,
four states, viz., Tamil Nadu, Punjab, Mizoram and
training was provided on CAS/MIS to 47,302 PACS
Kerala had very high recovery (above 80%). Out of
functionaries from 14 states.
87 RRB, 36 had recovery of above 80 per cent and
2 below 40 per cent.
80. During 2008-09, NABARD released
Rs.3,567 crore as GoI’s share towards recapitalisation 85. There was a decline in gross NPA position of
of eligible PACS in Andhra Pradesh, Chhattisgarh all RRB as a percentage of loans and advances
Gujarat, Haryana, Madhya Pradesh, Maharashtra, outstanding from 6.05 as at end-March 2008 to 5.58
Orissa, Uttar Pradesh and West Bengal as at end-March 2009. However, 56 RRB had NPA
enabling full recapitalisation of 33,411 PACS. levels below the national average of 5.58 per cent
The total support released, as at end-March 2009, and only 3 RRB had NPA levels above 20 per cent
stood at Rs.6,166 crore, including State as at end-March 2009. Lowest level of NPA was
Government share of Rs.474 crore. Keeping in observed in the case of RRB in southern (2%) and
view the health of the STCCS in the NER northern (3%) regions.
and Sikkim, their present business, training, etc.
GoI announced a special package for the STCCS 86. As on 31 March 2009, an amount of Rs.898
in NER. crore was released as GoI share towards

12

Highlight.p65 12 7/15/2009, 10:36 AM

 recapitalisation support announced for 27 RRB. Till voluntary inspections of 17 SCARDB and 2 apex
date, 26 and 1 RRB have been fully and partially co-operative societies were conducted. Some of the
recapitalised, respectively. State Governments and supervisory concerns relating to these banks brought
sponsor banks have contributed Rs.266 crore and out by the inspections were, improper application of
Rs.620 crore, respectively, as their share. IRAC norms resulting in inflated profit/reduced losses,
high level of NPA/erosion of assets, inadequate risk
87. In accordance with the announcement in the management strategies, deficiencies in sanction and
Union Budget 2007-08, RRB opened 474 branches disbursement of loans, ineffective funds management,
and 758 licenses were issued by RBI during 2008-09. weak internal checks and control systems, violation of
RBI relaxed the branch licensing norms for opening CMA norms, etc.
branches subject to certain stipulations. As part of
financial inclusion as at end-March 2008, RRB had 90. The Board of Supervision [BoS] (for SCB,
opened 929 lakh accounts (deposits and loans). DCCB and RRB) met thrice during the year. The
Further, as recommended by the Committee on issues reviewed by BoS included, (i) functioning of
Financial Inclusion, 15 RRB from 14 states operating SCB and SCARDB, (ii) functioning of co-operative
in the most financially excluded districts in the credit institutions and RRB of Kerala, Bihar and
country were identified for a R&D project with ICT Rajasthan, (iii) functioning of insolvent weak
based solutions under the PPP model. As part of DCCB and RRB, (iv) impact of supervision on
the Village Adoption and Debt Swap Programme, banks’ performance, (v) scheduling of amalgamated
RRB have adopted 20,981 villages as on 31 March RRB, (vi) supervisory trends pertaining to rating
2009, of which 7,811 have been freed from debt to of banks, (vii) banks compliance to various important
money lenders. statutory provisions, (viii) appropriate guidelines
to banks detailing the methodology for valuation
Supervision over Banks of properties and ensuring accountability of
values, etc.
88. NABARD inspects SCB and DCCB in terms
of the powers vested under Section 35(6) of the
91. As on 31 March 2008, 5 SCB and 108 DCCB
B.R. Act, 1949 (AACS), and of RRB under
were not complying with Section 11(1) of the B.R.
Section 35(6) of the B.R. Act, 1949. Keeping in view
Act, 1949 (AACS). The total erosion in the value of
the need for effective supervision over a sizeable
assets of these non-compliant co-operative banks
number of weak banks, NABARD’s inspections are
aggregated Rs.15,107 crore, which had affected
focussed on ensuring conformity with banking
deposits to the extent of Rs.4,937 crore in addition to
regulations and facilitating internalisation of prudential
their entire share capital.
norms. Accordingly, statutory inspections of all SCB,
DCCB and RRB not complying with minimum capital
requirements and voluntary inspections of all 92. NABARD issued revised inspection guidelines
SCARDB continued to be conducted annually. The for all banks keeping in view the latest development
statutory inspections of DCCB and RRB having and policy environment. The revised guidelines
positive net worth and voluntary inspections of Apex stressed on - Asset Liability Management, Codes of
Co-operative Societies/Federations are conducted once Standards and Fair Practices, Lenders Financial
in two years. Discipline, CRAR norms, etc. To improve the quality
and effectiveness of inspection, NABARD conducted
89. During the year, statutory inspections of 324 three Regional Supervision seminars for officers
banks (30 SCB, 243 DCCB and 51 RRB) and engaged in supervision, convened the 7 th
National

13

Highlight.p65 13 7/15/2009, 10:36 AM

 Seminar on Audit, conducted workshops on 93. NABARD initiated measures towards
implementing the ALM system/anti-money laundering re-engineering of the supervisory tasks. Licences for
and KYC, initiated dialogue with ICAI for use of an IT-based product, Regulator Plus were
strengthening the audit mechanism of co-operative obtained for strengthening knowledge management of
banks. inspecting officers.

Organisation and Management

94. During the year, the Board of Directors of the study visit programme on Deposit
NABARD met five times. The Executive Committee, Protection Mechanism for PACS in Germany
and the Audit Committee met four times each while and Hungary. He also attended the Excom Meeting
the Sanctioning Committee for loans under RIDF and of APRACA held in Moscow. In addition, 62 training
the Risk Management Committee of the Board met programmes covering 771 employees were conducted
six and three times, respectively, during the year. As at NBTC, Lucknow and ZTC, Hyderabad.
on 31 March 2009, the Board of NABARD Pre-promotional training programmes were also
comprised six new directors under Sections 6(1)(d) conducted for 11 Group B staff for promotion to
and 6(1)(e) of the NABARD Act, 1981. Grade ‘A’ in Secretarial Service.

95. Reserve Bank of India conducted the financial

97. During the year, 33 employees availed of
inspection of NABARD with reference to the financial
facilities under the modified incentive scheme, for
position as on 31 March 2008 between 6 January
professional studies in part-time and distance learning
and 19 February 2009.
courses. Study leave was granted to one officer
under the Staff Scheme for higher studies to pursue
Training and Skill Enhancement
Post Graduate Diploma in Management at Institute of
96. During the year, 91 training programmes Management Technology (IMT), Ghaziabad.
covering 1,816 officers were conducted at NBSC,
Lucknow in functional, behavioural and technical
areas and 9 programmes for 232 officers of client Other Matters
banks on various finance related issues. New 98. The process of recruiting 102 officers in
programmes on bio-diesel, bamboo cultivation, Grade ‘A’ of RDBS and Rajbasha Services and
financial inclusion, etc., were introduced during Grade ‘B’ of Legal Service was completed during the
the year. Besides, 40 officers were deputed for year and the process of recruiting 120 officers in
tailor-made programmes on software development, Grade ‘A’ in RBDS during 2009-10 has been
outdoor management, etc. As many as 218 officers initiated. Further, 269 promotions were effected in
were deputed for 118 off-the-shelf programmes, various grades of the officers’ cadre. As at
workshops/seminars/conferences at reputed institutions. end-March 2009, NABARD has total staff strength of
Further, 223 officers were deputed abroad for various 4,886 employees.
overseas training programmes, exposure visits,
seminars, etc. During the year, 18 exposure visits were 99. Preventive Vigilance Inspection of six RO/TE
organised with funding support from GTZ to study and one Chief Technical Examiner type inspection of
mF co-operatives and MFI regulation in Indonesia, civil/electrical work was undertaken during the year.
Bangladesh, Sri Lanka, Philippines, Malaysia, The Bank observed Vigilance Awareness Week from
Germany and South Africa. Chairman also attended 3-7 November 2008.

14

Highlight.p65 14 7/15/2009, 10:36 AM

 100. During the year, LAN was set up in 34 units 102. The Central Complaints Committee at HO
(HO/RO/SO/TE) of the Bank and limited accessibility and Committees in RO are functioning for prevention
to the Bank’s network was extended to ex-staff of sexual harassment of women at the work
members. The services of M/s. KPMG were engaged place.
during the year to study the activities, systems,
processes and IT applications currently in vogue in 103. The Bank continued to promote the use of
the bank and also to suggest a suitable IT Road Hindi in its day-to-day working. In addition to
Map. It has also been decided to set up a video 56 customised workshops, a three-day orientation
conferencing system in the Bank. programme to sensitise senior officers was conducted
during the year. The Drafting and Evidence
101. Inspection of 21 RO, 2 TE and 14 HO Sub-Committee of the Parliamentary Committee
Departments were undertaken during the year. In on Official Language reviewed the use of Hindi
order to improve the efficiency and effectiveness of in Sikkim and Kerala RO and NBSC, Lucknow,
the staff posted in Concurrent Audit Cell at RO/TE, while the Official Language Implementation
two workshops were organised. Pursuant to the Committees at HO/RO/TE undertook quarterly
directions of the Board of NABARD, ICRA reviews on the use of Hindi in their respective
Management Consulting Services Ltd (iMACS) was offices. The Committees found the performance of
assigned a study on Risk Management System in these offices satisfactory. During the year ‘Rashtriya
NABARD and their recommendations were submitted Bank Srijana’ bagged three National Level Awards.
to the top management. The Operational Risk Many RO brought out PLP and inspection reports
Management Committee met twice during the year. in Hindi.

15

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 I Rural Economic Environment

The year 2008-09 witnessed major international
financial collapse starting off with the sub-prime crisis in
US. The tremors of the global economic crisis have been
felt in India too though with a lesser intensity. The
Government of India and the Reserve Bank of India
announced a series of stimulus packages, including fiscal
and monetary measures, for arresting slow down. The
rural economy, nevertheless, has been impacted to a
certain extent and in the near future also is likely to
operate in an environ of the global crisis.
enabled per capita income (at 1999-2000 prices) to
increase from Rs.15,881 during 1999-2000 to
Rs.25,494 during 2008-09. Inflation concerns have
abated in the light of the global commodity prices,
specifically crude, coming down. Inflation declined and
was at 0.26 per cent as on 28 March 2009. Revenue
and fiscal deficits, are expected to be 4.6 and
6.2 per cent of GDP during 2008-09 as against 1.1 and
2.7 per cent, respectively, during 2007-08.

1.2 The Indian economy recorded 6.7 per cent
growth in GDP, powered by higher growth rates in the
services sector than in the industry sector. Consistent
with the trend, growth rates of 9.7 and 3.9 per cent in
the services and industry sectors, respectively, have
contributed to the GDP growth of 6.7 per cent during
2008-09. The impressive sectoral growth rates have
1.3 Agriculture growth at 1.6 per cent during
2008-09 was lower than 4.9 per cent during 2007-08
in spite of anticipated growth rates of 6.0 per cent in
horticultural crops, 5.5 per cent in livestock products
and 6.0 per cent in fisheries. The ensuing sections
review the trends in agriculture and rural sectors in the
Global and Indian economies.

Global Economy
1.4 Growth in the global economy witnessed Table 1.1: Overview of Global Economy
deceleration from 3.8 per cent in 2007 to 2.1 per cent (Annual per cent change)
Growth 2007 2008 2009*
2008, on account of the global melt down in the A. GDP (Real)
advanced economies and is expected to dip to -2.5 per a. World Output 3.8 2.1 -2.5
b. Advanced Economies 2.7 0.9 -3.8
cent in 2009. The growth rate of emerging and i. United States 2.0 1.1 -2.8
developing economies also declined to 6.1 per cent in ii. Euro Area 2.7 0.9 -4.2
iii. Japan 2.4 -0.6 -6.2
2008 as against 8.3 per cent in 2007 and is expected to iv. Newly Industrialised Asian Economies 5.7 1.5 -5.6
further decline to 1.6 per cent in 2009 (Table 1.1). Due c. Other Emerging and
Developing Economies 8.3 6.1 1.6
to the global financial crisis, there was a significant i. Developing Asia 10.6 7.7 4.8
impact on the economic growth of developing ii. China 13.0 9.0 6.5
iii. India 9.3 7.3 4.5
economies like China (9.0%) and India (7.3%) in 2008 d. ASEAN – 5@ 6.3 5.8 -
and this is expected to decline further to 6.5 per cent B. Consumer Prices
a. Advanced Economies 2.2 3.4 -0.2
and 4.5 per cent, respectively, in the year 2009. b. Other Emerging and Developing
Economies 6.4 9.3 5.7
C. World Trade Volume
1.5 The world production of cereals and pulses, as (goods & services) 7.2 3.3 -11.0
per FAO estimates, increased by about 5.1 and 3.4 per a. Imports by Emerging and
Developing Economies 14.0 10.9 -8.8
cent, respectively, during 2007 in comparison to 2006. b. Exports by Emerging and
India’s share, on a two-year average basis, was 11 and Developing Economies 9.5 6.0 -6.4
D. Commodity Prices
23 per cent, respectively, in global cereal and pulse a. Fuel (energy) 10.5 40.1 -94.4
production. India contributed to almost one-fifth of b. Non-Fuel primary commodities 14.0 7.5 -27.9
world primary fibre production (Table 1.2). Low income * : Projections.@ : Includes Indonesia, Malaysia, Philippines, Singapore and
Thailand.
food deficit countries accounted for nearly half of World Source : (i) World Economic Outlook, IMF, April 2009.
cereals production and 70 per cent of fibre production. (ii) RBI Bulletin, May 2009.

16

Ch-Eng-1 Pantone.p65 16 7/14/2009, 2:42 PM

 Table 1.2 Production of Major Crops in the World, 2007
(Million Tonnes)
Country/Group/ Cereals Production@ Pulses Production Fibre crops Production
% share in % share in % share in
2006 2007 World # 2006 2007 World# 2006 2007 World#
India 243 252 11 13 15 23 6 5 19
Net Food Importing
Developing Countries 249 248 11 12 13 21 5 5 16
Low Income Food
Deficit Countries 1052 1078 47 33 36 57 20 21 70
Least Developed Countries 163 167 7 9 10 16 2 2 7
European Union 270 266 12 4 3 6 1 0 2
Africa 150 146 6 11 12 19 2 2 6
Asia 1110 1141 49 28 30 48 20 20 69
World 2228 2342 100 59 61 100 28 29 100
@ : Rice is measured in terms of paddy (unhusked) # : Share based on average of 2006 & 2007
Source : FAOSTAT ; © FAO Statistics Division 2009 ; 08 May 2009

Indian Economy

A. Economic Scenario economy declined from 63.2 per cent during 2007-
08 to 59.9 per cent during 2008-09. However, a
a. Gross Domestic Product
higher growth in Gross Fixed Capital Formation
1.6 Indian economy registered an average annual (GFCF) is expected to improve its relative share in
growth of 7.8 per cent during the Tenth Plan (2002-07)
which was the highest for any Plan Period though Table 1.3: Economic Indicators
marginally less than the targeted 8 per cent. Particulars 2006-07 2007-08 2008-09
However, the growth in GDP is estimated at 6.7 per Growth in (%)
cent (at 1999-2000 prices) during 2008-09, as against Overall GDP ^ 9.7 9.0Q 6.7RE

9 per cent during 2007-08. The shortfall could be GDP from Agriculture &
Allied Activities^ 4.0 4.9Q 1.6 RE
attributed partly to the low growth in agriculture and
Food-grains Production 4.2 4.6# -
allied sectors (1.6%) and in the industry sector (3.9%).
Industrial Production* 10.6 8.5P 2.4P
Select economic indicators of the Indian Economy
Inflation as measured by WPI 5.9 7.7 0.3B
are presented in Table 1.3.
Imports^^ 27.3 20.4RE 29.0P
Exports ^^ 25.3 14.7RE 16.0P
1.7 Sectoral analysis of growth rates revealed that Gross Domestic Savings
deceleration in growth in agriculture and allied sectors (as % of GDP)^ 35.7 P 37.7Q 35.3
brought down its share in overall GDP further by Gross Domestic Investment
0.8 percentage points to 17.0 per cent during 2008-09. (as % of GDP)^ 36.9 P 39.1 Q 37.5

While the share of services sector increased to 57.2 per Fiscal Deficit
(as % of GDP)^^ 3.4 2.7 6.2 P
cent, that of industry sector declined to 25.8 per cent
Trade Balance (as % of GDP)^^ -6.8 -7.8 -12.0@
during the year (Table 1.4).
^^
External Debt (as % of GDP) 17.9 NA 26.2@

Q : Quick Estimate. RE : Revised Estimate.

b. Consumption, Savings and P : Provisional NA : Not Available
Investments # : 3rd Advance Estimate 2007-08. * : At 1993-94 prices.
B : As at end-March 2009. ^^ : In current market price
1.8 Private final consumption expenditure, in ^: At factor cost - 1999-2000 prices. @ : April-Dec., 2008
Source: (i) Economic Survey 2007-08. (ii) RBI Bulletin, May 2009.
1999-2000 prices, as a proportion to GDP in the

17

Ch-Eng-1.p65 17 7/15/2009, 10:42 AM

 Table 1.4: Sectoral Growth Rates of Real GDP*

(Per cent)
Q Q RE
Sector 2004-05 2005-06 2006-07 2007-08 2008-09

Agriculture & Allied - (20.8) 5.8 (19.9) 4.0 (18.5) 4.9 (17.8) 1.6 (17.0)
#
Industry 9.8 (26.0) 9.6 (26.1) 10.6 (26.7) 8.1 (26.5) 3.9(25.8)
Services 9.6 (53.2) 9.8 (54.0) 11.2 (54.8) 10.8 (55.7) 9.7(57.2)

Total GDP at factor cost 7.5 (100.0) 9.4(100.0) 9.6 (100.0) 9.0 (100.0) 6.7 (100)

Q : Quick Estimate. RE : Revised Estimate * : At 1999-2000 prices.

# : Includes mining & quarrying, manufacturing, electricity, gas and water supply and construction (ES 2003-04).
Figures in parentheses indicate percentage share in GDP Source: 1. Economic Survey 2007-08. 2. Central Statistical Organisation, GoI.

GDP (at market prices) to 32.2 per cent during B. Trade

2008-09 as against 31.6 per cent during 2007-08.
The relative shares of private consumption and
GFCF in GDP during the Tenth Plan stood at
60.9 and 27.0 per cent, respectively. Indian
economy achieved higher saving and investment
levels during the Tenth Plan compared to the Ninth
Plan. The savings ratio during the Tenth Plan at
31.4 was substantially higher than that of Ninth
Plan at 23.6. The investment ratio during the Tenth
Plan averaged 31.4 per cent as compared to
24.3 per cent during the previous Plan period.
During the year 2007-08, the upward trend
continued as gross domestic savings and the
investment as a proportion to GDP (at current
market prices) improved by at least 2 percentage
points over the previous year to reach from
37.7 and 39.1 per cent, respectively (Table 1.3).
However, these ratios declined to 35.3 and
37.5 per cent, respectively, during 2008-09.
c. Inflation
1.9 Headline inflation, as measured by year-on-year
variations in the Wholesale Price Index (WPI) fell
from its intra-year peak of 12.91 per cent on August
2, 2008 to 0.26 per cent by 28 March 2009.
fall in commodity prices, reflecting global trends, has
been the key driver of the sharp fall in WPI inflation
although effective management of domestic demand
too contributed. On the other hand, inflation
measured through various Consumer Price Indices
(CPI) was higher due to the firm trend in prices of
food articles.
1.10 The economy showed progress in integrating
with the world economy as evident from the improved
trade to GDP ratio at 34.8 during 2006-07 as
compared to 22.5 during 2000-01. The openness
indicator, by including services trade, showed further
improvement to 48 per cent as against 29.2 per cent
during the corresponding period. During 2008-09, both
exports and imports in US$ terms registered growth of
3.4 and 14.3 per cent, respectively. The exports
reached US $ 167.02 billion during April 2008 March
2009. Imports reached a volume of US $ 284.30
billion during the year. Share of agriculture in total
exports ranged between 10 and 11 per cent during
recent years (Table 1.5).
C. Agricultural Marketing and
Commodity Futures
1.11 Several states amended their APMC Acts to
ensure market reforms. GoI took initiatives to promote
modern terminal markets for fruits, vegetables and
other perishables in urban centres in ‘Hub-and-Spoke’
format. Andhra Pradesh, Bihar, Madhya Pradesh,
The Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu,
West Bengal, Nagaland and the Union Territory of
Chandigarh have identified land for setting up terminal
markets.
1.12 Cumulative value of trade in agricultural
commodities during the financial year 2008-09 was

18

Ch-Eng-1.p65 18 7/15/2009, 10:42 AM

 Table 1.5: Trends in Exports and Imports
(US$ billion)
Year Total Exports Share of Agri. Total Imports Share of Food & Allied
in Total Exports (%) Products in Total
Imports (%)
2003-04 63.84 (21.1) 11.8 78.15 (27.3) 4.7
2004-05 83.54 (30.8) 10.2 111.52 (42.7) 3.5
2005-06 103.10 (23.4) 9.91 149.15 (33.8) 2.5
2006-07 126.28 (22.6) 10.04 185.08 (24.5) 2.9
2007-08 R 162.99 (29.1) 11.3 251.57 (35.5) 3.1
P *
2008-09 167.02 (3.4) 10.5 284.30 (14.3) —
R : Revised. P : Provisional * : Pertains to April-December
Figures in the parentheses refer to percentage change over the previous year.
Source: 1. DGCI &S, Kolkata. 2. Ministry of Commerce and Industry 3. Economic Survey 2007-08 4. RBI Bulletin, May 2009.

Rs.6,27,303 crore registering a decline of 33.36 per 1.14 Food security has been assigned prime
cent compared to the previous year. Total trade in importance as reflected in buffer stock and public
futures increased by about 29.01 per cent over last distribution policies. During the year, food security
year. Thus, share of agricultural commodities in total issue came to the fore once again in the wake of
trade declined from 23.1 per cent in 2007-08 to diversion of food grains, especially corn to biofuel
12.0 per cent in 2008-09. An important development production, stoking global food prices up and due to
during the year was that the Forward Market threat perception of adverse effects of climate change.
Commission, on 16 March 2009, permitted NCDEX While food and fuel prices eased during last quarter of
to accredit the warehouses of producers/processors and the year at the macro level, sticky retail food prices still
similar participants, within 50 km of the municipal threaten weaker sections, including small and marginal
limits of the delivery centers, to enable such farmers, who are net buyers of food.

participants to deliver their goods on the exchange

E. Agriculture and Rural Economy
platform.
a. Rainfall Situation
D. Support Prices, Procurement and 1.15 In spite of ‘near normal’ precipitation during
Stock of Foodgrains southwest monsoon season 2008, erratic temporal as

1.13 Minimum Support Prices (MSP) announced for

major crops before the sowing season, during 2008-09,
showed significant upward revision by 8.0, 31.8, 48.2,
48.2 and 29.3 per cent, respectively, for wheat, paddy,
moong, urad and arhar. Procurement of wheat in the
marketing year (April-March) 2009-10 would be around
24 million tonnes as against 22.6 million tonnes during
the previous year. As Government has increased the
MSP to Rs.1,080 per quintal (by 8%), the procurement
is expected to be easy. Procurement of rice is expected
to be higher by 1.8 million tonnes than last year at 24.4
million tonnes. Paddy field

19

Ch-Eng-1.p65 19 7/15/2009, 10:42 AM

 well as spatial distribution of rainfall has impacted 1.6). Total live water storage, as on 26 March 2009,
the farmer community to some extent. While the was 26 per cent of the FRL compared to 33 per cent
central and south peninsular India witnessed scanty last year.
rains and drought like situation, regions like Bihar and
eastern Uttar Pradesh experienced massive floods
b. Crop Acreage
during the season. Insufficient showers in peak-sowing
month, i.e., July, fall in water storage levels in the 1.18 The crop coverage during kharif 2008 at 101.5
major reservoirs and inadequate supply of fertilisers million ha showed a decline of 2.4 million ha, due to
slowed down the pace of sowing operations. The decline in area under pulses and other cereals even as
North-East monsoon rainfall was subdued to make area under rice and oilseeds increased (Table 1.7). In
the cumulative rainfall about 31 per cent below spite of shortfall in North-East monsoon, area sown
normal (Table 1.6).
under rabi crops increased by 1.8 million ha. While
area under crops, except rice and oilseeds, declined
1.16 The cumulative rainfall recorded during the during kharif season, it generally improved during the
entire southwest monsoon season (June-September) rabi season. This trend has reversed the pattern
2008 was 2 per cent lower than the normal Long observed during 2007-08.
Period Average (LPA) rainfall. Though the season
started 5 days in advance it was marred by two
prominent dry spells, one in July and another in c. Agricultural Production
September 2008 causing deficiency in some parts of i. Foodgrains and Non-Foodgrains
the country.
1.19 Overall foodgrains production during 2008-09
is estimated at 229.9 million tonnes as against
1.17 In terms of spatial distribution, 30 out of 36 the target of 233.0 million tonnes and the previous
meteorological sub-divisions received normal rainfall. year’s production of 230.8 million tonnes. During
Only 2 (Punjab and Orissa) sub-divisions recorded the year, production of all crops, except rice, is
excess rainfall and 4 (Nagaland, Manipur, Mizoram & lower compared to last year; the reduction being
Tripura, West Madhya Pradesh, Vidharbha and larger at 16.9 per cent in case of sugarcane
Kerala) sub-divisions witnessed deficient rainfall (Table (Table 1.8).

Table 1.6: Trends in the Rainfall and Water Storage

Particulars South - West Monsoon North - East Monsoon
2006 2007 2008 2006 2007 2008
A. Cumulative rainfall
(% variation from normal) -1 5 -2.0 -21 -32 -31
B. Number of Sub-divisions with
• Normal 20 17 30 6 7 4
• Excess 6 13 2 3 2 2
• Deficient/Scanty/No Rain 10 6 4 27 27 30

C. Reservoir status (% of FRL)* 87 79 76 @ 33 33 26 #

Normal : ± 19 % ; Excess : + 20% or more; Deficient : -20 to - 59%; Scanty : - 60 % or less & No Rain : - 100%
* : Full Reservoir Level in 81 major reservoirs (accounting for 63% of total reservoir capacity in the country) as at the end of season.
@: As on 30 Sept 08 #: As on 26 March 2009 Source: Indian Meteorological Department

20

Ch-Eng-1.p65 20 7/15/2009, 10:42 AM

 Table 1.7: Area Sown under Major Crops
(Million ha.)

Crop Kharif (a) Rabi (b) Total (a+b)

2007 2008 2008 2009 2007-08 2008-09

Rice 37.3 38.5 0.8 4.6 38.1 43.1

Wheat - - 27.4 27.8 27.4 27.8
Other Cereals 21.1 20.0 6.5 6.9 28.5 26.9
Pulses 12.3 10.4 12.9 14.5 25.5 24.9
Oilseeds 17.5 18.3 8.5 10 26.2 28.3
Cotton 9.2 9.1 - - 9.3 9.1
Sugarcane 5.3 4.4 - - 5.1 4.4

All Crops 103.9 101.5 62.0 63.8 160.2 165.3

Source : Ministry of Agriculture, GoI - : Nil

ii. Plantation Crops These Funds will be operational till the end of
Eleventh Plan. Over time, coffee production,
1.20 Tea production in the country is expected to
consumption and exports improved. Rubber
rise to 9.81 lakh tonnes during 2008-09. With
production and consumption showed steady growth,
production shortfall in Kenya, the increase in
while exports fluctuated from year to year.
production helped to increase exports (Table 1.9).
Exports are likely to pick up in 2009 also as tea
iii. Horticulture
production in Kenya is expected to remain low. For
funding re-plantation and rejuvenation activities aimed 1.21 Horticulture sector contributes a significant
at improving productivity, GoI has set up Special proportion of GDP in agriculture. The area and
Purpose Funds for tea, rubber, coffee and cardamom. production grew in 2007-08 compared to the previous

Table 1.8: Production of Major Crops

(Million tonnes)

Crop 2004-05 2005-06 2006-07 2007-08 2008-09

Target Achievement $

Rice 83.1 91.8 93.4 96.7 97.0 99.4

Wheat 68.6 69.4 75.8 78.6 78.5 77.6
Coarse Cereals 33.5 34.1 33.9 40.8 42.0 38.7
Pulses 13.1 13.4 14.2 14.8 15.5 14.2
Foodgrains 198.4 208.6 217.3 230.8 233.0 229.9
Kharif 103.3 109.9 110.6 121.0 121.5 118.8
Rabi 95.1 98.7 106.7 109.8 111.5 111.1
Oilseeds 24.4 28.0 24.3 29.8 31.8 28.1
Sugarcane 237.1 281.2 355.5 348.2 340.0 289.2
Cotton@ 16.4 18.5 22.6 25.9 26.0 23.3
#
Jute & Mesta 10.3 10.8 11.3 11.2 11.0 10.3

$ : Third advance estimates @ : million bales of 170 kg each # : million bales of 180 kg each Source : Ministry of Agriculture, GoI

21

Ch-Eng-1.p65 21 7/15/2009, 10:42 AM

 Table 1.9: Production and Consumption of Major Plantation Crops

(lakh tonnes)

Year Tea Coffee Rubber

Production Consumption Exports Production Consumption Exports Production Consumption Exports

2003-04 8.79 7.14 1.83 2.71 0.70 2.33 7.12 7.20 0.76
2004-05 9.07 7.35 2.06 2.76 0.75 2.12 7.50 7.55 0.46
2005-06 9.49 7.57 1.97 2.74 0.80 2.15 8.03 8.01 0.74
2006-07 9.73 7.71 2.18 2.88 0.85 2.49 8.53 8.20 0.57
2007-08 89.45 7.86 1.85 2.62 0.90 2.19 8.25 8.61 0.6
2008-09 P 9.81 8.02 1.84 2.77 0.94 2.04 8.64 8.65 0.45
P : Provisional Source: Ministry of Commerce and Industry, GoI. Coffe Board, Tea Board and Rubber Board.

year and reached a level of 20.1 Mha and 207 MT, respectively. The value of output from the livestock
respectively (Table 1.10). The growth saga continued sector at current prices was about Rs.2,10,629 crore
in 2008-09 and GDP from horticuture recorded a during 2006-07.
6 per cent growth. Under the National Horticulture
Mission (NHM) launched in 2005, during 2005-06 ii. Fisheries
and 2006-07, a sum of Rs.1,575.30 crore was
1.23 Fisheries sector accounted as a livelihood
released. In 2008-09, an amount of Rs.1,010.49 crore
option for over 14 million persons during 2005-06.
was released further while the expenditure reported
Total fish production in the country during 2007-08,
has been Rs.1,148.50 crore.
increased by 4.4 per cent and reached 7.1 million
tonnes (2.9 million tonnes marine and 4.2 million
d. Agriculture and Allied Sector
tonnes inland). Export earning from the sector was also
i. Livestock and Poultry on the increase with the value of marine products
export amounting to Rs.7,620 crore during 2007-08.
1.22 As per the Livestock Census, 2003, the
livestock and poultry population in the country is
e. Agro and Food Processing Sector
485 million and 489 million respectively. The
contribution of the sector to agriculture and total 1.24 Food processing sector is a promising sector
GDP during 2006-07 was 31.7% and 5.26%, in the country due to changing consumer

Table 1.10: Area and Production of Major Horticultural Crops

(Area in million ha; Production in million tonnes)

Year Area Production
Total Total
Fruits Vege-tables Flowers Horticulture Fruits Vege-tables Flowers Horticulture
2002-03 4.8 5.9 0.1 16.4 49.2 84.8 0.2 152.0
2003-04 5.1 6.7 0.2 20.6 49.8 101.4 0.6 165.5
2004-05 5.1 6.7 0.1 17.8 50.9 101.2 0.7 167.0
2005-06 5.3 7.1 0.1 18.7 55.4 110.1 0.7 181.8
2006-07 5.6 7.6 0.1 19.4 59.6 115.0 0.9* 191.8
P
2007-08 5.8 7.8 0.2 20.1 63.5 125.9 0.9* 207.0
P: Provisional *: Excluding 37158 lakh and 43421 lakh cut flowers in 2006-07 and 2007-08, respectively.
Source: 1. National Horticulture Board. 2. Horticulture Division., Dept of Agriculture & Co-operation, GoI

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Ch-Eng-1.p65 22 7/15/2009, 10:42 AM

 preferences and growth of organised agri-food retailing ii. Fertilizers
sector. The Eleventh Plan, targets to utilise over
1.26 During 2007-08, fertilizer consumption (nutrient
20 per cent of agricultural products for processing/
terms) increased at 4.2 per cent to reach 225.7 lakh
value addition. The Food Industry, presently
tonnes and 117.1 Kg/ha, respectively. Current pricing
employing 1.6 million workers directly, is projected to mechanism coupled with the unscientific use of
grow to 37 million workers (direct and indirect job chemical fertilizers has resulted in nutrient imbalance
workers) by 2025. with excessive use of urea and a bias against
micronutrients. As against the desirable proportion of
f. Agricultural Inputs 4:2:1 of NPK, the average use is 5.5:2.1:1, thus,
i. Seeds adversely affecting soil profile, micronutrient use and
crop productivity.
1.25 The share of private sector in production and
distribution of seeds in the country was 46 per cent
of the seeds sold commercially. Breeder seed iii. Irrigation
production by National Agricultural Research System,
1.27 Total irrigation potential created under all types
reached 0.92 lakh quintals during 2007-08 registering
of irrigation structures was 102.8 million ha upto the
a 24.6 per cent growth over previous year. Certified/
end of Tenth Plan. The utilisation was to the extent
quality seed distribution during 2007-08 at 190 lakh
of 85 per cent, leaving a gap of 15 per cent. There
quintals was 15.5 per cent higher than the previous
have been several Central Sector schemes launched in
year.
recent years to create irrigation potential with social
responsibilty like Rainwater Harvesting Scheme for SC/
ST farmers and Artificial Groundwater Recharge
through Dugwells. The rainwater harvesting scheme,
implemented in all States and Union Territories during
2004-05 to 2006-07, installed 18,016 water harvesting
structures with a total subsidy utilization of Rs.24.04
crore. This is expected to benefit around 8807 ha. of
land of SC/ST farmers.

1.28 The scheme for artificial recharge seeks to

benefit the groundwater stressed areas in the country
that account for 28 per cent of the total assessment
units. Seven states, viz., Andhra Pradesh, Gujarat,
Karnataka, Madhya Pradesh, Maharashtra, Rajasthan
and Tamil Nadu account for 75 per cent of such
problem units. GoI is implementing a large scale
Groundwater recharge programme through Dug wells
in these States through a subsidy based scheme,
viz., Scheme on Artificial Recharge of Ground water
through Dugwells. Ministry of Water Resources is
the Nodal Ministry at the Central Government level
Rubber sap collection and the Fund is routed through NABARD.

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Ch-Eng-1.p65 23 7/15/2009, 10:42 AM

 system has disbursed Rs.2,87,149 crore as on
31 March 2009, achieving nearly three per cent more
than the target. Commercial banks, co-operative banks
and RRB disbursed Rs.2,23,663 crore, Rs.36,762 crore
and Rs.26,724 crore, respectively, thus, achieving
around 115, 67 and 89 per cent of the targets,
respectively (Table 1.11 ).

1.31 During the period 2004-09, the GLC flow for

agriculture and allied activities registered a compound
Oyster mushroom cultivation annual growth rate (CAGR) of 23 per cent. During
2007-08, while GLC flow for crop loans (31%)
improved, it declined in for term loans (19%) over
1.29 The programme is being implemented in 1180
2006-07. Sub sector-wise, hi-tech agriculture witnessed
Blocks/Talukas of 146 districts in these seven States.
the highest growth of 55 per cent in GLC flow during
The phasing is proposed over a period of 3 years,
2007-08 (Table 1.12)
i.e., 2007-2010. An estimated 44.5 lakh dugwells are
envisaged to be fitted with recharge structures under
the scheme. Total outlay of the programme is Kisan Credit Card Scheme
Rs.1,798.71 crore, of which Rs.1,536.75 crore has
1.32 The Kisan Credit Card (KCC) scheme introduced
been released to NABARD towards subsidy, capacity
in August 1998 has facilitated in augmenting the GLC
building and service charges. NABARD is a member
flow for crop loans by providing adequate, timely, cost
on the State Level Steering Committe (SLSC) and
effective and hassle free short-term (ST) loans for
District Level Implementation and Monitoring
Seasonal Agricultural Operation (SAO) to farmers. The
Committee (DLIMC).
Scheme is implemented across the country by all
public sector commercial banks, RRB and co-operative
iv. Agricultural Credit
banks. The scope of KCC was broadened by NABARD
1.30 As against the target of Rs.2,80,000 crore of to cater to various term credit needs under a single
credit flow to agriculture for 2008-09, the banking window. In addition to ST credit and term loans for

Table 1.11: Agency-wise Ground level Credit Flow

(Rs. crore)

Agency 2004-05 2005-06 2006-07 2007-08 2008-09P Growth Rate (%)

2004-09 # 2007-08 * 2008-09 *

Co-operative Banks 31,231 39,404 42,480 48,258 36,762 4 14 -24

RRBs 12,404 15,223 20,435 25,312 26,724 21 24 6
Commercial Banks 81,481 1,25,477 166,485 181,088 2,23,663 29 9 23
Other agencies 193 382 NA NA NA - -
Total 1,25,309 1,80,486 2,29,400 2,54,658 2,87,149 23 11 13
#: Compound Annual Growth Rate P: Provisional NA: Not Available
*: Percentage change over previous year. Source: NABARD

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Ch-Eng-1.p65 24 7/15/2009, 10:42 AM

 Table 1.12: Sub-sector-wise Ground Level Credit Flow for Agriculture and Allied Activities

(Rs. crore)

Sr. Sector/Sub- 2004-05 2005-06 2006-07 2007-08 Growth Rate (%)

No. Sector 2004-08 ^ 2007-08 *

I Crop Loan 76,062 1,05,350 1,38,455 181,393 34 31

(ST-Production Credit)
II Term Loans 49,247 75,136 90,945 73,265 14 -19
(MT & LT Investment Credit)
i. Minor Irrigation 4,186 8,663 8,566 2,840 -12 -67
ii. Land Development 840 1,749 2,285 2,553 45 12
iii. Farm Mechanisation 4,555 9,695 10,113 8,303 22 -18
iv. Plantation & Horticulture 1,720 4,481 5,266 5,910 51 12
#
v. Animal Husbandry 3,097 7,341 8,045 9,034 43 12
vi. Fisheries 1,301 1,019 1,424 1,248 -1 -12
vii. Hi-tech agriculture 6,648 9,737 21,498 33,325 71 55
viii. Others$ 26,900 32,451 33,748 10,052 -28 -70

Total (I+II) 1,25,309 1,80,486 2,29,400 2, 54,658 27 11

^ : Compound Annual Growth Rate * : Percentage change over previous year.

# : Animal Husbandry includes Dairy Development, Poultry Farming and Sheep/Goat/ Piggery
$ : ‘Others’ include storage/market yards, forestry/waste land development, RIDF, bullock and bullock carts, bio-gas and credit flow
through private sector commercial banks.

agriculture and allied activities, a certain component of 1.35 Keeping in view the Government’s emphasis on
loan through KCC also covers consumption needs. increasing credit flow to agriculture sector, NABARD
advised banks to identify and cover all farmers
including defaulters, oral lessees, tenant farmers, share-
1.33 During 2008-09, 67.95 lakh KCC were issued by
croppers, etc., so that all farmers are covered under
banks with sanction of credit limit of
the scheme by 31 March 2009. Further, banks were
Rs.38,245 crore. Of the total cards issued during the
advised to extend crop loans only through KCC and
year 40.37 lakh KCC were issued by commercial
banks, 13.44 lakh KCC by co-operative banks and
14.14 lakh KCC by RRB. Since inception of the
Table 1.13: Agency-wise, Year-wise Kisan Credit Cards Issued
scheme, 828.70 lakh cards were issued till end-March
(lakh)
2009 by the banking system. Co-operative banks
Year Co-operative RRB Commercial Total
accounted for the largest share (44%), followed by Bank Banks
commercial banks (42%) and RRB (14%) (Table 1.13).
2004-05 35.56 17.29 43.95 96.80
2005-06 25.98 12.49 41.65 80.12
1.34 State-wise analysis of KCC issued as at end- 2006-07 22.97 14.06 48.08 85.11
March 2009, revealed that Uttar Pradesh accounted for 2007-08 20.91 17.73 46.06 84.70
18 percent of the total cards issued followed by 2008-09 13.44 14.14 40.37* 67.95
Andhra Pradesh (17%), Maharashtra (10%), Tamil
Cumulative 361.45 114.71 352.54 828.70
Nadu (7%), and Karnataka, Madhya Pradesh, Orissa
*: Upto 31 December 2008
and Rajasthan (6% each).

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Ch-Eng-1.p65 25 7/15/2009, 10:42 AM

 renew them in time to ensure ‘quality in operations’. Table 1.14: Gross Capital Formation in Agriculture
Banks were also advised to ensure coverage of (At 1999-2000 prices)
all KCC-holders under Personal Accident Insurance
(Rs. crore)
Scheme (PAIS).
Year GCF Ratio of GCF in Agriculture to (%)
in Agri GDCF Agri. GDP Total GDP
Agricultural Debt Waiver and Debt Relief
1999-00 43,473 8.6 10.6 2.2
Scheme
2000-01 39,027 8.0 9.6 1.9
1.36 The Union Budget 2008-09 had announced 2001-02 48,215 10.2 11.1 2.2
Agricultural Debt Waiver and Debt Relief Scheme, 2002-03 46,823 8.4 11.8 2.1

2008 to ameliorate the indebtedness of farmers and 2003-04 44,833 6.7 10.2 1.9
2004-05 49,198 6.2 11.1 2.1
difficulties faced by farming communities, especially
2005-06 56,459 6.0 12.1 2.2
small and marginal farmers. NABARD implemented
P
2006-07 62,663 5.9 12.9 2.2
the Scheme as nodal agency for co-operative banks
2007-08 Q 67,864 5.5 12.3 2.2
and RRB. About 193 lakh farmer-borrowers of co-
P : Provisional. Q : Quick Estimate
operative banks and RRB are estimated to have
Source : Central Statistical Organisation, GoI
benefitted under the Scheme. The proportion of small/
marginal farmers benefitting is 83 per cent.
(end-31 March 2008). The weather based crop
F. Capital Formation insurance scheme (WBCIS) to protect farmers against
adverse conditions of weather parameters like rainfall,
1.37 Capital formation is very crucial in determining
temperature, frost, humidity, etc., was first
the production capacity in the future. Hence, there is
implemented during kharif 2007 in Karnataka and then
a need to step up capital formation in agriculture to be
extended to 12 states during rabi 2007-08. The scheme
able to reach the targetted growth of 4 per cent. Gross
was continued during 2008-09. The WBCIS has
capital formation (GCF) in agriculture increased from
covered about 6.71 lakh farmers. The total claims
Rs.43,473 crore in 1999-2000 to Rs.67,864 crore in
under the scheme for kharif 2007 and rabi 2007-08
2007-08. GCF as percentage of GDP in agriculture
amounted to Rs.106 crore. Insurance cover is now also
improved from 10.6 to 12.3 per cent during this period
available to farmers growing horticultural crops.
(Table 1.14). The past trends showed decline in public
sector formation, which in turn crowded out private
H. Land Reforms and Land Records
sector investment, the apparent revival in recent years,
notwithstanding. 1.39 Land reforms have formed the core of the
institutional reforms in agriculture. Of late, entry of
corporates in agriculture, forces of globalisation and
G. Agricultural Insurance liberalisation, etc., have necessitated a rethink on land

1.38 The National Agricultural Insurance Scheme reforms. At the same time, inclusive growth can be

(NAIS) continued to provide insurance coverage against ensured only by providing the poor access to land,

crop failure due to natural calamities, pests and
diseases. Since inception (1999-2000) of the Scheme,
about 11.55 crore farmers have been covered. During
this period, claims to the tune of Rs.11,607 crore have
been settled benefiting a total of 302 lakh farmers
credit, technology, markets and other productive assets.
Realising the importance of land reforms to achieve
this, GOI appointed the “Committee on State Agrarian
Relations and the Unfinished Task in Land Reforms”
under the chairmanship of the Union Minister for Rural

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 Development in 2008. The broad terms of reference 1.42 Sustainability has been a major issue in
relate to land ceilings, their implementation, tenancy agricultural sector. GoI launched a National Mission for
rights, besides suggesting better access of women to Agriculture as part of the effort to address climate
land and productive assets. change. It has suggested wide ranging action points
(Box 1.1).
1.40 Non-availability of proper land records has
always been a hindrance to land reforms and,
particularly, to development through credit. A J. Outlook for 2009-10
sponsored scheme on computerisation of land records
1.43 The Annual Monetary Policy Statement for
was started in 1988-89 with 100% financial assistance
2009-10 by RBI has many implications for rural
as a pilot project to address this problem. The Scheme
credit. Among others, introduction of CRAR norm for
is being implemented since 1994-95 in collaboration
RRB in a phased manner, assistance to RRB for
with the National Informatics Centre (NIC). At present,
adoption of ICT solutions for financial inclusion,
the scheme is being implemented in 544 districts of the
technology upgradation of RRB, liberalised branch
country. Of the 5261 tehsils where work is being
licensing, reckoning shortfall under weaker sections sub-
implemented, data entry was completed in 3537 tehsils
target (10%) for allocating amounts to RIDF,
(67.2%) and computerised copy of Record of Rights
continuation of interest subvention scheme, etc., will
(RoR) are available in 2923 tehsils (55.6%).
have implications for RFI and rural credit. The plan
of action will be finalised by the RBI in consultation
I. Climate Change with NABARD.

1.41 Global warming due to large-scale emmission of

1.44 The outlook for the coming financial year is of
Green House Gases (GHG) raises several concerns.
interest as the impact of global melt down is expected
Climate change being one of them has ocupied the
to roll over. While India is said to be less impacted
centre stage of academic and policy discussion round
compared to other parts of the world, the truth is that
the world. Government of India launched the National
no country can escape the downturn as amply
Action Plan on Climate Change during June 2008 to
demonstrated by the decline in industrial output. The
mitigate the impact of climate change on livelihoods of
year ahead is likely to have a lower growth of
people, sustainability and inter-generational equity
GDP inspite of favourable rainfall expectations.
issues in sharing natural resources. As part of the
Arrangement may have to be made with certain degree
national action plan, GoI constituted National Solar
of preparedness to provide a safety net to already
Mission, National Mission for Enhanced Energy
distressed farmers. Also, a number of initiatives may
Efficiency, National Mission on Sustainable Habitat,
have to be planned for the agriculture and other rural
National Water Mission, National Mission for
sectors for building long term capabilities while ensuring
Sustaining the Himalayan Ecosystem, National Mission
sustainability. Operating margins may have to be
for a Green India, National Mission for Sustainable
enhanced in favour of all farmers, especially the small
Agriculture and National Mission on Strategic
and marginal farmers, who are more vulnerable to
Knowledge for Climate Change.
market forces.

