INTRODUCTION TO NABARD:

Another landmark in respect of rural credit in recent years is the setting

up of the National Bank for Agricultural and Rural Development in 12th
July 1982.

From the very beginning, Reserve Bank of India (RBI) was extending the
agricultural credit through state level co-operative banks and land
development banks.

Later on, the Agricultural Refinance Development Corporation (ARDC)

was also set up by RBI in 1963 for meeting the long-term credit
requirement of rural areas.

But after the formation of NABARD, it took over all the agricultural
credit functions of RBI and the refinance functions of ARDC after its
merger with NABARD.

NABARD has an authorised share capital of Rs 500 crore and paid-up

capital of Rs 100 crore which is contributed equally by the RBI and the
Government.

RBI nominates three of its Central Board Directors as a member of the

board of NABARD and a Deputy Governor of RBI is appointed as a
Chairman of NABARD.

One of the most important landmark in respect of rural credit in recent

years is setting up of the National Bank for Agricultural and Rural
Development on 12th July, 1982.

From the very beginning, Reserve Bank of India (RBI) was extending
agricultural credit through state level Co-operative Banks and Land
Development Banks.

1
Lateron, the Agricultural Refinance Development Corporation (ARDC)
was set up by RBI in 1963 for meeting the long-term credit requirements
of rural areas.

But after the formation of NABARD, it took over all agricultural credit
functions of RBI and the refinance functions of ARDC.

One of the most important landmark in respect of rural credit in recent

years is setting up of the National Bank for Agricultural and Rural
Development on 12th July, 1982.

From the very beginning, Reserve Bank of India (RBI) was extending
agricultural credit through state level Co-operative Banks and Land
Development Banks.

One of the most important landmark in respect of rural credit in recent

years is setting up of the National Bank for Agricultural and Rural
Development on 12th July, 1982.

From the very beginning, Reserve Bank of India (RBI) was extending
agricultural credit through state level Co-operative Banks and Land
Development Banks.

NABARD has an authorised share capital of Rs. 500 crore and paid-up
capital of Rs. 100 crore which is contributed equally by the RBI and the
Government.

RBI nominates three of its Central Board Directors as member of the

board of NABARD and a Deputy Governor of RBI is appointed as a
chairman of NABARD.

Lateron, the Agricultural Refinance Development Corporation (ARDC)

was set up by RBI in 1963 for meeting the long-term credit requirements
of rural areas.

But after the formation of NABARD, it took over all agricultural credit
functions of RBI and the refinance functions of ARDC after its merger
with NABARD.
2
NABARD has an authorised share capital of Rs. 500 crore and paid-up
capital of Rs. 100 crore which is contributed equally by the RBI and the
Government.

RBI nominates three of its Central Board Directors as member of the

board of NABARD and a Deputy Governor of RBI is appointed as a
chairman of NABARD.

RBI nominates three of its Central Board Directors as member of the

board of NABARD and a Deputy Governor of RBI is appointed as a
chairman of NABARD.

NABARD has an authorised share capital of Rs. 500 crore and paid-up
capital of Rs. 100 crore which is contributed equally by the RBI and the
Government.

RBI nominates three of its Central Board Directors as member of the

board of NABARD and a Deputy Governor of RBI is appointed as a
chairman of NABARD.

Functions of NABARD:
The following are some of the important functions performed by
NABARD:
 NABARD provides refinancing facilities to Commercial banks,
State co-operative banks, Central Co-operative banks, Regional
rural banks and Land Development banks.

 It provides refinancing to agriculture, small scale industries and

other village and cottage industries by lending to commercial
banks.

 It promotes rural industries, small scale and cottage industries

including tiny sectors by providing loans to commercial and co-
operative banks.
 Special assistance is given by the bank for the promotion of small
scale, cottage and village industries under service area approach.

3
 The bills of commercial and co-operative banks are discounted to
enable them to finance for agricultural operations.

 The bank provides funds to State governments for undertaking

developmental and promotional activities in rural areas.
 In order to promote rural development and to help the weaker
sections, the bank refinances especially regional rural banks which
are set up in backward areas in most of the States.

 Towards long-term loan, the bank is providing loans to institutions

involved in long-term agricultural loan against guarantee of State
government.
 The bank is also financing research and
development of agricultural and rural industries.
 Provides finance for promoting non-form activities and
employment in non-farm sectors for the purpose of reducing rural
unemployment.
 It strengthens the co-operative structure in the States by providing
loans to both State co-operative banks and also to Land
Development Banks.

 It promotes minor irrigation projects by financing State

Government‟s sponsored irrigation projects.

 The bank is undertaking inspection work of Co-operative banks

and Regional rural banks.
 The bank has opened branches at all District headquarters by
which it co-ordinates the District development programmes along
with the district officials.

 The bank also helps in the annual credit plan of the commercial
banks and co-ordinates the activities of commercial and co-
operative banks at the district level.

 During natural calamities, such as droughts, crop failure and

floods, the bank helps by refinancing commercial and cooperative
banks so that the farmers tide over their difficult period.

4
  Ever since the setting up of NABARD, there has been a
considerable increase in the distribution of agricultural credit both
by commercial and co-operative banks.

 NABARD has also strengthened up the working of Regional rural

banks.

Thus, we find that the role of RBI in agricultural finance has been not
only taken over by NABARD but it has been discharging it to the atmost
satisfaction of all the parties concerned.

Other miscellaneous functions of NABARD are as follows:

• Conduct inspections of the RRBs and the co-operative societies,

without any prejudice to the authority of the RBI.

• All the applications for opening a branch by RRBs or co-operative

societies should be forwarded to the RBI through the NABARD.

• Copies of all returns submitted by the RRBs and co-operative

societies to the RBI should also be furnished to the NABARD.

• NABARD is also empowered to obtain any information or

statement from the RRBs and the co-operative societies.

• NABARD should undertake research and training programs. These

comprehensive training programs should be targeted towards
NABARD's own staff and the staff of SCBs and RRBs as well.

The R&D department of NABARD should take the lead in promoting

research concerning problems associated with India's agriculture and
rural development and also other allied aspects. For this purpose the
NABARD has been authorised to maintain and R&D fund out of profits
earned by it every year.

• NABARD is responsible for coordinating with the Government of

India, the Planning Commission, State Governments and other agencies
concerned with the development of rural industrialization.

It is also responsible for ensuring the implementation of various policies

and programs meant for providing finance to the rural industries.

