NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

INTRODUCTION

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas. It 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.

It co-ordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation. It prepares, on annual basis, rural credit plans for all districts in the country; these plans form the base for annual credit plans of all rural financial institutions It undertakes monitoring and evaluation of projects refinanced by it. It promotes research in the fields of rural banking, agriculture and rural development.

The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) set up by the RBI under the Chairmanship of Shri B Sivaraman in its report submitted to Governor, Reserve Bank of India on November 28, 1979 recommended the establishment of NABARD. The Parliament through the Act 61 of 81, approved its setting up.

OBJECTIVES

NABARD was established in terms of the Preamble to the Act, "for providing credit for the promotion 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 IRDP and securing prosperity of rural areas and for matters connected therewith in incidental thereto".

The main objectives of the NABARD as stated in the statement of objectives while placing the bill before the Lok Sabha were categorized as under:  

1. The National Bank will be an apex organisation in respect of all matters relating to policy, planning operational aspects in the field of credit for promotion of Agriculture, Small Scale Industries, Cottage and Village Industries, Handicrafts and other rural crafts and other allied economic activities in rural areas.  

2. The Bank will serve as a refinancing institution for institutional credit such as long-term, short-term for the promotion of activities in the rural areas.  

 3. The Bank will also provide direct lending to any institution as may approved by the Central Government.  

4. The Bank will have organic links with the Reserve Bank and maintain a close link with in.

ORGANISATIONAL STRUCTURE

MISSION

Promoting sustainable and equitable agriculture and rural development through effective credit support, related services, institution building and other innovative initiatives.

In pursuing this mission, NABARD focuses its activities on:

Credit functions, involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes

Development functions, concerning reinforcement of the credit functions and making credit more productive

Supervisory functions, ensuring the proper functioning of cooperative banks and regional rural banks

ROLE AND FUNCTIONS:

Credit Function

• Framing policy and guidelines for rural financial institutions.

• Preparation of potential-linked credit plans annually for all districts for identification of credit potential.

• Monitoring the flow of ground level rural credit.

• Providing credit facilities to issuing organizations.

• Supervisory Functions

• Undertakes inspection of RRBs and cooperative banks (other than urban/primary cooperative banks) under the provisions of Banking Regulation Act, 1949.

• Undertakes inspection of State Cooperative Agriculture and Rural Development Banks (SCARDBs) and apex non-credit cooperative societies on a voluntary basis

• Undertakes portfolio inspections, systems study, besides off-site surveillance of cooperative banks and RRBs.

• Provides recommendations to RBI on opening of new branches by State Cooperative Banks and RRBs. It co-ordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation.

• Administering the Credit Monitoring Arrangements in SCBs and CCBs.

Development and Promotional Functions

• Help cooperative banks and RRBs to prepare development actions plans for themselves.

• Provide financial assistance to cooperatives and RRBs for establishment of technical, monitoring and evaluations cells.

• Provide training for senior and middle level executives of commercial banks, Regional Rural Banks and cooperative banks.

• Create awareness among the borrowers on ethics of repayment through Vikas Volunteer Vahini and Farmer’s clubs.

• Provide financial assistance to cooperative banks for building improved MIS, computerisation of operations and development of human resources.

• Enter into MoU with state governments and cooperative banks specifying their respective obligations to improve the affairs of the banks in a stipulated timeframe.

• Help RRBs and the sponsor banks to enter into MoUs specifying their respective obligations to improve the affairs of the RRBs in a stipulated timeframe.