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Ch-Eng-1.p65 27 7/15/2009, 10:42 AM

 Box 1.1
National Mission for Sustainable Agriculture

Agriculture is vital to India’s economy and the livelihoods of its
people. The National Mission for Sustainable Agriculture, forming
part of the GOI’s National Action Plan on Climate Change,
suggested a multi-pronged strategy to make it more resilient to
climate change. The Mission seeks to identify and develop new
varieties of crops, especially thermal resistant crops, and
alternative cropping patterns capable of withstanding extremes of
weather, long dry spells, flooding and variable moisture
availability. Agriculture needs to progressively adapt to
anticipated climate change. It needs to be supported by the
convergence and integration of traditional knowledge and
practice systems, information technology, geospatial technologies
and biotechnology. The focus would be on improving
productivity of rainfed agriculture. The proposed National
Mission will focus on four areas crucial to agriculture in adapting
to climate change, namely dryland agriculture, risk management,
access to information and use of biotechnology.
Priority action on dryland agriculture: (i) development of
drought and pest-resistant crop varieties, (ii) improving methods
to conserve soil and water, (iii) training farming community,
stake holders for agro-climatic information sharing and
dissemination and (iv) financial support to enable farmers to
invest in and adopt relevant technologies to overcome climatic
related stresses.
Risk Management: (i) Strengthening of current agricultural
and weather insurance mechanisms, (ii) development and
validation for weather derivative models, (iii) creation of web-
enabled, regional language based services for facilitation of
weather based insurance, (iv) development of GIS and remote-
sensing methodologies for detailed soil resource mapping and
land use planning at the level of a watershed or a river basin, (v)
mapping vulnerable eco-regions and pest and disease hotspots
and (vi) developing and implementing region-specific contingency
plans based on vulnerability and risk scenarios.
Access to Information: (i) Development of regional databases
of soil, weather, genotypes, land-sue patterns and water
resources, (ii) monitoring of glacier and ice-mass, impacts on
water resources, soil erosion and associated impacts on
agricultural production in mountainous regions, (iii) providing
information on off-season crops, aromatic and medicinal plants,
greenhouse crops, pasture development, agro forestry, livestock
and agro processing, (iv) collation and dissemination of block-
level data on agro-climatic variables, land-uws and soci-
economic features and preparation of state-level agro-climatic
atlases.
Use of Biotechnology: (i) Use of genetic engineering to
convert C-3 crops to the more carbon responsive C-4 crops to
achieve greater photosynthetic efficiency for obtaining increased
productivity at higher levels of carbondioxide in the atmosphere
or to sustain thermal stresses, (ii) development of crops with
better water and nitrogen use efficiency which may result in
reduced emissions of green house gases or greater tolerance to
drought or submergence or salinity, (iiii) development of
nutritional strategies for managing heat stress in dairy animals to
prevent nutrient deficiencies leading to low milk yield and
productivity.

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Ch-Eng-1.p65 28 7/15/2009, 10:42 AM

 II Development Initiatives

NABARD continued to support various development and club programme, etc. This Chapter discusses the various
innovative programmes/ initiatives related to farm and initiatives and programmes of the Bank, efforts made
non-farm sectors, financial inclusion, Micro-Finance towards capacity building in the client institutions,
Institutions (MFI), Self-Help Groups (SHG), etc., in research and development activities funded during the
addition to the Bank’s on-going activities, viz., year. An account of the various developmental
watershed development, village development, farmers’ programmes of GoI and State Governments are given.

A. Watershed Development
2.2 The Watershed Development Fund (WDF) was
created with a corpus of Rs.200 crore during 1999-2000 to
replicate watershed development models
participatory approach. The corpus was augmented during
the year through interest accrued on unutilised portion of
the Fund (Rs.33.83 crore) and RIDF differential interest
(Rs.527.52 crore) taking the total
Rs.1,125.21 crore as on 31 March 2009. During
2008-09, 38 watershed projects were sanctioned, taking
the cumulative number of projects to 454 spread over 94
districts in 14 states. With a total commitment (loan and
grant) of Rs.257.20 crore under these projects, an area
of 4.54 lakh ha. is expected to be covered. The projects
are implemented in two phases, viz., Capacity Building
Farm Sector
Phase (CBP) and Full Implementation Phase (FIP).
During the year, 8 projects graduated to FIP, taking the
total of such projects to 169.
through
2.3 Under the Prime Minister’s Relief Package for 31
distress districts in four States, 1.90 lakh ha. has been
taken up for implementation during the year, taking the
cumulative area to 5.88 lakh ha. with total commitment
amount to
of Rs.706 crore. These watersheds are expected to
significantly mitigate farmers’ distress. While projects are
entirely grant based in distressed districts, combination
of grant and loan is provided in non-distress districts.
During the year, Rs.49.83 crore and Rs.8.10 crore were
disbursed as grants and loans taking the cumulative
disbursements to Rs.107.83 and Rs.15.10 crore,
respectively.

2.4 The participatory watershed development

programme being implemented by NABARD under the
Special Plan for Bihar component of Rashtriya Sam
Vikas Yojana (RSVY), aims to develop 80,000 ha. of
wasteland in Aurangabad, Banka, Bhabua, Gaya,
Jamuai, Munger, Nawada and Rohtas districts of Bihar
with an allocation of Rs.60 crore. During
2008-09, 18 watershed projects were sanctioned
involving financial commitment of Rs.21.60 crore, thus,
taking the cumulative number of watershed projects to
77 (covering 80,000 ha). During the year, 13 projects
DRIP Irrigation in Strawberry Garden. graduated to FIP taking the total to 15.

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Ch-Eng-2.p65 29 7/15/2009, 10:47 AM

 A sum of Rs.3.61 crore was disbursed during the year farmers to adopt new/innovative methods of farming.
and the cumulative disbursement stood at Farmers, preferably marginal and small, are taken on
Rs.5.62 crore as on 31 March 2009. exposure-cum-training visits to innovative projects.
Financial support is extended under the Farmers’

B. Village Development Programme Technology Transfer Fund (FTTF). During 2008-09,

116 exposure visits involving 3,048 farmers were
2.5 Introduced in 2007, the Village Development
arranged in collaboration with select research
Programme (VDP) envisages developing one village in
institutes, KVK, and Agriculture Universities on bio-
each DDM district and five villages in each of the PPID
globules, vermi-culture, bio-manures, organic farming,
blocks. A Village Development Committee comprising
poly-house technology, medicinal and aromatic plant
mainly of progressive villagers will take care of plan
cultivation, etc.
preparation, implementation, monitoring, etc. As on 31
March 2009, the programme is being implemented in
916 villages spread over 421 districts across 25 States. E. Tribal Development
2.9 The Tribal Development Fund (TDF) was
C. Integrated Development of created by NABARD in 2004 with a corpus of Rs.50
Backward Blocks crore to support integrated tribal development projects
2.6 The Pilot Project for Integrated Development with wadi as the core component. As on 31 March
(PPID) was launched in 2003 with the objective of 2009, balance outstanding in the Fund was Rs.574.98
bringing about integrated development of backward crore after marking out disbursement (Rs.28.05 crore)
blocks through credit and convergence of development during 2008-09. Assistance under the Fund is
programmes of various agencies. The programme is available for integrated tribal development programme
implemented primarily by RO through DDM. and the projects are expected to ensure sustainable
livelihood opportunities for tribal families, increased
agriculture/horticulture productivity and ecological
2.7 The project was expanded over the years to cover
sustainability. During the year, policy changes were
139 blocks across 16 States. Based on the feed back
effected wherein assistance was extended to socio-
received from RO about the identical nature of
economic weaker non-tribal families in the project
interventions under PPID and VDP, it was decided that
area as well, subject to their constituting maximum of
the duration of PPID would be restricted to three years
only, except wherever it was felt necessary to merge 10 per cent of total participating families. Sustainable

them with VDP. Following this, PPID has been closed livelihood options other than wadi, routing the
down in 29 blocks where it had completed three years assistance directly to the people’s organisations (being
and merged with VDP in 70 blocks. As on 31 March piloted) and stipulating an entry point activity like
2009, PPID was being implemented in 40 blocks across shramadan, were also attempted. During 2008-09,
6 states. grant of Rs.202.87 crore was sanctioned for 74
projects benefiting 61,924 tribal families in Andhra
Pradesh, Assam, Bihar, Chhattisgarh, Gujarat,
D. Capacity Building for Adoption of Jharkhand, Karnataka, Madhya Pradesh,
Technology Maharashtra, Nagaland, Orissa, Rajasthan, Uttar
2.8 NABARD has been implementing the ‘Scheme Pradesh and West Bengal. The cumulative sanction
for Capacity Building for Adoption of Technology’ was Rs.307.39 crore covering 93,217 families in 19
(CAT) through exposure visits and training to facilitate states and one UT.

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Ch-Eng-2.p65 30 7/15/2009, 10:47 AM

 G. Farmers’ Technology Transfer
Fund
2.12 The ‘Farmers’ Technology Transfer Fund’ (FTTF)
was set up and operationalised by NABARD with a
corpus of Rs.25 crore from 1 April 2008 with the
objective of promoting transfer of technology for
enhancing production and productivity in agriculture and
farm related activities. Operational guidelines on FTTF
were issued to major commercial banks, co-operative
banks and RRB in June 2008. These interventions are
Tomato cultivation. expected to result in perceptible impact at the ground
level. A Project Advisory Committee has been
constituted at HO level to recommend the proposals
received under FTTF.
F. Farm Innovation and Promotion
Fund 2.13 During 2008-09, 12 proposals were sanctioned
in 6 states involving financial assistance of Rs.233.31
2.10 The Farm Innovation and Promotion Fund (FIPF)
lakh (Rs.161.31 lakh as grant and Rs.72 lakh as soft
with a corpus of Rs.5 crore was set up in NABARD in
loan) for implementation of technology transfer and
2005 to promote innovative and feasible concepts/
capacity building programmes in areas like value
projects in agriculture and allied activities, development
chain of Vettiver Oil Production; turmeric processing
of marketable prototypes, technology patenting,
involving National Research Development Corporation
extension support, marketing, etc. During 2008-09, 14
(NRDC) and Mizorganic as a Special Purpose Vehicle
proposals were sanctioned in 6 States involving financial
(SPV) by Producer Group Company of farmers in
assistance of Rs.180.97 lakh (Rs.99.33 lakh was grant Mizoram;establishment of Outreach Centre by Central
and Rs.81.64 lakh as soft loan) covering areas like Agricultural Research Institute (CARI) at Diglipur for
village farm development, rainfed rabi cropping, efficent North & Middle Andaman District, etc. In addition, 22
management of carbon and plant nutrients under dry Farmers’ Training and Rural Development Centres were
land agriculture, etc. Cumulatively, as on 31 March sanctioned assistance of Rs.80.20 lakh during the year.
2009, 61 projects were sanctioned in 18 States
involving financial support of Rs.462.16 lakh, comprising 2.14 Further, to ensure specific strategies for Bihar,
grant and soft loan assistance of Rs.323.79 lakh and Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan,
Rs.138.37 lakh, respectively. Orissa and Uttar Pradesh, the respective ROs were
advised to identify appropriate projects for funding
support under FTTF highlighting, (i) identification of one
2.11 Of the 61 projects sanctioned, 16 projects have
compact block in each state, (ii) synergy with PPID/VDP
been successfully completed. Disbursement for the
programmes, (iii) centre staging of Farmers’ Clubs under
completed projects amounted to Rs.39.87 lakh the programme and (iv) prioritisation of technological
(Rs.34.68 lakh as grant and Rs.5.19 lakh as soft loan). interventions to 3 or 4 areas like soil and water
Of the completed projects, four were in Maharashtra, conservation, improved productivity measures, organic
three each in Jharkhand and Uttarakhand, two in farming, System of Rice Intensification (SRI) technique,
Chhattisgarh and one each in Delhi, Gujarat, Meghalaya energy solar technology, production of hybrid seed
and West Bengal. varieties, etc.

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 H. Farmers’ Club Program the Bank along with FMC organised eight such
programmes.
2.15 The Farmers’ Club (FC) programme aims to
organise farmers around a common agenda to facilitate
access to credit, technology, markets and extension
J. Government Projects
services. During the year, NABARD reviewed its policy 2.18 NABARD also continued to discharge the
for supporting FCs through various agencies. It was functions of implementing/project coordinating agency
decided to extend uniform support of Rs.10,000 for for various area specific projects of GoI.
three years to commercial banks, RRBs, co-operative
banks and grassroot level organisations (NGOs, PRIs, i. Kutch Drought Proofing Project
KVKs, Post Offices, etc.) for promoting and nurturing of 2.19 NABARD has been implementing the Kutch
FCs. The promoting agency will take steps to make the Drought Proofing Project since 2005 through community
clubs self-sustaining over a period of 3-5 years, when based organisations and NGOs. Till date, of the ten on-
funding support by institutional agencies will be going projects, implementation in the case of six projects
withdrawn. The sponsoring banks/agencies have to is complete. During 2008-09, Rs.4.43 lakh was
provide a consent letter for maintaining the clubs beyond disbursed. As on 31 March 2009, NABARD received
the agreed period of 3 years of NABARD support. The Rs.3.54 crore from GoI of which Rs.2.90 crore was
requirements of clubs have been segregated into ‘routine’ disbursed.
and ‘non-routine’ activities, and the latter shall be
supported on merit. The revised policy emphasises on ii. Cattle Development Projects
formation of federations of FCs/producers’ groups/ 2.20 The Projects are implemented by BAIF, Pune,
companies at district level with a view to promoting in 13 districts of Bihar and 17 districts of Uttar
increased access to credit, productivity and income Pradesh since 2004-05. The duration of both projects,
through collective efforts. which expired in February 2009, has been extended
upto 30 June 2010 by GoI without any additional
2.16 During the year 9,989 clubs were launched, financial assistance. NABARD is the co-ordinating
taking the total number of clubs to 38,215 covering agency and facilitator for channelising funds, ensuring
87,724 villages in 581 districts as on 31 March 2009. its utilisation, project supervision and monitoring. Out
Agency-wise, RRBs promoted maximum number of of Rs.13.61 crore allocated to each, an amount of
clubs (16,925), followed by commercial banks (10,058), Rs.10.89 crore each has been released by GoI under
co-operative banks (7,230) and other agencies (4,002). the Projects as at end-March 2009. During 2008-09,
The region-wise distribution of clubs indicates, that the Rs.161.47 lakh and Rs.142.33 lakh were released for
southern region has the major share (28%), followed by Uttar Pradesh and Bihar taking the cumulative
central (27%) eastern (17%), western (14%) and the disbursement to Rs.887.97 lakh and Rs.845.23 lakh,
northern (11%) regions while NER accounts for only 3 respectively, as on 31 March 2009.
per cent.
iii. Special Project on Livelihood Based
Development
I. Commodity Futures Trading
2.21 Sanctioned under SGSY by GoI in Sultanpur
2.17 In order to enable the farming community to reap and Rae Bareli districts of Uttar Pradesh the project is
the benefits of commodity futures trading, NABARD in under implementation since 2006-07. The project aims
collaboration with the Forward Market Commission to cover 11,500 BPL families in each district at an
(FMC) has undertaken the responsibility of organising approved cost of Rs.14.97 crore for Sultanpur and
exposure workshops for skill upgradation of farmers to Rs.14.90 crore for Rae Bareli. NABARD is the project
ensure their participation in the market. During 2008-09, holder on behalf of MoRD while BAIF and Dr. Reddy

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 Foundation (DRF) are implementing it. As on for 51 poultry). The cumulative sanctions stood at
31 March 2009, of the grant of Rs.5.16 crore and Rs.109.32 crore for 10,848 units (Rs.99.76 crore for
Rs.5.13 crore received from GoI for Sultanpur and Rae 10,656 dairy and Rs.9.56 crore for 192 poultry) as on
Bareli districts, disbursements of Rs.4.85 crore and 31 March 2009.
Rs.4.37 crore, respectively, were made.

iv. Dairy and Poultry Venture Capital Fund L. Externally Aided Projects

2.22 The programme is under implementation since 2.23 NABARD received Rs.37.25 crore and disbursed

2005-06. Assistance is extended as interest free loan an amount of Rs.32.01 crore as grant assistance during

upto 50 per cent of the outlay for identified components the year under the KfW supported externally aided

under dairy and poultry sectors. NABARD is the nodal projects, which are in various stages of implementation

agency for operationalising the scheme and (Table 2.1)

administering the Fund. The cumulative amount

a. On-going Projects
received from GoI was Rs.112.99 crore. During 2008-09,
an amount of Rs.43.59 crore was sanctioned for 4,840 2.24 The KFW-NABARD-V-Adivasi Development
units (Rs.39.71 crore for 4,789 dairy and Rs.3.88 crore Programme in Gujarat with an outlay of

Table 2.1: Support Extended under KfW-NABARD Externally Aided Projects

(Rs. lakh)
Sr. Name of the Project Effective Closing External Disbursements made Amount received by
No. From Date Assistance by NABARD NABARD
(• million) During Cumm. upto During Cumm. upto
2008-09 31.03.2009 2008-09 31.03.2009
1. KfW-NABARD
i. V-Adivasi Development 23 Dec 1994 30 Dec 2010 13.29 287.67 5,797.64 509.08 6,065.27
Programme in Gujarat (+ 1.5 Suppl. Grant)
ii. IX-Adivasi Development 2 June 2000 30 Dec 2010 14.32 623.98 4,664.58 647.96 4,669.08
Programme in Maharashtra
iii. Indo-German Watershed 15 July 2002 31 Dec 2011 8.69 365.16 667.13 342.22 691.52
Development Programme in
Andhra Pradesh
iv. Indo-German Watershed 27 Aug 2005 30 Dec 2009 19.94 1,438.03 2,468.62 1,777.16 2,645.25
Development Programme in
Maharashtra (Phase III)
v. Indo-German Watershed 7 Feb 2006 31 Dec 2012 9.20 123.18 180.48 100.80 230.34
Development Programme
in Gujarat
vi. Indo-German Watershed 7 Dec 2006 30 Dec 2014 11.00 73.92 123.43 70.40 160.62
Development Programme
in Rajasthan
vii. Adivasi Development 28 March 2006 31 Dec 2014 7.00 - - - -
Programme in
Gujarat (Phase II)
viii. KfW-Sewa Bank Project 28 June 2002 31 Dec 2009 4.09 292.95 392.95 296.40 396.92
2. NABARD- X- Credit Line
i. Grant 20 Oct 2006 31 Dec 2008 1.20 - - - -
ii. Loans 20 Oct 2006 31 Dec 2008 40.00 - 22,165.88 - 22,165.88

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 Rs.62.89 crore has been under implementation since check dams, 31 permanent dams, 3,149 jalkunds,
1994-95 in Valsad and Dangs districts through BAIF development of 1,049 spring sites and deepening/
Development Research Foundation, Pune. The in-built desilting of 99 old wells were completed as at end-March
credit programme is being implemented through Gram 2009.
Vikas Mandals (GVM) since 1998-99. As on
31 March 2009, a total of 488 SHGs formed in 130 2.26 The Indo-German Watershed Development
project villages achieved cumulative savings and Programme (IGWDP) in Maharashtra, introduced in
disbursements of Rs.39.51 lakh and Rs.55.57 lakh, early nineties is an integrated programme for
respectively. Eleven tribal co-operatives were also regeneration of natural resources, implemented by
registered to facilitate self-sufficiency in processing and Village Watershed Committees (VWCs) in association
programme management. These co-operatives collected with NGOs. The programme has successfully
288 tonnes of raw cashew (205 tonnes were processed) completed two phases ( Phase I : 1990 - 2000 and
and processed 4.30 tonnes of karvanda and 24.90 Phase II: 2001 – 2007) and has covered 95
tonnes of mango for making pickles through GVMs. As watersheds aggregating 1.13 lakh ha. spread across
on 31 March 2009, the loan disbursed and overall 25 districts. Under Phase III of the programme, which
recovery was to the tune of Rs.5.13 crore and Rs.4.24 commenced in January 2005, with an additional
crore, respectivey. KfW has also sanctioned Phase II commitment of • 19.94 million (approx. Rs.110 crore),
(2006-2014) of the programme involving grant 109 projects were sanctioned. Of these, 41 projects
assistance of • 7 million (approx. Rs.42.47 crore) to are under CBP, 28 under feasibility report/interim
cover 4,700 families from these districts, of which phase (FR/IP), 30 under FIP, 9 projects completed
2,159 families were identified and 864 ha. of wadi and 1 project discontinued.
established as at end-September 2008. A total of 102
2.27 KfW, Germany committed grant assistance of
wadi tukadis (SHGs formed by group of 8-10 wadi
• 8.69 million (approx. Rs.48.66 crore) under Indo-
owners) have been formed and savings worth
German Watershed Development Programme in Andhra
Rs.55,088 mobilised.
Pradesh for rehabilitation of watersheds in four districts
(Adilabad, Karimnagar, Medak and Warangal). A
2.25 Under the KfW-NABARD-IX-Adivasi Development
Programme Support Unit (PSU) has been set up in
Programme in Maharashtra, the successful wadi model of
Andhra Pradesh RO for overseeing implementation of
Gujarat is being replicated in Nasik and Thane districts
the project. A total of 38 projects are being implemented
through Maharashtra Institute of Technology Transfer for
of which, 8 are under FIP, 3 under FR/IP, 27 under
Rural Areas (MITTRA), Nasik. The programme with a
CBP. KfW has approved an additional amount of •2
project period of 10 years (2000-2010) aims to support
million (approx Rs.11 crore) for Complementary
13,000 tribal families by developing wadis on their
Measures Programme for capacity building of
marginally productive lands. The total families covered
stakeholders.
by the project are 13,848 from 258 villages and wadi
area of 4,977.12 ha. (as against the target of 4,048.58 2.28 The Indo-German Watershed Development
ha.) About 1,530 tribal participant families have taken Programme in Gujarat envisages rehabilitation of
up vegetable cultivation on 98.8 ha. of land. As at end- watersheds in four districts (Dahod, Panchmahals,
March 2009, 872 wadi tukadis were formed and all had Sabarkantha and Vadodara) with a commitment of
bank accounts with total savings worth Rs.50.15 lakh • 9.2 million (approx. Rs.51.52 crore) for the purpose. A
and internal lending of Rs.22.97 lakh. As on total of 35 projects are in various stages of
31 March 2009, an area of 278.54 ha. was brought implementation under the programme. Treatment
under block plantation and 4,917 ha. under soil measures under CBP are in progress in 21 projects, 4 are
conservation work. Under the water resources under FR/IP and 10 under pre-CBP. A Programme
development activities, construction of 2,230 temporary Management Unit (PMU), headed by a senior NABARD

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 official and assisted by subject matter specialists/ through GTZ has already been executed, the project
consultants has been set up in Dahod to oversee the agreement and separate agreement for financial
implementation. co-operation are in the final stage of execution.
During the year, four community managed NRM
2.29 KfW, Germany had committed grant assistance based livelihood projects were sanctioned in Bihar,
of • 11 million (approx. Rs.61.60 crore) under the Indo- Gujarat, Maharashtra and Tamil Nadu involving
German Watershed Development Programme in assistance of Rs.521.40 lakh (Rs.485.70 lakh as
Rajasthan for watershed development in five districts loan and Rs.35.70 lakh as grant). Cumulatively,
(Banswara, Chittorgarh, Dungarpur, Pratapgarh and financial assistance of Rs.557.39 lakh (Rs.516.34 lakh
Udaipur). In all, 21 projects are being implemented as loan and Rs.41.05 lakh as grant) were sanctioned
under the programme, of which, 13 are under CBP and for six projects in Bihar, Gujarat, Maharshtra, Orissa
8 under pre-CBP. A PMU, headed by a NABARD and Tamil Nadu, as on 31 March 2009, to be
official, has been set up in Udaipur. The specialists/ implemented by NGO and Producers’ Companies.
consultants of Dahod PMU assist the Udaipur PMU and During the year, Rs.259.99 lakh (Rs.250.49 lakh as
also co-orindate the operational aspects related to loan and Rs.9.50 lakh as grant) was disbursed, taking
project implementation. the cumulative disbursement to Rs.278.99 lakh
(Rs.265.64 lakh as loan and Rs.13.35 lakh as grant) as
b. Umbrella Programme on Natural at end-March 2009.
Resource Management
2.30 The Umbrella Programme on Natural Resource 2.31 During the year, loan product development
Management (UPNRM) is the new loan-cum-grant exercise with technical assistance from GTZ was also
based programme being piloted by NABARD from completed wherein various prototypes of loan products
2007-08 under Indo-German collaboration. It were developed to facilitate marketing of UPNRM to
envisages a shift from (i) project-based to programme- potential channel partners. In addition, marketing
based funding and (ii) grant-based to loan-based efforts through workshops, meetings, publishing
funding in the NRM sector. Pending execution of the marketing flyers and one-to-one contact among NGO,
project and financial agreement for financial and corporates, State Governments and MFI were taken
technical collaboration, the projects are being up. During the year, NABARD in collaboration with
supported by utilising funds currently available under GTZ-New Delhi conducted sensitisation and training
various Indo-German projects. The bilateral dialogues programme for its staff, bankers and NGO on climate
were carried forward during the year. While the change and Clean Development Mechanism (CDM).
implementation agreement on technical co-operation
2.32 NABARD is in the process of establishing a Bio-
Carbon Fund (BCF) in close collaboration with GTZ
for taking up green projects for climate change
mitigation and adaptations. A feasibility study on
setting-up BCF was assigned to Zenith Energy and
First Climate with financial support from GTZ under
UPNRM. The first phase of the study has already
been completed wherein the feasiblity of the BCF has
been established. The study report recommended that
the Fund should cater to Land Use, Land Use
Change and Forestry (LULUCF), agriculture,
agribusiness and rural infrastructure sectors under
Organic cultivation of Jowar. CDM as well as voluntary carbon credits market.

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 Rural Non-Farm Sector
A. NABARD-SDC Rural Innovation School of Rural Enterprise Management (CSREM) for
Fund conducting a diagnostic study on collection and
marketing of minor forest produce by tribals in Andhra
2.33 Innovative, risk mitigating experiments in farm,
Pradesh. For capacity building of staff engaged in RIF
non-farm and micro-Finance sectors as also projects
work, a regional workshop on identification and funding
with potential to generate employment opportunities in
rural areas are supported through the Rural of innovative projects was organised at Puri. Three

Innovation Fund (RIF). During 2008-09, 65 innovative publications - Understanding Innovations, Outcome-

projects were sanctioned taking the cumulative based Monitoring and Brochure on RIF (bilingual) were

number of projects sanctioned to 97, spread across also brought out.

22 states. An amount of Rs.12.48 crore (including
supplementary assistance to projects sanctioned 2.36 A Mid-Term Review Team headed by
earlier) was sanctioned during the year, taking the Dr. T. Haque was constituted to review the
cumulative sanctions made till end-March 2009 to performance of RIF and suggest mid-course
Rs.20.67 crore (up from Rs.8.19 crore as on 31 corrections, if any. The Steering Committee on RIF
March 2008). based on the Team’s report decided that (i) for
scrutiny of funding proposals, commercialisation and
2.34 As on 31 March 2009, 29 projects were in innovation shall be viewed as complementary features,
advanced stages of implementation. The projects (ii) 80 per cent of RIF budget to be dedicated for
supported involve both product and process funding innovative projects, and (iii) RO staff and
innovations. During the year, two projects were jointly DDM to be sensitised for scouting large number of
funded by NABARD and Department of Science and innovative projects.
Technology (DST) for (i) developing IT based advisory
services to farmers in Maharashtra and (ii) utilisation
B. District Rural Industries Project
of dry pine needles for use as cooler pads and for
production of lignin (an import substitute) having 2.37 The District Rural Industries Project (DRIP),
industrial uses. Some of the other projects sanctioned introduced as a pilot project during 1993-94, had
include setting-up of (a) Skill Training and Placement covered 106 districts by end-March 2007. On its
Cell for rural migrant labour in south Rajasthan, (b) successful implementation, the project was phased out
ready-to-eat fruit slices unit using Defence Food in 43 districts during 2006-2009. NABARD will continue
Resource Laboratory technology in Kerala and (c) to extend promotional support in these districts for
developing the dying art of Manjusha in Bihar. An developmental interventions.
additional commitment of Rs.5 crore was also made
to Aavishkaar Micro Venture Capital Fund during the 2.38 During 2008-09, GLC flow in 63 districts covered
year, taking the total commitment to Aavishkaar to under various phases reached Rs.1,378.17 crore and
Rs.10 crore. The total commitment under RIF, as on refinance availed was Rs.132.65 crore. A total of
31 March 2009, stood at Rs.60 crore. Further, as at 1.05 lakh units were set up generating employment for
end-March 2009, equity investments in 20 projects 1.98 lakh persons. Since inception of the project, GLC
amounting to Rs.8 crore from the Fund have already flow aggregated Rs.23,619.12 crore, facilitating
been committed. establishment of 19.04 lakh units and generating
employment opportunities for 43.06 lakh persons. The
2.35 Under Component III of RIF (Action Research), an cumulative refinance availed amounted to Rs.3,647.35
amount of Rs.3.72 lakh was sanctioned to Centurion crore, as on 31 March 2009.

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 C. Strengthening of Rural Haats Under the partnership mode, grant support of upto
Rs.15 lakh/cluster over 3 years is made available, while
2.39 The ‘Scheme for Strengthening of Rural
under the intensive mode, grant not exceeding Rs.1
Haats’, introduced in 1999 in DRIP districts, was
crore/cluster for a maximum of 5 years is provided. The
extended to all districts, village bazaar boards, SHG,
broad sectors identified for development on priority basis
NGO and to PRI/PACS during the year. The ceiling
under the programme are agriculture and allied
under the scheme was increased from Rs.3 lakh to
activities, food processing, rural SME, handicrafts and
Rs.5 lakh and coverage extended to include
handlooms, etc.
permanent structure/s as per local requirements.
During 2008-09, grant support of Rs.185.90 lakh was
sanctioned to 46 haats, 10 each in Andhra Pradesh 2.41 NABARD extended the cluster approach for
and Manipur, 5 in Tamil Nadu, 4 in Uttar Pradesh, developing agri/rural tourism, especially home-based
3 each in Bihar, Maharashtra and Orissa, 2 in rural tourism and agri-tourism in association with State
Nagaland and 1 each in Arunachal Pradesh, Assam, Tourism Department/Tourism Corporations, private
Meghalaya, Mizoram, Rajasthan and West Bengal. tourist operators and rural community. As on 31 March
Cumulative grant assistance of Rs.330.81 lakh has 2009, 101 clusters (90 participatory, 6 intensive, 3 rural/
been sanctioned for strengthening infrastructure in agri tourism, 1 NPRI and 1 rural toursim-cum-
101 rural haats across 22 States. handicrafts) across 81 districts in 25 States have been
approved. During 2008-09, 37 participatory, 1 intensive
D. Cluster Development and 1 eco-tourism clusters were sanctioned involving
grant of Rs.310.92 lakh.
2.40 Recognising the potential of cluster approach in
promoting rural industrialisation, raising income levels
and living standards of artisans through various planned 2.42 In accordance with GoI’s special emphasis on
interventions, NABARD has been actively involved in developing the handloom sector, NABARD decided to
development of 56 clusters under the National develop 50 handloom weavers’ clusters in partnership
Programme on Rural Industrialisation (NPRI). Beginning with other developmental agencies. As on
2005-06, NABARD decided to develop 55 clusters (50 31 March 2009, 59 handloom clusters (22 in Jharkhand;
participatory clusters partnering with other agencies and 8 each in Assam and Maharashtra; 4 in West Bengal; 2
5 intensively on its own) within a period of 3-5 years. each in Karnataka, Orissa, Rajasthan, Uttarakhand and
Uttar Pradesh; and 1 each in Bihar, Chhattisgarh,
Manipur, Meghalaya, Mizoram, Punjab and Tamil
Nadu) were approved.

2.43 With view to ensuring smooth implementation

Rural Mart supported by NABARD.
and monitoring of the cluster development initiative,
capacity building programmes were organised through
Entrepreneurship Development Institute of India, IIBM,
BIRD and RTC-Mangalore for imparting training on
various aspects of cluster development, viz., conducting
diagnostic studies, preparing action plan and monitoring
methodology. The participants were officials from banks,
government departments, NGO/VA and NABARD.
During 2008-09, 8 on-location cluster workshops were

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 conducted, taking the total number of such programmes 2.48 The scheme for setting-up of rural marts was
to 17. piloted by NABARD in 2005 and extended to all States in
2007, to enable rural artisans/craftmen realise optimum
prices and to establish marketing linkages. During 2008-
E. Rural Entrepreneurship Development
09, 73 rural marts in 12 States were sanctioned with
and Skill Development Programme
grant assistance of Rs.72.99 lakh. Cumulative grant
2.44 NABARD, since early nineties, has been
support of Rs.198.61 lakh has been provided to 202 rural
supporting both Rural Entrepreneurship Development
marts across 17 States.
Programme (REDP) and Skill Development Programme
(SDP) as a proven tool for generating self-employment
2.49 The provision of ‘Product Gallery’ in Post Offices
opportunities in rural areas. During the year 2,083
for displaying SHG products, initially introduced in
REDP/SDP involving a total amount of Rs.1,303.60 lakh
Meghalaya, was extended to all States. During the year,
were sanctioned, benefiting 50,264 rural youth.
two such units were sanctioned in Tiruvarur and
Cumulatively 11,905 REDP/SDP involving grant support
Sivaganga districts of Tamil Nadu.
of Rs.6,039.54 lakh covering 3 lakh persons were
supported as on 31 March 2009. Besides, an amount of
Rs.88.03 lakh was sanctioned to RUDSETI for capital H. Swarojgar Credit Card Scheme
expenditure.
2.50 The Swarojgar Credit Card (SCC) Scheme was
introduced in 2003 for facilitating hassle-free availability of
F. Women Empowerment Programme credit for meeting investment and working capital
2.45 The scheme for supporting Women Development requirements of small/micro-entreprenerus. During the year,
Cells (WDC) in RRB and co-operative banks, in 1.50 lakh cards with credit limit of Rs.627.98 crore were
operation since 1995-96, was modified and made issued. As on 31 March 2009, 9.84 lakh SCC involving an
performance linked with effect from 1 April 2007. During aggregate credit limit of Rs.4,007.33 crore were issued by
2008-09, 33 WDC were set up in 19 RRB, 12 DCCB various banks.
and 2 SCARDB. As on 31 March 2009, 102 WDC in 56
RRB, 43 DCCB and 3 SCARDB were sanctioned under
the modified scheme.
I. Training and Sensitisation
Programme
2.46 Under schemes for Marketing of Non-Farm
2.51 NABARD continued to provide financial support
Products of Rural Women (MAHIMA) and Assistance to
to institutions like BIRD - Lucknow, RTCs at Mangalore
Rural Women in Non-Farm Development (ARWIND),
and Bolpur, NIRB-Bangalore, MDMI-Shillong and IIBM-
grant support of Rs.6.02 lakh and Rs.6.82 lakh,
Guwahati for imparting training to participants in
respectively, was released till 31 March 2009.
various subjects in rural credit. During the year,
NABARD released Rs.19.46 lakh towards its share
G. Marketing / Other Initiatives (15%) of recurring expenditure of IIBM, Guwahati. The
2.47 During 2008-09, 213 marketing events/ Bank also released Rs.5.82 lakh to NIRB, Bangalore for
exhibitions were supported with grant assistance of conducting 25 programmes and Rs.3.40 crore (including
Rs.111.06 lakh. The Bank also co-sponsored SARAS grant of Rs.1.24 crore) to BIRD, Lucknow for supporting
Mahalaxmi Fair-2008 at Mumbai wherein 95 artisans activities of the Centre for Micro-Finance Research.
from 25 States participated in the 12 day-long Further, 45 training programmes covering 1,050 officers
exhibition. These events helped the artisans to realise of client banks, involving expenditure of Rs.118.37 lakh,
sales of over Rs.11 crore. were conducted during the year.

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 Financial Inclusion
2.52 The Committee on Financial Inclusion, headed enhancing investment in Information and
by Dr. C. Rangarajan, was set up by GoI to look into Communication Technology (ICT) aimed at promoting
the issues involved and suggest measures for bringing financial inclusion, stimulate transfer of research and
the excluded population into the ambit of the financial technology, increase technology absorption capacity of
system. Measures suggested by the Committee are financial service providers/users and encourage an
expected to provide access to comprehensive financial environment of innovation and co-operation among
services to at least 50 per cent (55.8 million) of the stakeholders. Both Funds have been set up with corpus
excluded rural households by 2012 and the remaining by of Rs.500 crore each (Table 2.2). During the year, four
2015. The Committee broadly defines financial inclusion and five projects were sanctioned under FIF and FITF,
as the process of ensuring access to financial services respectively (Box 2.1).
and timely/adequate credit, wherever needed at an
affordable cost to the weaker sections and low income
Table 2.2: Funding Sources for FIF and FITF
groups.
(As on 31 March 2009)
(Rs. crore)
2.53 Based on the Committee’s recommendations, Particulars Contribution Initial Corpus
GoI entrusted NABARD with setting-up of two funds, (%) Received
viz., Financial Inclusion Fund (FIF) and Financial FIF FITF FIF FITF

Inclusion Technology Fund (FITF). The FIF aims to GoI 40 40 10 10

RBI 40 40 -* -*
support developmental and promotional activities to
NABARD 20 20 5 5
secure greater financial inclusion particularly among
Total 100 100 15 15
weaker sections / low income groups and in backward
*: Matching contribution of 40% to be received with disbursements.
regions/hitherto unbanked areas. The FITF will focus on

Box 2.1
Financial Inclusion: Projects sanctioned during 2008-09
Projects under FIF
• Trainers’ training programme on financial literacy in
Kolkata.
• Pilot project to establish farmers’ service, village
knowledge, mobile credit counselling centres, promote
financial literacy and farmer education through mass
media in South Malabar district of Kerala through South
Malabar Gramin Bank.
• Pilot project for capacity building of 25 FC of West
Tripura, South Tripura and North Tripura districts to
function as business facilitators, generating new accounts
and business for Tripura Gramin Bank.
• R&D project for ICT solution in 15 select RRB with
support from World Bank and Technology provider.
Projects under FITF
• Smart card based pilot project in Tirunelveli district of
Tamil Nadu, covering 500 SHG (6,000 customers) to
help Pandyan Grama Bank and NGO in registering,
lending and micro-financing SHG.
• Project on smart cards in Medak, Mahbubnagar and
Warangal districts of Andhra Pradesh to facilitate
payments to the beneficiaries of NREGS and Social
Security Pensioners, opening of ‘No Frill Accounts’ of
other rural households by Andhra Pradesh Grameen
Vikas Bank (APGVB). Services are being extended
through Business Correspondent Model with the help of a
biometric card and mobile device. This will cover 13 lakh
beneficiaries in 1,115 villages.
• Pilot project to establish Financial Inclusion Hubs aiming
a ‘e-branch’ facility offering multiple financial products &
services in 10 PACS in Andhra Pradesh.
• Pilot for installing four ATMs, one in each district of
Tripura by the Tripura Gramin Bank for technology
upgradation to reach out to the excluded population.
• Impact study of 100% achievement under Financial
Inclusion in Kanyakumari district.

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 2.54 Two Advisory Boards, one for each Fund, was
constituted by GoI for guiding and tendering policy
advice on various aspects. A Sub-Committee of
Advisory Board for FITF has also been constituted to
look into the ICT based interventions for extending the
financial services. Each of the Advisory Boards met
thrice during the year and based on their directives,
following actions were initiated.

• State level seminars and district level workshops for

sensitising the various stakeholders were conducted
by NABARD and other organisations.
Arecanut leaf plate making.
• NABARD designed and conducted a five-day
training module for capacity building of its field level
• RBI appointed a Special Working Group on
officers.
deepening of financial inclusion in Goa under the
• ‘A Handbook on Financial Inclusion’ was prepared Chairmanship of OIC, NABARD RO, Goa. The
and distributed to various stakeholders. report has since been submitted.

micro-Finance*
2.55 SHG-Bank Linkage Programme, since its pilot in 2.56 During the year 10,81,474 SHG were credit
1992, has emerged as the leading micro-Finance (mF) linked with banks and bank loan of Rs.11,131.74 crore
programme in the country. It is recognised as an (including repeat loans) disbursed taking the number of
effective tool for extending access to formal financial SHG credit linked to Rs.47,07,415 SHG as on
services to the unbanked rural poor. Encouraged by the 31 March 2009. As on 31 March 2008, 50.09 lakh SHG
success, the programme has been adopted by State maintained savings bank accounts and had savings
Governments as a major poverty alleviation strategy. It worth Rs.3,785.39 crore. The programme has covered
has also led to the emergence of Micro-Finance more than 7 crore poor households, making it the largest
Institutions (MFI) as a bridge between the banking sector mF programme in the world. The overall progress of the
and the rural poor. mF programme is given in Table 2.3.

Table 2.3: Progress of the Micro-Finance Programme

(As on 31 March)
(Rs. crore)
*
Particulars Self-Help Groups Micro-Finance Institutions #
2007 2008 2007 2008
No. Amount No. Amount No. Amount No. Amount
@
Loans disbursed 11,05,749 6,570.39 12,27,770 8,849.26 334 1,151.56 518 1,970.15
(1,88,962) (1,411.02) (2,46,649) (1,857.74)
Loans outstanding 28,94,505 12,366.49 36,25,941 16,999.90 550 1,584.48 1,109 2,748.84
(6,87,312) (3,273.04) (9,16,978) (4,816.87)
Savings accounts 41,60,584 3,512.71 50,09,794 3,785.39 - - - -
with banks (9,56,317) (757.50) (12,03,070) (809.51)
* : Figures in parentheses indicate the share of SHG covered under SGSY. @ : During the year
# : Actual number of MFI provided with bank loans would be lower as several MFI have availed loans from more than one bank.

* Due to change in data and MIS, the reporting is for the position as on 31 March 2008.

40

Ch-Eng-2.p65 40 7/15/2009, 10:47 AM

 A. Support to Partner Agencies members to inculcate skills for managing thrift and
credit;
2.57 NABARD continued to extend grant to support
NGO, RRB, DCCB, FC and Individual Rural Volunteers • 324 awareness-cum-refresher programmes for CEOs
(IRV) for promoting and nurturing quality SHGs. Efforts and field staff of NGOs, covering 18,594
continued towards roping in new Self-Help Promoting participants;
Institutions (SHPIs) and supporting the existing ones.
• 591 training programmes for officers of commercial
During 2008-09, grant assistance of Rs.1,768.53 lakh
banks, co-operative banks and RRBs covering
was sanctioned to various agencies for promoting
24,018 participants;
59,359 groups, taking the cumulative assistance
sanctioned to Rs.7,887.90 lakh for 4.36 lakh groups • Four Trainers Training programmes covering 90
(Table 2.4/Chart 2.1). As on 31 March 2009, 2.06 lakh participants;
SHG have been credit linked to banks and Rs.3,275.62
• 25 exposure visits to banks and institutions
lakh released.
pioneering in MF initiatives for 630 bank/NGO
officials;
B. Capacity Building of Partner Agencies
• 193 field visits to nearby SHGs for 4,507 Block
2.58 Capacity building of stakeholders is crucial for up
Level Bankers’ Committee Members;
scaling the SHG movement and maintaining quality and
sustainability of SHGs. With this in view, an expenditure • 54 programme for the elected Members of PRIs
of Rs.18.73 crore was incurred during 2008-09 on covering 2,014 participants to create awareness
various promotional activities as against Rs.13.32 crore among them about the mF initiatives;
in the previous year. Further, three zonal workshops for • a training-cum-exposure visit for new DDMs/ DDOs
the Bank’s staff were conducted at Hyderabad, and an exposure programme on mF and SHGs for
Lucknow and Patna. senior IAS officers through Lal Bahadur Shastri
National Academy of Administration, Mussoorie;
2.59 During the year, NABARD supported conduct
of: • 45 sensitisation programmes for government
officials covering 1,610 participants; and
• 3,122 awareness creation and capacity building
programmes for SHG members in association with • 839 other programmes covering 41,542
identified resource NGOs, covering 1,41,984 SHG participants.

Table 2.4: Grant Assistance Extended to various Partners

in SHG-Bank Linkage Programme
(Rs. lakh)
Agency Sanctions during the Year Cumulative Sanctions
No. Amount No. of SHG No. Amount No. of SHG

Co-operative Banks 12 136.92 9,465 95 563.13 53,875

RRB 2 20.70 800 113 389.30 44,590
NGO 311 1,564.29 46,504 2,318 6,405.71 2,91,780
Farmers’ Clubs - - - - 61.06 14,544
IRV 6 46.62 2,590 66 529.76 31,233

Total 331 1,768.53 59,359 2,592 7,887.96 4,36,022

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 2.62 The project envisages promoting and credit
linking 22,000 SHGs, 1,100 Cluster Level
Associations (CLA) and 44 Block Level Associations
(BLA) in collaboration with participating banks and
implementing NGO. With an implementation period
of eight years (2007-2014), the project will cover 15
and 29 blocks in Phase I and II, respectively, in
Sultanpur, Raebareli, Barabanki, Pratapgarh,
Lucknow, Unnao, Fatehpur, Jhansi, Lalitpur,
Bahraich, Shravasti and Banda districts.

2.63 The project is being designed by NABARD and

RGCT with technical assistance from SERP. The
strategy involves using Professional and Trained
C. Documentation and Dissemination Resource Persons (PRP) from Andhra Pradesh to
2.60 During the year, 175 meets/seminars on mF were provide continuous handholding, training, extending
organised with financial support of Rs.21.29 lakh for support to SHGs and their federations at cluster and
dissemination of the programme. The SHG programme block levels. Demonstration effect of the external
has had far-reaching impact on the lives of its poor Community Resource Persons (CRP) on the rural
clientele. In order to assess in detail the socio-economic- population of Uttar Pradesh is an important part of
political impact as well as the challenges, issues and the project. External CRP are SHG members from
bottlenecks facing the programme in enhancing credit Andhra Pradesh, who have come out of poverty and
flow to the poor, six state specific study proposals on are willing to share their experiences with rural women
‘Quality and Sustainability of SHGs’ were sanctioned in Uttar Pradesh and mobilise them into SHG. Till
during the year to independent agencies in Karnataka, date 7,808 SHGs were promoted under RGMVP in
Kerala, Maharashtra, Rajasthan, Tamil Nadu, and West Sultanpur, Raebareli and Barabanki districts, of which
Bengal. 3,972 SHGs were credit linked as at end-March
2009. In addition, 273 village level and 14 block
level federations were formed. Phase II of the project
D. Scaling-up of Micro-Finance was launched on 1 January 2009 and 8,467 SHGs
Programme: Special Initiatives were promoted, of which 3,378 SHGs were credit
a. Rajiv Gandhi Mahila Vikas linked.
Pariyojana in Uttar Pradesh
b. micro-Finance Vision 2011
2.61 The Rajiv Gandhi Mahila Vikas Pariyojana
(RGMVP) is a special initiative of the Rajiv Gandhi 2.64 During 2008-09, an amount of Rs.39.15 lakh
Charitable Trust (RGCT) for promotion, credit linkage was sanctioned by NABARD for implementing the
and formation of SHG federations in select districts of project ‘micro-Finance Vision 2011’ by Government of
Uttar Pradesh. The project aims to replicate the SHG Arunachal Pradesh. Further, an amount of
institutional model implemented under UNDP-South Rs.33.66 lakh was sanctioned to the Essomi
Asian Poverty Alleviation Programme (SAPAP) in Foundation Trust for setting-up a Resource Centre at
Andhra Pradesh in collaboration with Society for Itanagar for providing policy, operational inputs,
Elimination of Rural Poverty (SERP), Government of capacity building support and marketing linkages
Andhra Pradesh. among the groups.