5
Recent Additions to the Functions of NABARD

During recent years, NABARD has extended its functions and made
them more broad based. These additional functions have been
undertaken by NABARD both in the agricultural sectors as well as in the
non-agricultural sector. These functions are;

Agricultural Sector

The additional programmes undertaken by NABARD in the agricultural

sector include;

1) Refining and updating the potental Linked Credit plans and

synthesising them with the service Area plans;

introducing full refinance scheme in districts where such synthesis

has been completed;

2) rationalising and liberalising the eligibility criteria for refinance of

term credit;

3) rationalising interest rate structures;

4) issuing guidelines to banks on new schemes for diversification of

lending for the development of agriculture;

5) introducing Self-Help Groups Scheme for the provision of

institutional credit to weaker sections; and

6) creating a Co-operative Development Fund to strengthen

institutional activities.

Non-Agricultural Sector

1) The programmes initiated in the non-agricultural sectors include;

6
 2) introducing Small Road Transport Scheme under which automatic
refinance is provided to banks for financing vehicles for 158
transporting farm produce and products of village industries for
marketing;

3) providing finance to commercial banks for projects of financing

non-agro small industrial units;

4) helping khadi and village Industries Centres in modifying their

schemes to bring them in conformity with banking norms and
becoming eligible for automatic refinance facility;

5) setting up an Advisory Committee in its office to advise in the

forrmulation of policy to promote non-agricultural sector and to
introduce new schemes;

6) appointing technical experts in non-agricultural sector in its offices

for identifying, formulating and appraising schemes and for
conducting surveys for assessing industrial potential formulating
District Rural Industries project, and;

7) creating Agriculture and Rural Enterprises Incubation Fund .

On the establishment, The National Bank has taken over the entire
undertaking of the Agricultural Refinance and Development
Corporation and has taken over from the Reserve Bank its refinancing
function in relation to the State Cooperative Banks and the Regional
Rural Banks.

This Bank is now the coordinating agency in relation to the Central

Government, Planning Commission, State Government and institutions
of all-India level and State level engaged in the development of small-
scale industries, village and cottage industries, rural crafts, etc., for
giving effect to the various policies and programmes relating to rural
credit.

The Bank will undertake all types of credit functions –

(a) production and marketing credit,

7
(b) loan conversion,

(c) rescheduling of loans,

(d) investment credit (medium term),

(e) other investment credit,

(f) loans to State Government for share capital,

(g) they may make direct loans,

(h) It can also issue guarantees.

The Bank has powers

(a) to coordinate the operations of various institutions engaged in the

field of rural credit,

(b) to act as agent of the Government of Reserve Bank of India, (

c) to provide facilities for dissemination of information and the

promotion of research. There is a special provision for the creation of a
Research and Development Fund to which the banks, annual surplus will
be credited for the first 15 years. The Banks income, profits or gains are
free from taxation.

It took over the functions of the erstwhile Agricultural Credit

Department, Rural Planning and Credit Cell of the Reserve Bank of India
and Agriculture Refinance and Development Corporation.

It subscribed and paid-up capital stands at Rs. 330 crore at the end of
March 1995, 160 contributed by the Central Government and the
Reserve Bank of India in equal proportions at various phases.

NABARD was established for providing credit for promotion of

agriculture, small scale industries, cottage and village industries,

8
handicrafts and other allied economic activities in rural areas with a view
to promoting integrated rural development and securing prosperity of
rural areas.

NABARD as the apex institution, is concerned with all policy planning

and operations in the field of credit for agriculture and other economic
activities in the rural areas.

Its functions are to :

 serve as an apex refinancing agency for institutions providing

investment and production credit for promoting various
development activities in the rural areas;

 take measures towards institution building for improving

absorptive capacity to credit delivery system including monitoring,
formulation of rehabilitation schemes, restructuring of credit
institutions, training of personnel, etc.;

 coordinate rural financing activities of all institutions engaged in

the development work at field level and maintain liaison with
Central/State governments, Reserve Bank of India and other
national institutions concerned with policy formulation and also

 undertake monitoring and evaluation of project refinanced by it.

NABARD provides refinance to the state land development banks, state

cooperative banks, scheduled commercial banks and regional rural
banks, while the ultimate beneficiaries of investment credit can be 161
individuals, partnership concerned companies, state owned corporations
etc. During 1995-96, NABARD sanctioned short-term credit limits
aggregating Rs. 4,750 crores to state co-operative banks for financing
seasonal agricultural operations as compared to Rs. 3,753 crore
sanctioned during 1994-95.

NABARD also disbursed Rs. 665 crore as refinance assistance to

regional rural banks. The total disbursement of NABARD during 1995-
96 to the commercial banks for various purposes was Rs. 842 crore. 17 .

9
Capital source for NABARD
The existing organizations such as Agricultural Credit Department, Rural
Planning Credit Cell of RBI, and Agricultural Refinance and
Development Corporation were taken over by NABARD.

The authorized capital of NABARD was Rs. 500 crores. The subscribed
and paid up capital as of March 2015 is Rs. 5000 crores out of which
Central Government has contributed 4980 Crores and RBI 20 Crores
(source).

In addition to this a loan of Rs. 1,200 crores was granted by RBI. All the
loans granted by RBI to various State Governments and State
Cooperative banks for agriculture were transferred to NABARD.

The NABARD has been recognized as the apex institution for agricultural
finance. As the name suggests, the bank has been set up not only for
agricultural finance, but also for the development of rural areas.

Co-Operative Credit Structure of NABARD:

In order to revamp the co-operative credit structure, the Government
announced a package in January 2006 for revival of Short-term Rural
Co-operation Credit Structure involving financial assistance of Rs 13,596
crore.

NABARD has been designated as the implementing agency for the

purpose. A Department for Cooperative Revival and Reforms has been
set up in NABARD for facilitating the implementation process.

States are required to sign a MoU with NABARD committing to

implement the legal, institutional and other reforms as envisaged in the
revival package.

So far 25 states and 3 UTs have agreed to implement the package; out of
which 17 states have signed MoU with the Government of India and
NABARD.

10
A total sum of Rs 1,073 crore has been released by NABARD as
Government of India‟s share under the package to Andhra Pradesh,
Madhya Pradesh and Haryana.

The Task Force has also submitted its report for revival of Long Term
Cooperatives Credit Structure. Steps have been initiative for
implementing the suggestion given in this report.

This package covers 96 per cent of the primary agricultural cooperative

societies (PACS) and 96 per cent of the central cooperative banks (CCBs)
in the country.

As of November 2010, an amount of Rs 8009.75 crore has been released

by NABARD as Government of India share for recapitalization of 49,983
PACS.

