Everything About NABARD for IAS Preparation

An important part of IAS exams is knowledge of the government system, the various organizations that have been set up by the government for the welfare of the people. One of the greatest examples of this is the NABARD. Keep reading this blog to know everything about NABARD for your IAS exam preparations.

What is NABARD?

NABARD stands for “National Bank for Agriculture and Rural Development”. With the sole objective of providing rural development credit and the mission of promoting sustainable and equitable agriculture and rural prosperity, it is one of the government-owned institutions with effective credit support linked to the development of institutions, creative initiatives and services.

NABARD is India’s apex financial growth institution. NABARD has its headquarters in Mumbai and 336 district offices, with six training centers and a special cell in Srinagar, India. The core work of NABARD includes planning and activities, lending to the agricultural sector and rural economic activity. It also carries out work to enhance the financial inclusion strategy.The Chief General Manager is the head of the NABARD regional office and the other employees at the headquarters are:

1. Executive Directors
2. Managing Directors
3. Chairperson       

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History of NABARD

The Government of India and the Reserve Bank of India formed a committee to improve rural sector loans after India attained independence. The committee was renamed the All India Rural Credit Survey Committee and was led by Mr. Gorewalla. With the RBI’s rising position, focusing on agricultural finance has been difficult.

A committee was formed in 1981, under the chairmanship of Mr. Sivaraman, to review institutional credit arrangements for agriculture and rural development. NABARD was developed at the suggestion of Mr. Sivaraman. On 12 July 1982, the Sivaraman Committee and the Regulation of the National Bank for Agriculture and Rural Development Act 1981 were established. Other organisations have displaced the present organisation, such as:

• The Agricultural Credit Department and Rural Planning and Credit Cell of Reserve Bank of India
• The Agricultural Refinance and Development Corporation

The authorised capital collection of NABARD was 500 crore and was subsequently improved by the bill passed in Parliament, which is six times more than today’s collection, i.e. 30,000 crores. The government owns the 100 percent paid-up capital share in NABARD, which is 6,700 crores. NABARD is globally recognised by organisations associated with the World Bank and by global development agencies.

By providing financial assistance and advice to people living in rural areas, these organisations and agencies help NABARD optimise the agricultural process. Not only for agricultural finance, but also for rural development, the bank was established.

Roles of National Bank for Agriculture and Rural Development

• It is the highest institution with the authority to deal with all strategy, planning and operational matters relating to the provision of credit for agriculture and other economic activities in rural areas.
• It is based on a refinancing agency pattern for those organizations that offer production and investment credit to fund a variety of rural development programmes and initiatives. These institutions are as follows:
  • Regional rural banks (RRBs)
  • Commercial banks (CBs)
  • Other financial institutions approved by RBI.
  • State co-operative agriculture and rural development banks (SCARDBs),
  • State co-operative banks (SCBs)
• The capacity of the credit system in India, which involves capacity expansion, regulation, the formulation of rehabilitation schemes, the restructuring of credit institutions and staff training, is being improved.
• It concerns the preparation of rural credit financing for all types of institutions engaged in field-level development work, while at the same time maintaining contact with the Government of the State and with the Central Government, as well as with the RBI and other national institutions involved in the formulation of policies and the credit system.
• It also circulates and prepares rural credit plans, annually as required, for all districts in the country.
• It also helps to promote research and training programmes in rural banking in the fields of agriculture and rural development.
• A variety of natural resource conservation programmes are also undertaken in addition to this NABARD, such as territorial development and the watershed development programme.