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Ch-Eng-2.p65 42 7/15/2009, 10:47 AM

 c. State Support Project on SHG
2.65 The ‘State Support Project on SHGs’ designed by
the Government of Tripura and supported by NABARD
was launched in December 2008. The project aims to
credit link 11,500 existing SHG, forming and credit
bank loans would cover investment activities and
working capital needs of the groups. Banks shall be
eligible to draw refinance for the loans provided to
ABG on the same terms as applicable for SHG
financing. In select cases, NABARD may also provide

linking 35,000 new SHG and promoting livelihood loans directly to registered groups or through the
activities among its 3 lakh members upto 31 March agencies promoting groups to establish few initial
2012. NABARD is to provide technical and capacity projects where none exist.
building support, besides helping in designing systems
and procedures for smooth implementation of the b. Micro-Enterprise Development
project. Programme
2.67 NABARD had launched the Micro-Enterprise
E. Micro-Enterprise Promotion by SHGs
Development Programme (MEDP) during 2005-06 for
a. Support to activity based groups skill upgradation, development of sustainable livelihoods
and venturing into micro-enterprises by matured SHG
2.66 During 2008-09, NABARD introduced a
members. During the year, 564 MEDP were conducted
product/scheme for supporting small-scale Activity-
covering 14,030 SHG members on location-specific
Based Groups (ABG) in which capacity building,
farm, non-farm and service sector activities, viz., bee-
production/investment credit and market related
keeping, soybean cultivation, organic farming,
support would be extended. The scheme will focus on
horticulture, floriculture, tailoring, etc. Cumulatively
forming and nurturing groups engaged in similar
1,313 MEDP had been conducted covering 33,205
economic activities such as farmers, handloom
participants as at end-March 2009.
weavers, craftsmen, fishermen, etc., to improve
efficiency of their production and realise better terms
from the market through economies of aggregation c. Pilot Project for Promotion of Micro-
and scale. The scheme draws upon NABARD’s Enterprises
existing modes of support and has both grant and
2.68 Launched in 2005-06, the pilot project for
loan components. While grant support would cover
promotion of micro-enterprises among members of
expenditure on group formation and training,
matured SHG is based on the 3M approach
extension services, establishing market linkages, etc.,
(micro-credit, micro-market, micro-planning). It is
being implemented by 14 NGO acting as ‘Micro-
Enterprise Promotion Agency’ (MEPA) in nine
districts, viz., Ajmer (Rajasthan), Chandrapur
(Maharashtra), Kangra (Himachal Pradesh), Madurai
(Tamil Nadu), Mysore (Karnataka), Panchmahals
(Gujarat), North 24 Parganas (West Bengal), Puri
(Orissa) and Raebareli (Uttar Pradesh). Under the
project 11,000 SHG members have been identified to
take up micro-enterprise through credit support.
Cumulatively 6,107 micro-enterprises were established
involving credit support of Rs.535.44 lakh, as on 31
Farmers’ Club Meeting in progress. March 2009.

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Ch-Eng-2.p65 43 7/15/2009, 10:47 AM

 F. Support to Micro-Finance available for the first rating of MFI with loan
Institutions outstanding exceeding Rs.50 lakh but less than Rs.500
lakh. During the year, rating support amounting to
2.69 Recognising the role of MFI in supplementing the
Rs.3.40 lakh was extended to banks in respect of four
efforts of the formal banking network in providing credit
agencies.
support to unreached clients for inclusive growth,
NABARD supports them through grant and loan based
2.73 During 2008-09, the Bank introduced a new
assistance from the Micro-Finance Development and
scheme to provide grant assistance directly to MFI for
Equity Fund (MFDEF).
availing the services of credit rating agencies for their
rating. The scheme is operational across the country for
2.70 The MFDEF, with a corpus of Rs.200 crore
one year (Box 2.2).
(Rs.160 crore contributed by different partners till
date) and maintained by NABARD, is used for
c. Capital/ Equity Support
promoting mF through scaling-up the SHG-bank
linkage programme, extending Revolving Fund 2.74 The scheme seeks to enable MFI to leverage
Assistance (RFA) and capital support to MFIs and capital/equity for accessing commercial and other
supporting various promotional initiatives/activities. funds from banks for providing financial services at
During the year, a sum of Rs.34.66 crore was utilised an affordable cost to the poor, and achieve
from the Fund towards mF related activities. The sustainability in credit operations over 3 to 5 years.
Advisory Board of MFDEF, comprising of During 2008-09, capital/equity support amounting to
representatives from RBI, commercial banks,
Rs.11.75 crore was sanctioned to 13 agencies taking
professionals with domain knowledge and NABARD,
the cumulative support to Rs.21 crore covering 24
provides guidance in formulation and refinement of
agencies as on 31 March 2009. NABARD also
policy initiatives.

a. Revolving Fund Assistance

2.71 NABARD has been selectively supporting MFI Box 2.2
for on-lending to the unreached poor as also Rating Support to MFI: Salient Features

experimenting with various mF models to innovate • The scheme is operational through out the country for a
alternative, sustainable and replicable credit delivery period of one year.

systems. During the year, RFA amounting to Rs.6.35
crore was sanctioned to four agencies taking the
cumulative credit sanctioned to Rs.42.73 crore and
covering 37 agencies.
• MFI (i) with a minimum loan outstanding of Rs.50 lakh,
(ii) seeking capital/equity support and/or RFA from
MFDEF and (iii) not possessing a current rating/grading
report from any of the approved credit rating agencies,
are eligible for support.

• MFI not eligible for rating under the present scheme if

b. Support for rating of MFIs
rated earlier under ‘scheme for financial assistance to
2.72 NABARD has been providing grant assistance banks for rating of MFI’.
to commercial banks and RRB to enable them to • Grant assistance for rating/grading available only once
avail the services of acredited rating agencies (CRISIL, for any MFI.
M-CRIL, ICRA, CARE and Planet Finance) for rating
• NABARD will reimburse 100% of the total professional
of MFI. Under the scheme, NABARD meets the cost fees paid by the MFI subject to a ceiling of Rs.3 lakh.
of rating to the full extent of professional fees, subject
• Any other incidental expenses will not be supported.
to a maximum of Rs.1 lakh. The assistance is

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Ch-Eng-2.p65 44 7/15/2009, 10:47 AM

 introduced a new scheme for capital support to G. Other Developments
start-up MFI with potential to scale-up their activities
2.76 The North-Eastern Council (NEC), under the
but lacking in capital, infrastructural facilities and Ministry of Development of North Eastern Region
managerial skills. Micro-Finance Organisations (MFO) (DONER), Shillong parked a fund of Rs.80 lakh with
and MFI-NBFC, identified as ‘start-ups’ on the basis NABARD during the year (Rs.60 lakh released upto
of area of operation, client outreach, lending model, 31 March 2009). Miscellaneous training interventions
borrowing history, etc., are eligible for support under involving government/bank officials, NGO, SHG from
the scheme (Box 2.3). States in the NER and Sikkim shall be facilitated under
the fund. Accordingly, an Advisory Group was
d. Support to SHG Federations constituted to guide and review the progress under the

2.75 Recognising the emerging role of the SHG Fund. As on 31 March 2009, an amount of Rs.72.35

Federations in nurturing of SHG, enhancing the lakh was utilised from the Fund.
bargaining powers of group members and livelihood
promotion, NABARD introduced a flexible scheme to 2.77 The National Council of Applied Economic
support such federations on a model neutral basis during Research (NCAER) conducted a study on ‘Impact and
2007-08. The broad norms identified for supporting Sustainability of SHG-Bank Linkage Programme’ under
SHG federations stipulate that the federations should be NABARD-GTZ Rural Finance Programme to assess the
need based, member owned/driven, democratically socio-economic conditions of members and their
managed with members at liberty to join/ become households in pre and post SHG scenario. The study
self-managed over three years, etc. Support to the coverd six States, viz., Andhra Pradesh, Assam,
Federation is extended by way of grant for training, Karnataka, Maharashtra, Orissa and Uttar Pradesh.
capacity building, exposure visits of SHG members, etc., The study findings reveal that the SHG-bank linkage
and also under all existing promotional schemes of programme has (i) significantly improved access
NABARD. During the year, grant of Rs.11.54 lakh was to financial services of the rural poor,
sanctioned to one Federation taking the cumulative (ii) positively impacted socio-economic conditions thus
grant assistance to Rs.22.02 lakh to 3 Federations as at reducing poverty of members and their households, (iii)
end-March 2009. empowered women members substantially and
(iv) contributed to increased confidence and positive
behavioral changes in the post-SHG period.

Box 2.3 2.78 In addition to the study, other activities

Capital Support to Start-Up MFI: Salient Feature
• Financial support as unsecured sub-ordinate debt,
which shall be sub-ordinated to the claims of all other
creditors.
• Quantum of support will be commensurate with the
business plan of the MFO/ MFI-NBFC but not exceeding
Rs.50 lakh.
• Interest rate fixed at 3.5 per cent for MFO and the
prevailing bank rate for MFI-NBFC.
• Repayment in 7 years including moratorium of 2 years.
• No option of pre-payment.
undertaken under the NABARD-GTZ Rural Finance
Programme which ended on 31 December 2008 were :
• Training modules developed and circulated to the
leading mF training institutions to sensitise bank
branch managers and SHG members for monitoring
groups through early warning system so that the
risks in lending can be minimised.
• ‘High Level Policy Conference on micro-Finance in
India’ was conducted with the support of GTZ with
the active participation of mF practitioners from

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Ch-Eng-2.p65 45 7/15/2009, 10:47 AM

 India and abroad to share their best practices, • The study on ‘Transaction cost of banks and MFI
experiences in mF. in delivering small loans’ was undertaken to assess
the transaction cost of commercial banks, RRB,
• A desk study on ‘Comparative Assessment on SHG co-operative banks and MFI in purveying mF
portfolio vis-à-vis other portfolio of banks’ was through SHG or other types of groups.
taken up. Data from various banks were compiled 2.79 The NABARD-KfW programme titled ‘Financial
to analyse the SHG loan portfolio as compared to Cooperation with India-Capitalization Program SEWA
other loan portfolio of the banks. Bank’ under implementation in Gujarat, aims at
sustainably improving access of poor women to
• The study ‘Portfolio Quality Study on NPA of
micro-credit, both in rural and urban areas. KfW has
Banks in Tamil Nadu’ analysed NPA levels of bank released a grant assistance of Rs.2.93 crore to SEWA
loan to SHG and suggested that measures be taken Bank during 2008-09, taking the cumulative release to
to mitigate overdue loans of SHG. Rs.3.93 crore.

Research and Development Activities

2.80 The Research and Development (R&D) Fund the critical areas, viz., education, science/technology,
was set up in 1982-83 in the Bank to extend contract farming, etc., where the corporate sector
financial support to select agencies for promoting could participate. The study recommended that (a) IT
applied research projects/studies, training and skill and engineering industries facing acute shortage of
upgradation of personnel of client institutions and skilled human capital should support educational
dissemination of research findings. The corpus of the institutions in rural areas to augment supply of
Fund is Rs.50 crore. trained human capital, (b) corporates in retail, food
processing, light engineering, agri-business may
A. Utiliszon of the Fund diversify their activities by forming producer companies
in rural areas which may be suitably incentivised by
2.81 During the year, an amount of Rs.876.11 lakh
the government, (c) co-operative and commercial
was utilised from the Fund for supporting activities like
(public and private) banks may spend a per cent of
research projects/studies (Rs.81.09 lakh), training/
their profit on social development projects, and (d)
summer placement (Rs.737.83 lakh), seminars (Rs.48.73
lakh) and other activities (Rs.8.46 lakh). As on 31
March 2009, the cumulative disbursement under R&D
Fund stood at Rs.108.68 crore.

B. Research Projects
2.82 During the year, 12 research projects/studies
were sanctioned involving grant assistance of
Rs.87.01 lakh. Further, 10 projects/studies sanctioned
earlier were completed during the year.

2.83 The study on ‘Corporate Initiatives in Rural

Bio-gas Plant.
and Agricultural Transformation’ examined some of

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Ch-Eng-2.p65 46 7/15/2009, 10:47 AM

 the Insurance Regulatory Development Authority symposia and workshops covering subjects/areas
(IRDA) can implement similar scheme for insurance related to agriculture and rural development including
providers. farm business economics, agri-extension, agri-
marketing, rural infrastructure, commodities futures,
2.84 The project, ‘NABARD Resource Centre for
micro-credit, seminar on NREGA, bio-technology,
Precision Farming for Poverty Alleviation’ was
fisheries, plantation and horticulture, etc. The grant
implemented in Kendrapara, Orissa by
support extended enabled the organisers of such
M. S. Swaminathan Research Foundation, Chennai.
programmes to document the proceedings and publish
With a view to bringing about sustainable
background papers, thus facilitating wider
development, the project had undertaken interventions
dissemination of the recommendations/action points as
related to integrated intensive farming system (IIFS),
also to initiate suitable policy interventions by
backyard kitchen garden, SRI, village knowledge
concerned agencies.
center, income generating activities for SHG/FC
through participation of all stakeholders (government/
D. Occasional Papers
bank officials, NGO, SHG farmers, etc.) and
imparting training on ‘precision farming’. The project 2.86 Publication of occasional papers was another
had (a) trained 590 farmers on modern crop channel to seek increased dissemination of research
cultivation enabling them to act as resource persons; findings on policy issues in the realm of rural and
(b) conducted a training-cum-interactive meet for 520 agricultural development. As on 31 March 2009, the
participants from various government departments, Bank has published 49 occasional papers with a
banks and research institutes; (c) provided quality cumulative disbursement of Rs.13.43 lakh. During the
seeds to 372 households for backyard cultivation, (d) year, two occasional papers on ‘Hi-Tech Floriculture in
periodic field training on nursery-management, Karnataka’ and ‘Financial Inclusion – An overview’ were
integrated nutrient and pest management, seed brought out.
production and post harvest preservation; (e) credit
linked and engaged 598 members of 41 SHG E. Training Activities
functioning in the project site in different income
2.87 Apart from extending grant assistance for various
generating activities; (f) trained farmers (through SHG
R&D activities, an amount of Rs.727.35 lakh was
participation), bank and government officials in
utilised from the Fund during the year for capacity
intensive farming system and precision farming
building of the staff of RFI in the NER.
practices; (g) experimented with SRI in certain pockets
in the project site; and (h) introduced sunflower
cultivation, which resulted in increasing the per acre
F. Summer Placement Scheme
yield by 16 per cent. 2.88 Under the scheme, in implementation since 2005-
06, students are assigned tasks/projects of relevance to
C. Seminars, Conferences and the Bank with a view to generating new product and
Workshops ideas that could be introduced. During 2008-09,
2.85 During the year, grant assistance of assignments/reports on agriculture/rural development,
Rs.77.60 lakh was sanctioned to various universities, allied sector, agri-business and social development were
research institutes and other agencies spread across received from 34 students from 14 RO involving
the country for organising 103 seminars, conferences, expenditure of Rs.10.48 lakh.

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 Training of Personnel of RFI
2.89 The Training Establishments (TE) of NABARD- in association with FEDAI were conducted. Further,
RTC at Bolpur, Mangalore and BIRD, Lucknow focus induction training programme for the newly recruited
on improving the effectiveness of the RFI through officers of Cauvery Kalpatharu Gramin Bank,
training and also supplement the efforts of other training revitalisation of co-operatives: programme for inspecting
institutions by providing technical and financial support. officers of co-operative banks, asset-liability, etc., were
During 2008-09, 434 training programmes were also conducted during the year. The seminar on ‘Agri
conducted by RTC and BIRD covering 10,949 Produce Enrichment’ at RTC, Mangalore organised by
participants (Table 2.5). The Centre for Micro-Finance NABARD in October 2008 was attended by 37 delegates
Research (CMR) was formally set up in BIRD on from the banking sector and 16 papers presented.
1 January 2008 to provide focused attention on mF
related issues. Further, CMR-BIRD, Lucknow in 2.91 BIRD celebrated its Silver Jubilee on
association with Institute for Financial Management & 19 September 2008 and a commemorative postal cover
Research (IFMR)-Chennai, Chandragupta Institute of was released on the occasion. During 2008-09, BIRD
Management (CIM)-Patna, Institute of Development (IDS)- conducted specially designed training programmes for the
Jaipur, established sub-centres in addition to the one already newly reconstituted RRB, introduced new programmes on
established at IIBM, Guwahati. NABARD sanctioned core banking solutions for Chairmen and General
grant assistance of Rs.3.75 crore out of MFDEF and Managers of RRB, CRAR norms, prevention of frauds/
released Rs.120.15 lakh during 2008-09 for activities of leakages and winning trust.
CMR and its sub-centres. A total of 11 studies on mF
have been programmed for the main centre and sub- 2.92 NABARD continued to subsidise the participation
centres. fees of personnel from client institutions. National
Institute of Rural Banking (NIRB), Bangalore was
A. Programme Diversification released Rs.5.82 lakh for conducting 25 training

2.90 Keeping in mind the shift in business strategies of programmes covering 273 bank officials during the year.

its clients, findings of specific studies conducted and Under the Scheme of Financial Assistance for Training
feedback received from the trainees/institutional clients, of Co-operative Bank personnel (SOFTCOB), the Bank
TE constantly endeavour to update their programmes provides technical and financial support to 10 Junior
and design new ones in consultation with the client Level Training Centres (JLTC), 11 Agricultural Co-
banks. During the year, programme/s for nominee operative Staff Training Institutes (ACSTI) and 3
Directors of RRB on fisheries, business opportunities for Integrated Training Institutes (ITI) set up by SCARDB
RRB in the emerging environment, forex business for RRs and SCB, respectively, to enable them to improve their

Table 2.5: Personnel Training of RFI

(Number)

Training Programmes Conducted Personnel of RFIs Training

Establishment 2006-07 2007-08 2008-09 2006-07 2007-08 2008-09

BIRD, Lucknow 207 192 257 4,969 4,311 6,616

RTC, Mangalore 86 103 91 1,946 2,399 2,065
RTC, Bolpur 60 73 86 1,207 1,778 2,268

Total 353 368 434 8,122 8,488 10,949

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Ch-Eng-2.p65 48 7/15/2009, 10:47 AM

 training system. During 2008-09, Rs.330.74 lakh was • Collect information and review existing
disbursed to JLTC, ACSTI and ITIs out of the Co- experiences in the establishment of Training
operative Development Fund (CDF) for conducting 303 Certification System through visits and
programmes (6,146 trainees) as against Rs.278.29 lakh discussions with national and international
disbursed during 2007-08 for conducting 330 training certification organisations, viz., IGNOU,
programmes (5,544 trainees).
AICTE, CERTIF-Indonesia, etc.

2.93 The Working Group constituted by NABARD • Conduct regional workshops with participation of
under the Chairmanship of Shri Amaresh Kumar, major stakeholders (national and state) to
Executive Director on capacity building requirements of generate ownership and commitment for required
RRB personnel has since submitted its report to the support.
Department of Economic Affairs, Ministry of Finance,
GoI, and NABARD. Measures are being taken to • Determine functions and responsibilities of the
implement the recommendation through all TE of certification unit, internal institutional set up,
NABARD and training institutes of sponsored banks. In staffing, organisational procedures, linkages, etc.,
order to address the medium and long-term training identify needs/initiate activities for HRD, review
requirements of the co-operative credit structure (CCS) financing/source of funding for the certification unit
after implementation of the revival package, the need for and system.
a national level single Training Certification Centre to
ensure overall quality and efficiency was felt. • Carry out an existing inventory/situation analysis on
Accordingly, under the on-going GTZ-NABARD training institutes/training environment, relevant
technical co-operation, BIRD was identified for setting- framework conditions and training capacities
up a ‘National Training Certification Centre for CCS’. (institutional/non-institutional) related to the CCS
The proposal was approved by the Governing Council, in select States
BIRD and accordingly a Certification Cell with two
officers was set up during the year. The Cell is proposed • Review quality standards/benchmarks applicable
to be called as Centre for Professional Excellence in for different components of the certification
Co-operatives (C-PEC). system.

• Carry out training need assessment for secretaries

2.94 The initial key activities related to training
certification system to be implemented are: and members of Boards of PACS, develop basic
competence and skills, initiate design of
• Prepare an operational plan for establishing standardised basic competency training programme
Training Certification System. for new entrants as Secretary at PACS level

49

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 III Business Operations

NABARD through its refinance operations and financial 3.3 The total financial support by NABARD during
support schemes, including RIDF, has been facilitating 2008-09 stood at Rs.50,577 crore, registering a
augmented credit flow for production and investment growth of 30 per cent over 2007-08 and CAGR
purposes in the rural and agriculture sectors. The Bank of 23 per cent during the period 2004-2009
continued its efforts to boost credit flow in the (Chart 3.1).
northeastern and hilly regions, the hitherto unreached
areas, by providing additional relaxations and
incentives to the banking sector. The Bank introduced
special liquidity support scheme/s, to enable
co-operative banks meet their commitments in the
wake of the Agriculture Debt Waiver and Debt Relief
Scheme.

3.2 Nabcons has established itself as a committed

and professional consultancy service provider by
leveraging on the core competence and multi-
disciplinary expertise of its parent organisation,
NABARD.

Production Credit
A. Short-Term Refinance level for profit-making State Co-operative Banks
(SCB) with no accumulated losses while it continued
a. State Co-operative Agriculture and
to be linked to gross NPA level for other banks.
Rural Development Banks
Consolidated ST-SAO limits were sanctioned to
3.4 The scheme of extending short-term (ST) eligible SCB to the extent of 75 per cent of crop
refinance to State Co-operative Agriculture and Rural loan disbursed during kharif 2008 (taking into account
Development Banks (SCARDB) for Seasonal the acute liquidity problem faced by banks with the
Agricultural Operations (SAO) was continued during operationalisation of ADWDR Scheme) and between
2008-09 also. During the year, refinance of Rs.64.32 25 and 35 per cent of crop loans to be issued during
crore was extended to Kerala (Rs.45.52 crore) and rabi 2008-09, depending on their gross/net NPA levels.
Rajasthan (Rs.18.80 crore) SCARDB, at 4.5 per cent The gross/net NPA norms for availing refinance by
for lending to the ultimate borrowers at 7 per cent. co-operative banks and quantum of refinance were
relaxed with a view to boosting credit flow in NER,
b. State Co-operative Banks
Jammu & Kashmir, Sikkim and Andaman & Nicobar
i. Support for Seasonal Agricultural Operations Islands. Relaxations were also granted to co-operative
3.5 The quantum of refinance assistance for ST- banks not complying with Section 11(1) of B. R. Act,
SAO to co-operative banks was linked to net NPA 1949 (AACS), in States that accepted/executed

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 MoU to implement the Vaidyanathan Committee forest produce)/ rural artisans (including weaver
recommendations relating to short-term co-operative members of PACS/LAMPS/FSS)/ procurement and
credit structure. The minimum coverage of small and distribution of agricultural inputs. The assessment
marginal farmers (SF/MF) continued to be at 30 per norms hitherto followed for different purposes
cent. continued mutatis mutandis. During 2008-09,
Rs.175.96 crore was sanctioned against which
3.6 During 2008-09 (April-March), ST-SAO credit Rs.64 crore was utilised under this line of credit.
limits were sanctioned to 20 SCB aggregating Punjab SCB had availed maximum amount of
Rs.15,448 crore against Rs.14,826 crore sanctioned Rs.63.82 crore for agriculture, allied and marketing
during 2007-08. The credit limits included activities
Rs.1,281.20 crore for the Oilseeds Production
Programme (OPP), Rs.134.56 crore for National ii. Support to Weavers
Pulses Development Programme (NPDP) and
3.9 The eligibility norm for sanction of working
Rs.441.20 crore for credit requirements of tribals
capital credit limits to SCB/DCCB for financing
under the Development of Tribal Population (DTP).
production/marketing activities of Primary Weavers’
It also included ST-SAO limit of Rs.115.88 crore
Co-operative Societies (PWCS), procurement and
sanctioned against pledge of government securities
marketing operations and trading-in-yarn by regional/
(July-June) against which the drawal was Rs.35 crore
apex weavers’ co-operative societies were linked to
upto 31 March 2009. The SCB reached a
gross/net NPAs depending on the financial position of
maximum outstanding of Rs.13,934.71 crore during
2008-09 constituting 90 per cent utilisation during the SCB. Relaxations continued to be granted to

the year. PWCS in NER, Sikkim, Jammu & Kashmir and

Andaman & Nicobar Islands.

3.7 While the SCB in northern (Haryana, Himachal

Pradesh, Punjab and Rajasthan) and southern regions 3.10 During 2008-09, ST (Weavers’) credit limits
(Andhra Pradesh, Karnataka, Kerala, Puducherry and aggregating Rs.265.63 crore were sanctioned to
Tamil Nadu) accounted for 40 and 23 per cent, five SCB (Andhra Pradesh, Orissa, Puducherry,
respectively, of aggregate credit limits sanctioned, Tamil Nadu and West Bengal) for financing
those in the central (Chhattisgarh, Madhya Pradesh, production/procurement/marketing activities as against
Uttarakhand and Uttar Pradesh), western (Gujarat Rs.332.13 crore during 2007-08. The maximum
and Maharashtra) and eastern (Bihar, Orissa and outstanding reached during the year was Rs.166.66
West Bengal) regions accounted for 18, 12 and 7 per crore as against Rs.184.78 crore during the previous
cent, respectively. Refinance availed by the co- year.
operative banks in NER (< 1%) continued to be low
despite relaxations. During the year, Meghalaya and 3.11 The High Level Committee appointed by GoI,
Sikkim SCB were sanctioned credit limit aggregating under the Chairmanship of Managing Director,
Rs.2.50 crore while the utilisation was Rs.2.44 crore. NABARD to suggest measures for revival of
Handloom Sector had proposed a financial package
3.8 Consolidated ST (Others) limit was sanctioned of Rs.2,600 crore for revival and revitalisation of the
to SCB on behalf of eligible DCCB for financing ST- apex and primary level co-operative societies. The
agriculture/ allied activities/ marketing of crops/ Package is under consideration of GoI. NABARD has
pisciculture/ industrial co-operative societies (other introduced a scheme for financing weavers outside the
than weavers)/ labour contract and forest labour co-operative fold by forming Handloom Weavers’
co-operative societies (including collection of minor Groups (HWG) and financing of Master Weavers.

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 Cumulatively 2,968 HWG were formed in ten States, Rajasthan (Rs.385.56 crore) and Kerala
viz., Andhra Pradesh (1,023), Orissa (1,366), Assam (Rs.335.10 crore). The maximum outstandings stood
(272), Madhya Pradesh (103), West Bengal (88), at Rs.2,868.56 crore, constituting 81 per cent of
Bihar (82) and other states (34), and 1,781 HWG sanctions during 2008-09. Further, one RRB each in
were credit linked. Arunachal Pradesh, Assam and Meghalaya were
sanctioned Rs.12.25 crore against which utilisation
b. Regional Rural Banks was Rs.11.36 crore (93%).

3.12 During the year, quantum of refinance to RRB

3.14 Consolidated credit limits were sanctioned to
was linked to net NPA. Based on net NPA levels
RRB for financing ST(Others) purposes upto 60 per
ranging between <10 and >15 per cent, refinance
cent of their realistic lending programme for eligible
was sanctioned at 15, 10 and 7.5 per cent,
purposes. RRB with net NPA upto 10 per cent were
respectively, of the expected credit flow for crop loans
eligible for refinance. The aggregate credit limit
during 2008-09. NPA norms were relaxed to increase
sanctioned for ST (Others) to RRB during 2008-09
credit flow in NER and Jammu & Kashmir and
was Rs.190.80 crore, as against Rs.151.42 crore
enhanced quantum of refinance was provided to RRB
during 2007-08. The maximum utilisation during
in these regions. RRB were advised to increase lending
2008-09 was Rs.178.30 crore, constituting 93 per cent
to tenant farmers and oral lessees through JLG or
of the limit sanctioned.
otherwise.

B. Long-Term Loans to State

3.13 During 2008-09, 72 RRB were sanctioned
Governments
limits of Rs.3,546.81 crore under ST-SAO against
Rs.2,940.18 crore sanctioned to 75 RRB during 3.15 NABARD continued to support State
2007-08. The reduction in the number of RRB Governments under Section 27 of the NABARD Act,
sanctioned limits was due to amalgamation of the 1981, for contributing to the share capital of
banks. These limits included Rs.271.37 crore for co-operative credit institutions. The policy was
OPP, Rs.77.45 crore for DTP and Rs.1.35 crore reviewed and it was decided to provide loans to State
for NPDP. Uttar Pradesh, with a sanction of Governments on reimbursement basis instead of
Rs.738.35 crore had the largest share of credit upfront loans as hitherto, with certain modifications in
limits sanctioned, followed by Andhra Pradesh the eligibility criteria. During 2008-09, profit earning
(Rs.614.40 crore), Karnataka (Rs.389.85 crore), SCB/DCCB with no accumulated losses or with net
NPA not exceeding 10 per cent, as on 31 March
2007 or 2008 (whichever was lower), were considered
eligible for assistance. Similarly, SCB/DCCB earning
profits during 2006-07 but with accumulated losses
and SCB/DCCB incurring losses during 2006-07 with
or without accumulated losses, with gross NPA not
exceeding 15 per cent, as on 31 March 2007 or 2008
(whichever was lower), were considered eligible for
assistance. No loan was sanctioned to State
Governments during 2008-09. An aggregate amount
of Rs.17.73 crore was drawn during 2008-09 by State
Governments of Haryana, Kerala and Orissa against
Handloom weaving sanctions of 2007-08.

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 C. Other Initiatives (SF/MF. The Scheme covered all direct agricultural

a. NABARD - GTZ Rural Finance loans disbursed to farmers between 31 March 1997
and 2007 by scheduled commercial banks, RRB
Programme
and co-operative credit institutions, which were
3.16 The Gramin Tatkal Scheme (GTS) formulated in
overdue as on 31 December 2007 and remained
co-ordination with GTZ, working on ‘family as a unit’
unpaid till 29 February 2008 (Box 3.1). The Scheme
concept, to provide financial assistance for multiple
also covered loans disbursed before 31 March 1997
activities of rural families, is being implemented since
but rescheduled/restructured through GoI’s special
2006-07 on a pilot basis in eight States. The
package/s on account of natural calamity. It is
implementing banks have covered 7,127 families
expected that the Scheme would benefit 192.59 lakh
involving loan amount of Rs.40.17 crore.
farmers (SF & MF - 160.77 lakh and other
The implementation and impact of the scheme are
farmers - 31.82 lakh) who had availed loans
under review, following closure of the pilot project on
amounting Rs.35,368.31 crore from co-operative
31 December 2008.
banks and RRB, of which, GoI would reimburse
Rs.30,999.14 crore.
b. Agricultural Debt Waiver and Debt
Relief Scheme, 2008 3.18 NABARD as the nodal agency implemented the
3.17 The Union Budget 2008-09 had announced the scheme for co-operative banks and RRB. As against
Agricultural Debt Waiver and Debt Relief (ADWDR) the claims of Rs.29,724 crore received from SCB,
Scheme, 2008, to address the indebtedness of farmers SCARDB and RRB, an amount of Rs.16,615 crore
and difficulties of the farming community, especially was disbursed to banks as at end-March 2009.

Box 3.1
Agricultural Debt Waiver and Debt Relief Scheme, 2008: Salient Features
• The Scheme defines a farmer cultivating (as owner/tenant
farmer/share cropper) agricultural land (i) upto 1 ha.
(2.5 acres) as marginal farmer, (ii) between 1-2 ha.
(2.5-5 acres) as small farmer and more than 2 ha.
(> 5 acres) as other farmer.
• The Scheme shall be applicable to all direct agricultural loans
extended to SF/MF and other farmers by Scheduled
Commercial Banks, RRB, co-operative credit institutions
(including urban co-operative banks) and Local Area
Banks (LAB) that were, (i) disbursed between 31 March 1997
and 2007, which were overdue on 31 December 2007
and remained unpaid till 29 February 2008; and
(ii) loans disbursed before 31 March 1997, which were
restructured/rescheduled by banks in 2004 and 2006 through
special packages of GoI, and in the normal course upto
31 March 2007, as per RBI guidelines on account of natural
calamity, whether overdue or not.
• A farmer availing investment credit for allied activities, where
the principal loan amount is < Rs.50,000, would be classified
as ‘SF/MF’ and where the principal amount is > Rs.50,000,
as ‘other farmer’.
• In the case of SF/MF, the entire ‘eligible amount’ shall be waived.
• In the case of ‘other farmers’, a one-time settlement (OTS)
would be extended wherein a rebate of 25% of the eligible
amount would be given subject to the farmer repaying the
balance 75%.
• In the case of revenue districts covering DPAP, DDP areas
and PM’s special relief package, the ‘other farmers’ will be
given rebate of 25% of the eligible amount or Rs.20,000
whichever is higher subject to the farmer repaying the balance
amount. If ‘eligible amount’ is <Rs.20,000, debt relief will be
limited to the eligible amount.
• Implementation of the Scheme shall be completed by 30 June
2008.
• NABARD shall act as the nodal agency for RRB and
co-operative credit institutions, while RBI shall be the nodal
agency for Scheduled Commercial Banks, urban co-operative
banks and LAB.
• At the national level, the implementation of the Scheme is
monitored by a National Level Monitoring Committee headed
by Secretary, Department of Financial Services, Ministry of
Finance, GoI. Chairman, NABARD is a Member of the
Committee.

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Ch-Eng-3.p65 53 7/14/2009, 3:03 PM

 The share of SCB, SCARDB and RRB was towards interest subvention, aggregate utilisation
Rs.10,507 crore, Rs.2,246 crore and Rs.3,862 crore, stood at Rs.2,538.97 crore (Rs.1,284.56 crore during
respectively. 2006-07 and Rs.1,254.41 crore during 2007-08).
Interest subvention payable to NABARD, co-operative
c. Liquidity Support to SCB and RRB banks and RRB for 2008-09 has been estimated at
3.19 In order to enable co-operative banks and RRB Rs.2,565 crore.
to tide over the temporary liquidity problem due to
implementation of the ADWDR Scheme, NABARD e. Package for Sugar Industry
provided liquidity support of Rs.1,551.15 crore and 3.21 NABARD is the nodal agency in respect of
Rs.302.43 crore to SCB and RRB, respectively, at co-operative banks for implementing the GoI ‘package
9 per cent p.a. during kharif 2008. Similar liquidity for restructuring of term loans of co-operative sugar
support scheme was also made available for rabi 2008- mills’. As against Rs.138.54 crore received from GoI
09 to SCB and RRB at 4.5 and 5.5 per cent, under the package, interest subvention of Rs.116.18
respectively, with subvention from GoI. During rabi crore was released to co-operative banks in respect of
2008-09 as against sanction of Rs.2,992.65 crore, 75 co-operative sugar mills. NABARD is also the
utilisation by banks was of Rs.2,415.23 crore. designated nodal agency for routing interest subvention
claims of co-operative banks under ‘the scheme for
d. Interest Subvention to Farmers providing financial assistance to sugar undertakings–
3.20 The Union Budget 2008-09 announced the 2007’.
continuance of interest subvention during 2008-09, to
enable banks to provide crop loans upto Rs.3 lakh to D. Interest Rates on Refinance
farmers at 7 per cent p.a. The operationalisation of the Assistance
scheme envisaged suitable interest subvention to 3.22 The rates of interest on ST/MT refinance to
NABARD and 3 per cent interest subvention on co-operative banks, RRB and scheduled commercial
involvement of own funds by co-operative banks/RRB. banks and long-term (LT) loans to State Governments
As at end-March 2009, of the aggregate sum of for contribution to share capital of co-operative
Rs.3,109.36 crore received from GoI for 2006-07 credit institutions during 2008-09 are indicated in
(Rs.1,331.36 crore) and 2007-08 (Rs.1,778 crore) Table 3.1.

Table 3.1: Rates of Interest

(Per cent)
Sr. Purpose Agency Interest Rate
No.
1. SAO SCB/RRB 3.5/4.5
2. Pledge of securities SCB 9.5
3. ST (Others- other than weavers’) SCB 9.0
4. ST (Weavers’- Apex/Regional WCS) SCB 8.75
5. ST (Weavers’)- Financing of PWCS Scheduled
Commercial Banks 9.5
6. Working capital requirements of SHDC and SCB & Scheduled
SHnDC# Commercial Banks 9.5
7. ST-OSAO loans RRB 9.0
8. MT (Conversion) loan SCB^ 5.5*-5.75**
RRB^^ 5.75*-6.0**
9. LT loans to State Governments State Governments 9.5
* : NPA < 20% ** : NPA > 20 % # : Last year’s policy continues. ^ : Net/gross NPA depending on eligibility. ^^ : Net NPA

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Ch-Eng-3.p65 54 7/14/2009, 3:03 PM

 3.23 NABARD extended refinance for crop loans to refinance was made available to those SCB and RRB,
co-operatives banks and RRB at 3.5 and 4.5 per cent which including their involvement of owned funds,
p.a., respectively, with interest subvention from GoI. The extended crop loans at 7 per cent p.a. to farmers.

Investment Credit
A. Rescheduling Principal Amount restrictions on ceilings prescribed for total financial
Repayment outlay (TFO) and refinance amount under Automatic
Refinance Facility (ARF) for commercial banks, RRB,
3.24 Consequent to the announcement of ADWDR
SCB and PUCB was completely removed, the ceiling
Scheme, 2008, by GoI, NABARD agreed to reschedule
on TFO for SCARDB was raised to
instalments of principal amount from SCARDB falling
Rs.50 lakh. Cent per cent refinance was made
due during June-December 2008 to 31 January 2009
available for thrust areas and for all purposes in hilly
or any other earlier date as preferred by the SCARDB,
States (Himachal Pradesh, Jammu & Kashmir and
subject to certain conditionalities. During the year,
Uttarakhand), NER & Sikkim and Andaman &
NABARD received proposals for rescheduling principal
Nicobar Islands. Refinance was extended to Section
amount from Andhra Pradesh, Chhattisgarh, Himachal
11 non-compliant SCB/DCCB in States that have
Pradesh, Orissa, Punjab, Haryana, Rajasthan and
executed MoU for implementing the recommendations
Uttar Pradesh SCARDB and rescheduled an amount of
of the Task Force on Revival of STCCS. The
Rs.1,061 crore.
relaxations in eligibility criteria in respect of recovery,
gross/net NPA that were hitherto available only to
B. Interim Finance to SCARDB States in NER were extended to Jammu & Kashmir,
3.25 In order to address the liquidity crunch faced by Himachal Pradesh and Uttarakhand. SCB, SCARDB
SCARDB after the announcement of ADWDR Scheme, and RRB continued to be classified under A/B/C/D
2008, NABARD decided to extend interim finance to categories based on their gross/net NPA, recovery
them, on a case-to-case basis even if they had position, net worth and profitability. However, (i) SCB
defaulted to NABARD either in interest payment or with gross NPA > 20 per cent, (ii) SCARDB with
principal repayment or both. The facility was, however, recovery < 30 per cent, (iii) commercial banks/PUCB/
available subject to the condition that (i) the total ADFC/NEDFi with net NPA > 3 per cent, and (iv)
principal and interest amount due to NABARD during RRB, with deposit erosion > 30 per cent were
June-December 2008 plus the liquidity support by way considered ineligible for availing refinance during
of interim finance is fully covered by the amount the year.
receivable under the ADWDR scheme, and
(ii) the outstanding dues (principal + interest + interim D. Security Norms
finance) payable to NABARD to be covered by State
3.27 Release of refinance to SCARDB/SCB, eligible
Government guarantee. During the year,
Section 11 non-compliant SCB/DCCB and non-
Rs.70 crore was sanctioned to Madhya Pradesh
scheduled SCB (for farm sector) was only against
SCARDB under the scheme.
government guarantee. This requirement was waived
for category ‘A’ and profit making SCB/DCCB. In the
C. Eligibility Criteria for drawal of
event of government guarantee not forthcoming,
Refinance alternative security like pledge of government securities
3.26 During 2008-09, the policy for drawing or fixed deposit receipts issued by scheduled banks
refinance was relaxed considerably. While the was considered on a case-by-case basis. Commercial

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 banks, RRB, PUCB and NBFC continued to a. Agency-wise Disbursements
be exempted from furnishing security/government
3.30 Commercial banks, with a share of 56 per cent
guarantee for availing refinance.
of the total refinance disbursed during the year
continued to be the single largest group availing
E. Interest Rates on Refinance refinance (Table 3.2/Chart3.2). The share of all other
3.28 Owing to the changing money market agencies in total refinance disbursed showed a
conditions and consequent impact on the cost of declining trend in absolute and percentage terms,
incremental market borrowings of NABARD, the though SCARDB showed an improvement in absolute
interest rates were revised six times during 2008-09. terms.
The interest rates, last revision being in February
b. Spatial Distribution of Refinance
2009, stood at 9 and 8.5 per cent for commercial
banks and RRB/co-operative banks/other agencies, 3.31 Refinance disbursement across regions varied
respectively. The interest rate on interim finance widely with the highest disbursement in southern region
provided to SCARDB was enhanced from 9.5 to 9.75 followed by northern, central, eastern, western and
per cent p.a. with effect from 22 September 2008. northeastern regions (NER) (Table 3.3/Chart 3.3). In
The interest rates in NER, Sikkim, Andaman & absolute terms, however, both central and eastern
Nicobar Islands, Himachal Pradesh, Jammu & regions witnessed a decrease while the southern and
Kashmir and Uttarakhand were kept in the lowest northern regions registered a significant increase.
interest slab throughout the year.
Table 3.2: Agency-wise Refinance Disbursement
(Rs. crore)
F. Refinance Support Agency 2006-07 2007-08 2008-09
3.29 The total refinance disbursement during SCARDB 1,742.72 1,950.58 1,986.54
SCB 1,130.67 826.55 801.51
2008-09 amounted to Rs.10,535.29 (including
Commercial Banks 4,568.82 3,951.73 5,867.19
Rs.64.32 crore under ST-SAO for SCARDB) as RRB 1,352.81 2,313.99 1,879.04
compared to the disbursement of Rs.9,046.27 crore PUCB/ADFC - 3.42 1.01

(including Rs.65.05 crore under ST-SAO) during the Total 8,795.02 9,046.27* 10,535.29*
*: Including ST-SAO refinance to SCARDB.
previous year.

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 3.32 Disaggregation of refinance disbursements by Table 3.3: Region-wise Refinance Disbursement
agencies and states indicated that while 77 per cent of (Rs. crore)
the disbursement to RRB was accounted for by Andhra Region 2006-07 2007-08 2008-09
Pradesh, Karnataka, Haryana, Uttar Pradesh, Orissa Central 1,695.62 1,810.40 1,526.02
and Tamil Nadu, around 70 per cent of the refinance Eastern 1,102.83 1,134.73 1,102.99
disbursed to the SCB was in Andhra Pradesh, Northern 2,111.10 1,957.78 2,636.45
Himachal Pradesh, Orissa, Uttar Pradesh and West North-Eastern 167.87 178.57 174.18
Bengal. Of the refinance disbursed to SCARDB, 68 per Southern 2,710.62 3,252.53 4,298.91
cent was absorbed in Haryana, Punjab, Kerala and Western 1,006.98 712.26 796.74
Uttar Pradesh. The trends once again reflect the Total 8,795.02 9,046.27 *
10,535.29*
varying absorptive capacity of different category of * : Including ST-SAO refinance to SCARDB.
Central : Madhya Pradesh, Chhattisgarh, Uttar Pradesh and
banks in different states.
Uttarakhand.
Eastern : Bihar, Jharkhand, Orissa, West Bengal and A&N Islands.
c. Sector-wise disbursements Northern : Haryana, Himachal Pradesh, Punjab, Rajasthan, J&K,
Delhi and Chandigarh.
3.33 Of the total refinance disbursement of NER : Assam, Arunachal Pradesh, Manipur, Meghalaya,
Rs.10,535.29 crore during 2008-09, NFS and SHG Mizoram, Nagaland, Sikkim and Tripura.
Southern: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu,
activities with 26 and 25 per cent, respectively,
Pondicherry and Lakshadweep Islands.
accounted for the major share, followed by farm Western : Gujarat, Goa, Maharashtra, DN Haveli and Daman & Diu.
mechanisation (14.4%). Of the other activities, land
development (9%) and minor irrigation improved their eight states (Haryana, Karnataka, Kerala, Madhya
shares (5.2%) over the previous years (Table 3.4). Pradesh, Punjab, Rajasthan, Tamil Nadu and West
Bengal) and refinance of Rs.16.83 crore covering 548
i. Farm Sector
borrowers. During 2008-09, 25 per cent of the
3.34 The scheme for ‘Financing Purchase of Land for refinance was against loans disbursed to small farmers
Agricultural Purposes’ under implementation since (Table 3.5).
August 2001, aimed to provide credit facility to SF/MF,
ii. Non-Farm Sector
share croppers/tenant farmers for purchase of
agricultural land. During 2008-09, bank loan of 3.35 During the year, refinance disbursed under NFS
Rs.19.60 crore was extended covering 607 borrowers in stood at Rs.2,706.79 crore, of which Rs.268.47 crore

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 Table 3.4: Sector-wise Disbursement of Refinance Table 3.5: Refinance disbursed to Small Farmers
(Rs. crore) vis-à-vis Total Disbursements
Sector 2006-07 2007-08 2008-09 (Rs. crore)
MI 670.97(7.6) 403.68(4.5) 545.85(5.2) Purpose Total Disbursement Assistance to
LD 651.30(7.4) 462.14(5.1) 949.94(9.0) Disbursement to SF SF (% to total
disbursement)
FM 1,857.51(21.1) 1,747.65(19.3) 1,514.03(14.4)
P&H 313.73(3.6) 341.82(3.8) 374.54(3.6) MI and LD 1,495.79 575.83 38
DD 504.02(5.7) 605.87(6.7) 489.41(4.6) Diversified Purposes* 7,377.91 1,640.21 22
PF/SGP/ Total 8,873.70 2,216.04 25
AH-Others 206.66(2.4) 216.29(2.4) 298.70(2.8)
* : Excludes refinance for farm mechanisation, storage and market
Fisheries 38.30(0.4) 25.45(0.3) 77.15(0.7)
yards, forestry, etc.
Forestry 8.38(0.1) 6.39(0.1) 6.56(0.1)
S & M Yard 35.61(0.4) 136.28(1.5) 141.01(1.3)
SGSY 355.06(4.0) 258.58(2.8) 201.12(1.9)
NFS 2,265.16(25.8) 2,747.95(30.4) 2,706.79(25.7)
31 March 2009, the cumulative refinance support
SC/ST-AP 28.32(0.3) 20.52(0.2) 28.94(0.3) under NFS stood at Rs.24,061.51 crore.
SHG 1,292.86(14.7) 1,615.50(17.8) 2,620.03(24.9)
Others 567.14(6.4) 458.15(5.1) 581.22(5.5) iii. micro-Finance
Total 8,795.02 9,046.27* 10,535.29*
3.36 During 2008-09, NABARD extended refinance of
(100.0) (100.0) (100.0)
Rs.2,620 crore under the SHG-bank linkage
* : Including ST-SAO refinance to SCARDB.
programme, registering an increase of 62 per cent over
MI : Minor Irrigation. LD : Land Development.
FM : Farm Mechanisation. PF : PoultryFarming. the previous year. The savings kept as deposits and
DD : Dairy Development. SGP : Sheep, Goat and Piggery. loans outstanding position of SHG, as on
AH : Animal Husbandry. P & H : Plantation and Horticulture. 31 March 2008, revealed that both the number of
S&M Yard : Storage and Market Yards
savings accounts and amount of savings mobilised
Figures in parentheses indicate percentage to total.
improved by 20 and 8 per cent, respectively. Similarly,
was towards rural housing (10%). Agency-wise, the number of loan accounts and amount of loan
commercial banks accounted for 57 per cent, followed outstanding registered a growth of 25 and 37 per cent,
by co-operative banks (33%) and RRB (10%). As on respectively (Table 3.6). However, while savings per

Table 3.6: Agency-wise Savings and Loans Outstanding to SHGs

(As on 31 March)
(Rs. crore)
Agency 2007 2008
No. Amount No. Amount
a. Savings
Commercial Banks 22,93,771(55) 1,892.42(54) 28,10,750(56) 2,077.73 (55)
RRBs 11,83,065(28) 1,158.29(33) 13,86,838(28) 1,166.49 (31)
Co-operative Banks 6,83,748(16) 462.00(13) 8,12,206(16) 541.17 (14)
Total 41,60,584(100) 3,512.71(100) 50,09,794(100) 3,785.39 (100)
Savings per SHG (Rs.) 8,469 7,556
b. Loans Outstanding
Commercial Banks 18,93,016(65) 8,760.38(71) 23,78,847(66) 11,475.47(68)
RRBs 7,29,255(25) 2,801.76(22) 8,75,716(24) 4,421.04(26)
Co-operative Banks 2,72,234(9) 804.35(06) 3,71,378(10) 1,103.39(06)
Total 28,94,505(100) 12,366.49(100) 36,25,941(100) 16,999.90(100)
Loan o/s per SHG (Rs.) 42,724 46,884
Figures in parentheses indicate percentage to total.