Management of NABARD The management of NABARD is

vested in the Board of Directors consisting of:

 A chairman

 Two directors from amongst experts in rural economics and rural

development, etc

 Three directors out of whom two will be persons with experience in

Co-operative Banking and one with experience in commercial
banking. Three directors from out of the directors of the Reserve
Bank

 Three directors amongst the official of the Central Government

 Two directors amongst the official of the State Government

11
  A managing director, and h. One or more whole time directors if
and when appointed by the Government. The chairman as well as
the Managing Directors will have a five years term whereas each
director‟s term will be 3 years

Sources of Funds

1) NABARD has a share capital of Rs. 100 crores contributed by the

Union and the Reserve Bank on a 50 : 50 basis

2) For its long term operations, NABARD will draw funds from the
Government of India, the World bank and other multilateral and
bilateral agencies and the market.

3) Another source of long term operation will be „National Rural Chit

Fund‟ that NABARD will maintain and to which will be 152
transferred the „National Agricultural Credit (Long term
operations) Fund‟ of the Reserve Bank of India, with further
contributions to the fund every year.

4) For the purpose of converting short-term loans into mediumterm

loans, funds will be drawn from National Rural Credit
(stabilisation) Fund to which will be transferred the National
Agricultural Credit (stabilisation) fund of the Reserve Bank of
India with further contribution made to it every year.

5) For its short term operations, it will draw funds mainly from the
Reserve Bank.

6) A „Research and Development Fund‟ will be created and

maintained through contribution from profits every year.

12
Working of NABARD:

NABARD is playing an important role in augmenting the flow of credit

for the promotion of agriculture, small scale and cottage industries,
handicrafts and other rural crafts and various other allied activities in
rural areas of the country.

NABARD does not help the farmers and other rural people directly
rather it flows the credit to these people through co-operative banks,
commercial banks, RRBs, etc.

It is thus working as an apex body dealing with policy, planning and

other operational aspects of rural credit for the all-round development of
rural economy.

During the last ten years, NABARD played an important role in

developing the rural economy and performed all its various functions
smoothly and efficiently.

Accordingly, the Bank sanctioned short-term credit limits to the extent

of Rs 3,020 crore in 1990-91 for financing seasonal agricultural
operations (at 3 per cent below the bank rate) as against Rs 2,807 crore
in 1989-90.

NABARD also sanctioned medium-term credit limits to the extent of Rs

46 crore in 1989.

During 1990-91, the bank advanced medium term and long term credit
to the extent of Rs 210 crore.

NABARD also pursued its policy for the promotion of investment in

agricultural sector in the less developed and under banked states.

In 1989-90 Rs 737 crore was disbursed in these states. The Bank also
provided refinance assistance for different purposes.

The purpose-wise refinance assistance advanced by NABARD can be

seen from the Table 7.17.

13
Table 7.17 shows that during -1990-91, NABARD sanctioned all total
10,650 schemes which involved its commitment of Rs 2,120 crore.
Moreover, up to the end of March 1991, NABARD along with erstwhile
ARDC sanctioned 89,510 projects for which it made a total commitment
of Rs 18,300 crore.

Purpose-wise, NABARD sanctioned largest number of schemes on minor

irrigation works which has more than 60 per cent (6,750 schemes) of the
total schemes sanctioned in 1990-91 and again on cumulative basis as on
March 1991, about 36,320 schemes, out of total 89,510 schemes, were
sanctioned for minor irrigation works.

Moreover, NABARD has introduced a rehabilitation programme for the

weak Central Co-operative Banks (CCBs) and State Co-operative Banks
(SCBs) of the country. As on June 30, 1988, about 175 CCBs and 7 SCBs
were covered under this rehabilitation programme.

In order to promote integrated rural development and also to attain

prosperity of rural areas, NABARD also advanced financial assistance to
76 RRBs for setting up or strengthening their Technical Monitoring and
Evaluation (TME) cells. Besides, about 13 SLDBs and 2 SCBs got
financial assistance from this fund.

The Government has established a Rural Infrastructural Development

Fund within NABARD from April 1995. The Fund will provide loans to
State Governments and State owned Corporations for completing
ongoing project, relating to medium and minor irrigation, soil

14
conservation watershed management and other forms of rural
infrastructure.

This Rural Infrastructural Development Fund (RIDF) has been set up

with the corpus of Rs2, 000 crore.

With the establishment of RIDF, 2,249 projects with a loan of about Rs

1,827 crore was sanctioned by NABARD to eighteen states. These
projects are expected to create an additional irrigation potential of 15.5
lakh hectares.

Thus, NABARD provides refinance facility to the state land development

banks, state co-operative banks, scheduled commercial banks and
regional rural banks, although the ultimate beneficiaries of investment
credit include individuals, partnership concerns, companies, state owned
corporations etc.

During 1996-97, NABARD sanctioned short-term credit limits

aggregating Rs 789.9 crore (as on September 1996), which consist an
amount of Rs 552.2 crore for seasonal agricultural operations (SAO) and
an amount of Rs 146.68 crore for other seasonal agricultural operation
(SAO) in respect of 103 RRBs.

The outstanding refinance under SAO and other short term limits for
RRBs stood at Rs 833.11 crore as on end-Septembers, 1996.

Again the aggregate sanctions by the National Bank for Agriculture and
Rural Development (NABARD) touched an all time high of Rs 14,000
crore in 1997-98, registering a growth of 17 per cent compared to 1996-
97.

The disbursements by NABARD during the year, including short,

medium and long term, to various agencies were Rs 11,110 crore.

The term credit sanctioned by NABARD to commercial banks, co-

operatives and to the newly set up agricultural development finance
companies was Rs 4,160 crore in 1997-98 compared to Rs 3,801 crore in
the previous year.

15
The sectors which contributed to agricultural production such as minor
irrigation, plantation and horticulture activities absorbed as much as Rs
1,790 crore during the year.

In January 2006, Government announced the package for revival of

Short-Term Rural Cooperative Credit Structure involving financial
assistance of Rs 13,590 crore, NABARD has been designated as the
implementing agency for the purpose.

States are recognised to sign MoU with NABARD committing to

implement the legal, institutional and other reforms as envisaged in the
revival package. So far 21 states have signed MoU with the Government
and NABARD.

Agriculture Debt Waiver and Debt Relief (ADWDR) Scheme 2008:

NABARD is the nodal agency for the implementation of the Agriculture
Debt Waiver and Relief (ADWDR) Scheme 2008 in respect of
cooperative credit institutions and Regional Rural Banks.

NABARD has already released Rs 25,113.92 crore towards debt waiver

and Rs 3,986.02 crore towards Debt Relief Claims as on 31st December
2011.

Thus the total amount of release of fund by NABARD under ADWDR

Scheme as on 31st December 2011 was Rs 29,099.94 crore.

