Quick notes for NABARD Grade A exam

Out of 200 marks in NABARD Grade A Preliminary examination, 40 marks will be from Agriculture and Rural Development. This quick notes will provide you basic insights about NABARD and also current developments happened in this apex development bank. Quick links at the end of article will help you to find relevant sources useful for the exam.

Genesis of NABARD

National Bank For Agriculture & Rural Development (NABARD) is set up as an apex Development Bank by the Government of India with a mandate for facilitating credit flow for promotion and development of agriculture, cottage and village industries.

The Reserve Bank of India (RBI) constituted a Committee to Review the Arrangements For Institutional Credit for Agriculture and Rural Development (CRAFICARD) to look into credit flow in rural areas. The Committee was formed on 30 March 1979, under the Chairmanship of Shri B. Sivaraman, former member of 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 formation of a unique development financial institution which would address these aspirations and formation of National Bank for Agriculture and Rural Development (NABARD) 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 (ARDC). It was dedicated to the service of the nation by the late Prime Minister Smt. Indira Gandhi on 05 November 1982. Set up with an initial capital of Rs.100 crore, its’ paid up capital stood at Rs.10,580 crore as on 31 March 2018. Consequent to the revision in the composition of share capital between Government of India and RBI, NABARD today is fully owned by Government of India.

Organization structure

NABARD has its head office at Mumbai, India.

NABARD Regional Office[RO] has a Chief General Manager [CGMs] as its head, and the Head office has several top executives viz the Executive Directors[ED], Managing Directors[MD], and the Chairperson. It has 336 District Offices across the country, one special cell at Srinagar. It also has 6 training establishments.

Dr. Harsh Kumar Bhanwala is the Chairman of National Bank for Agriculture and Rural Development (NABARD) since December 18, 2013.

Functions of NABARD

NABARD discharge its duty by undertaking the following roles :

Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas
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.
Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, state governments, Reserve Bank of India(RBI) and other national level institutions concerned with policy formulation
Undertakes monitoring and evaluation of projects refinanced by it.
NABARD refinances the financial institutions which finances the rural sector.
NABARD partakes in development of institutions which help the rural economy.
NABARD also keeps a check on its client institutes.
It regulates the institutions which provide financial help to the rural economy.
It provides training facilities to the institutions working in the field of rural upliftment.
It regulates and supervise the cooperative banks and the RRB’s, through out entire India.

The National Bank for Agriculture And Rural Development (Amendment) Bill, 2017

Transfers RBI’s share in NABARD to the central government. Also, provides for increasing authorised capital of NABARD from Rs 5,000 crore to Rs 30,000 crore by the central government in consultation with the RBI.

The Bill seeks to amend the National Bank for Agriculture and Rural Development Act, 1981. The 1981 Act provides for the establishment of the National Bank for Agriculture and Rural Development (NABARD). NABARD is responsible for providing and regulating facilities like credit for agricultural and industrial development in the rural areas.

Increase in capital of NABARD: Under the 1981 Act, NABARD may have a capital of Rs 100 crore. This capital can be further increased to Rs 5,000 crore by the central government in consultation with the Reserve Bank of India (RBI).

The Bill allows the central government to increase this capital to Rs 30,000 crore. The capital may be increased to more than Rs 30,000 crore by the central government in consultation with the RBI, if necessary.

Transfer of the RBI’s share to the central government: Under the 1981 Act, the central government and the RBI together must hold at least 51% of the share capital of NABARD. The Bill provides that the central government alone must hold at least 51% of the share capital of NABARD. The Bill transfers the share capital held by the RBI and valued at Rs 20 crore to the central government. The central government will give an equal amount to the RBI.

Micro, small and medium enterprises (MSME): The Bill replaces the terms ‘small-scale industry’ and ‘industry in the tiny and decentralised sector’ with the terms ‘micro enterprise’, ‘small enterprise’ and ‘medium enterprise’ as defined in the MSME Development Act, 2006. Under the 1981 Act, NABARD was responsible for providing credit and other facilities to industries having an investment of upto Rs 20 lakh in machinery and plant. The Bill extends this to apply to enterprises with investment upto Rs 10 crore in the manufacturing sector and Rs five crore in the services sector.

Under the 1981 Act, experts from small-scale industries are included in the Board of Directors and the Advisory Council of NABARD. Further, banks providing loans to small-scale, tiny and decentralised sector industries are eligible to receive financial assistance from NABARD. The Bill extends these provisions to the micro, small, and medium enterprises.

Consistency with the Companies Act, 2013: The Bill substitutes references to provisions of the Companies Act, 1956 under the NABARD Act, 1981, with references to the Companies Act, 2013. These include provisions that deal with: (i) definition of a government company, and (ii) qualifications of auditors.

Government Sponsored Schemes channelled by NABARD

Farm Sector

1. Dairy Entrepreneurship Development Scheme (Previously Venture Capital Scheme for Dairy and Poultry)

Department: Department of Animal Husbandry, Dairying and Fisheries (DAHD&F), GOI

Year: 2005-06

Renaming: 1 September 2010

Objectives:

a) To promote setting up of modern dairy farms for production of clean milk.

b) To encourage heifer calf rearing, thereby conserving good breeding stock.

c) To bring structural changes in the unorganised sector so that initial processing of milk can be taken up at the village level itself.