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Ch-Eng-3.p65 58 7/14/2009, 3:03 PM

 SHG declined by 11 per cent, loans outstanding per
SHG increased by 10 per cent.

3.37 The recovery position of banks with respect to

their SHG portfolios revealed that, as on
31 March 2008, of the 329 reporting banks, 223
banks (68%) reported recovery > 80 per cent.
Agency-wise, 24 (out of 33), commercial banks 47 (out
of 70) RRB and 152 (out of 226) co-operative banks
reported recovery > 80 per cent (Chart 3.4).

3.38 MFI are increasingly providing financial services

to the poor by raising funds from banks and their own
resources for on-lending to SHG. MFI in India operate
Rs.64.56 crore and NABARD share of Rs.31.55 crore.
as NGO-MFI, non-profit Section 25 NBFC-MFI,
Of these, 10 projects have been sanctioned in
co-operative MFI and for-profit NBFC-MFI. During
association with RRB and 2 with commercial banks
2007-08, 518 MFI were financed by banks to the tune
covering activities such as button mushroom/herb
of Rs.1,970.15 crore, thus, registering a growth of 55
cultivation, Individual Quick Freeze (IQF), agri
and 71 per cent in respect of number of MFI and
infrastructure, modern rice mill, etc. Since 2003,
amount disbursed, respectively. Total loans outstanding
40 projects involving TFO of Rs.736.11 crore, bank
increased to Rs.2,748.84 crore as on 31 March 2008,
loan of Rs.486.28 crore and NABARD share of
registering a growth of 73 per cent over 2006-07
Rs.214.11 crore have been sanctioned as on
(Table 3.7).
31 March 2009. An amount of Rs.36.95 crore was
disbursed during the year, registering an increase of
G. Co-financing 35 per cent over 2007-08. As at end-March 2009,
3.39 During 2008-09, 12 new projects were the cumulative disbursement under the co-financing
sanctioned with TFO of Rs.94.96 crore, bank loan of arrangement stood at Rs.109.76 crore.

Table 3.7: Progress under MFI-Bank Linkage Programme

(As on 31 March)
(Rs. crore)
Agency Bank Loan Disbursed Loans Outstanding
2006-07 2007-08P 2007 2008P
MFI Amount MFI Amount MFI Amount MFI Amount
(No.) (No.) (No.) (No.)

Commercial Banks 327 1,151.34 497 1,968.60 541 1,584.27 1,072 2,745.24

RRB 7 0.22 8 1.51 8 0.20 24 3.58

Co-operative Banks - - 13 0.04 1 0.01 13 0.02

Total 334 1,151.56 518 1,970.15 550 1,584.48 1,109 2,748.84

The actual number of MFIs would be less as some MFIs have availed loans from more than one bank. P : Data provisional.

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Ch-Eng-3.p65 59 7/14/2009, 3:03 PM

 Rs.3,516.65 crore, bank loan of Rs.1,556.90 crore
and Rs.2,307.26 crore and subsidy of Rs.413.32 crore
and Rs.513.52 crore for 1,791 (1,578 cold storages
and 213 onion godowns) and 16,593 projects were
sanctioned under cold storage/onion godown and rural
godown, respectively. The cumulative capacity created
under cold storage/onion godown and rural godown
as on 31 March 2009, stood at 73.54 lakh tonnes
(73.19 lakh tonnes of cold storage/0.35 lakh tonnes
of onion godown) and 208.24 lakh tonnes,
respectively.
Fly Ash Brick making Cluster at Yembodi

b. Agricultural Marketing Infrastructure,

H. Capital Investment Subsidy Grading and Standardisation
Schemes 3.42 The scheme in operation, since 2004, aims at

3.40 Since 2000-01, NABARD as the nodal agency, establishing/ strengthening of infrastructure for

continued to oversee implementation of the various marketing, grading, standardisation, quality certification

Capital Investment Subsidy (CIS) schemes of GoI of agricultural produce and creation of marketing

through administering subsidy and monitoring the infrastructure in agriculture and allied sectors. During

progress with bankers and GoI. During 2008-09, four 2008-09, projects involving Tuna long liners, fishing

CIS schemes, viz., (i) construction of cold storages, boats and fishing nets as functional infrastructure were

onion godowns and rural godowns, (ii) development/ also made eligible for subsidy under the Scheme. It

strengthening of agriculture marketing infrastructure, could be implemented in only such States that

grading and standardization, (iii) establishing amended the APMC Act to allow private participation.

Agri-Clinic and Agri-Business Centres (ACABC) by

agriculture graduates and (iv) supporting bankable Box 3.2
projects for commercial production of organic inputs
Cold Chain Infrastructure for Apples in
like bio-fertilizer, vermiculture hatchery and composting Himachal Pradesh
units of fruit and vegetable wastes, etc., under
M/s. Adani Agri Fresh Ltd. established three controlled
National Project on Organic Farming (NPOF) were
atmosphere (CA) cold storage units with a capacity of
implemented. 6,000 MT each and infrastructure for grading, sorting,
mechanised handling, packing and marketing of fresh apples.
a. Cold Storages, Onion Godowns and The units with TFO, bank loan and NABARD refinance of
Rs.173.39 crore, Rs.105.99 crore and Rs.95.39 crore,
Rural Godowns
respectively, are set up in Rewali, Sainj and Rohru districts
3.41 During the year, 94 and 3,013 projects were of Himachal Pradesh. The CA technology used in these units
sanctioned under cold storages/onion godowns increases the shelf life of apples from 3 months in
conventional cold storages to 10 months. The apple growers
(Box 3.2) and rural godowns with TFO of Rs.239.44
are, thus, able to realise 20% higher prices at Rs.25-28/kg.
crore and Rs.526.09 crore, bank loan of Rs.150.75
The improved infrastructure facilities of CA storages have
crore and Rs.349.90 crore and subsidy of Rs.37 crore helped to reduce tiers of intermediaries enabling a win-win
and Rs.59.17 crore, respectively. As at end-March situation for growers and promoters.
2009, cumulative TFO of Rs.2,770.78 crore and

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Ch-Eng-3.p65 60 7/14/2009, 3:03 PM

 As on 31 March 2009, 20 states and 5 UTs had Government. The studies covered investments under
amended the APMC Act and were eligible to receive farm and non-farm sector, micro-credit, government
subsidy assistance for projects under the Scheme. sponsored schemes and rural housing for identifying
factors affecting smooth implementation of
3.43 During the year, 564 projects were sanctioned investments/schemes and to ensure prompt corrective
involving TFO and bank loan of Rs.545.94 crore measures. A compilation of the major findings
and Rs.366.89 crore, respectively, while subsidy of and recommendations of 28 investment specific
Rs.61.43 crore was disbursed. Cumulatively studies conducted by 20 ROs in 2007-08 has been
3,265 projects involving TFO and bank loan of brought out in the form of a booklet for dissemination
Rs.1,295.66 crore and Rs.863.59 crore, respectively, among client institutions.
were sanctioned and subsidy of Rs.141 crore
released.
J. Physical Achievements

c. Establishing ACABC 3.47 The refinance disbursement supporting varied

3.44 The scheme, aimed at providing fee based
extension services to farmers, was announced by MoA,
GoI for implementation during 2006-07 and continued
during 2008-09. During the year, subsidy amounting to
Rs.1.60 crore was disbursed to 147 ACABC projects.
Cumulatively, 204 projects were sanctioned with a total
subsidy release of Rs.2.29 crore.
d. National Project on Organic
Farming
3.45 The subsidy based NPOF in operation since
2005 was extended during 2008-09. An amount of
Rs.40.25 crore was earmarked as subsidy for the
purpose. Both NABARD and National Co-operative
Development Corporation (NCDC) are
implementing agencies. Since inception, 416 units
(378 vermi-hatchery, 29 bio-fertilizer and 9 fruit &
vegetable waste compost) have been sanctioned with
subsidy of Rs.11.94 crore, as on 31 March 2009. Of
the Rs.11.32 crore received from GoI, subsidy of
Rs.7.90 crore has been released.
I. Investment and Scheme Specific
Studies
3.46 During 2008-09, 37 investment and 5 scheme
specific studies were conducted in association with
financing banks and nodal departments of the State
economic activities under various types of investments
during the year are presented in Table 3.8. Under
minor irrigation (MI) 13,000 tubewells with pumpsets
and 16,000 pumpsets on existing wells were financed.
Tractor financing continued to be the major item of
investment under FM with 43,000 units financed
during the year. During 2008-09, land area of 99,000
ha. was developed. Under the animal husbandry
sector, dairy farming and sheep/goat rearing showed
an increase of 1.77 lakh and 3.08 lakh animals,
respectively. The poultry sector showed good
growth with 73 lakh birds being financed during
2008-09.
K. Credit Planning
the
a. Potential Linked Credit Plans
3.48 NABARD, adopting a consultative approach,
continued to prepare district-wise Potential Linked
Credit Plans (PLP), to guide banks in the preparation
of their Annual Credit Plans. A review of the PLP
exercise was initiated during the year and revised
guidelines issued to improve the quality and content of
the document. To make the PLP documents
contemporary, a new chapter ‘Financial Inclusion’ was
included. The general and technical scrutiny of select
PLP was also undertaken to enhance and fine-tune
the contents.

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Ch-Eng-3.p65 61 7/14/2009, 3:03 PM

 Table 3.8: Units Financed and Completed
Sr. Investments Units Units Financed Units Completed
No. (upto 31 March) (upto 31 March)
2008 2009 2008 2009

1. Minor Irrigation
@
i. Tubewells with pumpsets ‘000 1,599 1,612 1,582 1,594
*
ii. Dugwells with pumpsets ‘000 2,076 2,094 2,063 2,081
iii. Dugwells with conventional lift ‘000 1,707 1,724 1,706 1,723
iv. Pumpsets on existing wells ‘000 2,451 2,467 2,422 2,436
**
v. Others ‘000 1,837 1,886 1,805 1,849

2. Land Development*** ‘000 ha. 3,252 3,351 3,190 3,285

3. Farm Mechanisation
i. Tractors ‘000 1,384 1,427 1,350 1,391
ii. Power tillers ‘000 162 164 159 160
iii. Other farm equipments ‘000 719 741 711 733

4. Plantation & Horticulture ‘000 ha. 2,261 2,323 2,215 2,273

5. Forestry lakh ETPs 2,348 3,216 2,332 2,657

6. Storage ‘000 tonnes 18,635 18,636 18,448 18,449

7. Market Yards No. 3,013 3,080 2,987 3,047

8. Dairy Development ‘000 animals 15,843 16,020 15,626 15,789

9. Sheep/ Goat Rearing ‘000 animals 38,161 38,469 37,725 38,010

10. Piggery 000 animals 1,692 1,702 1,685 1,693

11. Poultry lakh birds 1,819 1,892 1,797 1,860

12. Fishery
i. Mechanised Boats No. 22,679 22,765 22,036 22,082
ii. Other Boats No. 73,681 75,019 73,000 73,799
iii. Brackish Water Aquaculture ha. 5,362 5,371 5,301 5,308
iv. Fresh Water Aquaculture ‘000 ha. 414 417 409 412

13. Non-Farm Sector ‘000 8,032 8,268 7,892 8,088

14. Miscellaneous$ ‘000 14,786 15,330 14,486 14,671

@ *
: Includes borewells with pumpsets. : Includes dug-cum-borewells with pumpsets. ETP : Entire Trans-Planting.

**
: Includes dugwells/ dugwells-cum-borewells, deep tubewells with pumpsets, deepening/ renovation of wells, sprinkler, pipeline, storage/water
harvesting tank, lift irrigation, drip, pump house, shallow tubewells/million shallow tubewell programme, etc.

***
: Includes soil conservation, saline/ alkaline soil, channels/ lining/ under grouW2nd pipeline, wasteland and farm development.

$
: Includes bullock pairs, bullock carts, camels, camel carts, SHGs, other activities under AH, Kisan bikes, sericulture, ACABCs, soil/water testing,
compost/ manure plants, gobar gas plants, vermiculture, SRTO, contract farming,AEZs, SC/ST Action Plan, bee- keeping, etc.

Note : While estimating the completed units, appropriate adjustments have been made for units financed upto March 2009, but not likely to have been
completed. It is possible that some of the units have turned out to be infructuous or remained incomplete beyond their normal gestation period.

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Ch-Eng-3.p65 62 7/14/2009, 3:03 PM

 b. State Focus Paper
3.49 The district-wise/sector-wise potentials projected
in the PLP are aggregated into the State Focus Paper
(SFP) presenting a comprehensive picture of potentials
available in the State for development of various
sectors of the rural economy. The SFP highlights the
critical infrastructure gaps and linkage support required
from various line departments to facilitate credit flow
as estimated in the SFP. The SFP are presented to
bankers and State Governments at the state level
Credit Seminars to facilitate necessary budgetary
support for bridging the gaps and enable banks to
augment credit flow.
c. Integrated District Plans
3.50 The Ministry of Panchayati Raj and Planning
Commission, GoI introduced preparation of Integrated
Development Plans (IDP) for the 250 poorer districts
under the Backward Regions Grants Fund (BRGF).
It aims at embedding the participative planning process
and providing funds to local governments for filling
gaps based on the local needs under the flagship
programmes. NABARD was associated with
Technical Support Group of Planning Commission for
preparing the Manual of Guidelines for preparing IDP.
The Planning Commission and NABARD conducted
regional workshops to orient various state and district
level officials in preparing IDP. The Bank is also
involved as a Technical Support Institution (TSI) in
preparation of plans in 17 districts covering 5 states,
viz., Andhra Pradesh, Jharkhand, Maharashtra, Tripura
and Uttar Pradesh. The plans are under various stages
of finalisation and approval.
L. Special Package for NER
3.51 NABARD continued its policy of facilitating
larger flow of credit to NER and Sikkim by granting
relaxations to commercial banks, co-operative banks
and RRB operating in the region. The initiatives,
which were operational during 2008-09, are given
below.
Ch-Eng-3.p65 63
Exhibition of products made by SHG members
i. To enable SCB and RRB avail refinance for
ST-SAO purposes, NABARD relaxed its NPA
norms by 5 percentage points. An additional
5 to 15 percentage points relaxation for assessing
eligible quantum limits was extended to both SCB
and RRB.
ii. The NPA criteria for drawal of refinance under
investment credit was relaxed by 5 and 3
percentage points for co-operative banks and RRB,
respectively. Refinance to the extent of cent per
cent bank loan was provided. The rate of interest
on refinance for commercial banks in NER and
the Sikkim was fixed at 50 basis points lower than in
other parts of the country (9%). In the case of co-
operative banks and RRB, the interest rate on
refinance continued to be 8.5 per cent as in other
parts of the country.
iii. Interest rate on refinance to commercial banks
and RRB on loans to MFI for on-lending to
clients/SHG was 3 percentage points less than that
charged by banks, subject to a minimum of 8.5
per cent as against 9 per cent in other states.
iv. To facilitate creation of infrastructure facilities
under RIDF, NABARD extended 90 per cent of
the eligible project cost for roads and social sector
projects as against 80 and 85 per cent,
respectively, in rest of the country. Mobilisation
advance was also extended at 30 per cent of the
RIDF loan. The loan is phased over a period of
five years for major/medium irrigation projects
(loan > Rs.50 crore) and for four years for other
projects compared to three years given to other
states.
63
7/14/2009, 3:03 PM
 Loans under Rural Infrastructure Development Fund
3.52 The Government instituted the Rural B. Terms and Conditions
Infrastructure Development Fund (RIDF) with NABARD
3.54 The lending rate on loans continued to be 0.5
during 1995-96, with an initial corpus of Rs.2,000
per cent above the Bank Rate prevailing at the time of
crore by way of deposits from commercial banks to the
sanction of loan (6.5%). Loans are secured by means
extent of their respective shortfalls in agriculture lending
of irrevocable letters of authority (mandate) executed
under priority sector. The Fund has since been
by State Governments registered with RBI and Time
continued with annual allocation being announced in
Promissory Notes. Each drawal under sanctioned
the Union Budget. The Union Budget 2008-09
announced the XIV Tranche of Rs.14,000 crore, raising projects is considered as a separate loan repayable in

the aggregate allocation to Rs.86,000 crore. During five equal instalments over seven years, including
2008-09, Rs.4,000 crore was also allocated under a moratorium of two years. Further, states are sanctioned
separate window for funding rural roads component of loans within the ceiling of normative allocation (based
Bharat Nirman Programme, introduced during 2006- on its terrain, rural population, CD ratio, rural
07, raising the allocation to Rs.12,000 crore. As on 31 infrastructure index and performance under RIDF) of
March 2009, the cumulative allocation under both the RIDF corpus at the beginning of the financial year.
components of the fund stood at Rs.98,000 crore. Funds are provided to state governments on
reimbursement basis. As the on-going projects under
A. Eligible Projects RIDF are spread over several tranches, the pace of
3.53 The GoI has approved a broad range of 31 actual drawal of funds depends upon implementation
sectors/activities for financing under RIDF XIV. These at the field level. States are also governed by
include projects relating to rural roads and bridges, Article 293 (3) of the Constitution, which determines
minor/medium/major/community irrigation, mini/hydel/ their borrowing powers from Central Financial
non-conventional power projects, drinking water, soil Institutions during the year.
conservation, watershed development, reclamation,
drainage, flood protection, forest development, joint 3.55 The phasing of projects was as per the
forest management, marketing infrastructure, requirements of the state and ranged from 3 to 4 years
infrastructure for rural industries/animal husbandry/ with an extra year for projects to hilly states.
fisheries, infrastructure for rural education and public The maximum phasing period in the case of
health institutions, etc. medium/ major irrigation and other stand-alone projects
involving loan of Rs.50 crore and above, was
five years.

C. Operations
a. Sanctions and Disbursements
3.56 During the year 85,527 projects involving a
loan amount of Rs.14,719.42 crore were sanctioned
under RIDF XIV, thereby increasing the cumulative
number of projects to 3,65,003 and amount
sanctioned to Rs.88,359.09 crore. Of the total
amount sanctioned during the year, rural roads and
Barrage built under RIDF, Jharkhand bridge projects accounted for 46 per cent, irrigation

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Ch-Eng-3.p65 64 7/14/2009, 3:03 PM

 projects 28 per cent, social sector projects 18 per Table 3.9: Sector-wise Projects and Amount Sanctioned
cent, power sector projects 2 per cent and others 6 (As on 31 March 2008)
(Rs. crore)
per cent (Chart 3.5/Table 3.9). The cumulative
position of sector-wise sanctions and disbursements is Purpose RIDF XIV Share RIDF I to XIII Share
(2008-09) (%) (Total) (%)
given in Table 3.10. An amount of Rs.7,500 crore
Irrigation
was disbursed during 2008-09 to the National Rural No. 67,105 78.5 1,31,934 47.2
Roads Development Agency (NRRDA), taking the Amount 4,145.11 28.2 25,020.85 34.0
Rural Bridge
total disbursements to Rs.12,000 crore (Rs.4,000 crore
No. 986 1.10 11,360 4.1
each under RIDF XII, XIII & XIV) equalling the Amount 2,129.33 14.4 7,018.47 9.5
aggregate sanctioned amount under the Bharat Rural Roads
No. 6,991 8.2 61,321 21.9
Nirman Component.
Amount 4,616.38 31.4 24,548.93 33.3
Social sector*
3.57 The period of implementation of projects No. 8,095 9.5 50,406 18.0
Amount 2,667.48 18.1 8,383.57 11.4
sanctioned under RIDF VIII and IX was closed as at
Power sector**
end-September and December 2008, respectively. At No. 12 0.01 729 0.3
present, the projects under implementation pertain to Amount 231.74 1.6 1,613.05 2.2
those sanctioned under RIDF X to XIV. Others***
No. 2,338 2.7 23,726 8.5
Amount 929.38 6.3 7,054.80 9.6
3.58 During the year, disbursements worth Total
Rs.10,458.64 crore were effected. As per the phasing No. 85,527 100.0 2,79,476 100.0
Amount 14,719.42 100.0 73,639.67 100.0
of projects under various tranches (RIDF I to XIV), the
*
: Includes projects relating to Rural Drinking Water Supply, Primary/
total amount sanctioned was Rs.73,733.64 crore
Secondary Schools, Public Health Institution, Pay & Use Toilets
against which disbursements aggregated and Anganwadi Centres.
Rs.56,052.20 crore (Table 3.11). The amount of loan **
: Power includes projects relating to System Improvement in Power
sanctioned and disbursed to States in the NER Sector and Mini/Small Hydel projects.

aggregated Rs.946.56 crore and Rs.486.36 crore, ***

: Includes soil conservation, watershed development, rain water
harvesting, flood protection, CADA, drainage, cold storages,
respectively, during 2008-09. The state-wise analysis of
fishing harbour/jetties,, riverine fisheries, animal husbandry, forest
ratio of disbursements to sanctions as per approved development, inland waterways, rubber plantations, seed/agri./
horti. farms, citizen information centres, food park, rural libraries,
phasing under tranches VIII to XIV revealed that
rural market/ yard/ godown, meat processing, rural knowledge
Nagaland topped with 112 per cent, followed by centres, rural industrial estates/centre, etc.

Uttarakhand (100%), Sikkim and Mizoram (94% each),

Tamil Nadu (81%), Punjab (80%), Haryana (79%),
Gujarat (77%), Madhya Pradesh (76%), Himachal
Pradesh (75%), Chhattisgarh (72%), Rajasthan and
Jammu & Kashmir (71% each) and Andhra Pradesh
(70%). Slow pace of actual utilisation of loans under
RIDF compared to sanctions was due mainly to delay
in administrative and technical approval by State
Governments, land acquisition problems, delay in
obtaining statutory clearances and tendering process,
inadequate budgetary support, lack of coordination
among implementing departments, etc.

65

Ch-Eng-3.p65 65 7/14/2009, 3:03 PM

 Table 3.10: Sanctions and Disbursements under various Sectors
(As on 31 March 2009)
(Rs. crore)
Sector Amount
% of
Sanctioned Phased Disbursed Disbursement *
Irrigation 29,165.96 24,923.49 18,872.81 75.7
Rural Road & Bridges 38,313.11 32,299.22 25,653.20 79.4
Social Sector 11,051.05 8,347.36 6,022.31 72.1
Power 1,844.79 1,542.91 1,230.37 79.7
Others 7,984.18 6,620.66 4,273.51 64.5
Total 88,359.09 73,733.64 56,052.20 76.0
*
: With respect to amount phased.

b. Deposits/Repayments RIDF stood at Rs.66,329.42 crore (Chart 3.6). An

amount of Rs.2,998.33 crore was received from the
3.59 The interest payable by NABARD on the deposits
State Governments towards repayment of RIDF loans
from commercial banks continued to be equal to the
during 2008-09.
prevailing Bank Rate (6%). With the receipt of
Rs.18,805.21 crore (including Rs.6,647.43 crore under D. Employment Generation
Bharat Nirman) as deposits from commercial banks 3.60 It is expected that the projects, sanctioned under
during the year, the cumulative deposits received under RIDF, on implementation will facilitate expansion of

Table 3.11: Cumulative Sanctions and Disbursements under different Tranches

(As on 31 March 2009)
(Rs. crore)
RIDF Tranche Corpus No. of Amount % of
Projects Sanctioned Phased Disbursed Disbursement *
Closed Tranches
I 2,000 4,168 1,906.21 1,906.21 1,760.87 92.4
II 2,500 8,193 2,636.08 2,636.08 2,397.95 91.0
III 2,500 14,345 2,732.69 2,732.69 2,453.53 89.8
IV 3,000 6,171 2,902.55 2,902.55 2,482.00 85.5
V 3,500 12,106 3,434.52 3,434.52 3,054.96 88.9
VI 4,500 43,168 4,488.51 4,488.51 4,070.85 90.7
VII 5,000 24,598 4,582.32 4,582.32 4,052.59 88.5
Total 23,000 1,12,749 22,682.88 22,682.88 20,272.75 89.4
Ongoing Tranches
VIII 5,500 20,887 5,950.19 5,950.19 5,141.75 86.4
IX 5,500 19,548 5,638.51 5,638.51 4,870.36 86.4
X 8,000 17,190 7,717.47 7,717.47 6,198.38 80.3
XI 8,000 29,875 8,300.59 8,300.59 5,727.50 69.0
XII 10,000 42,279 10,600.95 10,600.95 5,770.84 54.4
XIII 12,000 36,948 12,749.09 9,600.83 5,057.14 52.7
XIV 14,000 85,527 14,719.42 3,242.22 3,013.48 92.9
Total 63,000 2,52,254 65,676.22 51,050.76 35,779.45 70.1
Grand Total 86,000 3,65,003 88,359.10 73,733.64 56,052.20 76.0
*:
With phased amount.

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Ch-Eng-3.p65 66 7/14/2009, 3:03 PM

 the production base in rural areas and creation of Box 3.3
additional employment opportunities (Box 3.3). Accretion to Rural Infrastructure and Employment
(lakh)
Rural Infrastructure
E. Monitoring of RIDF Projects Additional irrigation potential 144.97 ha.
3.61 Monitoring of RIDF projects under Rural road network 2.73 km.
Rural bridges 5.06 mt.
implementation is imperative to ensure timely
Employment Generation
completion and quality of assets being created. Though
Due to increased irrigation
the primary responsibility of monitoring of RIDF - Recurring (jobs) 70.55
projects vests with State Governments, NABARD also - Non-recurring (person days) 22,568
undertakes monitoring of RIDF projects by exception. From non-irrigation projects-
This two-pronged monitoring approach results in better - Non-recurring (person days) 42,785

implementation of projects, as various constraints are

identified, reviewed and sorted out at regular intervals. Major observations/issues were taken up with the
The High Power Committee (HPC) at State level has implementing departments as also the Finance
proven to be an effective mechanism for monitoring Department of State Governments for improving the
and in ensuring speedy and timely completion of pace and quality of the project execution.
projects. The HPC, chaired by the Chief/Finance
Secretary of the State, meets quarterly to review the F. Capacity Building Support
pace of project implementation. 3.63 Infrastructure deficient states also have
comparatively lower off-take of RIDF because of their
3.62 NABARD carried out monitoring of RIDF weak implementing apparatus. With a view to
projects through desk review based on periodic returns overcoming this limitation, NABARD initiated capacity
and field visits undertaken by HO/RO officers, DDM building of the stakeholders by organising awareness
and consultants hired by the bank. During the year workshops for officials of different Line/Implementing
5,290 projects were monitored through field visits. Departments and State Governments.

67

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 Kerala revealed that the projects were viable despite
the time over-run (15-39 years) in completion
(Table 3.12). The economic rate of return (ERR) of
these investments ranged between 15 and 38 per
cent, resulting in income and employment generation.
While no change in the cropping pattern was
observed, crop production and yield under all projects
improved. The bridge project had an impact in terms
of savings in vehicle operating cost, better
accessibility, improvement in quality of life, etc.
Investment in regulator-cum-bridge project benefited
Thattarkadavu Bridge under RIDF - XII, Kerala
2,600 ha. of arable land by preventing entry of
saline water into the fields. The study recommended
G. Rural Infrastructure Financing adequate fund allocation by State Government for
Alternative better maintenance of the structures, coordination
between different implementing agencies, viz.,
3.64 The gigantic gap in rural infrastructure cannot
Command Area Development Authority, Irrigation
be bridged by the state governments alone in view
of their limited resources and organisational structure.
In order to leverage private resources and its Box 3.4
implementing capacity, NABARD signed a Public-Private Partnership for Rural Infrastructure Projects

Memorandum of Agreement (MoA) with Infrastructure The Memorandum of Agreement (MoA) between NABARD and
Leasing & Financial Services Ltd (IL&FS). This will IL&FS aims at developing an integrated approach in planning
be a step towards developing products and services for rural infrastructure across the country, based on shared
and in fine-tuning the design of innovative delivery concern and collaborative leadership structure, whose scope
would comprise setting-up both programme and project-based
systems like Special Purpose Vehicles (SPV)
institutional arrangements, for taking up projects in
(Box 3.4).
commercially feasible/viable Public-Private-Partnership (PPP)
format and achieving the same through conceptualisation and
Economic Impact of Investments implementation of workable frameworks and processes. This
would include design, engineering, financing, procurement,
3.65 NABARD continued to conduct evaluation construction, improvement, operation and maintenance on
studies to assess field-level performance of various Build, Operate and Transfer (BOT) and any other appropriate
investment activities and their impact on income forms of PPP with defined roles for the parties, including project
accrual, employment generation and viability. During development and management of public system projects
financed by NABARD, partly or wholly, under RIDF or
2008-09, three ex-post evaluation studies on projects
otherwise.
supported under RIDF and SHG-Bank Linkage
Programme and three commodity specific studies, In order to implement this Agreement, NABARD and IL&FS will
examining the entire supply chain management were identify specific programme/project areas in various States to

completed. take forward the objectives of this Agreement.

The MoA will enable NABARD to work out self-supporting and

a. Infrastructure Investments bankable formats for launching infrastructure projects relevant
to agriculture and rural development and provide valuable
3.66 The evaluation study on investments in medium advice to GoI and State Government agencies to leverage their
irrigation, bridge and regulator-cum-bridge projects budgetary resources for these programmes.
under RIDF in Kannur and Ernakulam districts of

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 Table 3.12: Benefits under RIDF Investments
(Per unit)
*
State/ Type of Capital Net Benefited ERR Employment
Reference Investment Cost Incremental Area (ha.) (%) Generation
Year (Rs. lakh) Income (lakh persondays)
(Rs. lakh)^ Recurring Non-recurring
Kerala/ a. Medium 16,667 612 4,334 15 2.35 6.5
2004-05 Irrigation
b. Bridge 253 36 355 17 0.09 0.51
c. Regulator- 1,056 354 2,600 38 1.22 2.11
cum- Bridge
*: Economic Rate of Return ^: With Imputed Value of Family Labour

Department, etc. Based on the study findings, of members graduating to micro-enterprises (income
NABARD has decided to consider commitments by generating asset creation) activities such as dairy, flour
State Government/s for maintenance and repair of mill, rickshaw, grocery shop, brick kiln, mandap
projects already financed under RIDF as a parameter decoration, etc., varied between 29 per cent in Gujarat
for allocation of funds among States from 2009-10 and 32 per cent in Jammu & Kashmir. Income
onwards. generating activities (without asset creation), viz.,
purchase of inputs for farm enterprises, mushroom
b. SHG Bank Linkage Programme: cultivation, etc., were also undertaken by 35 and 39
Micro-Enterprises among SHG per cent members in Gujarat and Jammu & Kashmir,
members respectively (Table 3.13). Absence of rotation in
leadership, declining membership of SHG over time,
3.67 The evaluation studies on micro-entrepreneurship
lack of product diversification, use of low-level
among SHG members in Gujarat and Jammu &
technology, inadequate infrastructure, etc., were some
Kashmir revealed that with the passing of time SHG
of the constraints identified.
members shifted from consumption to production loans
for setting-up income generating micro-enterprises. In
Gujarat, it was observed that the percentage of bank
c. Commodity Specific Studies
loan utilised in asset creation improved from 8 in the 3.68 Commodity Specific Studies on groundnut,
first linkage to 67 by the fifth linkage. The percentage mango and sugarcane were undertaken during the year

Table 3.13: Micro-Enterprise among SHG Members

State/ No. Studied Average % of SHG Members Net Recovery
Reference Loan Size- Undertaking Income/ (%)
Year SHG Members Cumulative* Income- Micro- Unit (Rs.)
(Rs.) Generating Enterprises
Activities
Gujarat/ 20 49 74,313 35 29 13,262 93
2004-05
Jammu & 15 150 56,880 39 32 15,602 100
Kashmir/
2004-05
* : Includes the bank loan availed during fifth and second linkages in Gujarat and Jammu & Kashmir, respectively.

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 to identify the issues relating to activities of the entire co-operative sector vis-à-vis solvent and other
supply chain management (Table 3.14). crushing units in Gujarat was due to procurement of
raw material at a lower cost and no payment of
i. Groundnut brokerage on raw material and finished goods.
Farm gate price realised by farmers was 66 and
3.69 Groundnut is mainly cultivated in Andhra
45 per cent of the retail price in Jharkhand and
Pradesh, Gujarat, Karnataka, Maharashtra and
Rajasthan, respectively. Though groundnut was
Rajasthan. Being primarily a rainfed oilseed crop, its
mainly exported in the form of hand picked and
productivity reveals much variation across regions.
selected (HPS) and value added nuts, the residual
The commodity specific study on groundnut in
levels of aflatoxin in groundnut consignments did not
Gujarat, Jharkhand and Rajasthan revealed that the
meet the export quality specifications of the
net income realisation of farmers was maximum in
European Union. The study suggested standardisation
Rajasthan (Rs.22,470/ha.), followed by Gujarat
of agronomic practices, extension services,
(Rs.13,798/ha.) and Jharkhand (Rs.4,166/ha). Lack
technological innovations for increasing productivity,
of technology and traditional methods of cultivation
promotion of contract farming, formation of
were responsible for low net income realisation in
co-operative processing mills, improved storage and
Jharkhand. Although the investments in processing
drying techniques to prevent aflatoxin contamination,
units was profitable, unavailability/irregular supply of
etc.
raw materials led to under-utilisation of installed
capacities in Gujarat (41%) and Rajasthan (67%).
ii. Mango
High returns to investments (>50%) in groundnut
processing in Rajasthan were attributed to rapid 3.70 Mango, a tropical fruit, is popular in both fresh
rise in oil prices vis-à-vis groundnut prices and lower and processed forms. The study on mango
cost of investment in plant and machinery. The high undertaken in Andhra Pradesh, Maharashtra and
price (Rs.194/qtl) realised by processing units in the West Bengal, some of the major mango producing

Table 3.14: Commodity Specific Studies

Commodity State/ Reference Sample Yield Cost of Net Income
Year Size* (kg/ha) Cultivation @ Farmers Processors
(Rs./ha) (Rs./ha.) (Rs./qtl)
Groundnut Gujarat/ 2005-06 60 (32) 1,958 23,926 13,798 141-194
Rajasthan/2006-07 92 (70) 2,321 21,980 22,470 63
Jharkhand/ 2006-07 56 (56) 630 15,721 4,166 $
Mango Andhra Pradesh/ 75 (42) 9,880 13,585 41,990 200-636 #
West Bengal/ 104 (20) 45,000 35,815 2,42,838 800-6,000 ^
Maharashtra/ 59 (40) 8,000 A/ 62,760A/ 1,00,536 A/ 900
2005-06 9,984 K 52,572 K 1,29,588 K
Sugarcane Karnataka/ 57 (40) 99,837 84,078 17,979/ (-)82 to 113
40,649 **
Uttar Pradesh/ 107 (90) 55,575 56,417 (-) 3,478/ 6.10 **
2005-06 866 **

Figures in parentheses indicate the number of farmers covered. A : Alphoso mango K: Kesar mango
* : Includes farmers, processors, traders, etc. @ : With imputed value of family labour.
** : For ratoon sugarcane crop. .
# : Net income of Rs.2/kg for canned pulp processing and Rs.6.36/kg for jelly making.
^: Net income of Rs.11/kg for mango pickles, Rs.8/kg for sauce, Rs.25/kg for jam, Rs.60/kg for jelly and Rs.31/litre for squash.
$ : Bulk of groundnut production marketed as shells/kernels.

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 states, revealed that the investments in mango zone (Uttar Pradesh, Uttarakhand, Bihar, Punjab,
orchards for different varieties were financially viable Haryana) accounting for 67 and 62 per cent of the
with financial rate of return (FRR) > 50 per cent area and production, respectively. The tropical zone
in West Bengal, 20.8 per cent in Andhra Pradesh, (Maharashtra, Andhra Pradesh, Gujarat and
17.6 per cent (Alphonso) and 23.2 per cent (Kesar) in Karnataka) accounts for only 33 per cent of the area,
Maharashtra. Net income/ha. was maximum in West but contributes 38 per cent of the production owing
Bengal (Rs.2,42,838) due mainly to very high yield to relatively high productivity. The study on sugarcane
level. Although the scope for mango processing is conducted in Karnataka and Uttar Pradesh,
immense, processing activity was limited, owing to representing both types of agro-climatic regions,
preference for consuming fresh fruits. Some of the indicated that sugarcane cultivation, in Uttar Pradesh
major constraints identified by the study were, was not profitable as the returns, due to use of local
(i) prevalence of oral lease system for mango orchards varieties, especially by small farmers, were insufficient
in West Bengal, which deterred FI from lending, to cover all costs, particularly family labour. However,
(ii) indiscriminate use of chemical fertilizers/pesticides relatively better returns in Karnataka were due to
affecting the health of trees and production in the
above normal rainfall received during the reference
long run and (iii) predominance of middlemen in the
year, which reduced the cost of irrigation. Similarly,
supply chain resulting into low producers’ share in
sugar processing as a solo activity did not work out
consumer rupee (28.8% in Andhra Pradesh). On the
to be a viable proposition for sugar mills in Uttar
export front, though India has the potential to
Pradesh and Karnataka. This was due to factors such
become a major exporter, lack of quality control,
as small size of the plants, high cost of procuring
inadequate post-harvest infrastructure, incidence of
sugarcane, declining trend in free sugar prices,
fruit fly/stone weevil and inadequate follow-up of
controlled marketing, limited opportunities for
required pre-harvest practices by the producers, etc.,
diversification in favour of co-generation using
led to a dismal share of exports in total production
bagasse, etc. With an average crushing capacity of
(0.45% during 2004-05). Further, hybrid varieties like
4,519 TCD (tonnes crushed daily) and 4,630 TCD in
Mallika and Amrapally posed a threat to traditional
Karnataka and Uttar Pradesh, the sugar mills
varieties like Fazli, Aswina, Gopalbhog, etc., in West
operated on an average for 132 and 146 days,
Bengal. The study recommended rejuvenation of old
respectively. Stagnant productivity and variability in
orchards and awareness creation among the farmers
area under sugarcane and increase in number of
regarding the agricultural practices, export processes,
units/capacities adversely affected the working period
loan facilities, etc. Improved post harvest
of the sugar mills. Diversification in the form of
management, infrastructure support like packaging
ethanol production and co-generation of power by
house, cold storage, etc., ending the rumali system of
sugar mills can be considered for improving their
marketing (bidding under handkerchief) in
financial health. The study also recommended
Maharashtra, organisation of farmers into co-operative
societies, organising mango exhibitions might help upgrading sugar mills, timely payment to farmers for

farmers realise better price. supply of sugarcane, investment in R&D to increase

sugar recovery percentage, evolve disease/pest resistant
varieties, adoption of improved farm practices,
iii. Sugarcane
promotion of contract farming, transparency in
3.71 Although primarily a tropical crop, sugarcane dealings of sugar mills, especially, with the small
cultivation in India is concentrated in the sub-tropical farmers, etc.

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 NABARD Consultancy Services
3.72 NABARD Consultancy Services Pvt. Ltd. C. Progress
(Nabcons), a wholly owned subsidiary of NABARD, has 3.75 During the year, Nabcons contracted 109
established itself as a professional consultancy service assignments (as against 321 last year) involving
provider in the sphere of agriculture, allied activities and consultancy fees of Rs.16.66 crore registering a growth
rural development. The clientele includes GoI, State of 89 per cent in the fee amount. Thrust was laid on
Governments, National Institute of Agriculture Marketing contracting high value assignments like monitoring of
(NIAM), commercial banks, small entrepreneurs, infrastructure projects under Prime Minister’s Special
Agricultural Marketing Board-Mauritius, APRACA, Package for Arunachal Pradesh, UPDASP, study for
SIDBI, UPDASP, etc. Nabcons has signed assessment and development of financial models for
Memorandum of Understanding (MoU) with a number handicrafts artisans, etc. During 2008-09, the company
of banks and International Consultancy Organisations completed 122 assignments involving consultancy fee of
for promotion of business and jointly bid for a number Rs.10.42 crore (Table 3.15).
of assignments successfully.
3.76 Some of the new areas covered include, study of
A. Management foot and mouth disease in five States to assess the
3.73 The Board of Nabcons under the Chairmanship economic loss, supply chain management, NRM
of Dr. K.G. Karmakar, Managing Director, NABARD (Hinduja Foundation), study on financial inclusion
comprises of eight Directors. Consequent upon the (for RBI), restructuring of Maharashtra Agricultural
retirement of Dr. R. Balakrishnan, ED, NABARD and Marketing Federation, review of strategy for Agriculture
Shri S.M. Mehta, Chief Executive Officer (CEO), Marketing Board – Mauritius, study of rural finance
Nabcons, the Board was reconstituted by inducting Shri policies and regulation in Cambodia and Laos, etc.
P.L. Behera, ED, NABARD and Shri Madan Mohan as During 2008-09, the company earned an income of
CEO, Nabcons. The five independent Directors remained Rs.11.27 crore as compared to Rs.10.19 crore during the
unchanged. previous year. Profit after tax stood at Rs.4.28 crore as
compared to Rs.3.82 crore during the previous year,
B. Developments registering a growth of 15 per cent.

3.74 During 2008-09, Nabcons acquired ISO 9001:

2008 certification. In addition to executing five foreign Table 3.15: Client Profile of Nabcons
(As on 31 March 2009)
assignments (one each in Nepal, Laos, Cambodia,
(Rs. lakh)
Vietnam and Indonesia), Nabcons also arranged Client Assignments completed
international programmes for delegates from Kenya, Institution 2008-09 Cumulative
Sri Lanka, Bangladesh, etc., thus earning foreign No. Amount No. Amount
exchange worth $ 1.10 lakh. The company entered the Government of India 63 385.01 426 2,220.20
Mutual Fund Advisory Services in September 2008 and, State Government 21 500.14 97 1,102.01
as at end-March 2009, earned a revenue of
International
Rs.29.47 lakh. With a view to tapping the potential for Organisations 11 49.37 55 256.79
consultancy in African nations, Nabcons is opening a
Banks 3 18.20 34 81.61
liaison office in Nairobi, Kenya. The positioning of
Corporate Houses 12 62.75 110 393.85
Nabcons in Kenya is expected to garner potential rural
development consultancies in Africa in the areas of mF, Individuals 12 26.49 154 166.00

NRM, livelihood opportunities, etc. Total 122 1,041.96 876 4,220.66

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 Management of Resources
3.77 The financial resources of NABARD increased by scheduled commercial banks not achieving their priority
Rs.19,470 crore during 2008-09 as against an increase sector lending obligations, was set up with NABARD to
of Rs.17,486 crore during 2007-08. The resources enhance its refinance operations to ST co-operative
were augmented by issue of Corporate Bonds, credit institutions. NABARD received deposits from
Bhavishya Nirman Bonds (BNB), NABARD Rural commercial banks aggregating Rs.4,622 crore under this
Bonds, RIDF Deposits, Term Deposits, Certificate of Fund.
Deposits, Commercial Paper and Term Money
Borrowings (TMB). Repayment of RIDF deposits and C. Borrowings
redemption of Bonds amounted to Rs.2,375 crore and
3.81 The market borrowings of NABARD as
Rs.9,248 crore, respectively. The funds deployed for
percentage to working funds registered a significant
supporting investment credit operations (including
decline during 2008-09 (Table 3.17).
development of rural infrastructure) and loans to State
Governments for contributing to the share capital of
co-operative credit institutions together increased by Table 3.16: Sources of Funds
Rs.15,863 crore and the production and marketing credit (As on 31 March)
(including liquidity support) decreased by Rs.68 crore
(Rs. crore)
during 2008-09. The details on sources and uses of
Particulars 2008 2009
funds are furnished in Table 3.16 and 3.18, respectively.
Capital, Reserves & Surplus 10,603 11,586
(10.7) (9.8)
Sources of Funds
NRC (LTO) and (Stab.) Funds 15,159 15,571
(15.4) (13.2)
A. Capital
Deposits, Bonds & Debentures 28,806 24,366
3.78 The authorised capital of NABARD continued to (29.2) (20.6)
be Rs.5,000 crore as also the paid up capital, which
STCRC Fund - 4,622
remained the same since 2001-02 at Rs.2,000 crore
- (3.9)
(Rs.550 crore subscribed by GoI and Rs.1,450 crore by
Borrowings from GoI 370 354
RBI), as on 31 March 2009.
(0.4) (0.3)

Borrowings from Commercial Banks 2,500 500

B. Deposits (2.5) (0.4)
3.79 Deposits from tea, coffee and rubber companies Certificate of Deposits 1,422 1,816
outstanding as on 31 March 2009 aggregated (1.4) (1.5)
Rs.60 crore. Term deposits aggregrated Rs.421 crore. Term Money Borrowings - 244
During the year, NABARD received deposits from - (0.2)
commercial banks aggregating Rs.18,805 crore under
RIDF Deposits 30,593 47,023
RIDF VI to XIV. Repayments of Rs.2,375 crore were
(31.0) (39.8)
made to commercial banks under RIDF V to XI upto
Foreign Currency Loan 508 498
31 March 2009. Deposits outstanding under various
(0.5) (0.5)
tranches of RIDF as on 31 March 2009 were
Rs.47,023 crore as against Rs.30,593 crore as on Other Liabilities/Funds 8,745 11,596

31 March 2008. (8.9) (9.8)

Total 98,706 1,18,176

3.80 The Short-term Co-operative Rural Credit (100.0) (100.0)

(Refinance) [STCRC] Fund, with contribution by Figures in parentheses indicate percentage to total.