During the last ten years, NABARD played an important role in

developing the rural economy and performed all its functions smoothly
and efficiently.

Accordingly, the Bank sanctioned short-term credit limits to the extent

of Rs. 3,020 crore in 1990-91 for financing seasonal agricultural
operations (at 3 percent below the bank rate) as against Rs. 2,807 crore
in 1989-90.

16
 NABARD also sanctioned medium-term credit limits to the extent of Rs.
46 crore in 1989. During 1990-91, the bank advanced medium-term and
long-term credit to the extent of Rs. 210 crore.

NABARD also pursued its policy for promotion of investment in

agricultural sector in the less-developed and under banked states. In
1989-90 Rs. 737 crore was disbursed in these states. The Bank also
provided refinance assistance for different purposes.

During 1990-91, NABARD sanctioned a total of 10,650 schemes which

involved its commitment of Rs. 2,120 crore. Moreover, upto the end of
March 1991, NABARD along with erstwhile ARDC, sanctioned 89,510
projects for which it made a total commitment of Rs. 18,300 crore.

Purpose wise, NABARD sanctioned largest number of schemes on minor

irrigation works which has more than 60 per cent (6,750 schemes) of the
total schemes sanctioned in 1990-91.

Again on cumulative basis as in March 1991, about 36,320 schemes, out

of a total of 89,510 schemes, were sanctioned for minor irrigation works.

Moreover, NABARD has introduced a rehabilitation programme for the

weak Central Co-operative Banks (CCBs) and State Co-operative Banks
(SCBs) of the country. As on June 30,1988, about 175 CCBs and 7 SCBs
were covered under this rehabilitation programme.

In order to promote integrated rural development and also to attain

prosperity of rural areas, NABARD also advanced financial assistance to
76 RRBs for setting up or strengthening their Technical Monitoring and
Evaluation (TME) cells. Besides, about 13 SLDBs and 2 SCBs got
financial assistance from this fund.

The Government has established a Rural Infrastructural Development

Fund within NABARD from April 1995.

The Fund will provide loans to State Governments and State owned
corporations for completing ongoing projects, relating to medium and
minor irrigation, soil conservation, watershed management and other
forms of rural infrastructure.

17
This Rural Infrastructural Development Fund (RIDF) has been set up
with a corpus of Rs. 2,000 crore. With the establishment of RIDF, 2,249
projects with a loan of about Rs. 1,827 crore could be sanctioned by
NABARD to eighteen states.

These projects are expected to create an additional irrigation potential of

15.5 lakh hectares. RIDFs commulative sanctions and disbursements
under various tranches of RIDF stood at Rs. 99,654 crores and Rs.
62,824 crores upto Dec., 2009.

Thus, NABARD provides refinance facility to the state land development

banks, state co-operative banks, scheduled commercial banks and
regional rural banks.

Although the ultimate beneficiaries of investment credit include

individuals, partnership concerns, companies, state owned corporations
etc.

During 1996-97, NABARD sanctioned short-term credit limits

aggregating Rs. 789.9 crore (as on September 1996), which consist an
amount of Rs. 552.2 crore for seasonal agricultural operations (SAO) and
an amount of Rs. 146.68 crore for other seasonal agricultural operation
(SAO) in respect of 103 RRBs.

The outstanding refinance under SAO and other short-term limits for
RRBs stood at Rs. 833.11 crore as on end-September, 1996

. During 2008-09 NABARD sanctioned Rs. 24,962 crores for seasonal

agricultural operation (SAO).

Again the aggregate sanctions by NABARD touched an all-time high of

Rs. 14,000 crore in 1997-98, registering a growth of 17 per cent
compared to 1996-97.

The disbursements by NABARD during the year, including short,

medium and long-term, to various agencies, was Rs. 11,110 crore.

The term credit sanctioned by NABARD to commercial banks, co-

operatives and to the newly set up agricultural development finance

18
companies was Rs. 4,160 crore in 1997-98 compared to Rs. 3,801 crore
in the previous year.

The sectors which contributed to agricultural production such as minor

irrigation, plantation and horticulture activities absorbed as much as Rs.
1,790 crore during the year.

In January 2006, the Government announced a package for the revival

of Short-Term Rural Co-operative Credit Structure involving financial
assistance of Rs. 13,596 crore. NABARD has been designated as the
implementing agency for the purpose.

States are required to sign MOU with NABARD committing to

implement the legal, institutional and other reforms as envisaged in the
revival package.

So far 21 states have signed MOU with the Government and NABARD.

During 2008-09, NABARD sanctioned total credit limits aggregating Rs.

24,962 crores as against Rs. 18,689 crores during 2007-08 for various
short-term and medium purposes to SCBs and RCBs and long-term
loans to the State Governments.

Management of NABARD:

NABARD is managed by a management board. The appointment of

management board is made by the Indian Government, as per the advice
of Reserve Bank,

Besides the President and managing director there are two such
directors who are experts in rural economics and development.

Moreover, three directors from among the Reserve Bank directors, three
directors nominated Indian government and two directors from state
government are included.

One of the deputies Governors of Reserve Bank holds the post of

Chairman of NABARD. There are 15 members in the managing
committee of NABARD.

19
Agri-Clinic and Agri-Business Schemes of NABARD:
In the mean time, NABARD has already decided to launch its agri-clinic
and agribusiness centre scheme with an aim to strengthen the transfer of
technology for generating employment in agri and allied sector.

The concept of agri-clinic is envisaged to provide export services and

counseling to farmers on cropping practices, technology dissemination,
crop protection from pests and prices of crops in the market.

The objectives of both agri-clinic and agri-business centres are to

supplement the efforts of the government‟s extension services to make
available supplementary sources of input supply and services to needy
farmers.

The scheme has been aimed at providing gainful employment to

agriculture graduates (those youths acquiring knowledge in agriculture
and on the lookout for scope) in new emerging areas in agriculture and
allied sectors.

The scheme is open to all agricultural graduates in subjects like

horticulture, animal husbandry, fishery, dairy, veterinary, poultry
farming, pisciculture and other allied activities.

According to NABARD, the salient feature of the agri-clinic and

agribusiness centres include 100 per cent refinance support to banks and
automatic refinance facility up-to Rs 15 lakh.

If in case, the prospective borrowers are not able to provide the required
money, the same can be supported out of the soft loan “margin money
assistance fund” of the NABARD, subject to maximum cap of 50 per cent
of the margin prescribed by banks.

20
Such loans to banks will be interest free, but banks may charge service
charges at three per cent per annum.

The project can be taken up by the agriculture graduates either

individually or on group basis and the ceiling for the cost of the project
by individual is Rs 10 lakh and by group is Rs 50 lakh, as fixed by
NABARD.

