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NABARD: Functions & Responsibilities

January 18, 2024

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Finance is the fuel for any organisation to meet not only financial needs but also an operational one. Every organisation beyond its nature and responsibilities, stands above a substantial capital investment. Organizations take credits from various banks to complete their operational requisites. Despite being a Government or private organization, all of them need capital.

The India Agriculture sector has a keen potential of growth, and that needed a capital investment to rise. RBI is the one that takes control of every disbursement of credit needs of the Agricukture sector till 1980. With the rise in the number of activities and other duties, RBI was not able to draw the required attention towards it. After that, NABARD was formed in 1981 to look after the RBI’s agricultural Finance, small-scale agriculture industries, Cottage, and village industries, crafts, and other local crafts, and linked rural economic activity operations.

National Bank for Agriculture and Rural Development (NABARD) came into existence on 12th July 1982, under Parliament Act –National Bank For Agriculture And Rural Development Act 1981 on the recommendation of B . Sivaraman Committee with a focus primarily on the rural sector of the society. It is the apex bank to provide finance for agriculture and rural development.

Agriculture Sector of India Before NABARD was formed

Before NABARD, the RBI was extending agriculture credit through state-level cooperative and land development banks. In 1963, RBI set up the Agriculture Refinance Development Corporation (ARDC) to meet the long term credit requirement of rural areas. But with NABARD formation, all credit functions of RBI and the refinance functions of ARDC were taken by it and ARDC was merged with it.

NABARD has its headquarters in Mumbai. The authorized share capital is 500 crore and the paid capital is 100 crore which is contributed equally by the RBI and the Government. Deputy Governor of the RBI is appointed as chairman of NABARD and three of its central board directors are nominated as a member of the board of NABARD. The first Chairperson of NABARD was Shri M. Narsimhan and the current Chair Person is Mr. Shaji K V.

Functions of NABARD

NABARD plays a very important role in the upliftment of the rural economy and its overall development. Its functions include-

Building an empowered and financially inclusive rural India through specific goal-oriented departments categorized into three heads – financial, development, and supervision.
Refinance support for buildings and infrastructure.
Providing short, medium, and long-term credit to state cooperative banks, RRBs, and commercial bank for investment in agriculture and other allied activities.
Provide training to handicraft artisans and help them in developing a marketing platform for selling these articles.
Supervise cooperative banks and RRBs’ functioning and help them in integrating to the CBS (core banking solution ) platform – CBS is the networking of branches , enabling customers to operate their accounts and avail banking services from any branch of the bank , regardless of where he/she maintains an account.
Helps the Central government in designing development schemes and their implementation thus helping in the overall development of small scale village and cottage industries, rural crafts and other industries in the unorganized sector.
Receives financial assistance and advisory services from world- leading global organizations and mobilizes resources by issuing bonds and debentures guaranteed by the Central Government.
It also maintains a Research And Development Fund known as RIFD ( Rural Infrastructure Development Fund ) to promote research in agriculture and rural development .

NABARD has contributed to every aspect of rural economy whether it is finance –refinancing short, long term loans, food processing fund, warehouse infrastructure fund, credit facility to marketing federation etc or development – Kisan credit card scheme for farmers, climate- resilient agriculture, RuPay Kisan Cards, umbrella programme on natural resource management etc.

Here is a list of some Credit Faciltiies offered by NABARD to the Farmers or people related to the Agricultural Sector of India.

Some Credit Facilities Provided by NABARD

Rural Infrastructure Development Fund (RIDF)

The RIDF is a program that supports investing money in public agriculture projects. State governments, local village councils (Panchayati Raj Institutions or PRIs), Non-Governmental Organizations (NGOs), Self-Help Groups, and others can get funds from the RIDF for things like long-lasting irrigation, preventing floods, restoring the environment, building remote roads, constructing primary and secondary schools, setting up community clinics, developing village areas, promoting agroforestry, creating agricultural markets or storage buildings, collecting rainwater, expanding watersheds, and building defenses against floods, among other projects.