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 a. Bonds
3.82 Government of India has withdrawn the option
available to NABARD for raising resources through issue
of Capital Gain Bonds (CGB), Tax Free Bonds and
Priority Sector Bonds (PSB) from 1 April 2006.
Consequently, issue of Corporate Bonds, BNB and
NABARD Rural Bonds were the major sources of raising
resources during 2008-09.
i. Capital Gain Bonds
iii. Tax Free Bonds
3.85 Tax Free Bonds worth Rs.535.15 crore were
redeemed during the year. Thus, as on 31 March 2009,
no outstanding amount remains under these Bonds.
iv. Statutory Liquidity Ratio (SLR) Bonds
3.86 Though no SLR bonds were issued during
the year, an amount of Rs.116.23 crore was repaid.
The outstandings under SLR bonds aggregated
Rs.277.98 crore as on 31 March 2009.

3.83 During the year, under CGB an amount of

v. Bhavishya Nirman Bonds
Rs.4,086.51 crore was redeemed and the outstandings
stood at Rs.690.94 crore, with a weighted average cost 3.87 During the year, BNB worth Rs.2,766.76 crore
of 5.38 per cent. Investors have been given option to were issued. The outstandings under BNB aggregated to
reinvest the amount received on redemption of CGB as Rs.4,554.22 crore as on 31 March 2009.
term deposit for one year at a fixed rate of interest.
vi. Certificate of Deposits
Along with this, term deposits were also offered for
institutional investors under structured deals. An amount 3.88 NABARD raised resources worth Rs.1,816.15
of Rs.421.94 crore has been raised under term deposits crore by way of Certificate of Deposits (CD) during
during the year. 2008-09.

ii. Priority Sector Bonds and Corporate Bonds vii. Term Money Borrowings

3.84 During the year, PSB worth Rs.325 crore and 3.89 In order to meet the gap in resources, NABARD
Corporate Bonds worth Rs.4,185 crore were redeemed. started raising resources through TMB from 1 August
Corporate Bonds worth Rs.1,464 crore were issued 2008. As on 31 March 2009, TMB raised aggregated
during 2008-09. There were no outstandings under PSB, Rs.244.07 crore.
as on 31 March 2009, while it was Rs.18,156.50 crore
under Corporate Bonds.
viii. Commercial Papers
3.90 NABARD raised resources worth Rs.180.62 crore
by way of Commercial Papers during 2008-09 with face
Table 3.17: Market Borrowings of NABARD value of Rs.200 crore. As on 31 March 2009,
(As on 31 March)
outstandings under Commercial Papers stood at
Rs.180.62 crore.
(Rs. crore)
Year Total Working Outstanding Market ix. Rural Bonds
Funds Borrowings *
3.91 During the year, Rural Bonds (with benefit
2005 60,779 22,261 (36.6)
under Section 80C of IT Act) worth Rs.20.64 crore
2006 67,605 24,084 (35.6)
were issued. The total outstandings under Rural Bonds,
2007 81,220 32,146 (39.6)
since inception, aggregated Rs.23.98 crore as on
2008 98,706 33,606 (34.0) 31 March 2009.
2009 1,18,176 27,779 (23.5)

* : Includes deposits (excluding RIDF deposits and STCRC Fund),
borrowings, bonds and foreign currency borrowings.
Figures in parentheses indicate percentages of outstandings market
borrowing to total working funds.
b. Funds from GoI
3.92 During the year, an amount of Rs.16.40 crore
was repaid on maturity to GoI against the loans drawn
earlier under various externally aided projects.

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 c. Corporate Borrowings
3.93 An amount of Rs.2,000 crore was repaid during
the year. The amount outstanding under corporate
borrowings aggregated Rs.500 crore as on
31 March 2009.
d. Borrowings in Foreign Currency
3.94 The borrowings in foreign currency from KfW,
Germany aggregated Rs.498.29 crore (• 94.04 million),
as on 31 March 2009. The foreign exchange risk on this
loan as well as interest payments have been hedged at
a cost of 1.02 per cent for 10 years.
D. Short-Term Co-operative Rural
Credit (Refinance) Fund
3.95 As per the Union Budget 2008-09 announcement,
a STCRC (Refinance) Fund has been established with
NABARD with a corpus of Rs.5,000 crore. RBI had also
allocated the above amount among the public and
private sector banks having a shortfall in achievement of
agriculture lending target of 18 per cent. As on 31 March
2009, NABARD had raised demand for deposits to the
extent of Rs.5,000 crore against which deposit of
Rs.4,622.28 crore was received from the participating
commercial banks.
E. Agricultural Debt Waiver and Debt
Relief Scheme, 2008
3.96 With a view to ensuring adequate financing of
agriculture operations by banks, RBI provided liquidity
support to NABARD to the extent of Rs.17,500 crore
on 16 October 2008, to be allocated by NABARD
amongst co-operative banks and RRB, based on the
extent of debt waiver/relief afforded by them under
the ADWDR Scheme, 2008. Drawals were made and
disbursed to co-operative banks and RRB on receipt
of claims from the banks. Subsequently, GoI released
an amount of Rs.17,500 crore to NABARD in two
tranches in December 2008. The entire amount
has been repaid to RBI, including the accrued interest
of Rs.155.79 crore. As on 31 March 2009,
Rs.16,611.01 crore has been released by NABARD,
representing 56 per cent of the claims received from
co-operative banks and RRB.
F. Restructuring of Term Loans
of Co-operative Sugar Mills –
Interest Subvention
3.97 GoI had announced a revised package on
restructuring of Term Loans of Co-operative Sugar Mills.
Under this package, GoI has agreed to provide interest
subvention upto a maximum of 3 per cent. As against
Rs.138.54 crore received from GoI towards interest
subvention, an amount of Rs.116.18 crore was
disbursed during the year.
Uses of Funds
A. Loans and Advances
a. Schematic Lending
3.98 The amount outstanding under schematic lending
including subscriptions to Special Development
Debentures to SCARDB, was Rs.33,334.81 crore as on
31 March 2009 as against Rs.32,401 crore as on
31 March 2009.
b. ST, MT and MT (Conversion) Loan
Assistance
3.99 The ST loans advanced for financing SAO to the
SCB (Rs.13,897.88 crore) and RRB (Rs.2,816.50 crore)
together with other ST loans to SCB (Rs.62.12 crore)
and RRB (Rs.119.73 crore) decreased to Rs.16,896.23
crore, as on 31 March 2009, from Rs.17,381.50 crore as
on 31 March 2008.
3.100 As on 31 March 2009, the amount outstanding
under (i) LT investment non-project loans stood at
Rs.251.92 crore, and (ii) MT (conversion) loans stood at
Rs.200.68 crore compared to Rs.118.20 crore as on 31
March 2008. The amount outstanding under the
Liquidity Support Scheme for SCB and RRB aggregated
Rs.2,590.92 crore as on 31 March 2009 as against
Rs.1,939.89 crore as on 31 March 2008.
c. Loans to State Governments
i. Project Loans under RIDF
3.101 The project loans to State Governments under
RIDF stood at Rs.45,616.21 crore as on
31 March 2009, compared to Rs.30,648.59 crore as on
31 March 2008.

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 ii. Non-Project Loans CD, mutual funds, CBLO, etc. During the year,
3.102 The amount outstanding under non-project LT NABARD liquidated its ST deposits and G-sec
loans to State Governments for contribution to the share investments to support its business operations. As on
capital of co-operative credit institutions, amounted to 31 March 2009, the total investments of the surplus
Rs.251.93 crore as on 31 March 2009, compared to funds of the Bank in ST deposits, money market
Rs.290.14 crore as on 31 March 2008. instruments, G-sec, etc., aggregated Rs.16,194.75
crore.
d. Other Loans
C. Co-finance
3.103 Other loans outstanding stood at Rs.47.98 crore,
as on 31 March 2009, as against Rs.27 crore as at 3.105 The Bank has entered into agreements with
end-March 2008, which included outstanding amounts commercial banks to co-finance various projects.
of loans issued under various funds, viz., CDF, MFDEF, The outstanding as on 31 March 2009 aggregated
WDF and TDF. Rs.94.48 crore, an increase from Rs.66 crore as on
31 March 2008.
B. Investment of Surplus Funds
Income and Expenditure
3.104 NABARD deployed its surplus funds in
government securities (G-sec), ST deposits with 3.106 The total income of NABARD during the year
commercial banks and other instruments such as CP, amounted to Rs.7,050.68 crore as against Rs.5,509.10
crore during the previous year. Out of this, a sum of
Rs.597.40 crore has been provisionally earmarked
Table 3.18: Uses of Funds
towards payment of Income Tax and Fringe Benefit Tax
(As on 31 March)
(net of deferred tax asset), and Rs.340 crore has been
(Rs. crore)
contributed to Special Reserves in terms of Section
Particulars 2008 2009
36(1)(viii) of Income Tax Act, 1961. Of the remaining
Cash and Bank Balance 10,314 13,975
(10.4) (11.8)
income, Rs.400 crore has been transferred to the NRC
Government Securities and (LTO) Fund and Rs.10 crore to the NRC (Stabilisation)
other Investments 2,582 2,995 Fund under Sections 42 and 43, respectively, of the
(2.6) (2.5) NABARD Act, 1981.
Production and Marketing Credit 17,382 16,896
(17.6) (14.3) 3.107 Out of the balance income amounting to
Conversion of Production 118 20 Rs.5,703.28 crore (Rs.4,257.15 crore in the previous
Credit into MT Loans (0.1) - year), after meeting the total expenditure of
Liquidity Support 1,940 2,591 Rs.5,063.15 crore (Rs.3,761 crore in the previous year),
(2.0) (2.2)
the surplus amounted to Rs.640.13 crore, including
MT & LT Project Loans 32,401 33,335
(32.8) (28.2)
withdrawals of Rs.48.15 crore from funds against
LT Non-Project Loans 290 252 expenditure debited to P&L account (Rs.30.31 crore
(0.3) (0.2) during 2007-08). The surplus has been transferred to
Loans out of RIDF 30,649 45,616 CDF - Rs.38.11 crore (Rs.53.07 crore in the previous
(31.1) (38.6) year); R&D Fund - Rs.8.61 crore (Rs.7.49 crore in the
Co-finance Loans 66 94
previous year); Reserve Fund - Rs.555.53 crore
(0.1) (0.1)
Other Loans 27 48
(Rs.405.11 crore in the previous year); Investment
(including MT Investment Credit) - (0.1) Fluctuation Reserves - Rs.42 crore (Rs.25.78 crore in the
Fixed Assets & Other Assets 2,937 2,353 previous year); Financial Inclusion Fund - Rs.32.50 crore
(3.0) (2.0) (Rs.5 crore in the previous year); Financial Inclusion
Total 98,706 1,18,176 Technology Fund - Rs.18.50 crore (Rs.5 crore in the
(100.0) (100.0) previous year) and Farmers’ Technology Transfer Fund -
Figures in parentheses indicate percentage to total.
Rs.31.61 crore (Rs.25 crore in the previous year).

76

Ch-Eng-3 Pantone.p65 76 7/14/2009, 3:11 PM

 IV Capacity Building of Client Institutions

The financial health and growth of rural credit come under increasing pressure from competitors
institutions continue to be areas of concern to like public sector commercial banks, private sector
NABARD. Regional Rural Banks (RRB) and banks, new generation banks, etc. The Bank has,
Co-operative Banks continue to play a crucial role in therefore, been striving towards improving the health of
the dispensation of credit for agriculture and rural these institutions through various developmental
development. These institutions, however, have initiatives.

Institutional Development
4.2 This section discusses the performance of co- cent during 2007-08, the number of borrowing
operative banks and RRB, various measures and members increased substantially (64%). Deposits of
initiatives taken by NABARD during the year to PACS decreased by 2 per cent while borrowings
facilitate their development and improve performance. increased by 11 per cent (as on 31 March 2008)
compared to the previous year. The loans issued
A. Rural Co-operative Credit increased by 14 per cent over the previous year
Institutions: (Table 4.1).

a. Performance
4.4 As on 31 March 2008, the deposits of
4.3 Primary Agricultural Credit Societies (PACS), the SCB and DCCB, increased by 16 per cent while
credit institutions at the grassroots level, deal directly borrowings of SCB increased by 1 per cent and that of
with individual borrowers and grant short, medium and DCCB increased by 4 per cent. Loans issued by SCB
long-term loans. The membership of PACS improved and DCCB increased by 9 and 10 per cent,
during the period 2007-08 and aggregated 12.98 crore, respectively. The loans outstanding increased by 6 and
of which borrowing members at 7.87 crore constituted 12 per cent during 2007-08 over the previous year
61 per cent. While membership of PACS grew by 3 per (Table 4.2).

Table 4.1: Performance of PACS Table 4.2: Growth of Short-Term Co-operative

(As on 31 March) Credit Structure
(As on 31 March)
(Rs. crore)
(Rs. crore)
Particulars 2006 2007 2008 Particulars SCB DCCB
2007 2008P 2007 2008P
Numbers (lakh) 1.06 0.97 0.97
Number 31 31 370 370
Membership (lakh) 1,252 1,258 1,298
Share Capital 1,247 1,534 5,413 5,973
Borrowing Members (lakh) 461 479 787 Reserves 9,461 9,859 26,862 27,666
Owned Funds 9,292 11,039 11,004 Deposits 48,559 56,324 92,352 1,07,094
Deposits 19,561 23,484 23,013 Borrowings 22,256 32,577 29,912 31,114
Loans Issued* 52,924 57,455 84,823 93,162
Borrowings 41,018 43,714 48,708
Loans Outstanding 47,335 50,005 90,153 1,01,368
*
Loans issued 42,920 49,613 56,447
*: April-March P: Data provisional
Data for Bihar, Himachal Pradesh and Manipur SCB and DCCB in Bihar and
Source: NAFSCOB *: April-March
HP repeated for 2007-08.

77

Ch-Eng-4.p65 77 7/15/2009, 10:59 AM

 4.5 In the case of LT co-operative credit structure, Table 4.4: Working Results of Co-operative Banks
their performance in terms of business operations (Rs.crore)

is a cause for concern. Borrowings by both State Agency Total In Profit In Loss
(No.) No. Amount No. Amount
Co-operative Agriculture and Rural Development Banks
SCB
(SCARDB) and Primary Co-operative Agriculture and
2006-07 31 27 592 4 44
Rural Development Banks (PCARDB) during the year
2007-08 * 31 26 515 5 49
ending 2008 decreased by 1 and 3 per cent, DCCB@
respectively, over the previous year. While loans issued 2006-07 370 271 733 98 765
by SCARDB and PCARDB decreased by 9 and 8 per 2007-08 * 370 261 874 108 902
cent, respectively, loans outstanding decreased by 2 SCARDB$$
2006-07 20 9 309 9 70
and 3 per cent, respectively, over the previous year
2007-08 20 9 147 9 48
(Table 4.3)
PCARDB
2006-07 696 371 438 325 507
b. Working Results 2007-08 697 350 434 347 618
Data for 2007-08 provisional
i. Profitability @ : Profitability position of Baran DCCB in Rajasthan is not available
for the year 2007 and Boudh DCCB in Orissa for 2008.
4.6 Out of 31 SCB, 26 were in profit during 2007-08 * : Data for SCB and DCCB in Bihar, Himachal Pradesh, and
with overall profit at Rs.515 crore. At the aggregate Manipur repeated from 2007.
$ : Data for Boudh DCCB in Orissa is not available and
level, SCB as a group earned a net profit of Rs.466
Kumbhakonam DCCB in Tamil Nadu is neither in profit nor in loss.
crore during 2007-08. While 261 (out of 370) DCCB $$ : Data for Manipur SCARDB is not available as the SCARDB is
earned overall profit of Rs.874 crore, nearly one third under orders of liquidation. For 2005-06 and 2006-07 profit/loss
data for Bihar SCARDB is not received.
of the DCCB incurred losses to the extent of Rs.902
crore during 2007-08. In the case of the LT co-
operative structure, while the profits at the aggregate PCARDB declined. PCARDB at the aggregate level
level for SCARDB and PCARDB have been declining, incurred a loss of Rs.184 crore during 2007-08 while
the losses have been on the rise in the case of loss SCARDB generated an aggregate profit of Rs.99 crore
making units. The number of profit making and loss (Table 4.4).
making SCARDB remained static during the two year
period 2006-08 yet the number of profit making 4.7 The data on the aggregate amount of
accumulated losses of co-operative credit institutions,
Table 4.3: Growth of Long-Term Co-operative Credit as on 31 March 2008, show an increasing trend
Structure (Table 4.5).
(As on 31 March)
(Rs. crore)
Table 4.5: Accumulated Losses
Particulars SCARDB#@ PCARDB#
(As on 31 March)
2007 2008P 2007 2008P
(Rs.crore)
Number 20 20 696 697
Year SCB DCCB SCARDB* PCARDB**
Share Capital 792 789 922 912
Reserves 2,279 2,685 2,646 3,289 2006 276 5298 924 2724

Deposits 602 695 355 350 2007 389 5719 964 2891

Borrowings 16,684 16,519 12,767 12,411 2008# 429 6106 1354 3283
Data for 2008 Provisional.
Loans Issued* 2,436 2,221 1,970 1,822
# : Data for SCB and DCCB in Bihar, Himachal Pradesh and
Loans Outstanding 18,625 18,325 12,108 11,756 Manipur repeated.
P : Data provisional * : April-March * : Data for Bihar, HP and Tamil Nadu repeated for 2007-08 and
# : Data for Bihar, HP, and TN repeated. Manipur SCARDB under orders of liquidation.
@ : Manipur SCARDB under orders of liquidation. ** : Data for HP and Tamil Nadu repeated for 2007-08.

78

Ch-Eng-4.p65 78 7/15/2009, 10:59 AM

 Table 4.6: Region-wise Working Results of SCB
(As on 31 March)
(Rs. crore)
Region Profit/Loss NPA NPA as % to loans Recovery (%)
(+) / (-) outstanding (As on 30 June)
2006-07 2007-08 2007 2008 2007 2008 2007 2008
Central 72.44 65.12 763.47 820.01 13.85 12.50 82.54 82.94
Northern 122.57 101.33 301.86 321.99 3.07 2.92 98.16 97.75
Eastern 30.94 32.15 501.11 533.52 10.82 10.78 70.64 78.86
Western 317.34 276.11 2,565.97 2,352.33 20.48 19.75 79.06 67.54
Southern 8.42 10.10 2,154.49 1,718.23 15.51 11.85 87.91 87.69
North-Eastern -3.94 -19.39 417.10 422.61 43.34 40.40 43.02 42.56
All-India 547.77 465.42 6,704.00 6,168.69 14.16 12.34 86.00 84.35
Data for 2008 provisional.

4.8 During 2007-08, profits of SCB declined in all whereas Kerala and Tripura SCB reduced their losses
regions except the eastern (4%) and southern (20%) during 2007-08. The losses of Arunachal Pradesh and
regions, thus, affecting the profitability position of SCB Assam SCB increased considerably.
as a whole (Table 4.6). Losses of SCB in NER
increased substantially. While profits of 12 SCB 4.9 In the case of DCCB, profits during 2007-08
(Andaman & Nicobar, Andhra Pradesh, Chandigarh, increased across all regions, except in southern region
Delhi, Goa, Gujarat, Jammu & Kashmir, Meghalaya, where losses declined (5%). At the aggregate level,
Orissa, Sikkim, Uttar Pradesh and West Bengal) though the number of DCCB in profit decreased, the
improved, as on 31 March 2008, ten SCB amount of profit showed an increase (19%). However,
(Chhattisgarh, Haryana, Karnataka, Madhya Pradesh, the number and amount of loss-making DCCB
Maharashtra, Mizoram, Punjab, Rajasthan, Tamil recorded an increase (Table 4.7). The extent of profits
Nadu and Uttarakhand) showed declining profitability and number of profit making DCCB increased in
as compared to previous year. Puducherry SCB, which Haryana, Jharkhand, Madhya Pradesh, Karnataka,
was in profit in 2006-07, incurred loss during 2007-08, Uttar Pradesh and West Bengal.

Table 4.7: Region-wise Working Results of DCCB

(As on 31 March)
(Rs. crore)
#$
2006-07* 2007-08 NPA % Recovery (%)
Region DCCB Total NPA to Loans (As on
Profit Loss Profit Loss Outstanding 30 June)

(No.) No. Amt. No. Amt. No. Amt. No. Amt. 2007 2008 2007 2008 2007 2008

Central 104 71 121.64 33 186.00 77 179.53 27 188.37 3118.04 3481.63 30.14 28.86 61.57 46.94
Northern 73 56 118.32 16 44.01 57 121.37 16 57.95 1128.32 1357.69 6.83 7.22 82.92 65.01
Eastern 64 45 42.78 19 59.39 44 51.12 19 105.61 1241.64 1465.07 20.77 22.35 64.36 53.07
Western 49 37 167.64 12 226.54 30 182.06 19 313.08 6127.07 6940.32 21.75 22.32 60.34 44.30
Southern 80 62 282.19 18 249.03 53 339.70 27 236.60 4759.43 5496.04 16.09 16.73 77.60 64.86

All-India 370 271 732.51 98 764.97 261 873.78 108 901.61 16374.50 18740.75 18.16 18.49 71.08 55.82
Data for 2008 provisional. * : Data for 1 DCCB in Rajasthan not available for 2007.
# : Data for 1 DCCB in Orissa not available for 2008. $ : Data for DCCB in Bihar and Himachal Pradesh repeated from 2007

79

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 Table 4.8: Region-wise Working Results of SCARDB
(As on 31 March)
(Rs. crore)
Region No. of Profit / Loss Total NPA NPA as %
Branches (+) / (-) to loans Recovery (%)
outstanding (As on 30 June)
2008 2006-07 2007-08 2007 2008 2007 2008 2007 2008
Central 349 29.68 22.38 2340.40 2708.84 40.07 47.06 33.77 69.18
Eastern 204 -2.31 -2.94 374.73 451.72 40.72 46.24 31.33 33.03
North-Eastern 38 -0.09 -0.03 16.84 18.25 57.82 58.98 61.74 70.98
Northern 85 6.24 72.27 1409.38 699.75 24.07 12.57 79.06 58.00
Southern 56 -12.88 -12.11 687.41 757.61 16.94 18.78 50.31 46.82
Western 181 218.41 -19.31 813.93 1489.25 42.36 76.01 32.55 8.33
All-India 912 239.05 -132.08 5642.69 6125.41 30.30 33.43 44.24 49.39
Data for 2008 for Bihar, Himachal Pradesh and Tamil Nadu repeated. Manipur SCARDB under liquidation.

4.10 During 2007-08, SCARDB in central and
northern regions increased its profit while those in
other regions incurred losses. Alhough the SCARDB in
the NER reduced its losses substantially (78%), at the
aggregate level, SCARDB were loss-making entities,
incurring a net loss of Rs.132 crore (Table 4.8). The
profits of the SCARDB increased in Kerala, Madhya
Pradesh, Punjab and Rajasthan while it decreased in
Gujarat and West Bengal. The losses of SCARDB
increased further in Chhattisgarh, Jammu & Kashmir,
Tripura and Uttar Pradesh. SCARDB in Assam and
Haryana turned to profit during 2007-08 while
Karnataka and Maharashtra SCARDB that were in
profit, incurred losses during 2007-08. During 2007-
08, overall profit of PCARDB declined owing to
decline in profit across all regions, with the exception
of the northern region. The number and extent of
losses of loss-incurring PCARDB increased in all
regions, except northern region (Table 4.9). The
number of profit-making PCARDB increased in
Chhattisgarh, Haryana, Kerala and Punjab, while the
number of loss-incurring PCARDB increased
substantially in Karnataka, Maharashtra, Rajasthan
and West Bengal during 2007-08.
ii. Costs and Margins
4.11 The overall returns and cost of funds, as a
percentage to working funds, for SCB as a group worked
out to 4.92 and 7.15 per cent, respectively. Thus, the
financial margin available to SCB was 2.23 per cent
(excluding miscellaneous income of 0.63%) during

Table 4.9: Region-wise Working Results of PCARDB

(As on 31 March)
(Rs. crore)
Region 2006-07 2007-08 Total NPAs NPA as % Recovery (%)
to loans o/s (As on
Profit Loss Profit Loss 30 June)
No. Amt. No. Amt. No. Amt. No. Amt. 2007 2008 2007 2008 2007 2008
Central 20 2.92 30 53.48 17 0.97 33 119.60 555.78 744.21 37.51 53.39 56.71 56.81
Eastern 11 2.60 59 28.52 7 1.46 63 38.42 229.28 201.18 37.52 28.48 50.60 48.66
Northern 85 31.38 59 125.98 95 133.81 50 56.88 1984.83 2159.94 34.46 40.13 57.69 41.22
Southern 252 379.14 151 116.03 230 295.57 173 133.21 1090.54 1266.55 33.00 37.60 54.11 45.84
Western 3 22.19 26 183.28 1 2.02 28 269.79 456.02 767.93 48.00 84.90 23.75 4.10
All-India 371 438.23 325 507.29 350 433.83 347 617.90 4316.45 5139.81 35.65 43.72 52.25 40.46
Data for 2008 for Orissa, Himachal Pradesh and Tamil Nadu repeated

80

Ch-Eng-4.p65 80 7/15/2009, 10:59 AM

 2007-08. The average transaction and risk costs of SCB Table 4.10: Composition of NPA of Co-operative Banks
during 2007-08 worked out to 1.30 and 0.69 per cent, (As on 31 March 2008)P

respectively. SCB as a group earned a net margin* of (Rs.crore)

Assets
0.87 per cent during 2007-08 compared to 0.42 per cent Classification SCB# DCCB# SCARDB* PCARDB**
during the previous year. In the case of DCCB, the Sub-
overall return (yield on assets) to working funds and cost Standard 2,779.29 7,858.62 3,304.95 3,004.94
of funds was 7.63 and 5.28 per cent, respectively. Thus, Doubtful 2,652.44 8,222.09 2,802.80 2,111.07
the gross margin available to DCCB was 2.54 per cent Loss Assets 736.96 2,660.04 17.66 23.80
(excluding miscellaneous income of 2.01%). The average Total NPA 6,168.69 18,740.75 6,125.41 5,139.81

transaction and risk costs, were 1.93 and 1.33, Provisions required 2,654.30 6,555.69 1,395.13 909.16
Provisions made 2,997.90 7,110.79 1,417.75 944.99
respectively, during 2007-08. DCCB as a group earned
P : Data provisional
net margin* of 1.30 per cent during 2007-08.
* : Data for Bihar, HP and TN repeated from previous year. Manipur
SCARDB under orders of liquidation.
4.12 The risk cost as a percentage to working funds ** : Data for Tamil Nadu and Himachal Pradesh repeated from
previous year.
for SCB ranged between 0.05 (Gujarat) and 3.21 # : Data for SCB/DCCB in Bihar, HP and Manipur repeated from
(Goa), the average being 0.69 per cent. Similarly, previous year.
average risk cost for DCCB worked out to 1.33 per
cent, with a range of 0.14 (Andhra Pradesh) and 4.15 Compared to the all-India average, NPA were
10.18 per cent (Jharkhand) during 2007-08. lower in northern (3%), eastern (11%) and southern
(12%) regions, and higher in central (13%), western
4.13 During 2007-08, out of 18 reporting SCARDB, (20%) and north-eastern (40%) regions. SCB in
half had positive net margins. Similarly in case of Andaman & Nicobar Islands, Arunachal Pradesh,
PCARDB out of 12 states, in six they had positive net Delhi, Nagaland, Puducherry, Rajasthan, Tripura,
margins. West Bengal and Uttarakhand continued to exhibit
high NPA levels. NPA for DCCB was higher for all
iii. Non- Performing Assets (gross) and regions except for northern (7%) and southern regions
Recovery Performance (17%). DCCB in Haryana, Himachal Pradesh, Punjab
4.14 At the aggregate level, the percentage of gross and Rajasthan had low NPA levels while those in
NPA to total loans and advances outstanding Jharkhand, Uttar Pradesh, Chhattisgarh, Madhya
Pradesh, Jammu & Kashmir, Maharashtra and
decreased to 12.34 (SCB) while it increased to 18.49
Andhra Pradesh had very high NPA levels as on
per cent in the case of DCCB as on 31 March 2008.
31 March 2008.
(Table 4.6 and 4.7). In absolute terms, NPA were
estimated at Rs.6,169 crore and Rs.18,741 crore for
4.16 The average loan recovery of SCB and DCCB
SCB and DCCB as on 31 March 2008, registering an
declined to 84 and 56 per cent, respectively, as on 30
increase of 15 and 14 per cent, respectively (Table June 2008. In absolute terms, the loan recovery of
4.10). The percentage of NPA to total loans and SCB increased to Rs.25,891 crore (by 13%) as on 30
advances outstanding in the case of SCARDB and June 2008 from Rs.22,987 crore as on 30 June 2007.
PCARDB increased to 33.43 and 43.72 per cent (as The loan recovery of SCB in Orissa and Goa increased
on 31 March 2008) from 30.30 and 35.65 per cent, considerably to 93 and 76 per cent, respectively, as on
respectively (Tables 4.8 and 4.9). Total NPA of 30 June 2008, while SCB in Assam, Jammu &
SCARDB and PCARDB estimated at Rs.6,125 crore Kashmir, Gujarat, Kerala, Madhya Pradesh, Mizoram,
and Rs.5,140 crore showed an increase of 9 and 19 Tripura and Tamil Nadu marginally improved their
per cent, respectively. loan recovery performance. The recovery performance

* Includes miscellaneous income.

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 Table 4.11: Frequency Distribution of Cooperative Banks according to Range of loan recovery percentage
(As on 30 June)
(Number)
Recovery (%) SCB DCCB SCARDB PCARDB
2007 2008@ 2007$ 2008# 2007* 2008^* 2007 2008**

<40 5 3 51 131 8 9 295 253

>40 to <60 2 6 81 86 5 2 183 137
>60 to <80 12 11 110 74 3 6 146 66
>80 12 11 97 55 3 2 72 14

Total 31 31 339 346 19 19 696 470

Data provisional for 2008.
@ : Data of Bihar, Himachal Pradesh and Manipur SCB repeated from
previous year.
$ : Data for DCCB in Rajasthan and one DCCB in Punjab not
available.
# : DCCB-wise data for Bihar (22), Himachal Pradesh (2), not available.
^ : Data for Bihar, Himachal Pradesh, and Tamil Nadu SCARDB
repeated from previous year.
* : Manipur SCARDB under orders of liquidation.
** : Data for PCARDB in Tamil Nadu (180), Himachal Pradesh (1) and
Orissa (46) not available.

of SCB in northern and southern regions was very high 55 (16%) had high recovery levels (>80%). Many of
whereas recovery in NER declined further to 42.56 per the DCCB in Rajasthan, Madhya Pradesh, Jharkhand,
cent. Orissa, Maharashtra, and Andhra Pradesh, had a loan
recovery of less than 40 per cent to demand
4.17 As on 30 June 2008, out of 31 SCB, 11 each (Table 4.12). Loan recovery performance of DCCB
had recovery above 80 per cent or between 60 and 80 improved in Jammu and Kashmir and Kerala, while it
per cent (Table 4.11). Out of 346 reporting DCCB, declined in Andhra Pradesh, Chhattisgarh, Gujarat,
217 (63%) had recovery less than 60 per cent and only Haryana, Maharashtra, Orissa, Punjab, Rajasthan,

Table 4.12: Frequency Distribution of States/ UTs according to Level of Loan Recovery of SCBs and DCCBs
(As on 30 June 2008)
Recovery (%) SCB DCCB
<40 Arunachal Pradesh, Bihar and Haryana (2), Jammu and Kashmir (1) Rajasthan (9), Jharkhand (7), Orissa (5),
Manipur West Bengal (3), Chhattisgarh (3), Uttar Pradesh (32), Uttarakhand (3), Gujarat (4),
Maharashtra (17), Andhra Pradesh (21), Karnataka (3), and Tamilnadu (2),
Madhya Pradesh (19)

>40 and Assam, Megahlaya, Tripura, Haryana, (13), Rajasthan (9), Jharkhand (1), Orissa (7), West Bengal (5),
<60 Jammu and Kashmir, Sikkim and Chhattisgarh (2), Uttar Pradesh (11), Uttarakhand (3), Gujarat (6), Maharashtra (6),
Maharashtra Andhra Pradesh (1), Karnataka (4) Kerala (2), Tamil Nadu (4), Madhya Pradesh (11),
Punjab (1)

>60 Chandigarh, Himachal Pradesh, Haryana (3), Jammu and Kashmir (2), Rajasthan (10), Orissa (5), West Bengal (7),
and <80 Mizoram, Nagaland, Andaman Chhattisgarh (1), Uttar Pradesh (5), UttaraKhand (2), Gujarat (2), Maharashtra (7),
and Nicobar, West Bengal, Karnataka (5), Kerala (3), Tamil Nadu (5), Pujnab (9), Madhya Pradesh (8)
Chhattisgarh, Uttar Pradesh, Goa,
Andhra Pradesh, Pondicherry
Haryana(1), Rajasthan (1), West Bengal (2), Uttar Pradesh (2), Uttarakhand (2),
>80 Delhi, Haryana, Punjab, Gujarat (6), Maharashtra (1), Karnataka (9), Kerala (9), Tamil Nadu (12),
Rajasthan, Orissa, Madhya Punjab (10)
Pradesh, Uttarakhand, Gujarat,
Karnataka, Kerala, Tamil Nadu
Total 31* 346**
* : Data for Bihar, Himachal Pradesh and Manipur SCB repeated from previous year
** : DCCB-wise data for Bihar (22) and Himachal Pradesh (2) not available.

82

Ch-Eng-4.p65 82 7/15/2009, 10:59 AM

 Tamil Nadu, Uttar Pradesh, Uttarakhand, Jharkhand c. Areas of Concern
and West Bengal.
4.19 NABARD, as a matter of policy, continues to
emphasise the need for co-operative banks to be
4.18 As regards SCARDB, the loan recovery in managed by duly elected Boards of Management.
respect of SCARDB in Assam and Uttar Pradesh However, the phenomenon of superseding elected
improved considerably to 88 and 71 per cent, Boards continued in some States. As on 31 March
respectively, as on 30 June 2008. Although SCARDB 2008, Boards were superseded in 11 SCB (out of
in Jammu & Kashmir, Madhya Pradesh, Puducherry reporting 29) and 159 DCCB (out of reporting 360) in
and Tripura marginally improved their loan recovery the ST Structure, and in 8 SCARDB (out of 20) and
performance, the recovery performance of West Bengal in 260 PCARDB (out of 697) in the LT Structure
declined significantly (33%), as on 30 June 2008. Low (Table 4.14).
recovery performance and its declining trend are a
matter of concern. Out of 19 SCARDB, 11 had
d. Development Action Plans /
recovery less than 60 per cent and only 2 above 80 per
cent (Table 4.11). Out of 470 reporting PCARDB, 253 Memorandum of Understanding
(54%) had recovery below 40 per cent, while 80 (17%) 4.20 NABARD has been preparing institution specific
had recovery above 60 per cent. Recovery was less Development Action Plans (DAP) and executing
than 40 per cent in many PCARDB in Maharashtra Memorandum of Understanding (MoU) to enable
(29), Karnataka (157), Haryana (13) and West Bengal co-operative banks and RRB function as viable and
(13), Rajasthan (12) Chhattisgarh (3) and Punjab (26) sustainable entities since 1994-95. The process was
(Table 4.13). While the recovery performance of executed in three phases from 1994-95 to 1999-2000
SCARDB improved by 5 percentage points, in case of (Phase I), 2000-01 to 2003-04 (Phase II) and 2004-05
PCARDB it declined by 16 percentage points (as on 30 to 2006-07 (Phase III). In order to make it more
June 2008). The loan recovery performance of all focused and effective, PACS were included into the
PCARDB (except Kerala) declined significantly to 23 process during Phase III. PACS were advised to
per cent. prepare viability action plans under the guidance of

Table 4.13: Frequency Distribution of States/UT according to levels of Loan Recovery of SCARDB and PCARDB
(As on 30 June 2008)
Recovery (%) SCARDB PCARDB

< 40 Chhattisgarh, Bihar, Gujarat, Haryana (13), Punjab (26) Rajasthan (12), West Bengal (13), Chhattisgarh (3),
Jammu & Kashmir,Maharashtra Maharashtra (29), Karnataka (157),
Karnataka, Rajasthan, Tamil
Nadu and West Bengal

> 40 and Himachal Pradesh, Orissa Haryana (6), Punjab (38), Rajasthan (22),West Bengal (8), Chhattisgarh (8),
< 60 Madhya Pradesh (26), Karnataka (19), Kerala (10),

> 60 and Haryana, Madhya Pradesh, Punjab (20), Rajasthan (2) West Bengal (2), Chhattisgarh (1), Madhya Pradesh
< 80 Uttar Pradesh, Punjab Tripura, (10), Karnataka (1), Kerala (30)
Kerala

> 80 Assam and Puducherry Punjab (5), West Bengal (1), Madhya Pradesh (2) and Kerala (6).
Total 19* 346**
*: Data for Manipur SCARDB not available. Data for SCARDB in Bihar, Orissa, Himachal Pradesh and Tamil Nadu repeated.
**: Data for PCARDB in Himachal Pradesh(1), Orissa (46) and Tamil Nadu (180) not available.

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 Table 4.14: Elected Boards under Supersession f. Organisation Development
(As on 31 March 2008) Initiatives
Particulars SCB* DCCB* SCARDB* PCARDB*
4.23 Organisational Development Initiative (ODI) is
Total Institutions (No.) 31 370 20 697
Reporting (No.) 29 360 17 642 as an internally driven re-engineering process which
Institutions where facilitates and achieves change in organisational
Boards under
structure and culture, HRD, strategic planning, etc.,
Supersession (No.) 11 159 8 260
Boards under 38 44 40 37 vis-à-vis external environment to improve effectiveness
supersession (%) and efficiency of the organisation to fulfill its
*Data provisional mission. NABARD has been conducting ODI since
1994-95 to facilitate action for RRB and
respective DCCB and enter into MoU with it. The
co-operative banks improve their financial health.
revised/modified Phase IV of DAP/MoU for both
In view of the changing environment for RRB
ST and LT structures covers the period 2007-08 to
(amalgamation) and co-operative banks (adoption
2011-2012.
of revival package for STCCS), the design,
4.21 Considering the need for a common and more methodology and objective of ODI has been
effective forum, it was decided to have a single high- changed. This would focus on financial inclusion
powered ‘State Level Task Force’ (SLTF) for effective and sustainable viability. For co-operative banks,
monitoring of performance of co-operative banks on ODI were renamed ‘Business Revitalisation and
quarterly basis. This was effective from 1 April 2008. Managing Human Aspirations’ (BRAMHA). During
As on 31 March 2009, 22 RO have formed SLTF 2008-09, 10 ODI for RRB and 5 BRAMHA for co-
in their states. The Annual Review for 2007-08 operative banks were conducted.
revealed that Chhattisgarh, Karnataka, Maharashtra,
Meghalaya, Orissa and Rajasthan SCB had made
successful efforts to achieve the targets set for g. Revival of Short-Term Rural Co-
2007-08. According to the data available from operative Credit Structure
13 States 28,915 PACS have signed MoU with their 4.24 Based on the recommendations of Task Force
respective DCCB. for Short-Term Rural Co-operative Credit Structure
(STCCS), GoI announced a Revival Package for an
e. Co-operative Development Fund
estimated outlay of Rs.13,596 crore in 2006. The
4.22 The Co-operative Development Fund (CDF) is package was aimed at reviving the STCCS by making
replenished/augmented every year through contributions it a well-managed and vibrant channel to serve the
from NABARD’s surplus. The balance in the fund as credit needs of rural India. It provided an integrated
on 31 March 2009 was Rs.125 crore. Support under package of (a) financial assistance to bring the system
the Fund is provided for various developmental to an acceptable level of health, (b) introducing legal
initiatives by co-operative credit institution and has and institutional reforms necessary for their
resulted in improved deposit mobilisation, MIS, human democratic, self-reliant and efficient functioning, and
resource availability, thus contributing to overall (c) measures to improve the quality of management.
efficiency of the structure. During 2008-09, During 2008-09, seven States (Assam, Jammu &
Rs.5.95 crore was sanctioned and Rs.3.81 crore Kashmir, Jharkhand, Manipur, Meghalaya, Mizoram
disbursed (including sanctions of previous years). As on and Sikkim) executed MoU with GoI and NABARD
31 March 2009, cumulative sanctions and to implement the package, taking the total number to
disbursements were Rs.87.98 crore and Rs.77.73 crore, 25 as at end-March 2009, covering 96 per cent of
respectively. the STCCS.