Role of NABARD
The establishment of NABARD on July 12, 1982, marked a land mark in
the development of Indian agriculture in general and warehousing in
particular. It holds out a new hope for the rapid development of
warehousing in the states.
In view of the pronounced inadequacies of owned capacities of the State
warehousing Corporations and the Consequential adverse effect on the
growth of post-harvest agricultural infrastructure, the NABARD can
almost play a historical role in pushing up scientific public warehousing
efforts in the country.

Instead of toeing the conventional line, it must assume a positive role in

providing credit stimulus as well as credits for the construction of new
godowns to various State Warehousing
It can and should provide credit stimulus to State Warehousing
Corporations to increase their owned capacities.
Earlier, when no bank finance was available for storage, there was
hardly any question of credit stimulus in the field.
The ARRC provided it in a limited way; but the NABARD can provide
credit stimulus in a big way indeed. In so far as the provision of
investment credits for storage is concerned, the NABARD can resort to

21
the open money market and float debentures for the purpose, even if it
does not get concessional IDA credits.
It is already a priority sectors finance and it would not at all be a
problem for Government to guarantee the debentures. Economic
assistance in the field can also be availed of from the International
Agricultural Development Fund, the FAO, the Kredinstalt, the Asian
Development Bank and the EEC – Even if no international aid or loan is
available, the NABARD can mobilise adequate resources for storage
finance within the country itself.
Selling credit is an art and that too, not necessarily at the expense of the
borrowers. The borrowing institutions have to be taught proper
techniques for the formulation of viable project reports. The NABARD
will have to take an initiative for this purpose, and develop a number of
modalities for project formulation which are suitable for different
regions in the country with due regard to topographical and 163
ecological variations.
This is indeed badly needed to match the willingness of the borrowing
agencies to go in for investment credit for storage.
The provision of long-term credit for storage on the basis of properly
formulated project reports necessarily implies a large amount of project
discipline in the disbursement as well as a proper utilisation of credit.
Appropriate technical consultancies will have to be made available to
the beneficiaries by the NABARD so as to achieve an optimum
productivity for its lendings.
These consultancies should be made available on a regular basis for
purposes of project implementation as well as for the evaluation of the
on-going projects. The NABARD will have to equip itself with the
necessary technical staff, which may be a charge on the various projects
on a pro rata basis.

22
As income generation from the newly – created assets in the shape of
godowns is an important determinant of the total repayment schedule of
the borrowed loans, this may provide an impulse to the borrowing
warehousing corporations to rationalise and modernize their storage
charges structure.
The adoption of economically appropriate tariff structure has to be an
essential ingredient of any storage project financed by the NABARD. For
purposes of project execution and appropriate funds, materials, time and
personal management, the NABARD may insist on the provision of
suitable managerial cadres in the corporations at the base, 164
intermediate and top levels.
This may be done in consultation with the central warehousing
corporation18 . This chapter helps to understand the rural development
institutions and the objectives, functions, need and role of NABARD.

Achievements of NABARD:
The NABARD is an apex institution in the organised rural credit
structure.

It plays an important role in reducing regional disparities and helps

small farmers, marginal farmers and the weaker sections of the society.

It channelizes its refinance facilities for agricultural and rural

development in the country through major financial intermediaries like
SCBs, SLDBs, RRBs, commercial banks, etc.

1. Short Term Credit:

During 2002-03, it sanctioned Rs.8,764 crores as short term credit to
SCBs and RRBs for financing seasonal agricultural operations,

23
marketing of crops, purchase and distribution of fertilisers, and working
capital requirements of cooperative sugar factories.

2. Medium Term Credit:

The NABARD sanctioned Rs.496 crores in 2002-03 as medium term
credit to SCBs and RRBs for approved agricultural purposes.

3. Long Term Credit:

The NABARD provides long term loans not exceeding 20 years to State
Governments to enable them to contribute to the share capital of the
cooperative credit institutions.

In 2002-03 it sanctioned Rs.62 crores to State Governments for this

purposes.

4. Schematic Lending:
The NABARD provides refinance facilities relating to minor irrigation,
land development, farm mechanisation, plantation, horticulture, poultry,
sheep breeding, piggery, fisheries, dairy development, storage, market
yards, IRDP, etc.

5. Assistance to Non-Farm Sector:

The NABARD provides financial assistance to the non-farm sector. The
ceiling on individual loans under Composite Loan Scheme is Rs.50,000
and under Integrated Loan Scheme Rs.7.5 lakhs to enable the financing
banks to meet the credit requirements of entrepreneurs for setting up
cottage, tiny, village and small scale industries.

Further, State Cooperative Banks have been permitted to get refinance

on an automatic basis from the NABARD through CCBs for financing
industrial cooperative societies up to Rs. 7.5 lakhs. The Integrated Loan

24
Scheme has also been extended to Land Development Banks for
financing non-farm activities up to Rs. 7.5 lakhs.

SCBs have been permitted to draw refinance on automatic basis for loans
to industrial cooperative Societies for modernisation of existing units up
to Rs. 7.5 lakhs.

With the introduction of Swarnajayanti Gram Swarozgar Yojna from

April 1999 in rural areas, the NABARD provides refinance to commercial
banks for loans extended by them under the scheme.

A wide spectrum of activities covering agricultural allied activities,

industries, services and business that are bankable and viable are eligible
for refinance.

6. Other Types of Assistance:

The NABARD has started the following types of assistance recently:

(a) It undertakes on a modest scale co-financing/direct financing of hi-

tech and other special projects.

(b) Beginning 1995-96, it has started sanctioning a separate Short Term

(Seasonal Agricultural Operations) Credit limit to each of the
SCBs/RRBs operating in the 114 identified districts in the country.

(c) To step up credit flow to weaker sections including SCs/STs, the

NABARD has earmarked a sum of Rs. 150 crores for refinance under the
“SC/ST Action Plan” for allocation among commercial and cooperative
banks. The level of refinance is 100 per cent.

25
7. Institutional Development:
One of its important function is institutional development. In addition to
inspection of cooperative banks and RRBs, it helps in their
rehabilitation, reorganisation and re-establishment.

8. Cooperative Development Fund (CDF):

NABARD set up CDF in 1993 for strengthening the cooperative credit
institutions in the areas of organisational structure, human resource
development, resource mobilisation, recovery position, etc.

The assistance is provided to SCBs, CCBs, etc. by way of a grant or a soft

loan or both. At the end of March 2003, cumulative loans sanctioned
from CDF amounted to Rs. 65 crores.