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Objectives of NABARD

Co-operative banks and municipal banks in these areas pay roughly 50% of the rural credit. It is the responsibility of NABARD to mandate and supervise the activities of the cooperative banks and RRBs. NABARD works primarily to provide the rural credit distribution system with a stable and efficient framework and helps it to take care of the increasing and diverse credit needs of agriculture and rural growth. Thus, the NABARD objectives can be placed under three main heads:

• Credit Function
• Development Function
• Promotional Function

Duties of National Bank for Agriculture and Rural Development

1. NABARD is working to revitalize the rural and agricultural sectors and is setting the basis for rural and social innovation. It plays an important role in framing development initiatives for the rural sector, cottage sector, and small-scale industries of our country. In order to frame better development initiatives for rural and agricultural fields, it reinvests the income received from development expenditure towards research activities.
2. This helped NABARD gain trust among rural communities. NABARD has entered into collaborations with several national and international organizations for rural and agricultural growth and has over 4000 partner organizations that allow it to prepare and introduce rural and social innovation. Some of NABARD’s programmes include:
3. An effort to improve the living conditions of tree-based tribal societies, the SHG Bank Linkage Program,
4. Forming farmers’ clubs to educate and inspire farmers to introduce crop production projects, soil and water conservation programmes,
5. NABARD has consistently retained its status as the biggest taxpayer, with exchequer estimates in the top 50 taxpayers. NABARD carries out and promotes integrated growth for the rural market, along with its linked economies.

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Functions of NABARD

1. NABARD offers refinancing services to national cooperative banks, regional rural banks, and land development banks. Private banks, national co-operative banks.
2. It provides refinancing for agriculture, small-scale manufacturing, and other village and cottage industries, by lending money to commercial banks.
3. By providing loans to commercial and cooperative banks, it funds small-scale, cottage and rural businesses, including small and small sectors.
4. For the growth of the small-scale, cottage and village industries, special assistance under the service area approach is given by the bank.
5. In order to allow them to finance agricultural inputs, cooperative banks and commercial banks’ bills and controls are discounted.
6. As far as long-term loans are concerned, the bank approves loans to institutions engaged in long-term agricultural loans in collaboration with state government guarantees.
7. The bank also provides credit funding in the field of agricultural and rural industry research and development.
8. The policy of the Central Government and the RBI relating to agricultural credit is formulated by the bank.
9. It provides funding for the promotion of non-farming and job programmes in non-farming sectors in order to minimize the rate of rural unemployment.
10. It empowers the cooperative system in the States through the provision of credit loans to state cooperative banks and land development banks.
11. It also promotes some irrigation projects by credit from the state government’s sponsored irrigation projects.
12. The bank also supervised the inspection function of cooperative banks and regional rural banks.
13. At all District headquarters, the bank has opened regional branches through which the bank coordinates the District Development Programs together with the district workers.
14. In addition, the bank assists in the business banks’ annual credit plan and coordinates business and co-usable banks’ exercises at the area level.

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Achievements of NABARD

After the establishment of NABARD, there was a remarkable increase in rural finance and development in the cottage and small-scale industries. During the ’90s, nearly Rs. 4,000 crores were provided as opposed to Rs. 1,200 crores during the’ 80s in order to provide short-term loans.

With the assistance of medium-term financing, nearly Rs. 400 crores were allocated and were mainly optimised by states plagued by natural disasters. More than Rs. 240 crores were accepted as long-term loans for the promotion of cooperative institutions’ share capital.

NABARD also played a diligent role in stabilising the storage facilities of agricultural products in the region. A scientific role has also been played by the export of agricultural commodities, including vegetables and fruits. It also played a significant role in bringing the Green Revolution.

The activities of NABARD have led to the Blue Revolution and the White Revolution in the form of increased production of fish and milk. India ranked in the production of milk stabilizing as the top country in the world.

The work of NABARD in India’s overall development, when all is said to be achieved and explicitly regional and rural, is exceptionally crucial. Although the improvement in horticulture and the country is entirely dependent on the productivity of NABARD, which according to the prerequisites of the country’s economy, carries out its responsibility.

You can refer to IAS books for more information on NABARD and various related topics. Keep checking Leverage Edu for comprehensive study guides and notes for UPSC preparation.