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 i. Financial Assistance (i) democratic functioning of the co-operative
institutions, (ii) autonomy in financial and
4.25 Financial assistance was to be provided for
administrative matters and (iii) regulatory control of
cleansing of balance sheets of STCCS (as on
RBI on these institutions. During the year four states,
31 March 2004). Capital infusion was to be given
viz., Bihar, Maharashtra, Meghalaya and Tamil Nadu
to ensure minimum CRAR of 7 per cent, subject
passed bills to amend their CSA, taking the total
to legal and institutional reforms. Bottom up
number of States that have amended CSA to 10. Out
approach was adopted with financial assistance to
of remaining 15 states, draft amendments proposed by
PACS first, followed by DCCB and SCB. Eligibility of
9 were vetted by NABARD, while amendments are
PACS was determined on their recovery position as
being drafted in remaining six states. Based on the
on 30 June 2004. Capitalisation of ineligible PACS
amendments, the Rules and Bye-laws of the societies
would take place in the next upper tier by settling
are being revised by the States. ‘Fit and Proper
their dues to the higher tier and State Government
Criteria’ have also been prescribed by RBI for election/
to decide future set-up of ineligible PACS. The
appointment as Directors and CEO of SCB and DCCB
liability of funding the package is to be shared by
and the qualifications of the present incumbents are
GoI, State Governments, and the STCCS, based on
under review.
origin of loss and existing commitments. Financial
assistance is also being provided by World Bank
(US$ 600 million), Asian Development Bank v. Common Accounting System and

(US$ 1 billion) and KfW Germany (• 140 million) to Management Information System

GoI for funding the Package. 4.29 The Common Accounting System (CAS) and
Management Information System (MIS) for PACS have
ii. Special Audit been formulated and are being put in place in all
PACS to standardise accounting systems and decision-
4.26 The special audit of STCCS, as on 31 March
making process. Instructions for adoption of CAS/MIS
2004, was completed in 78,391 (out of 84,726) PACS
amongst PACS were issued to all implementing States
across 25 States. The special audit of DCCB was
while books of accounts as per the CAS were printed
completed in eight states and was in progress in
and distributed in nine states. Training on CAS/MIS
another two States.
was also initiated to ensure smooth implementation of
the system. Once operationalisation of CAS/MIS and
iii. Monitoring the Implementation Process development of capacities to maintain the new system
4.27 Implementation of the Package is guided and manually are achieved, computerisation of CAS/MIS
monitored by Implementing and Monitoring will be provided. Preparatory administrative work
Committees at the National (NIMC), State (SLIC) and for computerisation was taken up in eight states during
District (DLIC) levels. NIMC is headed by Secretary, the year.
Financial Services, MoF, GoI and has members from
RBI, NABARD and participating State Governments. vi. HRD Initiatives
So far, the NIMC has met six times. The SLIC and
4.30 Emphasising on the training of PACS
DLIC have been constituted in all implementing states.
functionaries and their Board Members, training
modules along with training material in vernacular
iv. Legal Reforms
languages, elaborate trainers’ manual and guidelines
4.28 The States are to amend their respective have been developed. A four-day training programme
Co-operative Societies Acts (CSA) to ensure for PACS’ Secretaries on ‘How to do the existing

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 business better in the post reform scenario?’, with including Sikkim keeping in view the health of
specific thrust on resource mobilisation, loan products, the institutions, their present business, training
housekeeping and accounting was conducted. Further, requirements, sharing pattern of losses, etc (Box 4.1).
two training modules of two-day each on ‘CAS/MIS’
and ‘business diversification and best practices in h. Revival of Long-Term Rural
governance and management’ were designed for
Co-operative Credit Structure
PACS’ Secretaries. Training was also imparted on CAS
& MIS for departmental auditors and supervisors of co- 4.33 Based on recommendations of the Task Force
operative banks to enable them to provide hand (Chairman: Prof. A. Vaidyanathan) on Long-Term
holding support to the PACS functionaries. A two-day Co-operative Credit Structure (LTCCS), GoI has
training programme for Board Members of PACS on finalised a package for revival of the LTCCS and the
self-sustenance through improved governance and same has been approved by the Union Cabinet. The
management of resources and a three-day programme package will help credit flow for long-term investment
for Board of Directors of SCB/DCCB on change in the purposes to around 16 million members of LTCCS and
post reform scenario were organised. Training was help revive SCARDB and PCARDB.
imparted to 227 master trainers from 16 states, who in
turn trained 1,687 district level trainers. A State Level g. Other Initiatives
Nodal Agency was identified to coordinate and ensure
4.34 During the year, an All-India Conclave of
smooth conduct of the programmes in each State. As
Registrars of Co-operative Societies (RCS) was
on 31 March 2009, training was imparted to 63,789
organised at BIRD to emphasise the role of the
PACS Secretaries from 13 States and 89,242 elected
Registrar in implementation of revival package for
board members of PACS from 10 States in first and
STCCS. It discussed the issues emerging in the NIMC
second modules, respectively. In addition, training was
and SLIC meetings, viz., compilation of statistics on
provided on CAS/MIS to 47,302 PACS functionaries
co-operative movement in India, audit, compliance to
(3,356 bank supervisors/departmental auditors) from
NABARD inspection reports, availability of State
14 States.
Government Guarantee for SCARDB, implementation
of the GoI’s interest subvention scheme, revival/reform
vii. Release of Funds to PACS

4.31 During 2008-09, NABARD released Box 4.1

Rs.3,567.42 crore as GoI share towards recapitalisation Special Package for NER: Highlights
• State Governments enabled to contribute to equity of SCB in
of eligible PACS in Andhra Pradesh, Chhattisgarh,
excess of 25% only when required to comply with Section 11
Gujarat, Haryana, Madhya Pradesh, Maharashtra,
(1) of B. R. Act, 1949 (AACS).
Orissa, Uttar Pradesh and West Bengal. Cumulative
• PACS to act initially as agents of SCB/RRB/ commercial
recapitalisation support released in these states stood at banks. Training to be imparted to build their capability for
Rs.6,166.17 crore, with GoI, State Government and financial intermediation over a period of 4 years.
STCCS share at Rs.4,874.47 crore, Rs.474.49 crore • GoI’s grant assistance for a period of 4 years for HR
and Rs.817.21 crore, respectively, as on initiatives, training and capacity building.
31 March 2009. This support has enabled • All PACS & SCB, irrespective of recovery, eligible to receive
33,411 PACS (40%) to be fully recapitalised. recapitalisation assistance contributed by GoI and State
Government in the ratio 90:10.
viii. Special Package for NER • Recapitalisation amount to be placed in separate account
with SCB and to be released as and when PACS attain
4.32 In November 2008, GoI announced a package
capacity to function as a independent institutions.
providing special dispensation for STCCS in NER

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Ch-Eng-4.p65 86 7/15/2009, 10:59 AM

 of Primary & Apex WCS, etc. An all India meet of objective of being rural commercial and professionally
CEO of SCB was held to obtain feed-back on the managed banks. Owing to their uniqueness, the
major policy/operational issues and problems faced in Committee on Financial Inclusion recognized and
general and in particular with reference to ADWDR recommended RRB as most suited for achieving cent
Scheme, 2008 and to facilitate their business and per cent financial inclusion. NABARD too has been
institutional development also. working towards developing RRB as a strong credit
delivery channel and effective tool for financial
4.35 The All-India Conference of Principals of RICM/ inclusion.
ICM was organised at BIRD, Lucknow during 2008-09
to provide a forum for coordinating the efforts of i. Amalgamation
various partners and improving the effectiveness of
4.38 As per GoI directives, the process of sponsor
training for co-operative institutions. NABARD initiated
bank-wise amalgamation of RRB (started in 2005)
the process of capacity building to familiarise Board
continued and three newly amalgamated RRB were
members of co-operative banks with the recent
formed during the year. As on 31 March 2009, the
developments in banking in general and co-operative
total number of RRB stood at 86 (45 amalgamated
banking in particular as well as their roles and
and 41 stand alone, including the new RRB set up in
responsibilities. Training/reading materials were made
Puducherry during 2007-08).
available in English, Hindi and local languages. Faculty
Members of RICM/ICM/ACSTI were trained at BIRD to
handle the massive training programme. As on 31 ii. Recapitalisation Support
March 2009, 196 Board members (39 DCCB and 1
4.39 The Union Budget 2007-08 had announced
SCB) were trained in 12 programmes. The Bank also
recapitalisation support to 27 RRB (11 amalgamated
organised 13 exposure visits for 805 staff/Committee
and 16 stand alone) having negative net worth
Members of PACS to 19 good working PACS that
(as on 31 March 2007). By end-March 2008,
were able to achieve a turnaround in their business and
recapitalisation support of Rs.1,795.97 crore was to
recovery performance on their own.
be contributed by GoI, sponsor banks and State
Governments in the ratio of 50:35:15. As on 31
h. Human Resource Policy for March 2009, 26 RRB have been fully recapitalised
Co-operative Banks and one RRB has been partly recapitalised with total
funding support of Rs.1,783.41 crore. Till date, GoI
4.36 A Working Group on Human Resource Policy
released its entire share of recapitalisation support
for co-operative banks (Chairman: Shri S.K. Mitra, ED,
amounting to Rs.897.98 crore to 27 RRB, while
NABARD) was constituted to study the norms of
sponsor banks and State Governments have released
recruitment/ promotion/training/computerization level in
Rs.619.80 crore and Rs.265.63 crore, respectively, to
co-operative banks and suggest a rationalised policy.
26 RRB.
During the year, two meetings of the Working Group
were held.
iii. Branch Expansion Programme

B. Regional Rural Banks 4.40 In accordance with the announcement in the

Union Budget 2007-08, RRB had opened 474 branches
a. Restructuring Initiatives
during 2008-09 against the target of 758 branches,
4.37 The process of revitalizing the RRB has been taking the cumulative number to 715 (as on 31 March
on-going since 2005 to help them reaffirm their 2009). Against 758 licenses issued by RBI, 43 licenses

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 were pending with RRB for opening of branches. In per RBI guidelines, RRB have started financing under
view of RRB requesting relaxation in branch licensing General Credit Card (GCC) and opening ‘No Frills’
norms, RBI has allowed RRB greater flexibility in deposit accounts. Total number of accounts (deposits
opening new branches, so long as they show improved and loans) stood at 834.85 lakh and 929.22 lakh as
profits and financial health. Further, to be eligible for on 31 March 2007 and 2008, respectively
opening new branch/es, RRB should (i) not have (Table 4.17).
defaulted in maintenance of SLR and CRR during the
last two years, and (ii) be making operational profits,
vii. ICT solution for Financial Inclusion
show improvement in net worth and its net NPA
should not exceed 8 per cent. 4.44 The Committee on Financial Inclusion had
identified 256 districts as most excluded districts in the
country. The Committee had recommended, RRB
iv. Review of Performance
taking-up 10 pilot projects with ICT solutions.
4.41 In continuation of the mechanism for review of Accordingly, 15 RRB were identified from 14 States for
performance of RRB by GoI, introduced during 2007- an R & D project on Financial Inclusion with ICT
08, two review meetings were held, one on 27 August based solutions through use of smart cards, POS
2008 under the Chairmanship of Hon’ble Union devices and mobile technology in different regions and
Finance Minister and the other on 16 January 2009 client groups in the country. The project, a PPP model,
under the Chairmanship of the Union Finance is funded by World Bank, with back ended incentive
Secretary. provided by NABARD under its Financial Inclusion
Fund (FIF).

v. Village Adoption and Debt Swap

b. Financial Performance
4.42 RRB were asked to adopt at least one village
per branch for financing indebted farmers to swap the 4.45 Following the amalgamation of RRB (2005-06
debt taken from moneylenders. RRB had adopted onwards), their number was reduced from 196
17,490 and 20,981 villages as at end-March 2008 and (2004-05) to 91 with a network of 14,761 branches
2009, respectively, of which 7,811 villages have been covering 591 notified districts in 26 States and 1 UT
freed from debt to moneylenders. (Puducherry) as on 31 March 2008. As at end-March
2009, the number of RRB stood at 86 with a network
of 15,235 branches. Over a period of four years
vi. Financial Inclusion
(2005-09), aggregate reserves of RRB increased
4.43 The Government envisages RRB as a strong significantly (33%), while their deposits and investments
intermediary for financial inclusion in rural areas. As increased by 15 and 5.4 per cent, respectively. The

Table 4.17: Status of Financial Inclusion

(As on 31 March)
(Lakh)
Year Deposit Accounts Loan Accounts
Total No Frills Total GCC SHG KCC Tenant SSI/ artisans/SCC &
retail trades.
2007 669.88 34.54 164.97 1.083 6.52 82.84 1.08 35.74

2008 758.02 81.17 171.20 2.35 7.20 93.14 1.03 33.53

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 borrowings also increased by 6.6 per cent. The loans During 2007-08, out of 91 RRB, 54 attained
and advances outstanding as on 31 March 2009 sustainable viability and 28 current viability, showing
increased by 12 per cent over the previous year improvement by way of increase in profits, reduction
(Table 4.18). in losses or by transcending from loss to profit. The
aggregate reserves of the 54 RRB that had wiped off
4.46 During 2008-09, 81 RRB improved their their accumulated losses increased to Rs.6,150 crore
performance and reported gross profit of Rs.1,745.84 as at end-March 2009. The net worth of RRB as a
crore, an increase of 26 per cent over 2007-08. The whole had also increased by 10 per cent to Rs.6,750
remaining 5 RRB despite continuing as loss-making crore as on 31 March 2009, while accumulated losses
entities reduced their losses by 39 per cent to declined by 2 per cent over 2007-08. Region-wise
Rs.33.85 crore. The net profit posted by RRB, as a performance of RRB during 2007-08 varied widely.
group, increased by 29 per cent during 2008-09. While all RRB (excepting Puduvai Bharathiar Grama
Bank that started functioning from 26 March 2008)
in the western and southern region were in profit,
Table 4.18: Indicators of Performance
126, 14, 13 and 5 RRB in the central, northern,
(As on 31 March)
(Rs. crore)
eastern and north-eastern regions, respectively, were in
profit (Table 4.19).
Particulars 2007 2008 2009P
No. of RRB 96* 91* 86*
Branch Network (No.) 14,520 14,761 15,235 c. Recovery Performance
Share Capital 196.00 197.00 197.00
4.47 As on 30 June 2008, the recovery performance
Share Capital
of RRB (87) declined to 78 per cent from 81 per
Deposit 2,188.43 2,832.53 3,971.84
Reserves 4,901.54 5,703.06 6 150.00E
cent as on 30 June 2007 (Table 4.19). Though RRB
Deposits 83,143.55 99,093.46 1,14,317.45 in the northern (85%) and southern (80%) regions
Borrowings 9,775.80 11,494.00 12,250.00 E maintained their recovery performance above national
Investments 45,666.14 48,559.54 51,159.00 E average, it declined compared to their performance
Loans & Advances during the previous year. Recovery performance of
(Outstanding) 48,492.59 58,984.27 6,5840.78
RRB in NER (72%), though lower than the national
Loans Issued@ 33,043.49 38,581.97 38,581.00 E
average improved over the previous year, while
RRB earning
Profit (No.) 81 82 81
that of eastern region (69%) declined. RRB in
Amount of Tamil Nadu registered the highest recovery (94%),
Profit (A)$ 926.40 1,383.69 1,745.84 followed by Punjab (91%), Mizoram (87%) and
RRB incurring Kerala (83%). Out of 87 RRB as at end-June 2008,
Losses (No.) 15 8 5 36 had above 80 per cent and 2 had below 40 per
Amount of Losses (B) 301.25 55.58 33.85
cent (Table 4.20).
Net Profit (A – B)$ 625.15 1,328.11 1,711.99
Accumulated Losses 2,759.49 2 624.22 2,574.00E
d. Non-Performing Assets
RRB with
accumulated losses (No.) 39 36 35 4.48 The aggregate gross NPA of all RRB improved
Recovery (%) ** 79.80 80.81 77.76 from 6.55 per cent, as at end-March 2007 to 6.05
NPA to loans
per cent as at end-March 2008 and further to 5.58,
outstanding (%) 6.55 6.05 5.58
as on 31 March 2009. During 2008-09, 56 RRB
Net worth 4,526.48 6,107.37 6,750.00 E
recorded the gross NPA levels below the national
* : After amalgamation. $ : Before Tax @ : During the year
** : As on 30 June P : Provisional E : Estimated average. 22 RRB had NPA level above the national
average (> 5.58% and < 20%) and only 3 RRB

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 Table 4.19: Region-wise Working Results of RRB
(As on 31 March 2008)
(Rs. crore)
Region RRBs Profit Earning Loss Net Accumu Loans & NPAs Recovery (%)
(No.) Incurring Profit lated Advances (As on
Losses O/S 30 June)
No. Amt. No. Amt. Amount % 2007 2008
North-Eastern 8 5 34.52 3 7.66 26.86 235.07 2190.51 217.94 9.95 64.73 71.54
Eastern 15 13 104.61 2 32.69 71.92 1726.56 10196.69 1147.13 11.25 70.65 68.52
Northern 16 14 245.01 2 12.38 232.63 261.47 8133.23 299.94 3.69 89.63 85.01
Central 27 26 458.04 1 2.85 455.19 271.12 15182.12 1166.64 7.68 80.00 77.20
Western 9 9 56.22 - - 56.22 130.00 3093.30 219.22 7.09 77.57 66.95
Southern 15 15 485.29 - - 485.29 0.00 20188.42 515.47 2.55 83.98 80.52
All-India 91 83 1383.69 8 55.58 1328.11 2624.22 58984.27 3566.34 6.05 80.81 77.76
# : Puduvai Bharathiar Grama Bank, Puducherry started functioning from 26.3.2008, hence, data pertains to 90 RRBs only as on 31.3.2008.

registered high NPA level (>20%). Low NPAs levels 4.50 The Committee to Undertake a Comprehensive
were observed in the case of RRB in southern region Review of Model RRB Officers’ and Employees’ Service
(2%) followed by northern (3%), central (5%), western Regulations, 2000, and RRB (Appointment &
and eastern (8%) regions, while RRB in NER had Promotion of Officers & Other Employees) Rules, 1998
NPA of 14 per cent, as at end-March 2009. (Chairman Shri Amaresh Kumar, ED, NABARD)
submitted its Report, which is under the consideration
e. Human Resource Policy for RRB of GoI.
4.49 Major recommendations of the Committee to
formulate a Comprehensive Human Resource Policy for
4.51 The Working Group on Capacity Building
RRB Personnel (Chairman: Dr. Y.S.P. Thorat) were
Requirements of RRB personnel, constituted under the
accepted by GoI during the year. These include norms
Chairmanship of Shri Amaresh Kumar, ED, NABARD
for, (i) categorisation of RRB/their branches, (ii) staffing
pattern at Head Office/controlling offices/branches and submitted its report to GoI. Action is being initiated
(iii) recruitment/promotion of staff, transfer, etc. for implementing the recommendations involving
NABARD circulated these recommendations among various agencies, viz., NABARD, sponsor banks, RRB,
sponsor banks/RRB for implementation. BIRD, etc.

Table 4.20: Frequency Distribution of States according to Levels of Recovery of RRBs

(As on 30 June 2008)
Recovery (%) States
< 40 Bihar (1), Nagaland (1)

> 40 and < 60 Assam (1), Bihar (2), Madhya Pradesh (1), Maharashtra (3), Uttar Pradesh (1), Manipur (1)

> 60 and < 80 Andhra Pradesh (2), Chhattisgarh (2), Gujarat (3), Haryana (1), Himachal Pradesh (1), Karnataka (3),
Kerala (1), Jammu & Kashmir (2), Jharkhand (2), Madhya Pradesh (4), Maharashtra (2), Meghalaya (1),
Orissa (4), Rajasthan (2), Tripura (1), Uttarakhand (1), Uttar Pradesh (5), West Bengal (3).

>80 Andhra Pradesh (3), Arunachal Pradesh (1), Assam (1), Bihar (1), Chhattisgarh (1), Haryana (1),
Himachal Pradesh (1), Jammu & Kashmir (1), Karnataka (3), Kerala (1), Madhya Pradesh (3), Maharashtra (1),
Mizoram (1), Orissa (1), Punjab (3), Rajasthan (4), Tamil Nadu (2), Uttarakhand (1) and Uttar Pradesh (6)

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 Supervision of Banks
4.52 NABARD inspects SCB and DCCB in terms of systems, (viii) delay in submission of returns and
the powers vested under Section 35 (6) of the satisfactory compliance to inspection observations, (ix)
B. R. Act, 1949 (AACS) and RRB under Section 35 lack of corporate governance, (x) weaknesses in
(6) of the B. R. Act, 1949. NABARD also conducts internal checks and control system, (xi) incidence of
voluntary inspection of SCARDB and Apex frauds, (xii) improper valuation of securities and
Co-operative Societies and Federations having irregularities in investment portfolio, (xiii) insufficient
borrowings outstanding from it. Considering the provision for depreciation and (xiv) violation of Credit
unique nature of these institutions, NABARD’s Monitoring Arrangement (CMA) norms, etc. These
supervisory role is comprehensive and holistic, were communicated to the concerned banks, RCS,
encompassing inspections (on-site and off-site), State Governments and sponsor banks for corrective
portfolio studies, monitoring, guiding and facilitating action. NABARD continued to hold discussions with
functions, besides the basic objective of ensuring the Boards of Directors of SCB/DCCB/RRB, core area
conformity with banking regulations and prudential compliance with CEOs of the banks, rating of
norms. Statutory inspections of all SCB, DCCB and compliance reports, conveying the supervisory ratings
RRB not complying with minimum capital for confidential information of the top management
requirements of B. R. Act, 1949 (AACS)/RBI Act, of the banks, etc.
1934 and voluntary inspections of all SCARDB
continue to be conducted annually. Statutory b. Board of Supervision
inspections of DCCB and RRB with positive net worth
4.54 The Board of Supervision [BoS] (for SCB,
and voluntary inspections of Apex Co-operative
DCCB and RRB) met thrice during the year. It
Societies/Federations are conducted once in two years.
reviewed: (i) the functioning of SCB and SCARDB,
(ii) functioning of co-operative credit institutions and
A. Operational Matters
RRB in Kerala, Bihar and Rajasthan, (iii) review of
a. Inspection of Banks frauds in supervised banks, (iv) functioning of
4.53 During 2008-09, statutory inspections of 324 insolvent/weak DCCB and RRB, (v) impact of
banks (30 SCB, 243 DCCB and 51 RRB) and supervision on banks performance, (vi) issues and
voluntary inspections of 17 SCARDB and 2 Apex Co- perspectives of listing of RRB, (vii) scheduling of
operative Societies (CO-OPTEX AND PONTEX) were amalgamated RRB, (viii) supervisory trends pertaining
conducted. While several banks registered to rating of banks, (ix) banks’ compliance to various
improvement and recomplied with minimum capital important statutory provisions, (x) progress on disposal
requirement/operational norms, sizeable number of of complaints against supervised banks, (xi) guidelines
banks continue to exhibit weaknesses. Some of the for appointment of Chartered Accountants, (xii)
supervisory concerns brought out by the inspections of appropriate guidelines to banks detailing methodology
these banks were, (i) non-compliance with statutory for valuation of properties and ensuring accountability
provisions, (ii) improper application of IRAC norms of valuers, etc.
resulting in inflated profit/reduced losses, shortfall in
provisions, etc., (iii) high level of NPA/erosion of c. Health of Supervised Banks
assets, (iv) deficiencies in sanction, appraisal of loans/
i. Compliance to Minimum Share Capital
advances and post-disbursement follow-up,
Requirement
(v) inadequate financial margins/high cost of
management/adverse working results, (vi) ineffective 4.55 As on 31 March 2009, the number of SCB
funds management, (vii) inadequate risk management and DCCB not complying with provisions of Section

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 11(1) of the B.R. Act, 1949 (AACS), stood at 5 4.59 As on 31 March 2009, out of 86 RRB, 61
and 108, respectively. The total erosion in the value complied with Section 42 (6)(a)(i) of the RBI Act,
of assets of these 113 non-compliant co-operative 1934, and 48 complied with Section
banks aggregated Rs.15,106.81 crore, which had 42 (6)(a)(ii) of the Act, ibid. Inspection of 4 RRB
affected deposits to the extent of Rs.4,937.47 crore would be taken up during 2009-10 as these RRB
(19.6% of total deposits) in addition to their entire were amalgamated in the year 2008-09. The erosion
share capital. Of the non-complying DCCB, 37 were in the value of assets of the 21 RRB not complying
granted exemption from the provisions of Section with Section 42 (6)(a)(i) of the Act ibid stood at
11(1) of the Act, ibid., by GoI, while the applications Rs.2,310.07 crore, thus, eroding deposits worth
for grant of exemption in respect of 62 banks Rs.1,090.63 crore (6.2% of total deposits) as on
(1 SCB and 61 DCCB) were under consideration by 31 March 2009.
the RBI/GoI.
B. Policy Decisions/ Guidelines
ii. Grant of Licence/Scheduling of Banks
a. Co-operative Banks
4.56 No new licence was granted during the year
4.60 During the year, NABARD issued revised
and the number of licensed co-operative banks, thus,
guidelines for SCB/DCCB on (i) exposure norms
remained unchanged at 89 (14 SCB and 75 DCCB)
and monitoring/reporting procedures under CMA,
as on 31 March 2009.
(ii) investment management by co-operative banks,
(iii) calculation of Net Demand and Time Liabilities
4.57 During the year, no SCB was included in the (NDTL) for the purpose of maintenance of CRR/SLR,
Second Schedule to the RBI Act, 1934. Thus, the (iv) revised framework of Long Form Audit Report
number of Scheduled SCB remained unchanged at (LFAR) in co-operative banks, etc. The Asset-Liability
16. Following amalgamation of RRB, inspections of Management (ALM) system (Box 4.2) introduced
22 RRB were taken up on an urgent basis during the in select SCB, on a pilot basis, during 2007-08,
year. Based on the inspection findings and was extended to all SCB from 1 August 2008
recommendations, 33 RRB were included in the and was also introduced in 31 select DCCB from
Second Schedule to the RBI Act, 1934. 1 September 2008. On the advice of NABARD,
the National Federation of State Co-operative Banks

iii. Compliance with various Sections of Acts

4.58 As on 31 March 2009, 5 SCB and 108 DCCB Box 4.2

did not comply with Section 22 (3)(a) of Asset Liability Management

B. R. Act, 1949 (AACS), with respect to their The ALM system was introduced in 5 SCB and 12 RRB
capacity to pay their depositors in full and 14 SCB from 1 April 2007. The RBI has also permitted NABARD to
introduce ALM system in all SCB, RRB and DCCB, based
and 333 DCCB did not comply with Section
on the feedback given by NABARD. The implementation of
22 (3)(b) of the Act, ibid., as the affairs of these
ALM system in these banks was reviewed closely and after
banks were conducted in a manner detrimental to the taking into account the need for Risk Based Supervision, it
interests of their depositors. Similarly, out of 16 was further decided to introduce the ALM system in all RRB
Scheduled SCB, 2 were not complying with Section and SCB from 1 August 2008. Subsequently, it was also
42 (6)(a)(i) of RBI Act, 1934 (minimum capital extended to 31 DCCB from 1 Spetember 2008. NABARD is
monitoring the progress in implementation of ALM in all
requirement), and 11 were not complying with Section
these banks.
42 (6)(a)(ii) of the Act, ibid.

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 (NAFSCOB) issued a Code on Standards and iii. The ALM system introduced in 12 select RRB
Fair Practices to all co-operative banks. All SCB during 2007-08 was extended to all RRB from 1
and DCCB were suitably advised on the modus August 2008.
operandi of fraud in a branch of a DCCB in iv. Issue of detailed guidelines for forming Audit
cash credit under consortium arrangement. A circular Committees and convening their meetings.
on adherence to prudential norms and completion v. Master Circular on frauds, rationalising the
of reconciliation of accounts of the banks was classification of frauds, submission of returns and
issued to all SCB and DCCB. A Master Cirular monitoring thereof issued.
was issued to all co-operative banks on ‘Toning
vi. A comprehensive circular for implementation of
up of Internal Inspection and Audit System’ in the
compliance function issued to all RRB for
banks.
operationalisation. This is in conformity with
Basel I Principle and the recommendations of
4.61 In the case of SCARDB, NABARD issued (i) Advisory Panel for Committee on Financial
guidelines on IRAC and provisioning norms to be Sector Assessment (CFSA), constituted by the
observed following implementation of the ADWDR RBI and GoI.
Scheme, (ii) advised SCARDB that GoI had decided
vii. A circular each on Lenders’ Financial Discipline
to pay interest on the second and subsequent
(for co-operative banks and RRB), Codes of
instalment/s of the ‘eligible amount’ under the
Standards and Fair Practices to RRB, revised
ADWDR Scheme at the prevailing yield-to-maturity
off-site surveillance (OSS) returns for RRB, were
(YTM) rate on 364-day GoI Treasury Bills. Hence,
issued.
these banks need not make any provisions for loss in
viii. RRB were advised to follow the LFAR on the
present value (PV) terms for amount receivable from
lines of commercial banks.
GoI under the Scheme. A circular was issued to all
SCARDB revising the instruction dealing with the ix. Modus operandi of certain high-value frauds
accounting system related to the ADWDR Scheme, detected were shared with the banks for their
2008. safeguards.
x. Instructions on Know-Your Customer (KYC) and
b. RRB Anti-Money Laundering (AML) obligations issued.

4.62 For RRB, the following major decisions were

taken by the Bank.
C. Other Developments
4.63 In order to improve the quality and
i. Implementation of revised inspection guidelines
effectiveness of inspection, NABARD conducted three
and the possibility of introducing inspections on
regional supervision seminars for officers engaged in
the pattern followed by RBI for commercial
supervision. The Bank also convened the seventh
banks on a pilot basis for amalgamated RRB to
National Seminar on Audit to sensitise Chartered
be explored.
Accountants engaged for the first time in audit of
ii. Issue of Master Circular on disclosure norms and SCB/DCCB, consequent to amendment of the State
instructions including Capital to Risk Weighted CSA in states that signed MoU for implementing the
Asset Ratio (CRAR) in the Annual Note on STCCS package, thus, helping to improve the quality
Accounts in their Balance Sheets, as on 31 and effectiveness of audit. The National Seminar on
March 2008. A road map for stipulation of Investment Management for SCB (in association with
CRAR for RRB from 31 March 2009, was the NAFSCOB) and state level seminars to streamline
suggested to RBI. the investment operations in SCB/DCCB were

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 organised. Three Regional Seminars on Internal policy issues received from NAFSCOB culminated in
Checks and Control Systems for Chiefs of Audit and a number of collaborative activities.
Inspection Departments of co-operative banks were
also organised. In addition, NABARD conducted 4.65 A team of officers from NABARD provided
regional training programmes on investment consultancy services to Bank Indonesia, on developing
management for co-operative banks and RRB; an early warning system (EWS) for the rural banks
workshops for RRB/SCB/select DCCB implementing supervised by the BI, in October 2008. A five-
ALM system; and workshop on AML, KYC and member delegation from BI visited NABARD in
monitoring of frauds through its TEs as well as state November 2008 to study supervisory practices adopted
level sensitisation programmes on prudential norms, by NABARD and other related interventions. The
CMA, frauds, etc., for auditors and supervised banks exchange of experience between the two institutions
through its ROs. Special portfolio studies were has been mutually rewarding and led to good
conducted in select co-operative banks on investment organisational linkage.
portfolio, internal checks and control systems, CMA
and MIS. 4.66 During the year, NABARD also initiated
measures towards re-engineering of the supervisory
4.64 For a holistic and more effective approach tasks. Licences for use of an IT-based product,
towards supervision, especially in strengthening internal Regulator Plus, were obtained for strengthening
checks and control systems in the supervised banks, knowledge management of inspecting officers. The
NABARD initiated dialogue with the Institute of software provides relevant circulars, instructions and
Chartered Accountants of India (ICAI) for reports, subject-wise, from the statutory/regulatory
strengthening the audit mechanism in co-operative institutions (RBI, IBA, SEBI, FEDAI, IRDA, CVC,
banks. Senior officials of ICAI were invited to NABARD, etc.) both offline and on a web-based
deliberate at the seventh National Seminar on Audit. platform. The trial version of a new IT product
NABARD invited officials of Financial Intelligence Unit on risk-based supervision was installed for three
of India (FIU), Ministry of Finance, GoI, to several months in Maharashtra and Andhra Pradesh ROs on
seminars involving co-operative banks and RRB to a pilot basis. An ‘e-mail forum’ has been put in
deliberate on KYC and AML norms under the Anti- place on the Bank’s corporate intranet, NABNET,
Money Laundering Act, 2002, and was also wherein users can post any query/suggestion on
associated with the Conferences of Principal Officers supervision related matters, which are quickly
of RRB and Trainers’ Training Programme on AML responded to by a team of experts, thus, helping to
convened by FIU. Similarly, inputs and feedback on build an FAQ.

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 V Organisation and Management

NABARD continued to lay emphasis on capacity within the country and abroad to achieve
building, development of skills and technical this. The developments during the year vis-à-vis
expertise of its staff and strove to refine existing the management and administration of
training modules, design new programmes and human resources of the Bank are encaptured
enhance exposure to various institutions here.

General
A. Board of Directors He was also nominated as a Member of the
Executive Committee.
5.2 The Board of Directors met five times during
the year. The Executive Committee and the Audit d. Smt. Shakuntala Jakhu, on her taking over as
Committee of the Board met four times each while the Financial Commissioner and Principal Secretary,
Sanctioning Committee for Loans under RIDF met six Agriculture Department, Government of Haryana,
times. The Risk Management Committee of the Board was appointed as Director vice Shri Krishna Mohan,
met thrice. with effect from 5 November 2008. She was
also nominated as Member of the Executive
5.3 The following changes took place in the
Committee.
composition of the Board during the year.
e. Shri Amarendra Pratap Singh, Secretary,
a. Shri T. Nandakumar, Secretary, Agriculture and
Department of Agriculture and Sugarcane,
Co-operation, Ministry of Agriculture, GoI, was
Government of Jharkhand was appointed as
appointed as Director with effect from
Director with effect from 1 December 2008 vice
1 September 2008, vice Dr. P. K. Mishra. He was
Shri A.K. Sarkar. He was also nominated as a
also nominated as Member of the Sanctioning
Committee for Loans under RIDF. Member of Audit Committee and Risk
Management Committee of the Board.
b. Dr. S. Chellappa, Agriculture Production
Commissioner and Principal Secretary, Government f. Shri O. Nabakishore Singh, Commissioner
of Andhra Pradesh, was appointed as Director vice (Agriculture), Government of Manipur was
Shri Pankaj Dwivedi with effect from 9 May 2008 appointed as Director with effect from
and was also nominated as a Member of the 19 January 2009 vice Shri Letkhogin Haokip.
Sanctioning Committee for Loans under RIDF. He was also nominated as a Member of Project
Shri Pankaj Dwivedi had been appointed as Sanctioning Committee for Loans under RIDF.
Director with effect from 29 April 2008 vice
Shri D. K. Panwar.
B. Other Senior Executives
c. Shri Krishna Mohan, Financial Commissioner and
Principal Secretary, Agriculture Department, 5.4 S/Shri S.K. Mitra and Amaresh Kumar continued
Government of Haryana was appointed as Director as Executive Directors of the Bank and guided the RO
with effect from 10 July 2008 vice Shri Raj Kumar. and HO Departments for effective functioning of the

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 organisation. Dr. R. Balakrishnan, ED, superannuated on D. Regional/DDM Offices
30 September 2008. Shri P. L. Behera and Dr. Prakash
5.6 In addition to the Head Office at Mumbai, the
Bakshi were elevated to the post of Executive Directors
Bank has 28 RO, a sub-office at Port Blair, a Cell
during the year.
at Srinagar and Training Establishments in Bolpur,
Hyderabad, Lucknow and Mangalore. As on 31 March
C. Inspection of NABARD
2009, there were 392 DDM offices, covering 490 districts
5.5 The financial inspection of NABARD was including 98 tagged districts. The remaining districts are
conducted by RBI between 6 January and managed by the District Development Officers (DDO)
19 February 2009 with reference to its financial position from their respective RO. No new DDM office was
as on 31 March 2008. opened during the year.

Human Resource Management

A. Training and Skill Upgradation 5.9 During the year, 18 exposure visits for officers
were organised with funding support from GTZ to study
a. Officers and Executives
mF co-operatives and MFI regulation in Indonesia,
5.7 During 2008-09, National Bank Staff College Bangladesh, Sri Lanka, Philippines, Malaysia, Germany
(NBSC), Lucknow conducted 91 programmes on various and South Africa. A separate team of 10 officers from
subjects for 1,816 officers and 9 programmes for NABARD and MFI visited Indonesia under the
232 officers of client banks on various finance related leadership of Shri S. K. Mitra, ED, NABARD to study
issues. New programmes on bio-diesel, bamboo the regulatory arrangements for rural/smaller financial
cultivation, financial inclusion, etc., were introduced institutions.
during the year. In addition, 40 officers were deputed for
tailor-made programmes on software development,
ii. Visits by Senior Management
outdoor management, etc., while 218 officers were
deputed for 118 off-the-shelf programmes, workshops, 5.10 Shri U. C. Sarangi, Chairman, attended the
seminars and conferences organised by various reputed Study Visit Programme on Deposit Protection
institutions. Some of the areas covered in these Mechanism for PACS in Germany and Hungary in
programmes were strategic HRM, information systems, September 2008. He also attended the 55th EXCOM
audit, risk management, treasury management, Right to Meeting and other related events of APRACA in Russia
Information Act, women empowerment, negotiation in November 2008.
skills, mutual funds, water harvesting and ground water
recharge, etc.
b. Other Employees
i. Overseas Training / Exposure Visits
5.11 Training was imparted to employees (Group ‘B’
5.8 During the year, 223 officers were deputed for and ‘C’) at National Bank Training Centre (NBTC),
various overseas training programmes, exposure visits, Lucknow and Zonal Training Centre (ZTC), Hyderabad.
seminars, etc. Besides this, 98 officials from client/ During 2008-09, 62 training programmes covering 771
partner institutions, viz., GoI, RBI, State Government, participants were conducted. A pre-promotional training
commercials banks, RRBs, co-operative banks, NGO, programme for DA (Secretarial) in Group ‘B’ for
etc., were also deputed for programmes organised by promotion to Private Secretary in Group ‘A’ was
HO, RO and RTC. conducted at NBTC, Lucknow.

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 c. Support for Higher Studies by Table 5.1: Promotions effected during the Year

Officers Particulars Total Of which

SC ST
5.12 The Bank introduced schemes to facilitate/
Officers in Grade ‘B’ to ‘C’ 86 12 5
support officers to pursue higher education. The
Officers in Grade ‘A’ to ‘B’ 100 17 9
modified incentive scheme for professional studies in Group ‘B’ to Group ‘A’ 21 1 1
part-time and distance learning courses was introduced Group ‘C’ to Group ‘B’ 46 12 8
with effect from 2 April 2008. During the year, 33
Total 253 42 23
employees availed of the facility. Further, under the staff
scheme for higher studies, one officer was granted study
leave to pursue Post-Graduate Diploma in Management b. Staff Assessment
at the Institute of Management Technology (IMT), 5.14 An in-house group under the Chairmanship
Ghaziabad. of Shri S.K. Mitra, ED was constituted to assess
staff requirements of the Bank. Based on the
B. Recruitment, Promotion and Staff
recommendation of the Group, additional 3, 12 and 21
Strength posts in Grade ‘F’, ‘E’ and ‘D’, respectively, were
a. Recruitment and Promotion approved by the Board.

5.13 During the year, recruitment of 102 officers in

c. Staff Strength
Grade ‘A’ in the Rural Development Banking Service
(RDBS), Rajbhasha Service and Grade ‘B’ in Legal 5.15 As on 31 March 2009, the total staff strength
Service was completed and 99 (97 in RDBS and 2 in stood at 4,886 out of which 1,255 belonged to SC
Rajbhasha) and 3 (Legal) officers were appointed in (17.4%) and ST (8%) categories. The total number of
Grades ‘A’ and ‘B’, respectively. The process of employees in Group ‘A’, ‘B’ and ‘C’ stood at 2,887,
recruiting an additional 120 officers in Grade ‘A’ in 1,122 and 877, respectively, The strength of
RDBS during 2009-2010 has also been initiated. During ex-servicemen and physically challenged employees
the year, 13, 27 and 43 promotions were effected from stood at 103 and 91, constituting 2.1 and 1.8 per cent
Grade ‘E’ to ‘F’, ‘D’ to ‘E’ and ‘C’ to ‘D’, respectively. of the total staff strength, respectively. During the year,
The details of other promotions effected upto Grade ‘C’ 88 officers in Grade ‘C’ availed of the Optional Early
are given in Table 5.1. Retirement Scheme.

Administrative and Other Matters

A. Industrial Relations Kerala, and presided over by Shri U. C. Sarangi,
Chairman.
5.16 Industrial relations in the Bank continued
to be harmonious during the year. Periodic discussions
5.17 The Central Complaints Committee at HO and
were held between the Management and the Committees at RO have been functioning effectively for
All India NABARD Employees’ Association and preventing of sexual harassment of women at workplace.
National Bank Officers’ Association. About 372
employees from the Bank’s various units participated in B. Welfare Measures for SC/ST
the XII NABOTSAV – the annual cultural and sports Employees
event, held at Thiruvananthapuram between 19 and 5.18 The Bank continued to adhere to instructions
23 January 2009. The Meet was inaugurated by issued by GoI regarding reservations for SC/ST in
Shri V. S. Achutanandan, Hon’ble Chief Minister, recruitment and promotions. Quarterly meetings of the

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 Senior Executives and Chief Liaison Officer with important functional areas were also hosted on the
representatives of the Welfare Association of SC/ST were NABNET. These are updated every month. NABARD
held at HO and RO. Pre-promotional training also developed the District Agricultural Development
programmes for 242 SC/ST staff members and pre- Index for a comparative position of districts in respect of
recruitment training for 5,194 SC/ST candidates were agricultural development in various states. The model
conducted at 21 Centres. was tested in Maharashtra, Karnataka and Rajasthan.
Apart from internal and external circulars, an e-journal
C. Other Staff Benefits ‘Issues in Agriculture and Rural Development’ was
5.19 During the year, housing loan aggregating made available on the NABNET. To improve the quality
Rs.1,956.38 lakh was sanctioned to 270 employees. The of data management in the Bank, a three-day workshop
disbursements against the sanctions, including sanctions was conducted at NBSC, Lucknow, for officers handling
of previous year, amounted to Rs.2,297.74 lakh. data in RO.

D. Library
F. Information Technology
5.20 NABARD maintains a Central Library at HO,
Mumbai, besides its units in RO. The Library Committee 5.22 During the year, LAN was set up in 34 units

supervises the functioning of these libraries. The Central (HO/RO/SO/TE) of the Bank. The scope of the Bank’s

Library houses 26,000 books in English and Hindi and inter-office portal was enlarged to host more information
subscribes to 105 journals and magazines, on agriculture regarding model projects, NABARD publications, Annual
and allied activities, banking, rural development, Report, business and organisational data/statistics, etc. A
information technology, etc. The Library also subscribes discussion forum was introduced to make the portal more
to institutional memberships of the British Library and interactive and user-friendly. Limited accessibility was
NIRD-Hyderabad, and networks with other major extended to ex-staff members also. The Bank decided to
libraries in Mumbai. Further, on-line access to the replace Lotus Smart Suite as the corporate office
Library Catalogue and relevant articles was also automation system with the Open Office Suite. In order
enabled. With a view to providing a wider choice to the to improve the efficiency of DDM and facilitate them in
staff and broad base the selection of books, four discharging field duties, each of them was provided a
exhibitions were arranged at HO. Laptop. The Human Resource Management System
(HRMS), developed in-house to cater to the needs
E. Data Management of HRMD and GAD, was expanded to include

5.21 During 2008-09, district profile data containing the entire processes of training needs assessment,

information in 14 broad areas, viz., geo-physical annual transfer operations, assessment on promotion,

features of the district, demographic profile, animal interviews, etc. Members of the Interview Board set up for
population, land holding/utilisation, irrigation, rural internal promotions were given online access to enable
infrastructure, key banking statistics, trend in area/ them to retrieve the profile of the candidates. During
production/productivity of major crops, etc., in respect the year, NABARD engaged the services of
of 560 districts were uploaded on the NABNET. M/s. KPMG to study the activities, systems, processes and
In addition, two new data products, (i) MIS for Top IT applications currently in vogue in the Bank as also to
Management, comprising of 66 statements, on latest suggest a suitable IT Roadmap. In order to effectively
achievements in all major business and development control travel and related costs, save executive time and
areas and (ii) Star Performance Indicators indicating the facilitate direct interaction it has been decided to set up
comparative position of achievements by RO in the Video Conferencing System in the Bank.

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 G. Office Premises / Residential external auditors. The concurrent audit of Central
Quarters Library and HRMD (leave section) was also entrusted to
the external auditors during the year. The checklist for
5.23 The construction of Natural Resource Management
concurrent audit was further revised keeping in view the
Centre (NRMC) in Kolkata, RO building in Itanagar and
items falling under Information System Audit. Off-site
sub-office in Port Blair is in progress. In addition, 17 other
monitoring of CAC established in RO/TE was
major construction activities aggregating Rs.150 crore are
undertaken through monthly audit returns. Two
in the pipeline. The Bank owns 17 office premises out of
workshops to improve the efficiency and effectiveness of
29. The Bank has placed an order for procuring 62
the CAC in RO/TE, were organised at RTC-Mangalore
residential flats for officers in Ranchi from the State
and NBSC-Lucknow. Pursuant to the directions of the
Government and has also procured a suitable plot for its
Board of NABARD, ICRA Management Consulting
office building in Raipur.
Services Ltd. (iMACS) was assigned a study on Risk
Management System in NABARD. The study was
H. Vigilance completed and the recommendations have been
submitted for consideration of the top management. The
5.24 NABARD conducted six Preventive Vigilance
operational risk to NABARD by the constituents
Inspections of RO for maintaining transparency in
continued to be monitored on an on-going basis. During
decision-making by laying emphasis on systems and
the year, the Operational Risk Management Committee
procedures followed by them. In addition, one Chief
met twice.
Technical Examiner (CTE) type inspection of civil/
electrical works at Cenotaph Road quarters of Tamil
Nadu RO was carried out. Two training programmes J. Public Relations
were conducted at RTC, Mangalore and NBSC, 5.27 In its endeavour to build a strong corporate image
Lucknow to equip officers attached to RO/TE about the and disseminate information on rural development
role of Enquiry Officer and Presenting Officer. The Bank programmes, NABARD initiated measures to widen its
also observed ‘Vigilance Awareness Week’ from 3 to 7 media coverage. The Bank continued to publicise
November 2008. ‘Bhavishya Nirman Bonds’ and ‘Rural Bonds’ as well as
areas like ‘Co-financing’, ‘Rural Innovation Fund’,
I. Inspections ‘Village Development Programme’, etc. Recruitment of
staff was also widely advertised. NABARD regularly
5.25 During 2008-09, inspections of 21 RO, 2 TE
responded to queries/issues on agriculture and rural
and 14 HO Departments were conducted as approved
sector. The Bank continued to bring out its monthly and
by the Audit Committee of the Board (ACB).
quarterly publications, NABARD Newsletter and
Major findings of the inspections along with the
NABARD Parivar, which were also made available to
compliance status were placed before the Executive
retired employees. During the year, NABARD Parivar
Directors’ Committee and ACB. The major areas of
won the first prize in the ‘Headlines’ category of the
concern were also put forth to the top management as
Annual House Journal Awards of ABCI. NABARD
flash reports.
Newsletter is also available electronically.

5.26 The concurrent audit of all RO/TE continued to

be undertaken by the Concurrent Audit Cells (CAC) of K. Visit of Parliamentary Committees
respective RO/TE, while that of select HO departments, 5.28 Eight Parliamentary Committees held discussions
viz., FD, AD, GAD, Premises Department and with NABARD on various aspects. These were:
Co-financing Cell of ICD continued to be done by (i) Committee on Government Assurances (Lok Sabha),

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 (ii) Committee on Subordinate Legislation, (iii) Standing Hindi. In order to motivate staff members to work in
Committee on Agriculture, (iv) Drafting and Evidence Hindi, the Cash Award Scheme continued to be
Sub-Committee of the Parliament on Official Language, implemented. Staff members were also deputed for
(v) Parliamentary Standing Committee on Personal/ participation in inter-bank competitions organised by
Public Grievance, Law and Justice, (vi) Committee on respective TOLIC. Rajbhasha Shield for 2007-08 was
Government Assurances (Rajya Sabha), (vii) Committee awarded to Madhya Pradesh, Gujarat and Andhra
on Subordinate Legislation – RRB’ Service Regulation, Pradesh RO for Regions ‘A’, ‘B’ and ‘C’, respectively,
and (viii) Committee of Parliament on Official and NBSC, Lucknow among TE. At the HO level, the
Language. Shield was awarded to Corporate Planning Department
and Central Statistical Information Department.
Effective from 2008-09, the evaluation criteria for
L. Promotion of Hindi Rajbhasha Shield were modified to make the scheme
5.29 NABARD continued to promote the use of Hindi more objective and productive. Gujarat RO was
in its everyday functioning. To enable the staff to work awarded Rajbhasha Shield by TOLIC, Ahmedabad for
in Hindi, 56 workshops were conducted and training on best performance in use of Hindi among FI while Assam
the use of new bilingual software APS Saral was RO ranked first among banks operating in NER by the
imparted. A three-day orientation programme was Regional Implementation Office, GoI.
organised to sensitise senior officers to the official
language policy of GoI. In addition, the 20th Business 5.31 During the year, ‘Rashtriya Bank Srijana’ bagged
Plan Meet of Rajbhasha officers at Hyderabad, a five- three National Level Awards, viz., Best Hindi House
day translation training programme for Rajbhasha Journal Award from Ashirvad-Mumbai, Mayaram
officers at NBSC, Lucknow and an orientation Surjan Foundation-Raipur and ABCI Award in the
workshop for nodal officers handling the work of Hindi category of Indian language publications. The corporate
in the RO in NER were also conducted. The Official license for APS Saral, the advanced unicode-compliant
Language Implementation Committees (OLIC) at HO/ version of APS 2000++ was procured and the software
RO/TE undertook quarterly reviews on use of Hindi in installed across regional offices. This is expected to ease
their respective offices. On-site inspections of five RO the process of electronic communication in Hindi
and two TE were conducted. Hon’ble Members of the between NABARD and other institutions. In addition to
Drafting and Evidence Sub-Committee of regular translation work, the ‘Model Operational
Parliamentary Committee on Official Language Procedure for Settlement of Claims of Deceased
reviewed the progress of Hindi in Sikkim and Kerala Depositors’, ‘Funds and Investment Management in
RO and NBSC, Lucknow. Co-operatives’, ‘Reading Material for the Elected
Members on Boards of DCCB and SCB’ were translated
5.30 The Bank continued to organise various in Hindi. Many RO brought out PLP and Inspection
competitions across all offices to encourage the use of Reports in Hindi.

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 Annual

Accounts

2008-2009

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 Khimji Kunverji & Co.
Chartered Accountants

AUDITORS’ REPORT

We have audited the attached Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (the ‘Bank’) as at
March 31, 2009 and the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed
thereto in which are incorporated the returns of 12 Regional Offices and 1 Training Centre audited by us. These offices and
training Centre have been selected in consultation with the Bank in terms of notification no. 1/14/2004–BOA dated March
26, 2009 issued by Ministry of Finance, Department of Economic Affairs (Banking Division). Also incorporated in the
Balance Sheet, Profit and Loss Account and Cash Flow Statement are the returns from 16 Regional Offices, 1 Sub–Office and
2 Training Centers which have not been subjected to audit. These unaudited offices account for 15.56% of advances,
0.13% of deposits and term money borrowings, 15.19% of interest income and 0.30% of interest expenses. These
financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for
our opinion.
Subject to the limitations of the audit mentioned in paragraph 1 above, we report that:
a. We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit and have found them to be satisfactory;
b. In our opinion, the transactions of the Bank which have come to our notice have been within the powers
of the Bank;
c. The returns received from Regional Offices and Training Centers of the Bank have been found adequate for
the purposes of our audit;
d. The Balance Sheet and Profit and Loss Account have been drawn up in accordance with Schedule ‘A’ and
Schedule ‘B’ of Chapter IV of the National Bank for Agriculture and Rural Development (Additional)
General Regulations, 1984;
e. In our opinion and to the best of our information and according to the explanations given and as shown by
the books of the Bank:
i. the Balance Sheet, read with Significant Accounting Policies and notes on accounts contains all necessary particulars
and is properly drawn up in conformity with the accounting principles generally accepted in India so as to exhibit
a true and fair view of the state of affairs of the Bank as at March 31, 2009; and
ii. the Profit and Loss Account, read with Significant Accounting Policies and notes on accounts, shows a true
balance of the ‘profit’ for the year ended on that date, and is in conformity with accounting principles generally
accepted in India; and
iii. the Cash Flow Statement gives a true and fair view of the cash flows of the Bank for the year ended on that date.