9. Rural Infrastructure Development Fund (RIDF):

KIDF-I was set up in 1995-96 with a corpus of Rs. 2,000 crores for
providing funds to State Governments and State owned corporations to
enable them to complete various types of rural infrastructure projects.
This scheme had been continued in subsequent years as RIDP-II with
Rs.2,500 crores in 1996-97, RIDF-III with Rs. 2,500 crores in 1997-98,
RIDF-IV with Rs. 3,000 crores in 1998- 99, RIDF-V with Rs. 3,500
crores in 1999-2000, RIDF-VI with Rs. 4,500 crores in 2000-01, RIDF-
VIl with Rs. 5,000 crores in 2001-02, RIDF-VIII with Rs. 5,500 crores in
2002-03 and RIDF-IX with Rs. 5,500 crores in 2003-04.

The amount mobilised under various RIDF schemes amounted to Rs.

16,145 crores as at ending March 2002. The cumulative sanctions of
loans under RIDF were Rs. 29,475 crores as at 31 March, 2003.

26
10. Memorandum of Understandings (MOUs):
The NABARD signs MOUs with the‟ Cooperative banks and the
concerned State Government for revamping and improving the
cooperative credit structure. Similar MOUs exist between the RRBs and
the sponsor banks.

11. Research and Development:

It has been providing financial assistance for research and training to the
staff of rural banking structure out of its R & D Fund and for
strengthening the technical, monitoring, and evaluation cells of RRBs.

12. Improving storage facilities for agricultural commodities

In the country, It has also promoted the export of agricultural
commodities which include vegetables and fruits.

It has played a supplementary role in sustaining Green Revolution in the

country.
White Revolution and Blue Revolution in the form of increased milk
production and fisheries have also been contributed by the sustained
effortts of NABARD.

India stands the top most country in the world in production of dairy
milk.

Rural Infrastructure Development Fund (RIDF):

An important development in the area of rural infrastructure finance has

been the creation of the Rural Infrastructure Development Fund (RIDF)
in 1995-96 in NABARD with a corpus of Rs. 2,000 crore to provide funds
to state governments and state owned corporations, so as to enable them
to complete various types of rural infrastructure projects.

Initially there have been five RIDFs (RIDF-I to RIDF-V) with a total
corpus of Rs. 13,500 crore.

27
The funds for RIDF are mobilised from domestic commercial banks, on
the basis of shortfall in their priority sector advances vis-a-vis the
stipulated targets.

The cumulative sanctions and disbursements out of RIDF amounted to

Rs. 12109.33 crore and Rs. 4639.48 crore respectively at the end of
November 1999. Analysis of trends in utilisation of RIDF at the state
level has revealed considerable shortfall vis-a-vis sanctions.

There have, however, been interstate variations in this regard. In some

states, the utilisation has been poor mainly due to inadequacy of own
funds to supplement the provisions under RIDF.

In other cases, there have been a wide range of factors which

contributed to the relatively poor utilisation of funds.

In order to enable the states to enhance utilisation, the Union Budget for
1999-2000 has widened the scope of RIDF so as to include lending
towards Gram Panchayats, Self Help Groups and other eligible
institutions for implementing rural infrastructure projects.

Thus, the successive Union Budgets have enhanced allocations to the

RIDF corpus and extended the scope of the Fund

. The Union Budget for 2001-02 announced the setting up of RIDF-VII

with a corpus of Rs. 5,000 crore.

At the end of November 2001, the total corpus of RIDF under tranches I
to VII amounted to Rs. 23,000 crore.

The contribution to RIDF is received by NABARD from Indian scheduled

commercial banks against their shortfall in priority sector/agricultural
lending during the preceding year.

Total sanctions and disbursements under various tranches of RIDF

amounted to Rs. 20,344 crore and Rs. 10,409 crore respectively as on
November 30, 2001.

Again in February 2002, NABARD has sanctioned Rs. 713.94 crore in

loans under RIDF- VII for creation of infrastructure in 12 states.

28
In the subsequent budgets, the allocation on RIDF was enhanced.

In 2008-09 budget, the allocation on RIDF-XIV was enhanced by 14 per

cent, i.e., to Rs. 14,000 crore with a separate window for the construction
of rural roads with a corpus of Rs. 4,000 crores.

Refinancing of Industries in Rural Areas

The NABARD provides refinance to all small, village and cottage

industries in rural areas.

Facilities for Rearrangement In the event of changes and rearrangement

of credits, when there are natural calamities like drought and famine
army as enemy operations etc.,

The NABARD provides refinance to State Co-operative Banks and

Regional Rural Banks for a period not exceeding 7 years –

NABARD also provides these facilities to provide loans to artisans, small

industries, etc.

NABARD provides refinance to the state land development banks, state

cooperative banks, scheduled commercial banks and regional rural
banks, while the ultimate beneficiaries of investment credit can be 161
individuals, partnership concerned companies, state owned corporations
etc. During 1995-96,

NABARD sanctioned short-term credit limits aggregating Rs. 4,750

crores to state co-operative banks for financing seasonal agricultural
operations as compared to Rs. 3,753 crore sanctioned during 1994-95.
NABARD also disbursed Rs. 665 crore as refinance assistance to regional
rural banks. The total disbursement of NABARD during 1995-96 to the
commercial banks for various purposes was Rs. 842 crore.

29
Developmental Functions The following development functions are
performed by NABARD –

1) Co-ordination of rural credit institutions; ii. institutions building

for the improvement of capacity of credit delivery system; 155
2) Developing specialisation for solving the problems relating to
agriculture and rural development efforts;
3) Performing agency functions on behalf of the Government and the
Reserve Bank for monitoring and evaluating the work in
agricultural related activities;
4) Providing facilities for research in agricultural and rural
development activities out of its Research and Development fund.
The training facilities are provided in the field of rural banking,
agriculture and rural development through Bankers of „Rural
Development Institute and National Bank staff colleges at
Lucknow, Bhopal, and Mangalore and college of Agricultural
Banking at Pune;
5) Disseminating information regarding, rural banking and
development;
6) Helping the State Government in subscribing to the Share capital
to State Co-operative banks;
7) Providing direct credit in cases, approved by the Government of
India, connected with agriculture and rural development; and
maintaining an Easy Credit Aid Fund out of its profits so that
entrepreneurs getting refinance facilities for village, cottage and
small industries may be provided margin money.
8) This is interest free and is recovered in annual instalments after
the loan has been fully repaid.

