National Bank for Agriculture and Rural Development
The National Bank for Agriculture and Rural Development is an All India Development Financial Institution and an apex Supervisory Body for overall supervision of Regional Rural Banks, State Cooperative Banks and District Central Cooperative Banks in India. It was established under the passed by the Parliament of India. It is by Government of India and functions under the Department of Financial Services under the Ministry of Finance.
History
The importance of institutional credit in boosting rural economy has been clear to the Government of India right from its early stages of planning. Therefore, the Reserve Bank of India at the insistence of the Government of India, constituted a Committee to Review the Arrangements For Institutional Credit for Agriculture and Rural Development to look into these very critical aspects. The Committee was formed on 30 March 1979, under the Chairmanship of Shri B. Sivaraman, former member of the Planning Commission, Government of India.The Committee’s interim report, submitted on 28 November 1979, outlined the need for a new organisational device for providing undivided attention, forceful direction and pointed focus to credit related issues linked with rural development. Its recommendation was the formation of a unique development financial institution which would address these aspirations, and the formation of National Bank for Agriculture and Rural Development was approved by the Parliament through Act 61 of 1981.
NABARD came into existence on 12 July 1982 by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation. It was dedicated to the service of the nation by the late Prime Minister Smt. Indira Gandhi on 5 November 1982. Set up with an initial capital of Rs.100 crore, its paid up capital stood at Rs.14,080 crore as of 31 March 2020. Consequent to the revision in the composition of share capital between the Government of India and RBI, NABARD today is fully owned by the Government of India. The authorized share capital is Rs.30,000 crore.
International Partners
World Bank: International associates of NABARD include World Bank-affiliated organisations and global developmental agencies working in the field of agriculture and rural development. These organisations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimising the agricultural process.UNDP: The United Nations Development Programme and the National Bank for Agriculture and Rural Development signed a Memorandum of Understanding to co-create data-driven innovations in agriculture and food systems to support smallholder farmers. Under this MoU, both organizations will work to improve the lives and livelihoods of smallholder farmers by sharing open-source data for product development, transfer of technology and supporting the framing of agrarian policies.
KfW: Several initiatives are underway to design and implement development projects in India, including the KfW-NABARD Adivasi development programme, the Indo-German watershed development programme, the Indo-German Umbrella Programme for Natural Resource Management, and the NABARD- SDC Rural Innovations Programme. These programs aim to address various challenges faced by rural communities in India.
Women World Banking: In a bid to enhance financial inclusion, the National Bank for Agriculture and Rural Development and Women's World Banking entered into a Memorandum of Understanding to promote the Jan Dhan Plus program through Regional Rural Banks. This collaboration targets increased utilization and adoption of basic financial services amongst the 8.09 crore Jan Dhan account holders, with a specific focus on empowering the 5.45 crore women account holders.
Role
NABARD has been instrumental in grounding rural, social innovations and social enterprises in the rural hinterlands. As of May 2023, NABARD operates at 31 Regional Offices in the country. It has in the process partnered with about 4000 partner organisations in grounding many of the interventions, be it the SHG-Bank Linkage programme, tree-based tribal communities’ livelihoods initiative, the watershed approach in soil and water conservation, increasing crop productivity initiatives through the lead crop initiative or dissemination of information flow to agrarian communities through farmer clubs. Despite all this, it pays huge taxes too, to the national treasury – figuring in the top 50 tax payers consistently. NABARD virtually ploughs back all the profits for development spending. Thus the organisation had developed a huge amount of trust capital in its 3 decades of work with rural communities. NABARD's role could be broadly categorised into three functions:1. Refinancing
NABARD serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas. It co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with the Government of India, state governments, Reserve Bank of India and other national level institutions concerned with policy formulation. It also refinances fund from World Bank and Asian Development Bank to state co-operative agriculture and rural development banks, state co-operative banks, regional rural banks, commercial banks and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations or co-operative societies, production credit is generally given to individuals.2. Banking Supervision
NABARD supervises State Cooperative Banks, District Cooperative Central Banks, and Regional Rural Banks and conducts statutory inspections of these banks. It takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc. It also undertakes monitoring and evaluation of projects refinanced by it.3. Development
NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to lend to self-help groups. Largely because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. By March 2006, 22 lakh SHGs representing 3.3 crore members had to be linked to credit through this programme.NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.