40^th Foundation Day of NABARD

What is NABARD?

• NABARD is a development bank focussing primarily on the rural sector of the country. It is the apex banking institution to provide finance for Agriculture and rural development.
• Its headquarter is located in Mumbai.
• It is responsible for the development of small industries, cottage industries, and any other such village or rural projects.
• It is a statutory body established in 1982 under Parliamentary act-National Bank for Agriculture and Rural Development Act, 1981.

Functions of NABARD

• NABARD’s initiatives are aimed at building an empowered and financially inclusive rural India through specific goal-oriented departments which can be categorized broadly into three heads: Financial, Developmental and Supervision.
• It provides refinance support for building rural infrastructure.
• It prepares district-level credit plans to guide and motivate the banking industry in achieving these targets.
• It supervises Cooperative Banks and Regional Rural Banks (RRBs) and helps them develop sound banking practices and integrate them to the CBS (Core Banking Solution) platform.
• Core Banking Solution (CBS) is the networking of branches, which enables Customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a Branch. He becomes the Bank’s Customer.
• It is involved in designing Union government’s development schemes and their implementation.
• It provides training to handicraft artisans and helps them in developing a marketing platform for selling these articles.
• NABARD has various international partnerships including leading global organizations and World Bank-affiliated institutions that are breaking new ground in the fields of rural development as well as agriculture.
• These international partners play a key consultant’s role in providing advisory services as well as financial assistance designed to ensure uplifting of rural peoples as well as optimization of various agricultural processes.

NABARD (Amendment) Bill, 2017

• The Bill seeks to amend the NABARD Act, 1981 which establishes NABARD by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC).
• The amendment bill seeks to increase the authorised capital of the Bank to 30,000 crore rupees from 5,000 crore rupees.
• Currently the Central government is holding 99.60% share of the bank and the rest is with RBI (0.40%). The capital can be increased further by the government in consultation with the RBI.
• NABARD is responsible for providing and regulating facilities like credit for agricultural and industrial development in the rural areas.
• It provides both direct finance (lending directly to customers) and refinance (lending to financial institutions to provide loans to customers)

Direct Finance by NABARD

• Loans for Food Parks and Food Processing Units in Designated Food Parks
• Loans to Warehouses, Cold Storage and Cold Chain Infrastructure
• Rural Infrastructure Development Fund
• Long Term Irrigation Fund
• Alternative Investment Fund
• State Cooperative Banks and Regional Rural Banks for providing short term agricultural loans

Refinance by NABARD

• Cooperative Banks - State, District, Primary Urban;
• RRB, Commercial Banks, Agriculture Development Finance Companies, NBFC for providing credit for investment activities in agriculture and allied activities.

What is the news?

• In the budget of the current financial year, Rs.16 lakh crore lending target has been set up for the sector.
• NABARD has made available crop loans to farmers at concessional rates through cooperative and regional rural banks and in 7 years this amount reached to Rs.6.5 lakh crore.
• Government has also reformed agricultural marketing.

1. There are one thousand Integrated National Agriculture Market (e-NAM) mandis and in the current year one thousand more mandis will be linked to this portal.
2. The launch of 'Operation Greens' scheme and 'Kisan Rail' are also historic steps in this direction.

• The losses are being reduced by transporting fruits and vegetables from the fields to the consumer cities.
• A scheme has also been launched to form 10,000 new Farmer Producer Organizations (FPOs), which will work on the model of collectivism.
• Prime Minister has allocated Rs 1.5 lakh crore for the development of agriculture and allied sectors. Rs. 1 Lakh crore has been allocated for special 'Agriculture Infrastructure Fund' with the objective to promote investment.
• Farmers will now get financial assistance from the government with 3% interest and loan guarantee.
• NABARD, a participant in the scheme, has set a target to develop 35 thousand primary agricultural cooperative societies (PACS) as 'one-stop shops'.
• NABARD has sanctioned Rs. 1,700 crore to 3 thousand PACS for setting up multiple service centres. Shri Tomar said that in the last 7 years, NABARD has given Rs 1.81 lakh crore to the states under the Rural Infrastructure Development Fund of which one-third is used for irrigation. This fund has been increased to 40 thousand crores.
• NABARD and others have also contributed well in 'Per Drop - More Crop' under PM Krishi Sinchai Yojana. In this campaign, the Center has increased the group amount of Micro Irrigation Fund under NABARD to Rs.10 thousand crore.

Way Forward

• There is a need for private investment to develop Indian agriculture and to promote innovations through investment.
• In this context, he mentioned that the new farm acts are very important for the development of small and marginal farmers. Commenting on the development of the agriculture sector, Dr. Subramaniam said Credit is very important for small and marginal farmers and institutions like NABARD ensure that proper provision is made to provide credit to these farmers across the country.
• There is a need to make appropriate investments in green infrastructure, which will be around Rs 18.37 lakh crore by the year 2024-25, out of which Rs.7.35 lakh crore will be kept for agricultural infrastructure.
• The agricultural eco-system is changing, due to which the life of the farming community will become more convenient than before as farmers will be able to use information technology for farming systems, processing as well as export, which will increase their income. He said that since the last several decades, NABARD has been striving for the upliftment of the agricultural and rural community through various measures.