30
Regulatory Functions

The following regulatory functions are performed by the NABARD:-

1) It undertakes inspection of regional rural banks and of Cooperative

banks except the primary agricultural credit societies, apex co-
operative marketing federations, state handloom weaving societies
etc.,
2) Applications for opening of a branch by the regional rural bank as
Co-operative bank other than the primary agricultural credit
societies, are to be submitted to the Reserve Bank of India through
the NABARD; and
3) The NABARD is empowered to obtain any information or
statement from the Co-operative banks and the regional rural
banks, that it may deem necessary.

Special Agricultural Credit Plan (SACP):

In order to ensure that the flow of credit to agriculture increases

substantially,

RBI has evolved a scheme since 1994-95 in which they have advised the
banks that they should prepare an annual action plan for disbursement
of credit to agriculture under different heads.

Accordingly, each bank is preparing Special Agricultural Credit Plan

(SACP), segregated into quarterly targets, which is being monitored by
the RBI.

As per guidelines, every year banks should plan for at least 25 per cent
growth in disbursements over the previous year.

31
Views of the Khusro Committee:
The ACRS or Khusro Committee in its Report published in January 1989
pointed out certain weaknesses and made suggestions to improve the
working of NABARD.

Some of these are as under:

 NABARD‟s activities in institutional development are primarily
reactive rather than proactive in nature. It should therefore
undertake a more effective role in institutional development,
particularly with regard to cooperative development. Its role
should be one o( policy planning and review, besides extension
of necessary financial assistance.
 The inspection function of NABARD is not integrated with
refinancing and institutional development function. It should
redefine the purpose and objectives of inspections to facilitate
such integration.
 The training of NABARD‟s staff should be separated from that
of client banks.
 R & D Fund should be used much more aggressively and
imaginatively to identify, evaluate, develop and promote new
and practical initiatives in rural development.
 It has to find resources to meet its client banks‟ demand for
investment loans which it will have to provide in an increasing
measure in the next 10-12 years. If NABARD has to expand its
operations, either its equity base should be strengthened or low
cost borrowings should be resorted to at a concessional rate of
5.5 percent from GOI/RBI.

32
  There is lack of control over NABARD‟s member institutions. It
should be rectified with the help of and in coordination with
RBI.

The Khusro Committee observed,

“If NABARD has to emerge as a strong development bank of rural

regeneration, it has to take certain fresh initiatives.

It should concentrate more on building up of the cooperatives, improve

its functional capabilities in project identification, preparation,
appraisal, and monitoring, forge a better linkage between inspection and
function, pay greater attention to-the non-farm sector and staff training
and extend its network to the district level.

NABARD will have to play its part in open market borrowing also, so
that it could meet its refinance commitments.”

Other Plans of NABARD:

In order to reduce the farmers‟ distress, NABARD has designed a Rs
2,000 crore plan aimed at helping them earn a supplementary income.
As part of the Strategy, a National Milk Plan has been launched in 325
districts across the country with help from National Dairy Development
Board to ensure that every farmer gets a regular daily subsidiary income
to overcome distress during crop failures.

NABARD has also launched an innovative village adoption scheme in

July 2007 for integrated and holistic development of villages. Initially,
NABARD proposes to adopt 400 villages which would become a model
for development and also rope in the lead banks to expand this initiative.

33
It is expected that every year 1,200 villages are expected to be developed
by NABARD and lead banks once this scheme works successfully.

In order to give support to the development of micro finance, NABARD

would be setting up an institution with a corpus of Rs 500 crore in 3
years.

These measures are aimed at alleviating the suffering of debt ridden

farmers, some of whom even resort to suicide and ensure a regular
income during adverse situations besides attaining overall development
of villages.

Recent Developments:

In India the biggest risk factors are comprised of weather and climate's
un predictability which impacts arm performance and management.

Extreme weather and climate events such as severe droughts, floods or

temperatures often lead to decline in agricultural production,
particularly in arid and semi-arid zones

In Maharashtra NABARD has decided to use technological

advancements in order to aid farmers in their activates which is to be
financed under the Farmers' Technology Transfer Fund (FTTF) which
will be launched jointly by the National Bank for Agricultural and Rural
Development (NABARD) and India Meteorological Department (IMD).

This is to aid about 50,000 farmers in ten districts of Maharashtra are

expected to benefit from a pilot project which will disseminate weather-
related inputs using Information and Communication Technology (ICT)
to improve land productivity and boost crop output.

34
The aim of the project is to create awareness increasing farmers'
knowhow and capacity building for enhanced income through adoption
of new technologies, reduction of costs, getting better price for produce
and securing technical inputs for crop management.

The information will be accessible to the farmers in SMS form in the

pilot initiative and the 50,000 farmers from 500 farmers' clubs
promoted by NABARD will be provided weather-related information and
crop advisories through SMS.

This initiative is to promote a two-way communication between

agriculture experts and grassroots level communities which will be
envisaged in a three year plan using ICT tools for providing need-based
agro-meteorological advisory services to ryots in the context of local
farming and culture.

The project will mainly focus on ICT initiative for improving productivity
of land and production of crop to augment income of farmers, the IMD's
Agri-Met field units will provide weather and crop-related advisories
right from sowing to harvesting operations with technical expertise.

In the district of Tiruchirapalli in Tamil Nadu NABARD has sanctioned

over Rs.4 crore for developing rural infrastructure in the district.

The Rural Infrastructure Development Fund (RIDF) tranche XVIII it has

sanctioned Rs.1.71 crore for strengthening and laying black-topped roads
at Kattuputhur, Lalgudi, Mettupalayam, Musiri, Pullambadi,
Thathaiangarpets.

Added to that t has sanctioned Rs.51 lakh for construction of sanitary

complexes at various districts .The objective is to strengthen the market
infrastructure and prevent post-harvest losses of farmers, it has

35
supported construction of rural warehouses of 100 metric tonnes (MT)
each at 12 Primary Agricultural Cooperative Societies, 2,000-MT
warehouse at Thuvarankurichi regulated market, and 25-MT cold
storage facility at Ariyalur regulated market at a cost of Rs.1.25 crore,
Rs.1.14 crore and Rs.30.21 lakh respectively.

Spokespersons from NABARD strongly believe that India's decision not

allowing Bt technology in crops other than than cotton despite
certification from leading international bodies regarding the safety
of genetically modified (GM) plant technology is a huge progress
opportunity that is being missed out by India..

The main reason being for Bt crops not being approved in India is the
opposition by certain states such as Bihar, Kerala, Chhattisgarh, Madhya
Pradesh, West Bengal and Karnataka where as high productivity states
such as Gujrat and Punjab.