2. Capital Investment Subsidy Scheme for Commercial Production Units for organic/ biological Inputs

Department: Department of Agriculture, Cooperation & Farmers’ Welfare, GOI

Year: 2004-05

Objectives:

a) To promote organic farming in the country.

b) To increase agricultural productivity.

c) To reduce total dependence on chemical fertilizers and pesticides.

d) To convert organic waste into plant-nutrient resources.

e) To prevent pollution and environment degradation by proper conversion and utilization of organic waste.

3. Agriclinic and Agribusiness Centres Scheme

Department: Department of Agriculture, Cooperation & Farmers’ Welfare, GOI

Year: 2002

Objectives:

a) To provide extension and other services to the farmers on payment basis or free of cost.

b) To support agricultural development.

c) To create gainful self-employment opportunities for unemployed agricultural graduates, agricultural diploma holders, intermediate in agriculture and biological science graduates with post graduation in agri-related courses.

4. National Livestock Mission

Department: Department of Agriculture, Cooperation & Farmers’ Welfare, GOI

Year: 2014-15

Objectives:

Sustainable development of Livestock Sector

Includes:

a) Poultry Venture Capital Fund (PVCF)

b) Integrated Development of Small Ruminants and Rabbit (IDSRR)

c) Pig Development (PD)

d) Salvaging and Rearing of Male Buffalo Calves (SRMBC)

Off Farm Sector

1. Credit Linked Capital Subsidy Scheme

The Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Up-gradation of Micro & Small Enterprises was launched by the Government of India in October 2000.

The scheme aims at facilitating technology up-gradation of SSI units in the specified products/ sub-sectors by way of induction of well-established and improved technologies approved under the scheme for which capital subsidy is extended by GOI.

2. Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)

The Ministry of Rural Development (MoRD), Government of India launched the National Rural Livelihood Mission (NRLM) by restructuring Swarnajayanti Gram Swarojgar Yojana (SGSY) with effect from 01st April 2013.

NRLM was renamed as DAY-NRLM (Deendayal Antyodaya Yojana – National Rural Livelihoods Mission) w.e.f. March 29, 2016 and is the flagship program of Govt. of India for promoting poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods services.

NABARD is implementing the Interest Subvention Scheme for Women SHGs under DAY-NRLM for RRBs and Cooperative Banks in Category-I (250) districts.

3. Weavers Package

National Handloom Development Programme (NHDP) to be implemented during the XII Plan has been formulated as a centrally-sponsored plan scheme.

Revival, Reform and Restructuring (RRR) package
Institutional Credit component of Integrated Handlooms Development Scheme (IHDS) as Concessional Credit, and
Comprehensive Handlooms Development Scheme (CHDS).

Out of the above schemes, two schemes, RRR and CHDS are being implemented by NABARD.

Funds Created under NABARD

Cabinet approved corpus for Micro Irrigation Fund under PMKSY

The Union Cabinet approved a corpus of Rs 5,000 crore for a Micro Irrigation Fund under the Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) in May 2018. Of this, Rs 2,000 crore was approved for the year 2018-19. The remaining Rs 3,000 crore will be utilised in 2019-20.

The Fund has been set up under NABARD. State governments can use the loans extended by NABARD to incentivise micro irrigation through subsidies or to invest in cluster-based micro irrigation projects. These loans must be paid back within seven years (including the grace period of two years). An interest subvention of 3% is provided on these loans. This is estimated to incur an expenditure of Rs 750 crore during the two-year period.

Cabinet approved creation of Agri-Market Infrastructure Fund

The Union Cabinet approved the creation of an Agri-Market Infrastructure Fund of Rs 2,000 crore in February 2019. This Fund has been approved for development and up-gradation of infrastructure in 10,000 gramin agricultural markets and 585 regulated wholesale markets.

This corpus fund will be created with the assistance of NABARD. The Fund will be used to provide subsidised loans to states and union territories against their proposals for development of infrastructure in gramin agricultural markets and regulated wholesale markets.

The Fund may also be used to provide assistance to states and union territories for innovative integrated market infrastructure projects. The National Rural Employment Guarantee scheme and other government schemes will be used to strengthen the physical and basic infrastructure in gramin agricultural markets.

Cabinet approved Fisheries and Aquaculture Infrastructure Development Fund

The Union Cabinet approved the creation of Fisheries and Aquaculture Infrastructure Development Fund in October 2018. The Fund seeks to provide concessional finance for investment in fisheries development to (i) state and union territory governments and entities, (ii) cooperatives, and (iii) entrepreneurs, among others. The loans will be provided for a period of five years from 2018-19 to 2022-23, with repayments required to be made over a period of 12 years.

The fund is estimated to be worth Rs 7,522 crore, funded by the following sources: (i) Rs 5,266 crore from the nodal loaning entities, (ii) Rs 1,317 crore through contribution from beneficiaries, and (iii) Rs 939 crore through budgetary support from the central government. The nodal loaning entities consist of NABARD, National Cooperatives Development Corporation, and all the scheduled banks.

Source: PRS website and NABARD website. Republished for Education purpose.

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