Place: Mumbai
Dated: June 17, 2009
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia
Partner (F-033494)

Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.
Telephones: +91 22 22662550, 22661270, 22662011 • Fasimile: +91 22 22664045
E-mail: info@khimjikunverji.com • Website: www.khimjikunverji.com

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 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
BALANCE SHEET AS ON 31 MARCH 2009 (Rupees)
Sr. FUNDS AND LIABILITIES SCHEDULE As on As on
No. 31.03.2009 31.03.2008

1. Capital
(Under Section 4 of the NABARD Act, 1981) 2000,00,00,000 2000,00,00,000

2. Reserve Fund and Other Reserves 1 9535,20,60,005 8602,84,75,385

3. National Rural Credit Funds 2 15571,00,00,000 15159,00,00,000
4. Funds out of grants received from International Agencies 3 154,81,78,661 170,38,44,460
5. Gifts, Grants, Donations and Benefactions 4 5111,01,92,515 3967,49,29,810
6. Other Funds 5 2101,80,68,588 1518,00,64,973
7. Deposits 6 52127,12,34,628 30698,81,85,462
8. Bonds and Debentures 7 23703,63,05,906 28700,12,30,600
9. Borrowings 8 3592,94,14,312 4800,26,56,118
10. Current Liabilities and Provisions 9 4278,56,76,956 3089,53,14,729

Total 118176,11,31,571 98706,47,01,537

Forward Foreign Exchange Contracts 634,56,79,356 605,58,18,093

(Hedging) as per contra

(Rupees)
Sr. PROPERTY AND ASSETS SCHEDULE As on As on
No. 31.03.2009 31.03.2008

1. Cash and Bank Balances 10 13975,21,04,689 10314,24,14,644

2. Investments 11 2994,68,29,886 2582,05,89,335
3. Advances 12 98852,67,05,981 82872,42,54,280
4. Fixed Assets 13 247,17,14,222 257,28,88,784
5. Other Assets 14 2106,37,76,793 2680,45,54,494

Total 118176,11,31,571 98706,47,01,537

Forward Foreign Exchange Contracts (Hedging) as per contra 634,56,79,356 605,58,18,093

Commitment and Contingent Liabilities 17
Significant Accounting Policies and Notes on Accounts 18

Schedules referred to above form an integral part of accounts.

As per our attached report of even date
Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

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 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2009 (Rupees)
Sr.No. INCOME SCHEDULE 2008-09 2007-08
1. Interest received on Loans and Advances
(Refer Note B-2 & 3 of Schedule 18) 5693,02,22,426 4518,08,36,863
2. Income from Investment Operations/ Deposits 1214,81,25,586 903,34,71,377
3. Discount and Commission 92,55,15,672 51,71,40,176
4. Other Receipts (Refer Note B-5 of Schedule 18) 50,29,52,260 35,95,18,391
Total “A” 7050,68,15,944 5509,09,66,807

Sr.No. EXPENDITURE SCHEDULE 2008-09 2007-08

1. Interest and Financial Charges 15 4255,90,25,220 3137,48,84,464

2. Establishment and Other Expenses 16 A 693,38,57,487 495,96,97,851
3. Provisions 16 B 92,49,80,587 105,91,02,349
4. Depreciation (Refer Note B-16 of Schedule 18) 21,36,41,786 21,63,06,861
Total “B” 5063,15,05,080 3760,99,91,525

5. Profit before Tax (A - B) 1987,53,10,864 1748,09,75,282

6. a) Provision for Income Tax 674,00,00,000 560,00,00,000
b) Deferred Tax - Asset (Adjustment)
(Refer Note B-12 of Schedule 18) (-) 80,20,00,000 (-) 41,45,00,000
c) Provision for Fringe Benefit Tax 3,60,00,000 3,40,00,000
7. Profit after Tax 1390,13,10,864 1226,14,75,282

Significant Accounting Policies and Notes on Accounts 18

Schedules referred to above form an integral part of accounts.

PROFIT AND LOSS APPROPRIATION ACCOUNT

(Rupees)
Sr.No. APPROPRIATIONS / WITHDRAWALS 2008-09 2007-08
1. Profit for the year brought down
Add: Withdrawals from Funds against
expenditure debited to Profit & Loss A/c 1390,13,10,864 1226,14,75,282
a) Co-operative Development Fund (Refer Schedule 1) 3,81,14,043 3,06,99,557
b) Research and Development Fund (Refer Schedule 1) 8,76,10,683 7,48,95,872
c) Watershed Development Fund (Refer Schedule 5) 24,91,45,824 11,90,51,701
d) Micro Finance Development and Equity Fund (Refer Schedule 5) 9,92,70,242 7,38,32,004
e) Farm Innovation & Promotion Fund (Refer Schedule 1) 73,40,088 46,08,634
2. Profit available for Appropriation 1438,27,91,744 1256,45,63,050

Less: Transferred to:

a) Special Reserve u/s 36(1) (viii) of IT Act, 1961 340,00,00,000 320,00,00,000
b) National Rural Credit (Long Term Operations) Fund 400,00,00,000 400,00,00,000
c) National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000
d) Co-operative Development Fund 3,81,14,043 53,06,99,557
e) Research and Development Fund 8,76,10,683 7,48,95,872
f) Investment Fluctuation Reserve 42,00,00,000 25,78,45,000
g) Financial Inclusion Fund 18,50,00,000 5,00,00,000
h) Financial Inclusion Technology Fund 32,50,00,000 5,00,00,000
i) Farmers Technology Transfer Fund 31,61,42,310 25,00,00,000
j) Farm Innovation & Promotion Fund 46,55,57,504 0
k) Reserve Fund 504,53,67,204 405,11,22,621
Total 1438,27,91,744 1256,45,63,050
Refer Schedule 18 for Significant Accounting Policies and Notes on Accounts.
As per our attached report of even date
Khimji Kunverji & Co.
Chartered Accountants
Hasmukh B. Dedhia S. Akbar
Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandakumar Usha Thorat

Chairman Managing Director Director Director

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 SCHEDULES TO BALANCE SHEET
Schedule 1 - Reserve Fund and Other Reserves
(Rupees)
Sr. Particulars Opening Transferred Transferred Balance as on
No. Balance From P&L to P&L 31.03.2009
as on 01.04.2008 Appropriation Appropriation

1. Reserve Fund 4718,80,35,657 504,53,67,204 0 5223,34,02,861

2. Research and Development Fund 50,00,00,000 8,76,10,683 8,76,10,683 50,00,00,000
3. Capital Reserve 74,80,53,208 0 0 74,80,53,208
4. Investment Fluctuation Reserve 73,00,00,000 42,00,00,000 0 115,00,00,000
5. Co-operative Development Fund 125,00,00,000 3,81,14,043 3,81,14,043 125,00,00,000
6. Soft Loan Assistance Fund for Margin Money 10,00,00,000 0 0 10,00,00,000
7. Agriculture & Rural Enterprise Incubation Fund 5,00,00,000 0 0 5,00,00,000
8. Foreign Currency Risk Fund 147,06,03,936 0 0 147,06,03,936
9. Special Reserve Created & Maintained
u/s 36(1)(viii) of Income Tax Act, 1961 3395,00,00,000 340,00,00,000 0 3735,00,00,000
10. Farm Innovation & Promotion Fund 4,17,82,584 46,55,57,504 73,40,088 50,00,00,000

Total 8602,84,75,385 945,66,49,434 13,30,64,814 9535,20,60,005

Previous year 7802,41,16,398 811,45,63,050 11,02,04,063 8602,84,75,385

Schedule 2 - National Rural Credit Funds

(Rupees)
Sr. Particulars Opening Balance Contribution by Transferred from Balance as on
No. as on 01.04.2008 RBI P&L 31.03.2009
Appropriation

1. National Rural Credit

(Long Term Operations) Fund 13615,00,00,000 1,00,00,000 400,00,00,000 14016,00,00,000
2. National Rural Credit (Stabilisation) Fund 1544,00,00,000 1,00,00,000 10,00,00,000 1555,00,00,000

Total 15159,00,00,000 2,00,00,000 410,00,00,000 15571,00,00,000

Previous year 14747,00,00,000 2,00,00,000 410,00,00,000 15159,00,00,000

Schedule 3 - Funds out of Grants received from International Agencies

(Rupees)
Sr. Particulars Opening Grants received/ Interest Exp./Disb./ adjust. Balance
No. Balance as on adjusted during credited to during the as on
01.04.2008 the year the Fund year 31.03.2009

1. National Bank - Swiss

Development Coop. Project 54,71,00,174 90,77,000 0 0 55,61,77,174
2. Rural Innovation Fund
(Refer Note B-9 of Schedule 18) 109,73,98,549 0 5,05,40,943 25,50,49,494 89,28,89,998
3. Rural Promotion Fund
(Refer Note B-8 of Schedule 18) 5,49,05,183 1,76,25,141 0 0 7,25,30,324
4. KfW - NABARD V Fund for
Adivasi Programme 44,40,554 5,09,07,803 0 2,87,67,192 2,65,81,165

Total 170,38,44,460 7,76,09,944 5,05,40,943 28,38,16,686 154,81,78,661

Previous year 182,63,92,591 6,16,75,699 6,21,16,899 24,63,40,729 170,38,44,460

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 Schedule 4 - Gifts, Grants, Donations and Benefactions
(Rupees)
Sr. Par ticulars Opening Grant received Interest Adjusted Balance as on
No. Balance as on during Credited to against the 31.03.2009
01.04.2008 the year the Fund expenditure

A.
1. KfW - NB - IX Adivasi Development Programme -
Maharashtra (Refer Note B-9 of Schedule 18) 11,45,898 6,47,96,054 4,42,023 6,23,98,314 39,85,661

2. KfW-NB-Indo German Watershed Development

Programme - Phase III - Maharashtra
(Refer Note B-9 of Schedule 18) 0 16,37,34,736 2,28,182 14,38,42,327 2,01,20,591

3. Indo German Watershed Development Programme -

Andhra Pradesh (Refer Note B-9 of Schedule 18) 52,84,458 3,42,22,285 1,76,130 3,59,98,229 36,84,644

4. Indo German Watershed Development Programme -

Gujarat (Refer Note B-9 of Schedule 18) 74,39,581 1,00,80,108 2,43,625 1,23,15,630 54,47,684

5. Indo German Watershed Development Programme -

Rajasthan (Refer Note B-9 of Schedule 18) 42,37,753 70,40,297 3,25,906 73,89,813 42,14,143

6. KfW Umbrella Programme on Natural Resource

Management (Refer Note B-9 of Schedule 18) 9,65,12,324 45,00,000 9,91,638 3,04,99,000 7,15,04,962

7. NABARD Grant for Fixed Assets

under NB-SDC HID Project 7,02,569 0 0 42,503 6,60,066

8. GTZ-NABARD RFP - Financial Component 0 2,39,35,333 0 2,39,35,333 0

9. NE Council Fund for

Miscellaneous Training Programme 4,98,357 60,00,000 0 72,35,053 (-) 7,36,696

10. KfW NB SEWA Bank Capitalisation of RFIs 0 2,96,39,708 0 2,96,39,708 0

B.
1. Capital Investment Subsidy for
Cold Storage Projects - NHB 20,82,710 14,81,22,000 0 14,03,14,800 98,89,910

2. Capital Subsidy for Cold Storage - NHM 4,26,890 21,09,52,600 0 20,85,95,400 27,84,090

3. Capital Subsidy for Cold Storage - TM North East 0 3,64,42,626 0 2,10,00,000 1,54,42,626

4. Credit Linked Capital Subsidy for

Technology Upgradation of SSIs 7,08,39,480 1,31,36,000 0 7,75,85,128 63,90,352

5. Capital Investment Subsidy for Rural Godowns 4,94,51,650 78,00,00,000 0 59,17,74,198 23,76,77,452

6. On-farm Water Management for Crop Production 89,62,638 0 0 87,70,820 1,91,818

7. Million Shallow Tubewell Programme - Bihar 228,95,48,442 0 0 (-) 2,71,81,447 231,67,29,889

8. Cattle Development Programme - Uttar Pradesh

(Refer Note B-9 of Schedule 18) 3,74,98,385 0 17,28,923 1,69,54,000 2,22,73,308

9. Cattle Development Programme - Bihar

(Refer Note B-9 of Schedule 18) 4,01,40,212 0 19,82,468 1,49,45,000 2,71,77,680

10. National Project on Organic Farming 3,52,31,798 3,68,33,000 0 2,57,52,960 4,63,11,838

11. Integrated Watershed Development Programme -

Rashtriya Sama Vikas Yojana 7,93,35,452 14,41,93,344 0 3,72,33,304 18,62,95,492

12. Capital Investment Subsidy Scheme -

Horticulture Development - Bihar 14,41,93,344 0 0 14,41,93,344 0

13. Rain Water Harvesting Scheme 57,93,313 0 0 (-) 24,88,031 82,81,344

14. Kutch Drought Proofing Project 68,90,555 0 0 4,43,336 64,47,219

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 Schedule 4 - Gifts, Grants, Donations and Benefactions
(Rupees)
S r. Pa r ticulars Opening Grant received Interest Adjusted Balance as on
No. Balance as on during Credited to against the 31.03.2009
01.04.2008 the year the Fund expenditure

15. Dairy and Poultry Venture Capital Fund 24,06,52,774 35,00,00,000 0 34,96,79,705 24,09,73,069
16. Capital Subsidy for Agriculture Marketing
Infrastructure, Grading and Standardisation 53,21,990 77,05,09,000 0 61,43,30,770 16,15,00,220
17. Vidharbha Package 63,26,230 0 0 63,26,230 0
18. Livelihood Advancement Business School -
Sultanpur, Uttar Pradesh
(Refer Note B-9 of Schedule 18) 70,68,766 0 4,57,349 0 75,26,115
19. Livelihood Advancement Business School -
Rae Bareli , Uttar Pradesh
(Refer Note B-9 of Schedule 18) 1,01,03,957 0 6,53,726 0 1,07,57,683
20. Multi Activity Approach for Pover ty
Alleviation - Sultanpur, Uttar Pradesh
(Refer Note B-9 of Schedule 18) 86,44,952 0 4,70,663 82,00,000 9,15,615
21. Multi Activity Approach for Pover ty
Alleviation - BAIF - Rae Bareli, Uttar Pradesh
(Refer Note B-9 of Schedule 18) 2,24,91,402 0 12,22,446 2,15,25,000 21,88,848
22. Capital Subsidy Scheme -
Agri Clinics Agri Business Centres 2,31,46,360 0 0 1,60,54,665 70,91,695
23. Ar tificial Recharge of
Groundwater in Hard Rock Area 1536,75,00,000 0 0 143,34,08,400 1393,40,91,600
24. Subsidy Reserve - CSAMI under RIDF 0 69,47,300 0 0 69,47,300
25. DWDR Scheme 2008 0 17500,00,00,000 0 16611,01,23,675 888,98,76,325
26. Interest Subvention (Sugar TL) 0 138,53,76,000 0 116,18,47,080 22,35,28,920
C Revival Package of Short Term
Cooperative Credit Structure
1. Cost of Special Audit 26,09,93,479 (-) 3,50,00,000 0 6,78,13,854 15,81,79,625
2. Recapitalisation Assistance to
Credit Cooperative Societies 2048,32,12,766 3838,76,00,000 0 3567,41,93,693 2319,66,19,073
3. Technical Assistance 14,96,75,184 40,00,00,000 0 13,33,71,772 41,63,03,412
4. Human Resources Development 14,09,11,818 50,00,00,000 0 12,72,87,260 51,36,24,558
5. Implementation Cost 6,26,64,323 35,00,00,000 0 26,73,69,939 14,52,94,384
D Long Term Co operative Credit
Structure (LTCCS) 0 20,00,00,000 0 0 20,00,00,000

Total 3967,49,29,810 21902,90,60,391 89,23,079 20760,27,20,765 5111,01,92,515

Previous year 711,81,48,778 4923,66,29,181 81,57,993 1668,80,06,142 3967,49,29,810

E As on 31.03.2009 As on 31.03.2008

1. Grants to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937

2. Less : Grants Released to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937

Total 0 0

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 Schedule 5 - Other Funds
(Rupees)
Sr. Particulars Opening Additions/ Transferred Interest Expenditure/ Transferred Balance as on
No. Balance as on Adjustments from P & L Credited Disb.during to P&L 31.03.2009
01.04.2008 during the year Appropriation the year Appropriation

1. Watershed Development
Fund (Refer Note B-9 of
Schedule 18) 613,68,48,645 527,52,11,636 0 33,83,13,420 24,91,45,824 24,91,45,824 1125,20,82,053
2. Micro Finance
Development and Equity
Fund (Refer Note B-9 of
Schedule 18) 126,60,86,662 20,00,00,000 0 6,04,41,953 8,80,32,101 9,92,70,242 133,92,26,272
3. Interest Differential Fund -
(Forex Risk) 117,67,59,671 14,05,00,274 0 0 0 0 131,72,59,945
4. Interest Differential Fund -
(Tawa) (Refer Note B-1 of
Schedule 18) 11,41,518 13,930 0 0 0 0 11,55,448
5. Adivasi Development Fund 1,93,60,592 1,45,94,702 0 0 0 0 3,39,55,294
6. Tribal Development Fund 602,98,67,885 5,00,000 0 0 28,05,33,698 0 574,98,34,187
7. Financial Inclusion Fund
(Refer Note B-9 of Schedule 18) 15,00,00,000 0 18,50,00,000 94,71,129 36,14,706 0 34,08,56,423
8. Financial Inclusion
Technology Fund
(Refer Note B-9 of Schedule 18) 15,00,00,000 0 32,50,00,000 96,43,865 9,44,899 0 48,36,98,966
9. Farmers Technology
Transfer Fund 25,00,00,000 0 31,61,42,310 0 6,61,42,310 0 50,00,00,000

Total 1518,00,64,973 563,08,20,542 82,61,42,310 41,78,70,367 68,84,13,538 34,84,16,066 2101,80,68,588

Previous year 1112,28,92,249 385,67,09,519 35,00,00,000 42,67,77,994 38,34,31,085 19,28,83,704 1518,00,64,973

Schedule 6 – Deposits
(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. From Central Government 0 0
2. From State Government 0 0
3. From Others
a) Tea / Rubber / Coffee Deposits 60,45,95,645 106,08,44,199
b) Term Deposits 421,63,02,000 0
c) Commercial Banks (Deposits under RIDF) 47022,75,11,983 30592,73,41,263
d) Short Term Cooperative Rural Credit Fund 4622,28,25,000 0

Total 52127,12,34,628 30698,81,85,462

Schedule 7 – Bonds and Debentures

(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008

1. SLR Bonds 277,98,11,000 394,21,11,000

2. Tax Free Bonds 0 535,15,00,000
3. Priority Sector Taxable Bonds 0 325,00,00,000
4. Non Priority Sector Bonds 18156,50,00,000 20877,50,00,000
5. Capital Gains Bonds 690,93,90,000 4777,45,10,000
6. Bhavishya Nirman Bonds 4554,22,17,906 1787,45,72,600
7. NABARD Rural Bonds 23,98,87,000 3,35,37,000

Total 23703,63,05,906 28700,12,30,600

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 Schedule 8 – Borrowings
(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. From Central Government 353,80,83,226 370,20,89,182
2. From Reserve Bank of India 0 0
3. From Others :
(a) In India
(i) Certificate of Deposits 1816,15,33,900 1421,92,03,300
(ii) Commercial Paper 180,61,86,000 0
(iii) Term Money Borrowings 244,07,00,000 0
(iv) From Commercial Banks 500,00,00,000 2500,00,00,000
(b) Outside India
(i) From International Agencies 498,29,11,186 508,13,63,636

Total 3592,94,14,312 4800,26,56,118

Schedule 9 - Current Liabilities and Provisions

(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008

1. Interest / Discount Accrued 2012,53,59,327 1674,07,05,305

2. Sundry Creditors 596,61,60,450 67,63,27,343
3. Provision for Gratuity (Refer Note B-17 of Schedule 18) 261,52,90,025 232,66,17,081
4. Provision for Pension (Refer Note B-10 and B-17 of Schedule 18) 637,35,36,151 466,91,98,168
5. Provision for Encashment of Ordinary Leave
(Refer Note B-17 of Schedule 18) 24,52,09,592 19,30,26,212
6. Unclaimed Interest on Bonds with RBI 6,54,086 11,56,586
7. Unclaimed Interest on Bonds 9,36,66,167 6,29,04,755
8. Unclaimed Interest on Term Deposits 27,913 0
9. Bonds matured but not claimed (Refer Note B-11 of Schedule 18) 69,11,50,000 81,87,70,000
10. Provisions and Contingencies
(a) Depreciation in Value of Investment a/c - G. Sec.
(Refer Note B-7 of Schedule 18) 0 35,73,98,880
(b) Amortisation of G. Sec. - HTM 72,72,63,808 54,54,47,856
(c) For Standard Assets 493,07,00,000 419,37,00,000
(d) Depreciation in value of Investments 2,12,28,000 1,66,08,000
(e) Sacrifice in Interest Element of Restructured Loans 4,54,00,000 13,16,00,000
(f) Provision for Other Assets & Receivables 35,48,250 37,97,358
(g) Provision for Income Tax [Net of Advance Tax] 94,64,83,187 15,80,57,185
Total 4278,56,76,956 3089,53,14,729

Schedule 10 - Cash and Bank Balances

(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. Cash in hand 21,579 21,531
2. Balances with :
a) Reserve Bank of India 169,67,65,931 3795,85,77,121
b) Others
(I) In India
(i) Other banks in India
a) On Current Account 420,21,61,811 107,56,48,175
b) Deposit with Banks 13067,10,00,000 5789,00,00,000
(ii) Remittances in Transit 185,25,16,092 157,59,35,668
(iii) Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149
(II) Outside India 0 0

Total 13975,21,04,689 10314,24,14,644

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 Schedule 11 – Investments
(Rupees)

Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. Government Securities
a) Securities of Central Government (Refer Note B-6 of Schedule 18) 1555,21,24,186 1422,29,02,151
[Face Value Rs. 1530,30,50,000 (Rs. 1380,30,50,000)]
[Market Value Rs. 1602,95,63,114 (Rs. 1406,58,19,973)]
b) Treasury Bills [Face Value Rs. 168,50,00,000 (Rs.278,77,75,000)] 156,51,75,000 260,41,87,184
2. Other Approved Securities 0 0
3. Equity Shares in :
a) Agri-Development Finance Companies :
i) NABARD Financial Services Ltd. Rs. 5,20,00,000
[52,00,000 - Equity shares of Rs.10 each]
ii) Agri-Business Finance [Andhra Pradesh] Ltd. Rs. 5,20,00,000
[52,00,000 - Equity shares of Rs.10 each]
iii) Agri Development Finance [Tamil Nadu] Ltd. Rs. 5,20,00,000 15,60,00,000 15,60,00,000
[52,00,000 - Equity shares of Rs.10 each]
b) Agricultural Finance Corporation Ltd. 1,00,00,000 1,00,00,000
[1,000 - Equity shares of Rs.10,000 each]
c) Small Industries Development Bank of India 48,00,00,000 48,00,00,000
[1,60,00,000 - Equity shares of Rs.10 each (face value)]
d) Agriculture Insurance Company of India Ltd. 60,00,00,000 60,00,00,000
[6,00,00,000 - Equity shares of Rs.10 each]
e) NABARD Consultancy Services Pvt. Ltd. 5,00,00,000 5,00,00,000
[50,00,000 - Equity shares of Rs.10 each]
f) National Commodity and Derivatives Exchange Ltd. 4,50,00,000 4,50,00,000
[45,00,000 - Equity shares of Rs.10 each]
g) Multi Commodity Exchange of India Ltd. 1,25,00,000 1,25,00,000
[12,50,000 - Equity shares of Rs.10 each]
4. Others
a) Units of Liquid Mutual Funds 1000,00,00,000 760,00,00,000
(Refer Note B-24 of Schedule 18)
b) APIDC-Venture Capital Pvt. Ltd. - BVF
[50,000 (50,000) class A units of Rs. 1000 (800) each] 5,00,00,000 4,00,00,000
c) Commercial Paper 142,60,30,700 0
[Face Value Rs.150,00,00,000 (Rs. Nil)]
Total 2994,68,29,886 2582,05,89,335

Schedule 12 – Advances
(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. Refinance Loans
a) Production & Marketing Credit 16896,23,31,000 17381,49,72,000
b) Conversion Loans for Production Credit 20,06,77,000 118,20,43,000
c) Medium Term Investment Credit- Non-Project loans 4,80,000 9,60,000
d) Liquidity Support 2590,91,89,000 1939,88,56,605
e) Other Investment Credit :
i) Medium Term and Long Term Project Loans
(Refer Note B-15 of Schedule 18) 33334,81,37,417 32401,00,02,486
ii) Long Term Non-Project Loans 251,92,69,717 290,14,34,014
2. Direct Loans
a) Loans under Rural Infrastructure Development Fund 45616,21,10,206 30648,59,05,219
b) Other Loans:
i) Cooperative Development Fund 3,27,78,368 3,51,05,480
ii) Micro Finance Development Equity Fund 29,74,13,365 16,41,99,746
iii) Watershed Development Fund 14,72,11,100 6,64,64,900
iv) Tribal Development Fund 23,52,000 3,68,000
c) Co-Finance Loans (Net of Provision) 94,47,56,808 66,39,42,830

Total 98852,67,05,981 82872,42,54,280

110

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 Schedule 13 - Fixed Assets
(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. LAND : Freehold & Leasehold
(Refer Note B-14 of Schedule 18)
Opening Balance 144,16,62,113 118,43,09,971
Additions/adjustments during the year 34,73,754 25,73,52,142
Closing Balance (at cost) 144,51,35,867 144,16,62,113
Less: Amortisation of Lease Premia 32,37,09,461 30,07,14,152
Book Value 112,14,26,406 114,09,47,961
2. PREMISES
(Refer Note B-14 of Schedule 18)
Opening Balance 256,05,62,671 244,58,60,686
Additions/adjustments during the year 1,96,46,744 11,47,01,985
Closing Balance (at cost) 258,02,09,415 256,05,62,671
Less: Depreciation to date 135,58,29,200 125,56,08,556
Book Value 122,43,80,215 130,49,54,115
3. FURNITURE & FIXTURES
Opening Balance 54,85,48,549 56,90,90,253
Additions/adjustments during the year 1,57,37,977 1,24,47,228
Sub-Total 56,42,86,526 58,15,37,481
Less: Cost of assets sold/written off 15,65,752 3,29,88,932
Closing Balance (at cost) 56,27,20,774 54,85,48,549
Less: Depreciation to date 52,71,25,392 50,01,79,543
Book Value 3,55,95,382 4,83,69,006
4. COMPUTER INSTALLATIONS & OFFICE EQUIPMENTS
Opening Balance 61,87,59,611 63,23,32,978
Additions/adjustments during the year 6,26,97,833 3,62,81,283
Sub-Total 68,14,57,444 66,86,14,261
Less: Cost of assets sold/written off 2,00,55,046 4,98,54,650
Closing Balance (at cost) 66,14,02,398 61,87,59,611
Less: Depreciation to date 59,23,72,621 55,82,35,788
Book Value 6,90,29,777 6,05,23,823
5. VEHICLES
Opening Balance 4,19,68,259 3,92,01,244
Additions/adjustments during the year 1,63,83,824 51,79,072
Sub-Total 5,83,52,083 4,43,80,316
Less: Cost of assets sold/written off 1,07,49,021 24,12,057
Closing Balance (at cost) 4,76,03,062 4,19,68,259
Less: Depreciation to date 2,63,20,620 2,38,74,380
Book Value 2,12,82,442 1,80,93,879

Total 247,17,14,222 257,28,88,784

Schedule 14- Other Assets

(Rupees)
Sr. Particulars as on as on
No. 31.03.2009 31.03.2008
1. Accrued Interest 1501,44,94,051 2173,58,69,541
2. Deposits with Landlords 1,23,85,912 1,00,90,952
3. Deposits with Government Departments and Other Institutions 2,28,58,811 2,16,00,208
4. Housing loan to staff 103,55,76,565 98,42,58,611
5. Other Advances to staff 64,33,12,331 56,24,05,783
6. Advances to Landlords 1,54,000 2,73,433
7. Capital Work in Progress [Purchase of Staff Quarters & Office Premises] 9,84,29,348 4,96,86,759
8. Sundry Advances 26,19,12,331 28,44,91,070
9. Advance Tax (Net of Provision for Income Tax) 0 0
10. Deferred Tax Assets [Refer Note B-12 of Schedule 18] 384,99,00,000 304,79,00,000
11. Expenditure recoverable from Government of India/International Agencies 4,37,219 1,64,48,340
12. Discount Receivable 12,43,16,225 9,15,29,797

Total 2106,37,76,793 2680,45,54,494

111

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 Schedule 15 – Interest & Financial Charges

(Rupees)
Sr. Particulars 2008-09 2007-08
No.

1. Interest Paid on
a) Loans from Central Government 25,76,35,682 27,02,49,958
b) Borrowings from Reserve Bank of India 5,99,45,694 0
c) Bonds (Refer Note B-4 of Schedule 18) 1581,54,51,596 1361,55,15,697
d) Special Loan Deposits from State Governments 0 6,690
e) Tea / Coffee / Rubber Deposits 3,24,31,169 4,76,68,588
f) Term Money Borrowings 38,26,30,457 0
g) Term Deposits 8,95,97,323 0
h) Borrowings from International Agencies 27,70,71,578 24,32,59,546
i) Commercial Paper (Refer Note B-4 of Schedule 18) 7,18,81,566 0
j) Short Term Cooperative Rural Credit Fund
(Refer Note B-4 of Schedule 18) 27,69,81,135 0
k) Deposits under RIDF 2157,00,88,384 1400,62,85,028
l) Cattle Development Programme (UP & Bihar) 37,11,391 14,90,600
m) Watershed Development Fund 33,83,13,420 34,73,68,791
n) Financial Inclusion Fund 94,71,129 0
o) Financial Inclusion Technology Fund 96,43,865 0
p) Micro Finance Development and Equity Fund 6,04,41,953 7,94,09,203
q) Indo German Watershed Development Programme - Andhra Pradesh 1,76,130 2,17,699
r) Indo German Watershed Development Programme - Rajasthan 3,25,906 1,67,216
s) KfW - NB Indo German Watershed Development Programme -
Phase III - Maharashtra 2,28,182 12,31,130
t) KfW - NB - IX Adivasi Development Programme 4,42,023 2,11,824
u) Indo German Watershed Development Programme - Gujarat 2,43,625 1,09,631
v) Corporate Borrowings from Banks and FIs in India 130,08,45,106 187,90,01,244
w) Rural Innovation Fund 5,05,40,943 6,21,16,899
x) Livelihood Advancement Business School RF Project -
Sultanpur, Uttar Pradesh 4,57,349 4,95,616
y) Multi Activity Approach for Poverty Alleviation BAIF Project -
Sultanpur, Uttar Pradesh 4,70,663 17,64,718
z) Livelihood Advancement Business School RF Project -
Rae Bareli, Uttar Pradesh 6,53,726 8,81,983
aa) Multi Activity Approach for Poverty Alleviation BAIF Project -
Rae Bareli, Uttar Pradesh 12,22,446 15,76,950
ab) Other Deposits / Borrowings 12,83,178 0
ac) Discount on Certificate of Deposits 175,19,07,902 61,49,39,574
ad) Tribal Development Fund - Wadi [West Bengal] 0 29,824

2. Discount on Collateralised Borrowing and Lending Obligations 3,17,86,414 3,91,67,660

3. Swap Charges 3,14,00,171 3,28,30,183

4. Discount, Brokerage, Commission & Issue exp. on Bonds and Securities 13,17,45,114 12,64,14,035

5. Repo Interest Expenditure 0 24,74,177

Total 4255,90,25,220 3137,48,84,464

112

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 Schedule 16 A - Establishment and Other Expenses

(Rupees)
Sr. Particulars 2008-09 2007-08
No.
1. Salaries and Allowances 251,39,90,425 233,08,89,082
2. Contribution to / Provision for Staff Superannuation Funds 266,79,98,747 123,39,40,370
3. Travelling & Other allowances in connection with Directors’ &
Committee Members’ Meetings 34,35,966 16,47,887
4. Directors’ & Committee Members’ Fees 1,49,375 1,58,250
5. Rent, Rates, Insurance, Lighting, etc. 19,14,09,388 19,11,04,599
6. Travelling Expenses 23,59,04,413 19,68,77,252
7. Printing & Stationery 2,52,26,434 2,76,11,644
8. Postage, Telegrams & Telephones 6,58,96,399 6,42,32,097
9. Repairs 5,85,61,031 3,89,31,822
10. Auditors’ Fees
[includes Rs.Nil (Previous Year Rs 2,03,136) paid to erstwhile auditors] 7,11,496 7,11,466
11. Legal Charges 11,55,909 15,81,688
12. Miscellaneous Expenses 50,27,83,251 41,63,64,138
13. Expenditure on Miscellaneous Assets 55,30,410 67,10,778
14. Expenditure on Study & Training 25,00,60,356 19,77,01,338
[Including Rs.5,52,86,037 (Rs. 4,77,77,782) pertaining to
establishment expenses of Regional Training Colleges]
15. Expenditure on Promotional Activities under
(i) Cooperative Development Fund 3,81,14,043 3,06,99,557
(ii) Micro Finance Development and Equity Fund 9,92,70,242 7,38,32,004
(iii) Watershed Development Fund 24,91,45,824 11,90,51,701
(iv) Farm Innovation and Promotion Fund 73,40,088 46,08,634
16. Wealth Tax 1,71,73,690 2,30,43,544

Total 693,38,57,487 495,96,97,851

Schedule 16 B - Provisions
(Rupees)
Sr. Particulars 2008-09 2007-08
No.
Provisions for :
1. Amortisation of G. Sec 18,18,15,952 18,18,15,952
2. Standard Assets 73,70,00,000 62,52,00,000
3. Non Performing Assets 8,88,11,531 2,22,76,786
4. Depreciation in Investments G.Sec [Refer Note B-7 of Schedule 18] 0 35,73,98,880
5. Depreciation in Value of Investment Account - Equity 46,20,000 (-) 36,12,000
6. Sacrifice in Interest Element of Restructured Accounts (-) 8,62,00,000 (-) 12,35,00,000
7. Other Assets / Receivables (-) 10,66,896 (-) 4,77,269

Total 92,49,80,587 105,91,02,349

Schedule 17 - Commitments and Contingent Liabilities

(Rupees)
Sr. Particulars As on As on
No. 31.03.2009 31.03.2008
1. Commitments on account of capital contracts remaining to be executed 16,80,39,000 4,51,19,000
Sub Total “A” 16,80,39,000 4,51,19,000
2. Contingent Liabilites
Disputed claims for additional payments towards construction of premises 3,36,60,000 9,11,29,000
Sub Total “B” 3,36,60,000 9,11,29,000

Total (A + B) 20,16,99,000 13,62,48,000

113

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 Schedule 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF
ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2009

A. Significant Accounting Policies
1. Basis of Preparation
1.1 The accounts are prepared on the historical cost
convention and comply with all material aspects
contained in the National Bank for Agriculture and Rural
Development Act, 1981 and Regulations thereof,
applicable Accounting Standards (AS) issued by the
Institute of Chartered Accountants of India (ICAI) and
regulatory norms prescribed by the Reserve Bank of India
(RBI). Except otherwise mentioned, the accounting
policies have been consistently applied by National Bank
for Agriculture and Rural Development (NABARD / the
Bank) and are consistent with those used in the previous
year.
1.2 Preparation of financial statements as per
Generally Accepted Accounting Policies (GAAP) requires
the management to make several assumptions and
estimates that affect reported results and the reported
state of affairs of the Bank; the example of such cases
include the estimated life of fixed assets, liability on
account of employee retirement benefits, provision for
anticipated losses, etc. Actual results could differ from
such estimates. Such differences are recognized in the
year of outcome of such results.
2. Income and expenditure
2.1 Income and expenditure are accounted on
accrual basis except the following, which are accounted
on cash basis:
a. Interest on non-performing assets are identified as per
RBI guidelines.
b. Income by way of penal interest charged due to
delayed receipt of loan dues or non-compliance with
terms of loan.
c. Service Charges on loans given out of Agriculture
and Rural Enterprises Incubation Fund, Micro Fin-
ance Development and Equity Fund, Watershed
Development Fund and Cooperative Development
Fund.
d. Expenses not exceeding Rs.10,000 at each
accounting unit under a single head of
expenditure.
2.2 Issue expenses relating to floatation of bonds are
recognised as expenditure in the year of issue of Bonds.
2.3 Dividend on investments is accounted for when
the right to receive the dividend is established.
3. Fixed Assets and Depreciation
3. 1 Fixed assets are stated at cost of acquisition less
accumulated depreciation and impairment losses, if any.
The cost of assets includes taxes, duties, freight and other
incidental expenses related to the acquisition and
installation of the respective assets. Subsequent
expenditure incurred on existing assets is capitalised only
when it increases the future benefit from the existing
assets beyond its previously assessed level of
performance.
3.2 Expenditure incurred on assets purchased for the
value not exceeding Rs.5,000 per unit is charged to Profit
and Loss Account.
3.3 Land includes free hold and leasehold land.
3.4 Premises include value of land where segregated
values are not readily available.
3.5 Depreciation on premises situated on free hold
land is charged @ 10% p.a. on written down value basis
3.6 Depreciation on leasehold land and premises
situated thereon is computed and charged at higher of 5%
on written down value basis or the amount derived by
amortising the premium / cost over the remaining period
of lease hold land on straight-line basis.
3.7 Depreciation on other fixed assets is charged over
the estimated useful life of the assets ascertained by the
management at the following rates on Straight Line
Method basis:
Type of Assets Depreciation Rate
Furniture and Fixtures 20%
Computer Installations 32%
Office Equipments 20%
Vehicles 20%

114

Balance Sheet-09-A Final.p65 114 7/15/2009, 11:33 AM

 Depreciation is charged for the full year
irrespective of the date of purchase of asset. No
depreciation is charged on assets sold during the year.
4. Intangible Assets and Amortisation
Intangible assets are recognized / amortised as per
the criteria specified in AS 26 "Intangible Assets".
5. Investments
5.1 In accordance with the RBI guidelines,
Investments are classified into "Held for Trading" (HFT),
"Available for Sale" (AFS) and "Held to Maturity" (HTM)
categories (hereinafter called "categories"). Under each of
these categories, investments are further classified under
(i) Government Securities (ii) Other Approved Securities
(iii) Shares and (iv) Others.
5.2 Securities that are held principally for resale
within 90 days from the date of purchase are classified as
"HFT" . Investments that the Bank intends to hold till
maturity are classified as "HTM". Securities which are not
to be classified in the above categories, are classified as
"AFS".
5.3 Investments categorized under "HTM" are carried
at cost and provision for depreciation / diminution /
amortisation, if any, in value of investments is included
under Current Liabilities and Provisions.
5.4 Provision for diminution, other than temporary,
in the value of investments in subsidiaries under the
category "HTM" is made, wherever necessary.
5.5 Profit on sale of investment categorized under
"HTM" is recognized in Profit & Loss A/c and then
transferred to Capital Reserve A/c. Loss on sale of
investment categorized under "HTM" is recognized in
Profit & Loss A/c.
5.6 Investments under "AFS" and "HFT" are marked
to market scrip wise at the rate declared by Primary
Dealers Association of India (PDAI) jointly with Fixed
Income Money Market and Derivative Association of
India (FIMMDA) at prescribed intervals. While only net
depreciation, if any, is provided for investments in the
category classified as "AFS", depreciation / appreciation is
recognised in the category for investments classified as
"HFT".
5.7 Treasury Bills are valued at carrying cost.
Balance Sheet-09-A Final.p65 115
5.8 Unquoted Shares are valued at breakup value,
if the latest Audited Accounts of the investee
companies is available, or at Re.1/- per share as per
RBI guideline.
5.9 Brokerage, commission, etc. paid at the time of
acquisition, are charged to revenue.
5.10 Broken period interest on debt investment is
treated as a revenue item.
5.11 Transfer of a security between the categories is
accounted for at lower of the acquisition cost / book
value / market value on the date of transfer and
depreciation, if any, on such transfer is fully provided
for.
6. Advances and Provisions thereon
6.1 Advances are classified as per RBI guidelines.
Provision for standard assets and non-performing assets is
made in respect of identified advances based on a
periodic review and in conformity with the provisioning
norms prescribed by RBI.
6.2 In case of restructuring / rescheduling of
advances, the difference between the present value of
future interest as per the original agreement and the
present value of future interest as per the revised
agreement is provided for at the time of restructuring /
rescheduling.
6.3 Advances are stated net of provisions towards
Non-performing Advances.
7. Foreign Currency Transactions
7.1 Foreign currency borrowings, which are covered
by hedging agreements, are marked to market at every
reporting date, the resultant gain if any is ignored and loss
if any, is provided for. The liability towards foreign
currency borrowings at the prevailing exchange rate on the
reporting date is mentioned under the Balance sheet as a
contra entry.
7.2 Profit on cancellation of or renewal of currency
SWAP agreement, if any, is accounted for on the final
settlement of agreement; however, loss on such
transactions is provided at the market rates as on the date
of Balance Sheet.
115
7/15/2009, 11:33 AM
 8. Retirement Benefits
8.1 The Bank has a Provident Fund Scheme
managed by RBI. Contribution to the Fund is made on
actual basis.
8.2 Provision for gratuity is made based on actuarial
valuation, in respect of all employees including employees
transferred from RBI. The amount of gratuity due from
RBI, in respect of employees transferred from RBI, is
accounted on cash basis.
8.3 Provision for Pension is made based on actuarial
valuation.
8.4 Employer's contribution to Provident Fund
relating to the pension optees (part of Pension Fund) are
maintained with RBI.
8.5 Provision for Encashment of Ordinary Leave is
made on the basis of actuarial valuation.
9. Taxes on Income
9.1 Tax on income for the current period is
determined on the basis of taxable income and tax credits
computed in accordance with the provisions of Income
Tax Act, 1961 and based on expected outcome of
assessments / appeals.
9.2 Deferred tax is recognized, on timing difference,
being the difference between taxable income and
accounting income for the year and quantified using the
tax rates and laws that have been enacted or substantively
enacted as on Balance Sheet date.
9.3 Deferred tax assets relating to unabsorbed
depreciation / business losses are recognised and
carried forward to the extent that there is virtual
certainty that sufficient future taxable income will be
available against which such deferred tax assets can be
realized.
9.4 Other deferred tax assets are recognised and
carried forward to the extent that there is a reasonable
certainty that sufficient future taxable income will be
available against which such deferred tax assets can be
realized.
9.5 Fringe Benefit Tax and Wealth Tax is provided in
accordance with the provisions of the relevant Acts.
116
Balance Sheet-09-A Final.p65 116
10. Segment Reporting
10.1 Segment revenue includes interest and other
income directly identifiable with / allocable to the
segment.
10.2 Expenses that are directly identifiable with /
allocable to segments are considered for determining the
segment result. The expenses, which relate to the Bank as
a whole and not allocable to segments, are included under
"Other Unallocable Expenditure".
10.3 Income, which relates to Bank as a whole and
not allocable to segments is included under "Other
unallocable bank income".
10.4 Segment assets and liabilities include those
directly identifiable with the respective segments.
Unallocable assets and liabilities include those that relate
to the Bank as a whole and not allocable to any segment.
11. Impairment of Assets
11.1 As at each Balance Sheet date, the carrying
amount of assets is tested for impairment so as to
determine:
a) the provision for impairment loss, if any required; or
b) the reversal, if any, required for impairment loss
recognized in the previous periods.
11.2 Impairment loss is recognized when the carrying
amount of an asset exceeds recoverable amount.
12. Provisions, Contingent Liabilities
and Contingent Assets
12.1 Provisions are recognised for liabilities that can be
measured only by using substantial degree of estimation
if:
a) the Bank has a present obligation as a result of a past
event;
b) a probable outflow of resources is expected to settle
the obligation; and
c) the amount of the obligation can be reliably
estimated.
12.2 Reimbursement, expected in respect of
expenditure, which require a provision, is recognised only
when it is virtually certain that the reimbursement will be
received.
7/15/2009, 11:33 AM
 12.3 Contingent liability is disclosed in the case of:
a) a present obligation arising from past events, when it
is not probable that an outflow of resources will be
required to settle the obligation,
b) a present obligation when no reliable estimate is
possible, and
c) a possible obligation arising from past events where
the probability of outflow of resources is not remote.
12.4 Contingent assets are neither recognized, nor
disclosed.
12.5 Provisions, contingent liabilities and contingent
assets are reviewed at each Balance Sheet date.
B. Notes forming part of the Accounts
1. In terms of TAWA Command Area Development
Project Agreement, interest chargeable by the
Government of India (GoI) on loans to the Bank at 6.5%
(6.5%) per annum has been accounted to the extent of
4.5% (4.5%) by credit to the "Interest Differential Fund" to
be utilised for certain specified purposes and the balance
2% has been paid to GoI.
2. Interest Received on Loans and Advances
includes Rs. Nil (Rs. 37.36 crore) representing Interest
Subvention received from GoI for providing assistance
under Liquidity Support to State Co-operative Banks
(SCBs) / Regional Rural Banks (RRBs). The scheme is
closed.
3. Interest Received on Loans and Advances
includes Rs. 10.70 crore (Nil) representing Interest
Subvention received from GoI for providing assistance
under Liquidity Support to State Co-operative Banks
(SCBs) / Regional Rural Banks (RRBs) for Rabi 2008-09.
4. Subvention received / receivable from GOI
amounting to Rs. 874.44 crore (Rs. 879.74 crore) being
the difference between the cost of borrowing by NABARD
and the refinance rate, has been reduced from interest
and financial charges.
5 Other receipts includes Rs.32.02 crore (Rs.28.87
crore) received / receivable from GoI towards
administration charges on providing refinance under
interest subvention scheme to SCBs and RRBs for
financing Seasonal Agricultural Operations.
6. Investments in Government securities includes
the following securities pledged with Clearing Corporation
Balance Sheet-09-A Final.p65 117
of India Limited as collateral security for Business
segments:
(Rs. crore)
Particulars Face Value Book Value
Pledged for Business 10.00 (10.00) 9.25 (11.19)
Segment (Securities)
Pledged for Business 1,212.00 (1212.00) 1,220.97 (1256.67)
Segment (Collateralised
Borrowing and Lending
Obligation)
7. Investments under HTM category excluding
investments in subsidiaries as on 31 March 2009 stood at
22.90% as against 43.43 % as at 31 March 2008. As per
RBI directives, the bank has shifted investments
amounting to Rs. Nil (Rs. 480.65 crore, book value Rs.
432.30 crore) from HTM to AFS category. The resultant
diminution in the value of the shifted investments
amounting to Rs. Nil (Rs. 35.74 crore) has been provided
for, at the year end.
8. In accordance with the Memorandum of
Understanding entered into with the Swiss Agency for
Development Cooperation, repayments of loan, service
charges and other receipts made out of Rural Innovation
Fund (RIF) are being credited to the Rural Promotion
Fund (RPF).
9. Interest at the rate of 6.00% per annum on
unutilised balances of RIF, Watershed Development
Fund, KfW NB IGWDP - (Andhra Pradesh, Gujarat,
Maharashtra and Rajasthan), KfW NB IX Adivasi
Development Programme and KfW Umbrella Programme
on Natural Resource Management has been credited to
respective fund based on respective agreements. Further,
interest at the rate of 6.47% per annum on unutilised
balances of Micro Finance Development and Equity
Fund, Cattle Development Programme (Uttar Pradesh &
Bihar), LAB's Revolving Fund (Sultanpur & Rae Bareli)
and MAPA BAIF - (Sultanpur and Rae Bareli), Financial
Inclusion Fund and Financial Inclusion Technology Fund
has been credited to the respective funds.
10. Pending receipt of confirmation of balance of
Provident Fund Account in respect of employer's
contribution as on March 31, 2009 maintained with RBI,
provision for pension is made after considering the
balance of PF maintained with RBI as per the records
available with the Bank.
117
7/15/2009, 11:33 AM
 11. Outstanding balance payable on account of 17.1 Defined Benefit Plans
'bonds matured but not claimed' amounting to Rs.69.12
crore (Rs.81.88 crore) includes Rs.1.53 crore (Rs.1.53 Employees Retirement Benefit plans of the bank include
crore) on account of SLR Bonds issued by the Bank which Pension, Gratuity and Leave Encashment, which are
were earlier serviced / managed by RBI. From October 1, defined benefit plans. The present value of obligation is
2003, servicing of these bonds was taken over by the determined based on actuarial valuation using the
Bank. Projected Unit Cost Method, which recognises each period
of services as giving rise to additional unit of employee
12. The Bank has, during the year, in accordance benefit entitlement and measures each unit separately to
with AS 22 "Accounting for taxes on Income", recognized build up the final obligation.
in the Profit and Loss account the difference of Rs.80.20
crore between net deferred tax assets of Rs.384.99 crore a. Reconciliation of opening and closing balances of
and Rs.304.79 crore as at March 31, 2009 and March 31, defined benefit obligations:
2008 respectively; as detailed below: (Rs. crore)
Particulars Pension Gratuity Leave
(Rs. crore) Encashment
Sr. Deferred Tax Assets 31 March 31 March
Present value of defined 705.11 232.66 92.18
No. 2009 2008
benefit obligation at the (632.97) (195.05) (72.88)
1 Provision for Retirement Benefits 344.80 267.84 beginning of year
made in the books but allowable
Current Service Cost 20.90 17.26 9.10
for tax purposes on payment basis
(18.67) (14.08) (5.64)
2 Depreciation on Fixed Assets 23.71 24.59
Interest Cost 56.41 18.62 7.37
3 Amortisation of G Sec 16.48 12.36 (50.64) (15.60) (5.83)
Total 384.99 304.79 Actuarial (gain)/ loss 127.38 -9.84 10.64
(17.34) (12.12) (15.66)

13. Provision for Income Tax on account of Special Benefits paid -17.79 -8.17 -3.78
(-14.51) (-4.19) (-7.83)
Reserve created u/s 36(1)(viii) of the Income Tax Act,
Present value of defined 892.01 250.53* 115.51
1961, is not considered necessary, as the Bank has benefits obligations (705.11) (232.66) (92.18)
decided not to withdraw the said reserve. at the year end

* Excludes incremental gratuity of Rs. 11 crore to be paid to

14. 'Land' and 'Premises' include Rs. 34.77 crore employees who have retired on or after January 01, 2006.
(Rs.35.94 crore) paid towards Office Premises and
Staff Quarters for which conveyance is yet to be b. Amount recognized in the balance sheet as on 31
completed. March 2009:
(Rs. crore)
15. The Bank has subscribed to debentures issued by
Particulars Pension Gratuity Leave
various State Land Development Banks / State (Partly (Unfunded) Encashment
Cooperative Agriculture & Rural Development Banks, Funded) (Funded)
which are included under "Advances - Other Investment Present value of 892.01 250.53 115.51
Credit - Medium Term and Long Term Project Loans". defined benefits (705.11) (232.66) (92.18)
The value of Allotment Letters / Debenture Scrips, yet to obligations as
at the year end
be received, as at the year end, aggregates to Rs.195.33
Fair value of 254.66 0.00 90.99
crore (Rs.14.42 crore). plan assets as (238.19) @ (0.00) (72.88)$
at the year end
16. Depreciation charged in Profit & Loss Account is Liability recognized in 637.35 250.53 24.52
net of Swiss Development Corporation share of the Balance sheet as (466.92) (232.66) (19.30)
depreciation amounting to Rs. 42,503 (Rs. 1,27,677) on at the year end

assets purchased under SDC- HID project.