The reason for opposition could be the health hazards it may cause but
GM plant technology has been approved by European Union (EU) as
well UN's Food and Agricultural Organisation

NABARD chose Polaris Financial Technology Company and Intellect TM

Lending Solution comprising Loan Management and Accounting
modules to be the bank's new Centralized Loan Management and
Accounting System (CLMAS).

This management system will allow NABARD to tap into the Polaris's
Intellect Loan Origination, Intellect Loan Management, Intellect GL
(Accounting, Budgeting, MIS), Training, Handholding and Helpdesk
services to centralize decision making and attain access to centralized
accounting across the bank's head office and regional offices.

36
CLMAS is an important part of the agenda which the Re-positioning
Department of NABARD initiated to propagate several innovative
measures.

The objective was automation of financial transactions online and

accounting at enterprise level, generation of Trial Balance on daily basis
and avoidance of reconciliation of various accounts, centralized
repository of data and an efficient Management Information System

Progress of NABARD:
There has come a change in the financial atmosphere of the country with
the establishment of NABARD.

It has positively attempted to lessen the regional inequalities through

regional rural banks, co-operative banks and commercial banks working
in country.

The progress of NABARD can be made clear by the following

captions:

(1) Village Development Programme:

In the year 2007-08, Village Development Programme was implemented

in 916 villages of 421 districts of 25 states of the country. The Purpose of
this programme is to accelerate the speed of social and economic
development in villages in such a way that the available resources may be
properly used.

(2) Farm Innovation:

In the Year 2008-09,14 new proposal were accepted with the purpose to
bring innovation in the fields of rural agricultural development. For this
a provision of Rs. 181 lakhs was kept.

With the acceptance of this new proposal, the total of proposal of this
sector reached upto sixty one. Sixteen out of them have been completed.

37
(3) Farmer’s Technology Fund:

Farmer‟s Technology Funds was started to provide information related

agricultural technology to the farmers. So far, 38,215 Kisan Clubs have
been established by adding 87,724 villages of 581 districts. The farmers
of these clubs are provided with the knowledge of new technology in
Agricultural Science Centres, Agriculture Research Institutes,
Agriculture University etc. so that they may enhance their agricultural
productivity.

(4) Umbrella Programme on National Resource Management:

In the year 2008-09, an amount of Rs. 451 lakh was provided for the
management of natural resources in Bihar, Gujarat, Maharashtra and
Tamil Nadu, from which Rs. 260 lakhs has already been allotted this
year.

(5) Government Sponsored Schemes:

Various government sponsored schemes have been started by NABARD

in which they have succeeded to a great extent.

The progresses of some of the important schemes are as

follows:

(a)Cold Storage:

Through NABARD so far 1,578 cold storages have been established in the
country‟s different states with an investment of Rs. 2,76,090 lakh. Uttar
Pradesh tops this list with 775 units; Gujarat holds the 2nd position with
107 units.

Accordingly, 103 units in Punjab and 78 units in Bihar have been

established. Rs. 41,234 lakhs has been accepted as yet for the payment to
the entrepreneurs of these units.

38
(b) Rural Godowns:

The building of Rural Godowns has been developed for the projection of
farmers‟ produce. So far with the help of NABARD and through different
entrepreneurs 13,019 rural godowns have been constructed in the
country by investing Rs. 2,47,686 lakh.

For this 35,508 lakh has been provided as subsidy too. Gujarat has the
maximum numbers of godowns of this kind which are used regularly.

Accordingly, 1913 rural godown in Karnataka, 1,214 in Punjab, 773 in

Andhra Pradesh, 555 in Rajasthan, 2,565 in West Bengal, 296 in
Haryana, 231 in Chhattisgarh, 259 in Orissa, 209 in U.P., 164 in Assam,
43 in Bihar and 88 in Uttrakhand have been brought in existence.

(c) Onion Godowns:

Rs. 988 lakh has been released so far for construction of 213 godowns for
the storage of onions in the country‟s four onion-producing states-
Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh. The total
capacity of these godowns for storing onion is 34,691 tons.

NABARD has also displayed a remarkable progress in the fields of

development of dairies, animal husbandry, marketing, etc.

Working of Recent Schemes Related to Rural Credit:

In recent times, the Government of India has introduced few new

schemes related to the supply of rural credit so as to benefit the rural
economy of the country-

Though rural financial institutions have played a leading role in the

provision of rural credit, the rural sector, especially the agricultural
sector, is still in need of more credit.

The National Bank for Agricultural and Rural Development (NABARD),

which is an apex organisation in the field of rural credit, has taken
several initiatives in this regard.

39
Notable developments that have taken place in recent years are the
introduction of Kisan Credit Card (KCC) and the linkage of the Self Help
Groups (SHGs) with banks.

As against the target of introduction of 20 lakh KCCs indicated in the

Union Budget for 1999-2000, the actual number of KCCs issued by the
public sector banks in the country was 9.1 lakh during April-December
1999.

The amount sanctioned through these cards was Rs. 2,377 crore, which
worked out to Rs. 26,161 per card.

At the end of December, 2000, the cumulative achievement in respect of

issue of KCCs and the amount of loan sanctioned were Rs. 108.42 lakh
and Rs. 21,222 crore respectively.

Shareholding in NABARD / Ownership of NABARD As on 31st

March 2014

Initially, RBI held 72.5 per cent of equity in NABARD amounting to Rs

1450 crore.

The remaining shareholding of Rs 550 crore was with the Government of

India.

The Union Cabinet in May 2008 approved the Reserve Bank's proposal
to transfer its share holding in NABARD to the Government of India.

Accordingly, the Government of India issued a notification on Sep-16-

2010 prescribing the proportion of subscription/ownership of
Government of India and Reserve Bank in NABARD as 99 per cent and 1
per cent respectively.

In September, 2013, GoI gave an amount of Rs.700 crore towards Share

Capital.

40
 CONCLUSION

The parliament created the NABARD act and the Apex bank in order to
aid the rural farmers that had long been neglected by the Government.
There was such an imitative to uplift industries and capital market that
these agricultural sectors were being grossly neglected.

Even the apex bank of the country the Reserve Bank of India was so knee
deep in other responsibilities and duties that it could not give adequate
assistance to the rural farmer and their population which mostly
comprised of artisans, small business owners and small other small
enterprises.

The apex rural bank was able to form the relation between credit
deliverance and the agricultural sector.

The rural bank has been successful in creating multiple funds and
schemes in order to aid the rural farmer.

But recent statistics will show that the farmers have lived up to the
confidence instilled in them and are actually creating profit and are now
operating hassle free when it comes to financing their activities.

The statistic will only show that the Rural Bank is doing much better and
is far more efficient to its clientele than most Corporate and other
Financial Institutions hence proving not everything "rural" is backwards.

41