Kisan Credit Cards

NABARD has developed a plan for a system that issues Kisan Credit Cards to farmers depending on the size of their land. These cards can be used by farmers to purchase agricultural necessities like seeds, fertilizers, pesticides, and more. Farmers can also withdraw cash from these cards for their farming requirements. To participate in this program, farmers need to approach banks affiliated with the scheme.

Micro Credit Innovation Scheme

NABARD’s MCIS programs incorporate different microfinance initiatives to offer affordable and extended financial support to the underserved poor in rural areas. Ensuring long-term access to finance is crucial for these marginalized communities.

Refinance for Rural Housing Facilities Scheme

Only individuals, cooperative society unions, governmental entities, housing boards/improvement trusts, community group bodies, independent agencies and NGOs, and housing finance companies that are registered with the NHB are allowed to undertake housing projects in rural areas. The allocated funds will be used for various purposes, including building new homes, as well as repairing and restoring existing homes. Additionally, the funds can be utilized for projects such as constructing rainwater harvesting structures, hygienic latrines, and other initiatives in rural areas.

Research and Development Fund

The bank established it to gain new insights into agricultural and rural development by conducting in-depth and applied research. The focus is on experimenting with innovative approaches supported by technological and financial studies. This initiative offers training facilities, distributes information, and promotes research in agriculture, rural banking, and agricultural development through studies, techno-economic surveys, and other research activities. Eligible institutions include research institutes, organizations, and entities engaged in action-oriented, applied research. Groups and individuals sponsored by relevant organizations, with the ability to certify proper fund usage and accounting, may qualify for assistance. Typically, private and commercial organizations are not eligible for funding from this initiative.

Swarojgar Credit Card Scheme

The Small Credit Card (SCC) Scheme aims to provide timely funding for small businesses and self-employed individuals, such as artisans, weavers, fishermen, and micro-entrepreneurs. It covers borrowers in metropolitan areas and those in priority industries, supporting income-generating initiatives with components for consumption needs. Activities like fisheries and dairy are also included. The SCC system focuses on short-term credit for self-employment operations, not as an end goal. Importantly, being part of the SCC program doesn’t exclude units from receiving subsidies. Banks can use SCCs to attract borrowers for loan distribution under any plan, subsidized or not.

Farmer’s Club Program

The Farmers’ Club Program is a simple community initiative. Rural bank branches create these clubs with support from NABARD, benefiting both banks and the local population. The main tasks involve helping banks provide loans to members and enhancing the relationship between borrowers and banks.

How to get into NABARD?

NABARD also proves to be a great organization to work in. It recruits eligible candidates through an online examination for various posts: NABARD Grade A in different streams, NABARD Grade B and NABARD Development Assistant. Almost every year NABARD releases the notification for these posts and a large number of candidates await and apply for these posts. We recommend you to stay updated for these notifications through NABARD official website or just stay tuned with us. At ixamBee, you will find every Government Exam update on time.

Conclusion

NABARD is like a helping hand for making villages and farming better in India. It gives money and support for lots of things like building roads, schools, and helping farmers. If you want to be part of this good work, you can try for NABARD exams like Grade A and Grade B. Attaining a position at the National Bank for Agriculture and Rural Development (NABARD) is not just a career milestone but is a remarkable accomplishment as in being able to contribute to the pivotal development of rural economies and the overall growth of the nation.

NABARD Grade A notification 2024 and other NABARD exams are eagerly anticipated, this year. Considering this, feel free to explore ixamBee, where we offer valuable study materials to ensure your preparedness for NABARD exams. Avail yourself of our Online Coaching classes tailored for NABARD Grade A (Agriculture, IT, Legal, Finance), NABARD Grade B, and NABARD Development Assistant, enhancing your readiness for success.

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