@ Represents the Banks contribution towards PF for pension
optees available with RBI.
17. Disclosure required under AS 15 (Revised) on $ Represents the amount invested with Insurance companies
"Employee Benefits" is as under: towards the liability for Leave Encashment.

118

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 c. Expenses recognized in the Profit and Loss Profit and Loss account during the year is Rs.12.29 crore
Account during the year: (Rs.12.74 crore)
(Rs. crore)
Particulars Pension Gratuity Leave
18. In the opinion of the Bank's management, there
Encashment is no impairment to assets to which AS 28 - "Impairment
Current Service Cost 20.90 17.26 9.10
of Assets" applies requiring any provision.
(18.67) (14.08) (5.64)
19. The movement in Contingent Liability as required
Interest Cost 56.41 18.62 7.37
(50.64) (15.60) (5.83) in AS 29 "Provisions, Contingent Liabilities and
Contingent Assets" is as under:
Actuarial (gain)/ loss 127.38 -9.84 11.21
(17.34) (12.12) (15.66) (Rs. crore)

Expected return on - 0.00 -2.69 Particulars 2008-09 2007-08

Plan Assets - (0.00) (0.00)
Opening Balance 9.11 58.78
Expense recognized in 188.06 26.04 24.99^ Provided during the year 0.01 0.00
the statement of (68.10) (41.80) (27.13)
Profit & Loss Reversed during the year 5.75 49.67

^ net of income on plan assets Rs. 3.11 crore (Rs. Nil). Closing Balance 3.37 9.11

d. Actuarial assumptions: 20. Prior period items included in the Profit and Loss
account are as follows:
Particulars Pension Gratuity Leave
Encashment (Rs. crore)

Mortality Table (LIC) 1994-96 1994-96 1994-96 Sr. No. Particulars 2008-09 2007-08
(Ultimate) (Ultimate) (Ultimate)
1 Depreciation 0.032 0.000
Discount rate (per annum) 7.5% 7.5% 7.5%
2 Other Expenses 0.041 0.000
Salary growth (per annum) 4% 7% 7%
3 Dividend Income 0.000 0.625
Withdrawal rate 1% 1% 1%
Total 0.073 0.625

17.2 The estimates of rate of escalation in salary 21. Capital adequacy ratio of the Bank as on 31
considered in actuarial valuation, take into account March 2009 is 25.85% (26.61%) as against a minimum
inflation, seniority, promotion and other relevant factors of 9% as stipulated by RBI.
including supply and demand in the employment
market.
22. During the year the bank has implemented an
Optional Early Retirement Scheme (OERS) for its
17.3 The aforesaid liabilities include liability of
officers in Grade C who have completed 45 years of
employees deputed to subsidiaries.
age and 22 years of service with the bank. A provision
of Rs.15.03 crore has been made in current year and
17.4 The above information is certified by the actuary,
included under the head "Salaries and Allowances".
except in respect of pension for fair value of plan assets,
expected return on plan assets and expense recognized in
profit and loss account. 23. NPA on staff loans:
(Rs. crore)
17.5 Defined Contribution Plan: Particulars 2008-09 2007-08

The bank contributes a defined sum of 10% on the basic Opening Balance 0.10 0.11
salary for both pension optees and non pension optees Addition during the year 0.00 0.00
every month towards Provident Fund. The contribution Written Back during the year 0.03 0.01
made for the pension optees forms part of the plan assets
Closing Balance 0.07 0.10
of pension scheme. The total contribution charged to

119

Balance Sheet-09-A Final.p65 119 7/15/2009, 11:33 AM

 24. Investments in Mutual Funds:
(Rs. crore)
S.No Name of the Mutual Fund FY 2008-09 FY 2007-08
Book Value Market Value Book Value Market Value
1 Birla Sun life 100.00 100.04 60.00 60.02
2 Tata 50.00 50.02 60.00 60.01
3 Kotak Mahindra 50.00 50.02 60.00 60.02
4 UTI 75.00 75.03 60.00 60.02
5 ICICI Prudential 100.00 100.02 60.00 60.02
6 HDFC 75.00 75.02 60.00 60.01
7 Canara Robeco 50.00 50.00 40.00 40.01
8 SBI 50.00 50.01 60.00 60.02
9 Reliance 50.00 50.01 60.00 60.02
10 ING 50.00 50.11 60.00 60.01
11 Franklin Templeton 50.00 50.01 60.00 60.02
12 LIC 100.00 100.05 60.00 60.02
13 Religare 50.00 49.93 0.00 0.00
14 IDFC 50.00 50.01 0.00 0.00
15 Deutsche 50.00 50.02 0.00 0.00
16 Baroda Pioneer 50.00 50.01 0.00 0.00
17 PRINCIPAL 0.00 0.00 60.00 60.01

Total 1000.00 1000.31 760.00 760.21

25. As per the information available with the Bank, (c) Risk weighted assets
there are no dues payable under Micro, Small and (Rs. crore)
Medium Enterprises Development Act 2006. Particulars 31 March 2009 31 March 2008
On - Balance Sheet Items 43,436.86 38,880.81
26. Previous year's figures have been regrouped / Off - Balance Sheet Items 27.61 36.47
rearranged wherever necessary.
(d) Pattern of Capital contribution as on the
27. Figures in brackets pertain to previous year. date of the balance sheet
(Rs. crore)
28. The following additional information is disclosed in
Contributor 31 March 2009 31 March 2008
terms of RBI circular No.RBI/2008-2009/63
Reserve Bank of India 1,450 1,450
(DBOD.FID.FIC.2/01.02.00/2008-09) dated 01July 2008. Government of India 550 550
Total 2,000 2,000
28.1 Capital
(a) Capital to Risk-weighted Assets Ratio 28.2 Asset Quality and Credit Concentration
(CRAR) (e) Net NPA position
(Percent)
Particulars 31 March 2009 31 March 2008
Particulars 31 March 2009 31 March 2008
CRAR 25.85 26.61 Percentage of Net NPAs 0.0306648 0.0232661
to Net Loans & Advances
Core CRAR 24.45 25.34
Supplementary CRAR 1.40 1.27
(f) Asset classification
(Rs. crore)
(b) Subordinated Debt
Classification 2008-09 2007-08
(Rs. crore)
Amount (%) Amount (%)
Particulars 31 March 2009 31 March 2008
Standard 98822.36 99.969 82,853.14 99.977
Amount of Nil Nil Sub-standard 6.86 0.007 2.40 0.003
subordinated debt Doubtfull 23.45 0.024 16.88 0.020
raised and outstanding Loss 0.00 0.000 0.00 0.000
as Tier II Capital Total 98852.67 100.00 82872.42 100.00

120

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 (g) Provisions made during the year (i) Credit exposure as percentage to Capital
(Rs. crore) Funds and as percentage to Total Assets
Provisions against 2008-09 2007-08 (Rs. crore)

Standard Assets 73.70 62.52 2008-09 2007-08

Category Credit Exposure Credit Exposure
Non Performing Assets 8.88 2.23 as % to as % to
Investments (Net) (35.28) 35.38 Capital Total Capital Total
Income Tax (including 677.60 563.40 Funds Assets Funds Assets
Fringe Benefit Tax)
I Largest Single 106.32 10.15 43.25 4.56
Total 724.90 663.53 Borrower
II Largest Borrower Not Applicable Not Applicable
Group
(h) Movement in Net NPAs
(Rs. crore) III Ten Largest 333.06 31.81 270.19 28.48
Single Borrowers
Particulars 2008-09 2007-08 for the year
(A) Net NPAs as at beginning of the year 19.28 22.96 IV Ten Largest Not Applicable Not Applicable
Borrower Groups
(B) Add: Additions during the year 11.03 7.16
(C) Sub-total (A+B) 30.31 30.12
(j) Credit exposure to the five largest
(D) Less: Reductions during the year 0.00 10.84
industrial sectors as percentage to total
(E) Net NPAs as at the end of the year (C-D) 30.31 19.28
loan assets: Not Applicable

28.3 Liquidity
(k) Maturity pattern of Rupee Assets and Liabilities
(l) Maturity pattern of Foreign Currency Assets and Liabilities
(Rs. crore)
#
Sr. Item Less than More than More than More than More than Total
No. or equal to 1 year upto 3 years upto 5 years upto 7 years
1 year 3 years 5 years 7 years
1. Rupee Assets 48326.90 28354.64 23204.68 14243.36 3551.34 117680.92
(43,339.36) (21,629.83) (17,758.77) (11,714.26) (3,843.23) (98,285.44)
2. Foreign currency 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00)
assets
Total Assets 48326.90 28354.64 23204.68 14243.36 3551.34 117680.92
(43,339.36) (21,629.83) (17,758.77) (11,714.26) (3,843.23) (98,285.44)
3. Rupee Liabilities 16553.97 22015.52 24003.42 17404.61 37205.11 117182.63
(19,155.78) (15,913.71) (17,067.14) (11,389.93) (34,250.74) (97,777.30)
4. Foreign currency 9.94 64.33 108.68 108.69 206.64 498.29
liabilities (9.96) (64.32) (108.68) (108.69) (216.50) (508.14)
Total Liabilities 16563.91 22079.85 24112.10 17513.3 37411.75 117680.92
(19,165.74) (15,978.03) (17,175.82) (11,498.62) (34,467.24) (98,285.44)
# Net of provision made as per RBI directives on Standard Assets, NPA as well as for diminution in value of Investments
aggregating to Rs.495.19 crore (Rs.421.03 crore).

28.4 Operating results

Particulars 2008-09 2007-08
(m) Interest income as a percentage to average working funds 6.47 6.13
(n) Non interest income as a percentage to average working funds 0.13 0.08
(o) Operating profit as a percentage to average working funds 1.86 1.97
(p) Return on average Assets (%) 1.30 1.38
(q) Net Profit per Employee (Rs. in crore) 0.28 0.25

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 28.5 Movement in the provisions
(a) Provision for Non Performing Assets (Loan Assets)
(Rs. crore)
Particulars 2008-09 2007-08

Opening balance as at the beginning of financial year 5.52 3.18

Add: Provision made during the year 8.88 2.34
Less: Write off, write back of excess provision 0.00 0.00
Closing balance at the close of financial year 14.40 5.52

(b) Provision for depreciation in investments

(Rs. crore)
Particulars 2008–09

A. Opening balance as at the beginning of the financial year 37.40 (2.02)

B. Add
(i) Provisions made during the year 0.63 (35.80)
(ii) Appropriation, if any, from Investment Fluctuation
Reserve Account during the year 0.00 (0.00)
C. Sub Total [A+B(i)+B(ii)] 38.03 (37.82)
D. Less
(i) Write off, Write Backs of excess provision 35.91 (0.42)
(ii) Transfer, if any, to Investment Fluctuation Reserve Account 0.00(0.00)
35.91 (0.42)
E. Closing balance as at the close of financial year (C-D) 2.12 (37.40)

28.6 Restructured accounts 28.10 Investments in Non : NIL (NIL)

During the current financial year six loan accounts
outstanding to the extent of Rs. 51.63 crore (Rs. 15.13
crore) have been rescheduled. Out of the above, two loan
accounts outstanding of Rs. 26.47 crore (Rs. 9.44 crore) is
classified as Standard asset and four loan accounts
outstanding of Rs.25.16 crore (Rs. 5.69 crore) has been
classified as Doubtful Asset. There is no Interest sacrifice
on these reschedulements.
The interest sacrifice on loans restructured during FY
2005-06 amounted to Rs.31.08 crore. Interest sacrifice is
reviewed at each balance sheet date and necessary
provision is made or reversed. Accordingly, Rs.8.62 crore
(Rs.12.35 crore) was written back during the current
financial year.
28.7 Assets sold to : NIL (NIL)
securitisation company/
reconstruction company
28.8 Forward Rate Agreements : NIL (NIL)
and Interest Rate Swaps
28.9 Interest Rate Derivatives : NIL (NIL)
Government Debt
Securities
28.11 Corporate Debt : NIL (NIL)
Restructuring (CDR)
28.12 Disclosure on risk exposure in
Derivatives
The Bank does not trade in derivatives. However, it has
hedged its liability towards borrowings from KfW
Germany to the extent of 55.99 million Euro and interest
thereon for a period of 10 years and 40 million Euros and
interest thereon for the entire loan period. Consequent
upon hedging of foreign currency borrowings the same is
shown at contracted value as per the Swap agreement.
The Bank does not have any open exposure in foreign
currency.
The value of outstanding principal amount of hedge
contract at the year-end exchange rate stood at Rs.
634.57 crore and the value of outstanding principal
liability in the books of account stood at contracted value
i.e. Rs. 498.29 crore. The quantitative disclosure in this
regard is as under:

122

Balance Sheet-09-A Final.p65 122 7/15/2009, 11:33 AM

 (Rs. crore)
Sr. Particulars Currency Interest Rate
No. Derivatives Derivatives
1. Derivatives (Notional Principal amount)
A) For Hedging 498.29 (508.14) NA
B) For Trading NA NA
2. Marked to Market Positions [1]
a) Asset (+) 136.28 (97.44) NA
b) Liability (-) NA NA
3. Credit Exposure [2] NA NA
4. Likely impact of one percentage change in interest rate (100*PV01) NA NA
a) on hedging derivatives NA NA
b) on trading derivatives NA NA
5. Maximum and Minimum of 100*PV01 observed during the year NA NA
a) on hedging NA NA
b) on trading NA NA

28.13 Exposures where the FI had exceeded prudential exposure limits : NIL (NIL)
during the year
28.14 Related Party Transactions
As the Bank is state controlled enterprise within the meaning of AS-18 "Related Party Transactions", the details of the
transactions with other state controlled enterprises are not given.
List of Related Parties:
Key Management Personnel:
1. Shri Umesh Chandra Sarangi - Chairman
2. Dr. K G Karmakar - Managing Director
(Rs. crore)
Name of the Party Nature of Relationship Nature of Amt. of transaction Outstanding
Transaction during the year
Dr. Y.S.P. Thorat Key Management Remuneration including 0.00 -
Personnel - Ex-Chairman perquisites (0.07)
Shri U. C. Sarangi Key Management Remuneration including 0.14 -
Personnel - Chairman perquisites (0.02)
Dr. K.G. Karmakar Key Management Remuneration including 0.22 -
Personnel - Managing Director perquisites (0.08)

No amounts, in respect of the related parties have been written off/back, or provided for during the year.
Related party relationships have been identified by the management and relied upon by the auditors.

28.15 Issuer categories in respect of investments made

(Rs. crore)
Sr. No. Issuer Amount Investment 'Below 'Unrated' 'Unlisted'
made through investment grade' Securities held Securities
private placement Securities held
(1) (2) (3) (4) (5) (6) (7)
1. PSUs 60.00 (60.00) 60.00 (60.00) - - 60.00 (60.00)
2. FIs 48.00 (48.00) 48.00 (48.00) - - 48.00 (48.00)
3. Banks` - - - - -
4. Private Corporates - - - - -
5. Subsidiaries/Joint ventures 20.60 (20.60) 20.60 (20.60) - 20.60 (20.60) 20.60 (20.60)
6. Others (Net of Provision)
including Mutual Funds 1152.23 (769.09) 11.75 (0.00) 0.00 (0.00) 11.75 (0.00) 1152.23 (769.09)
7. Provision held towards
depreciation 2.12 (1.66) - - - 2.12 (1.66)

Total 1282.95 (899.35) 140.35 (128.60) 0.00 (0.00) 32.35 (20.60) 1282.95 (899.35)

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 28.16 Non performing investments: NIL (NIL)
28.17 Disclosure on Repo transactions
(Rs. crore)
Particulars Minimum Maximum Daily average Outstanding
outstanding outstanding outstanding as on
during the year during the year during the year 31 March 2009

Securities sold under repo 0.00 (206.42) 0.00 (206.42) 0.00 (0.56) 0.00 (0.00)
Securities purchased under reverse repo 275.00 (0.00) 275.00 (0.00) 0.75 (0.00) 0.00 (0.00)

28.18 Information on Business Segment Development Banks, State Coop. Banks, Regional Rural
Banks etc. as refinance against the loans disbursed by
(a) Brief Background them to the ultimate borrowers.
The Bank has recognized Primary segments as under:
iii) Treasury: Includes investment of funds in
i) Direct Finance: Includes Loans given to state treasury bills, short-term deposits, government
governments for rural infrastructure development, co- securities, etc.
finance loans and loans given to voluntary agencies / non-
governmental organisations for developmental activities. iv) Unallocated: Includes income from staff loans
and other miscellaneous receipts and expenditure incurred
ii) Refinance: Includes Loans and Advances given for the developmental role of the bank and common
to State Governments, Commercial Banks, Land administrative expenses.

(b) Information on Primary Business Segment

(Rs. crore)

Direct Finance Refinance Treasury Unallocated Total

Revenue 2337.37 (1536.94) 3389.92 (3007.63) 1307.36 (955.06) 16.03 (9.46) 7050.68 (5509.09)
Results 118.46 (79.66) 1181.87 (1224.76) 1283.21 (894.18) -596.01 (-450.51) 1987.53 (1748.09)
Assets 45798.54 (30822.03) 54265.45 (54058.31) 16434.04 (8950.55) 1678.08 (4875.58) 118176.11 (98706.47)
Liabilities 47695.61 (31176.46) 51039.60 (50951.52) 192.86 (167.86) 19248.04 (16410.63) 118176.11 (98706.47)

Other Items :
Amortization & Depreciation 0.00(0.00) 0.00(0.00) 18.18(18.18) 21.36(21.63) 39.54 (39.81)
Non Cash Expenses
(other than above) 9.07(23.19) 64.65(29.09) 0.46(35.38) 47.76(64.23) 121.94 (151.89)

(c) Since the operations of the Bank are confined to India only there is no reportable secondary
segment.

As per our attached report of even date

Khimji Kunverji & Co
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Mumbai: 17 June 2009 Date: 17 June 2009

Umesh Chandra Sarangi Dr. K. G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

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 National Bank for Agriculture and Rural Development
Cash flow for the year ended 31 March 2009
(Rupees)

Particulars 2008-09 2007-08

(a) Cash flow from Operating activities

Net Profit as per Profit and Loss a/c before tax 1987,53,10,864 1748,09,75,282
Adjustment for:
Depreciation 21,36,41,786 21,63,06,861
Provisions and Amortisations 18,53,69,056 53,51,25,563
Provision for Non performing Assets 8,88,11,531 2,22,76,786
Provision for Standard Assets 73,70,00,000 62,52,00,000
Provision for sacrifice in interest element of Restructured Loan (-) 8,62,00,000 (-) 12,35,00,000
Profit / Loss on sale of Fixed Assets (-) 7,61,670 2,05,11,318
Interest credited to various Funds
(including addition/ adjustment made to Interest Differential Fund) 61,78,34,663 64,16,48,347
Other Expenses 0 0
Income from Investment (including Discount Income) (-) 1307,36,41,258 (-) 955,06,11,552
Expenditure from various Funds (-)20857,49,50,989 (-)1731,84,53,498

Operating profit before changes in operating assets (-) 20001,75,86,017 (-) 745,05,20,893
Adjustment for net change in:
Current Assets (-) 6610,57,48,689 402,13,61,457
Current Liabilities 1110,19,36,226 710,03,19,377
Increase / Decrease of Bonds (-) 4996,49,24,694 (-) 191,77,45,150
Increase / Decrease in Borrowings (-) 1207,32,41,806 1628,56,71,289
Increase / Decrease in Deposits 21428,30,49,166 10461,96,05,956
Increase in Loans and Advances
(Including Housing Loan & Other Advances to Staff) (-) 16067,34,69,946 (-) 13429,94,33,700

Cash generated from operating activities (-) 26344,99,85,760 (-) 1164,07,41,664

Payment of Income Tax (-) 598,75,73,999 (-) 459,78,97,070

Net cash flow from operating activities (A) (-) 26943,75,59,759 (-) 1623,86,38,734

(b) Cash flow from Investing activities

Income from Investment (including Discount Income) 1307,36,41,258 955,06,11,552
Increase / Decrease in Fixed Asset (-) 11,17,05,555 (-) 42,28,33,123
Increase / Decrease in Investment (-) 431,26,76,503 (-) 559,22,13,016

Net cash used / generated from investing activities (B) 864,92,59,200 353,55,65,413

(c ) Cash flow from financing activities

Grants / contributions received 22461,69,90,603 5303,10,94,480

Net cash raised from financing activities (C) 22461,69,90,603 5303,10,94,480

Net increase in cash and cash equivalent (A)+(B)+(C ) (-) 3617,13,09,956 4032,80,21,159
Cash and Cash equivalent at the beginning of the period 4525,24,14,644 492,43,93,485

Cash and cash equivalent at the end of the period 908,11,04,689 4525,24,14,644

125

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 National Bank for Agriculture and Rural Development
Cash flow for the year ended 31 March 2009
(Rupees)
1. Cash and cash equivalent at the end of the period includes : 2008-09 2007-08

Cash in hand 21,579 21,531

Balance with Reserve Bank of India 169,67,65,931 3795,85,77,121

Balances with other Banks in India 420,21,61,811 107,56,48,175

Remittances in Transit 185,25,16,092 157,59,35,668

Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149

Total 908,11,04,689 4525,24,14,644

2. Previous year’s figures have been regrouped/ rearranged to conform to the current year’s presentation, wherever
necessary.

As per our attached report of even date

Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

126

Balance Sheet-09-A Final.p65 126 7/15/2009, 11:33 AM

 Consolidated Balance Sheet

Profit and Loss Account

&

Cash Flow

of

NABARD

&

its Subsidiaries
(NABCONS,ADFT,ABFL & NABFINS)

2008-09

127

Balance Sheet-09-A Final.p65 127 7/15/2009, 11:33 AM

 Khimji Kunverji & Co.
Chartered Accountants

Auditors' Report on Consolidated Financial Statements

To the Board of Directors
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

1 We have examined the attached Consolidated Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
(‘The Bank’) and its Subsidiaries as at March 31, 2009, the Consolidated Profit & Loss Account and the Consolidated
Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility
of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in
all material respects, in accordance with an identified financial reporting framework and are free of material misstatement.
An audit also includes examining, on test basis, evidence supporting amounts and disclosures in financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by the management, as
well as evaluating overall financial statements. We believe that our audit provides a reasonable basis for our opinion

3 We did not carry out the audit of financial statements of subsidiaries of the Bank. The total Assets and total Revenues in
respect of these subsidiaries are Rs 53.83 crore and Rs14.79 crore respectively. The financial statements of three
subsidiaries, being not audited, any adjustments to their balances could have consequential effects on the attached
Consolidated Financial Statements, the impact of which is not ascertained. These financial statements have been certified
by the managements of the respective subsidiary companies and have been furnished to us. In our opinion, in so far as
it relates to the amounts included in respect of the Subsidiaries in Consolidated Financial Statements is based solely on
such certified financial statements

4 We report that the Consolidated Financial Statements have been prepared by the Bank in accordance with the requirements
of Accounting Standard (AS) 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of
India, and on the basis of the separate audited/ certified financial statements of the Bank and its Subsidiaries included in
the consolidated financial statements

5 We report that on the basis of the information and explanations given and on the consideration of separate audited/
certified financial statements of the Bank and its Subsidiaries and subject to our comment in para 3 above, we are of the
opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting
principles generally accepted in India:

a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Bank as at March 31, 2009;
b) in the case of the Consolidated Profit and Loss Account of the consolidated results of operations of the Bank for the
year ended on that date; and
c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Bank for the year ended
on that date

Place: Mumbai
Dated: June 17, 2009
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia
Partner (F-033494)

Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.
Telephones: +91 22 22662550, 22661270, 22662011 • Fasimile: +91 22 22664045
E-mail: info@khimjikunverji.com • Website: www.khimjikunverji.com

128

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 National Bank for Agriculture and Rural Development
Consolidated Balance Sheet as on 31 March 2009
(Rupees)

Particulars As on 31.03.2009 As on 31.03.2008

FUNDS AND LIABILITIES

Capital 2000,00,00,000 2000,00,00,000

Reserve Fund and Other Reserves 9551,33,61,533 8614,18,37,839

National Rural Credit Funds 15571,00,00,000 15159,00,00,000

Funds Out of Grants received from International Agencies 154,81,78,661 170,38,44,460

Gifts Grants, Donations and Benefactions 5111,01,92,515 3967,49,29,810

Other Funds 2101,80,68,588 1518,00,64,973

Minority Interest 12,73,59,475 11,96,69,848

Deposits 52127,12,34,628 30698,81,85,462

Bonds and Debentures 23702,62,34,987 30122,04,33,900

Borrowings 3592,94,14,312 3378,34,52,818

Current Liabilities and Provisions 4281,43,94,987 3092,22,07,877

TOTAL FUNDS AND LIABILITIES 118206,84,39,686 98732,46,26,987

PROPERTY AND ASSETS

Cash and Bank Balances 14018,72,65,778 10352,51,52,981

Investments 2974,08,29,886 2561,45,89,335

Advances 98858,23,52,501 82878,81,34,744

Fixed Assets 247,31,45,985 257,42,30,724

Other Assets 2108,48,45,536 2682,25,19,203

TOTAL PROPERTY AND ASSETS 118206,84,39,686 98732,46,26,987

As per our attached report of even date

Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

129

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 National Bank for Agriculture and Rural Development
Consolidated Profit and Loss Account for the year ended 31 March 2009
(Rupees)
Particulars 2008-09 2007-08

Income:
Interest Received on Loans and Advances 5694,13,82,207 4518,31,32,065
Income from Investment operations 1218,59,65,570 906,66,95,489
Discount Received 92,55,15,672 51,71,40,175
Other Receipts 60,18,62,544 44,91,27,953

TOTAL INCOME 7065,47,25,993 5521,60,95,682

Expenditure:
Interest and Financial Charges 4255,90,43,429 3152,68,04,735
Establishment and other expenses 698,69,20,566 486,19,42,059
Depreciation 21,39,95,163 21,65,89,205
Provisions 93,04,17,887 105,68,36,154
Preliminary expenses written off - 3,83,633

TOTAL EXPENDITURE 5069,03,77,045 3766,25,55,786

Profit before Income Tax 1996,43,48,948 1755,35,39,896

Provision for Income Tax 676,66,13,885 562,41,27,188
Provision for Fringe Benefit Tax 3,66,35,726 3,45,27,535
Deferred Tax Asset Adjustment (-) 80,28,25,064 (-) 41,42,86,923
Short / (Excess) provision for Income Tax in earlier years 9,397 1,43,06,538
Profit after Tax 1396,39,15,004 1229,48,65,558
Share of Profit / Loss in Subsidiaries attributable to Minority Interest 80,65,434 (-)18,93,517

Profit available for Appropriation 1395,58,49,570 1229,67,59,075

Appropriations:
Profit as above 1395,58,49,570 1229,67,59,075
Add: Withdrawals from various funds against expenditure 48,14,80,880 30,30,87,768
debited to Profit & Loss Account

Total Profit Available for Appropriation 1443,73,30,450 1259,98,46,843

Transferred to:
Special Reserve u/s 36(I)(viii) of the Income Tax Act, 1961 340,00,00,000 320,00,00,000
National Rural Credit (Long Term Operations) Fund 400,00,00,000 400,00,00,000
National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000
Co-operative Development Fund 3,81,14,043 53,06,99,557
Research & Development Fund 8,76,10,683 7,48,95,872
Investment Fluctuation Reserve 42,00,00,000 25,78,45,000
Financial Inclusion Fund 18,50,00,000 5,00,00,000
Financial Inclusion Technology Fund 32,50,00,000 5,00,00,000
Farm Innovation and Promotion Fund 46,55,57,504 0
Farmers Technology Transfer Fund 31,61,42,310 25,00,00,000
Reserve Fund 509,99,05,910 408,64,06,414

Total 1443,73,30,450 1259,98,46,843

130

Balance Sheet-09-A Final.p65 130 7/15/2009, 11:33 AM

 Additional Notes to Consolidated Accounts

1. Consolidation has been done pursuant to the listing agreement with stock exchange
2. Financial statements of the subsidiaries except NABARD Consultancy Services (Private) Limited are unaudited.
3. Details of the subsidiaries:

Name of the Subsidiary Country of incorporation Proportion of ownership

Agri Development Finance (Tamilnadu) Ltd. India 52.10
Agri Business Finance (AP) Ltd. India 47.82*
NABARD Financial Services Limited India 82.41
NABARD Consultancy Pvt. Ltd. India 100.00

* NABARD controls the Board of Directors of Agri Business Finance (AP) Ltd.and hence considered as a subsidiary.
4. The financial statements of the company and its subsidiary companies are combined on a line to line basis by adding
together expenses after fully eliminating infra-group balances and intra-group transactions in accordance with
Accounting Standard - (AS) - 21 -"Consolidated Financial Statement"
5. Depreciation on fixed asset is provided on Written Down Value Method (WDV), at the rates specified in Schedule XIV
to the Companies Act, 1956 by Agri Development Finance (Tamilnadu) Ltd and Agri Business Finance (AP) Ltd.,
whereas NABARD Financial Services Ltd. and NABARD consultancy services (Private) Limited has provided
depreciation on fixed assets by adopting Straight Line Method (SLM) at the rates specified in Schedule XIV to
the Companies Act, 1956 on prorata basis. Thus the Accounting Policy followed by subsidiaries for depreciation
are different from the Accounting Policy for depreciation followed by NABARD in the preparation of Consolidated
Financial Statements. Thus out of the total depreciation of Rs.21.40 crore (21.66 crore) included in the
Consolidated Financial Statement, 0.17% (0.13%) of that amount is determined based on depreciation provided
by following WDV / SLM at the rates as specified in Schedule XIV to the Companies Act, 1956.
6. Income on foreign assignments by NABCONS is accounted on "receipt" basis. The amount of such fees receivable is
not material.
7. Disclosure as required under AS – 17 "Segment Reporting" in consolidated financial statement are as under:
(Rs. crore)
Direct Finance Refinance Treasury Unallocated Total
Revenue 2340.89 (1539.27) 3389.92 (3007.63) 1307.36 (955.06) 27.30 (19.65) 7065.47 (5521.61)
Results 120.78 (81.02) 1181.87 (1224.76) 1283.21 (894.18) -589.43 (-444.61) 1996.43 (1755.35)
Assets 45814.35 (30837.30) 54265.45 (54058.31) 16434.04 (8950.55) 1693.00 (4886.31) 118206.84 (98732.46)
Liabilities 47711.41 (31191.72) 51039.60 (50951.52) 192.86 (167.87) 19262.97 (16421.36) 118206.84 (98732.46)
Other Items :
Amortisation & Depreciation 0.02(0.03) 0.00(0.00) 18.18(18.18) 21.37(21.63) 39.58(39.84)
Non Cash Expenses
(other than above) 9.62(25.26) 64.66(29.09) 0.46(35.38) 47.75(64.27) 122.49(154.00)

Note: There are no reportable secondary segments for the bank and its subsidiaries.

8. Previous Year figures have been regrouped / rearranged wherever necessary

As per our attached report of even date

Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K. G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

131

Balance Sheet-09-A Final.p65 131 7/15/2009, 11:33 AM

 National Bank for Agriculture and Rural Development
Consolidated Cash Flow Statement for the year ended 31 March 2009
(Rupees)
Particulars 2008-09 2007-08
(a) Cash flow from Operating activities
Net profit as per P & L a/c before tax 1996,43,48,948 1755,35,39,896
Depreciation 21,39,95,164 21,65,89,206
Provisions and Amortisations 18,53,69,056 53,51,25,563
Provision for Non performing Assets 9,42,07,091 2,22,76,786
Provision for Standard Assets 73,70,00,000 62,52,00,000
Provision for Sacrifice in interest element of restructured loan (-) 8,62,00,000 (-) 12,35,00,000
Interest credited to various funds 61,78,34,663 64,16,48,347
Other expenses 0 3,83,633
Income from Investment (-)1307,40,79,660 (-)903,34,71,377
Profit / Loss on sale of Fixed Asset (-) 7,61,799 2,05,11,318
Expenditure from various funds (-) 20857,49,50,989 (-) 1731,84,53,498
Operating profit before working capital changes (-)19992,32,37,526 (-) 686,01,50,126
Adjustment for net change in:
Current Assets (-) 6610,56,33,642 398,47,17,891
Current liabilities 1109,81,36,716 708,28,46,611
Proceeds of Bonds (-) 4996,49,24,694 (-)191,77,45,150
Increase / Decrease in Borrowings (-)1207,32,41,806 1628,56,71,289
Increase / Decrease in Deposits 21424,95,42,087 10461,02,50,436
Increase/Decrease in Loans and Advances (-)16067,23,06,900 (-)13425,10,46,317
Cash generated from operating activities (-) 26339,16,65,765 (-) 1106,54,55,366
Payment towards Income tax (-) 601,39,55,521 (-) 463,77,13,257
Net cash flow from operating activities (A) (-) 26940,56,21,286 (-) 1570,31,68,623
(b) Cash flow from Investing activities
Dividend paid (-) 29,24,875 (-) 32,93,101
Income from Investment 1307,40,79,660 903,34,71,377
Increase / Decrease of Fixed Assets (-) 11,21,48,627 (-) 42,28,66,375
Increase / Decrease in Investments (-) 432,27,47,422 (-) 559,22,13,016
Net cash used in investing activities (B) 863,62,58,736 301,50,98,885
(c ) Cash flow from financing activities
Grants / contributions received 22461,69,90,603 5303,10,94,480
Net cash raised from financing activities (C) 22461,69,90,603 5303,10,94,480
Net increase in cash and cash equivalent (A)+(B)+(C) (-) 3615,23,71,947 4034,30,24,742
Cash and cash equivalent at the beginning of the period 4527,11,51,488 492,81,26,746
Cash and cash equivalent at the end of the period 911,87,79,541 4527,11,51,488

Cash and cash equivalent at the end of the period includes : 2008-09 2007-08
Cash in hand 27,285 27,338
Balance with Reserve Bank of India 173,44,35,078 3797,73,08,158
Balances with other Banks in India 420,21,61,810 107,56,48,175
Remittances in Transit 185,25,16,092 157,59,35,668
Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149
Total 911,87,79,541 4527,11,51,488
As per our attached report of even date
Khimji Kunverji & Co.
Chartered Accountants

Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager
Mumbai Accounts Department
Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director

132

Balance Sheet-09-A Final.p65 132 7/15/2009, 11:33 AM

 Regional Offices/Sub-Office/Training Establishments

REGIONAL OFFICES

ANDHRA PRADESH GUJARAT MADHYA PRADESH NEW DELHI

1-1-61, RTC Cross Road,
Musheerabad,
Hyderabad – 500 020
Tel No. : (040)27685555, 27612640
Fax No.: (040) 27611829
E-mail : nabapro_hyd@dataone.in
hyderbad@nabard.org
Opp.Municipal Garden,
Usmanpura
Ahmedabad – 380 013
Tel No. : (079) 27552257-58-59
Fax No.: (079) 27551584
E-mail : ahmedabad@nabard.org
E-5, Arera Colony,
Ravishankar Nagar,Post office
Bittan Market
Bhopal – 462 016
Tel No. : (0755) 2463341, 2463369,
2466695
Fax No.: (0755) 2466188
E-mail : bhopal@nabard.org
NABARD Tower
24, Rajendra Place
New Delhi - 110 125
Tel No. : (011) 41539353, 25818707
Fax No.: (011) 41539187, 41539185
E-mail : delhi@nabard.org

ARUNACHAL PRADESH HIMACHAL PRADESH MAHARASHTRA ORISSA

Bank Tinali, VIP Road,
P.B. No. 133,
Itanagar – 791 111
Arunachal Pradesh
Tel No. : (0360) 2212675, 215967
Fax No.: (0360) 2212675
E-mail : nabardita@sancharnet.in
NABARD Bhavan, Block Number 32
S.D.A. Commercial Complex
Dev Nagar, Kasumpati
Shimla - 171 009
Tel No. : (0177) 2624160, 2622258
Fax No.: (0177) 2622271
E-mail : nabardsm@dataone.in
shimla@nabard.org.
54, Wellesley Road, ‘Ankur’, 2/1,
Shivaji Nagar, Nayapalli Civic Centre,
Pune – 411 005 P. B. No. 179,
Tel No. : (020) 25541439, Bhubaneshwar – 751 015
25542090 Tel No. : (0674) 2553884
Fax No.: (020) 25542250 Fax No.: (0674) 2552019
E-mail : pune@nabard.org E-mail : nabbhu@sancharnet.in
bhubaneswar@nabard.org

ASSAM JAMMU & KASHMIR MANIPUR PUNJAB & HARYANA

G.S.Road, Post Box No.1
Opposite Assam Secretariat Dispur
Guwahati - 781 006
Tel No. : (0361) 2235661,
2238013/14
Fax No. : (0361) 2235657
E-mail : guwahati@nabard.org
IVth Floor, B-II, South Block,
Bahu Plaza, Rail Head Complex,
Post Bag No. 2, Jammu-180012,
Tel No. : (0191) 2472355, 2472287
Fax No.: (0191) 2472337
E-mail : nabjam@sancharnet.in
89/686, Lalambung,
RIMS Road, Lamphelpat,
Imphal – 795 004, Manipur
Tel No. : (0385) 2416192,
2410706
Fax No. : (0385)2416191
E-mail : nbimphal4@sancharnet.in
Plot No. 3, Sector 34-A,
Post Box No. 7,
Chandigarh – 160 022
Tel No. : (0172)5046700, 5071401
Fax No.: (0172) 5046702
E-mail : nabard1@sancharnet.in

BIHAR JHARKHAND MEGHALAYA RAJASTHAN

Maurya Lok Complex, Block ‘B’,
4th & 5th floor, Dak Bunglow Road,
Post Box No.178,
Patna – 800 001
Tel No. : (0612) 2223985
Fax No.: (0612) 2238424
E-mail : Pat_nab@dataone.in
patna@nabard.org
Opp. Adivasi College Hostel
Karamtoli Road
Ranchi - 834 001
Tel No. : (0651) 2361107
Fax No. : (0651) 2361108
E-mail : nabardjh@dataone.in
Dipu Cottage, 3, Nehru Place,
Upper Lachumiere, Tonk Road,
Shillong – 793 001 Post Bag No.104,
Tel No. : (0364) 2501518 Jaipur – 302 015
Fax No.: (0364) 2227463 Tel No. : (0141) 2740821
E-mail : nabsh@sancharnet.in Fax No.: (0141) 2742161
nabard_shg@dataone.in E-mail : Jaipur@nabard.org

CHHATTISGARH KARNATAKA MIZORAM SIKKIM

Pithalia Complex, K.K. Road
Fafadih
Raipur - 492 009
Tel No. (0771) 2888499
Fax No. (0771) 2884992
E-mail nab_rpr@dataone.in
raipur@nabard.org
113/1, Jeevan Prakash Annexe,
J.C. Road, P. B. No.29,
Bangalore – 560 002
Tel No. : (080) 22225241/44
Fax No.: (080) 22222148
E-mail : nabbng@bgl.vsnl.net.in
Ramhlun Road Om Nivas, Church Road,
Bawngkawan Post Box No.46,
Aizwal - 796 014 Gangtok –737 101
Tel No. : (0389) 2346119, 2343428 Tel No. : (03592)203015, 204173
Fax No. : (0389) 2340815 Fax No.: (03592) 204062
E-mail : aizawl@nabard.org E-mail : nabard_gtk@dataone.in
gangtok@nabard.org

GOA KERALA NAGALAND TAMIL NADU

Third floor, Nizari Bhavan,
Menezes Braganza Road,
Panaji – 403 001.
Tel No. : (0832) 2220490,
2432967,
Fax No.: (0832) 2223429
E-mail : panaji@nabard.org
Punnen Road, Statue,
P. B. No. 202
Thiruvananthapuram – 695 039
Tel No. : (0471) 2323846,
2323590, 2323859
Fax No.: (0471) 2324358
E-mail : trivandrum@nabard.org
4th Floor, West Wing
Administrative NSCB Bldg.
Khermahal, Circular Road
Dimapur - 797 112
Tel No. : (03862) 227040,
235600, 235601
Fax No. : (03862) 227040
E-mail : dimapur@nabard.org
48, Mahatma Gandhi Road,
Post Box No.6074,
Nungambakkam,
Chennai – 600 034
Tel No. : (044) 28276088 28304444
Fax No.: (044) 28275732
E-mail : nabchn@dataone.in
chennai@nabard.org

133

Add Reg.p65 133 7/14/2009, 3:55 PM

 TRIPURA
Palace Compound (East),
Uzirbari Road, Post Box No.9,
Agartala - 799 001
Tel No. : (0381) 2224125,
2229633,2229644
Fax No.: (0381) 2224125
E-mail : nabagtro@sancharnet.in
BOLPUR
Bolpur Lodge,
Regional Training College,
Bolpur – 731 204,
Birbhum (West Bengal)
Tel No. : (03463) 252812, 254065
Fax No.: (03463) 252295
E-mail : ksh_nabbol@sancharnet.in
ksh_nabprbol@sancharnet.in
HYDERABAD
Zonal Training Centre,
10-1-128, Masab Tank,
Hyderabad – 500 028
Tel No. : (040) 23375007
E-mail : zonal@sancharnet.net
134
Add Reg.p65 134
UTTARAKHAND UTTAR PRADESH WEST BENGAL
113/2, Hotel Sunrise Building 11, Vipin Khand, ‘‘Abhilasha’, 2nd floor
2nd & 3rd Floor Gomti Nagar, 6, Royd Street, Post Box No.9083
Post Bag No.139, Rajpur Road Lucknow - 226 010 Kolkata - 700 016
Dehradun - 248 001 Tel No. : (0522) 2304530, Tel No. : (033) 22552102, 22267943
Tel No. : (0135) 2740230-31 Fax No.: (0522) 2304531 Fax No.: (033) 22494507
Fax No. : (0135) 2748610 E-mail : lucknow@nabard.org E-mail : nabcal@cal.vsnl.net.in
E-mail : dehradun@nabard.org kolkata@nabard.org
nabarddoon@dataone.in
SUB-OFFICE/CELL
PORT BLAIR SRINAGAR CELL
Kannada Sangh Building, Opp. Gate No. 1
Ground Floor,18,Tagore Road, Amar Singh College
Head Post Office,
Gogji Bagh
Port Blair – 744 101
Srinagar - 190 008
Tel No.: (03192) 233308
Fax No.: (03192) 237696 Tel No. : (0194) 2310280
E-mail : nabpbl@sancharnet.in Fax No.: (0194) 2310479
portblair@nabard.org
TRAINING ESTABLISHMENTS
LUCKNOW LUCKNOW
National Bank Staff College, Banker’s Institute of Rural Development,
Sector ‘H’, LDA Colony, Sector ‘H’, L.D.A. Colony,
Kanpur Road, Kanpur Road, Lucknow – 226 012
Lucknow – 226 012 Tel No. : (0522) 2421137, 2421154,
Tel No. : (0522) 2421072 2421055, 2421187
Fax No.: (0522) 2421035 Fax No.: (0522) 2421176, 2421047
E-mail : nbsc@sancharnet.in E-mail : bird@sancharnet.in
bird@bsnl.in
Website : www.birdindia.com
LUCKNOW MANGALORE
National Bank Training Centre, Regional Training College,
Sector D/S, Sitapur Road, Manjusha Building,
Opp. Mandi Samiti, Aliganj, Bejaji Church Road,
Lucknow – 226 020 Near KSRTC Bus Main Stand,
Tel No. : (0522) 2757564, 2757610 Bejaji, Mangalore - 575004.
Fax No.: (0522) 2757566 Tel No. : (0824) 2225836, 2225831
E-mail : nbtc@sify.com Fax No.: (0824) 2225835
E-mail : nabrtcmtr@dataone.in
7/14/2009, 3:55 PM