National Bank for Agriculture and Rural Development is the main regulatory body in the country's rural banking sector and is considered as the peak financial institution providing credit to rural banking organizations. Established on 12th July 1982, NABARD's primary objective is to promote sustainable and equitable agricultural and rural development in India.
NABARD, as a Development Bank, is mandated for providing and regulating credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas, and for matters connected therewith or incidental thereto. NABARD is wholly owned by Government of India. NABARD, with its Head office at Mumbai.
Objectives Of NABARD:-
- Promotion of agricultural and rural development in India : -
NABARD aims to accelerate agricultural production and rural development by providing financial support, promoting institutional development and implementing various schemes.
- Facilitating credit for agriculture :-
It plays a crucial role in channeling credit to the agricultural sector. It provides refinancing facilities to commercial banks, RRBs, and other financial institutions so that they can provide proper loans to farmers.
- Institutional Development : -
It focuses on strengthening and developing rural financial organizations to improve their performance and outreach.
- Promotion of non-agriculture employment opportunities by encouraging the semi-rural and rural people to explore and opt for alternate professions and job options.
Functions of NABARD : -
1) Credit related activities : -
NABARD is involved in providing credit to institutions working in rural areas of the country. NABARD does not provide direct loans to farmers, rather it provides refinancing facilitates to these organizations. The credit facilities are then further divided into three parts :-
- Short term refinance, NABARD provides Co-operative Banks and Regional Rural Banks loans and advances, repayable on demand or on the expiry of fixed periods not exceeding 12 months, by way of refinance for production, marketing and procurement activities. The basic objective of short-term refinance provision is to supplement the resources of banks and to improve credit flow at the ground level.
- Medium term credit facilities, these loans are majorly given for state land development banks with a max tenure of 15 years to RRBS, CBs, SCBs. This includes teraforming and building irrigational facilities.
- NABARD’s long-term refinance lays emphasis on investment credit which leads to capital formation through asset creation and promotes alternate employment opportunities in rural and semi urban areas by supporting to farm and off-farm sector activities.
2) Development Activities :-
NABARD is focused on institution building and development. Establishment of RRBs is a major function of NABARD. All 43 RRBS are financed by NABARD.
NABARD also provides support to SHGs through it's SHG bank linkage program
3) Research and development Fund :-
Financial assistance is provided for research and development of economic and banking activities to rural areas, NABARD sponsors many entrepreneurial development programs.
4) Soft loan assistance fund :-
A fund managed by NABARD which provides low rate of interests on loans. It is collected, managed and distributed to regional banks
5)Regulatory activities : -
Co-operative banks are all regulated and inspected by NABARD. RRBS, SCARBDS, etc have to provide their financial statements to NABARD.
6) RIDF :-
The Rural Infrastructure Development Fund was set up by the government in 1956 for financing ongoing rural infrastructure projects, the fund is currently managed by NABARD with a corpus fund of 40,000 crores.
Performance of NABARD : -
- As of the year 2022-23, NABARD provides a total of 158905 crores as short term refinancing to coop. banks and RRBs
- 1,07,014 crores is the amount allocated by NABARD for long term financing.
- Total assets of NABARD have increased by a total of 8,000 crores.
- IT has a growth rate of 13.99%