Access to Agricultural Credit Facilities by Women

Development of women received attention of the Government of India in the First Plan (1951-56), with the welfare of disadvantaged groups like destitute, disabled, aged, etc. The Sixth Plan (1980-85) adopted a multi-disciplinary development approach with special thrust on the three core sectors of health, education and employment of women. In the Seventh Plan (1985-90), the developmental programmes continued with the major objective of raising their economic and social status and bringing them into the mainstream of national development. The Eight Plan (`1992-97) played a very important role in the development of women. It promised to ensure that benefits of development from different sectors do not by pass women, implement special programmes to complement the general development programmes and to monitor the flow of benefits to women from other development sectors and enable women to function as equal in the development process. The “Empowerment of women” became one of the nine primary objectives of the Ninth Plan (1997-2002). To this effect the approach of the plan was to create an enabling environment where women could freely exercise their rights both within and outside home, as equal partners along with man. The approach to Tenth Plan (2002-07) for empowering women was distinct from that of earlier plans, as it now stands on a strong platform for action with definite goals, targets and a time frame. Accordingly, a sector-specific 3 fold streategy for empowering women, based on the prescription of the National Policy for Empowerment of Women, included:

a) Social Empowerment: To create an enabling environment through various affirmative developmental policies and programmes for development of women besides providing them easy and equal access to all the basic minimum services so as to enable them to raise their full potentials.

b) Economic Empowerment: To ensure provision of training, employment and income generation activities with both “forward and backward” linkages with the ultimate objective of making all potential women economically independent and self reliant; and

c) Gender Justice:- To eliminate all forms of gender discrimination and thus, allow women to enjoy not only the de-jure but also the de-facto rights and fundamental freedom on par with men in all spheres, viz, political, economic, social civil, cultural, etc.

Women and Micro-credit:- The Tenth Plan recognized the need for a comprehensive credit policy to increase women’s access to credit either through the establishment of new micro credit mechanisms or micro-financial institutions or strengthening the existing ones. In this context, expansion of the activities of Rashtriya Mahila Kosh have received special attention with adequate financial support in the Tenth Plan. Efforts are made to draw lesions from the success stories of various voluntary organizations which have already established their credentials in the field of micro credit for women and encouraged them to expand their activities, both within and outside their states. Efforts are made to equip all States/Union Territories with Women’s Development Corporations to provide both “forward” and “backward” linkages of credit and marketing facilities to women entrepreneurs, besides being active catalyst for empowering women economically.

NABARD’S Exclusive schemes for women:-

1. ASSISTANCE TO RURAL WOMEN IN NON-FARM DEVELOPMENT (ARWIND)

This scheme has objective of encouraging lending to rural women, preferably organized in groups and supported by Voluntary Associations (VAs)/Non-Governmental Organizations (NGOs), Women Development Corporations, Khadi Village and Industries Commission\ (KVIC)/Khadi and Village Industries Board (KVIB), Co-operative Societies, Trusts, etc. The scheme has both credit and grant components. It is envisaged that women groups organized or sponsored by a suitable agency could avail of bank credit normally not exceeding Rs.50,000/- per woman member for an individual activity or a group activity with 100% refinance support from NABARD.

NABARD considers need-based grant assistance subject to availability of promotional funds to meet the sponsoring agency’s expenditure for organization of groups, sensitisation, training and other related expenditures. In case, the sponsoring agency provides services such as supply of raw materials, quality control, marketing, etc., such services undertaken by it, are also eligible for financial assistance under NABARD’s credit linked promotional schemes, viz., Mother Units/Common Service Centres.

2. ASSISTANCE FOR MARKETING OF NON-FARM PRODUCTS OF RURAL WOMEN (MAHIMA):-

In this scheme the objective is of extending credit and credit linked promotional assistance to agencies dealing with marketing of non-farm products of rural women with a view to giving a fillip to their efforts for creating a “niche” or “pro-women” market. The credit is extended by way of refinance, i.e., 100% refinance upto Rs.10 lakh promotional grant. The ceiling on quantum of promotional assistance is 25% of the project outlay of Rs.10lakh, i.e., Rs.2.5 lakh or 25% of the minimum sales turnover, whichever is lower. The loan assistance through banks is upto Rs.10 lakh by way of refinance and 100% through refinance support. The ratio of grant to refinance is 1:3. Soft loan assistance to agencies for margin money (interest free loan) is provided. The bank will, however, levy a service charge of 3%. Furthermore, it is expected that the Voluntary Associations/Non-Governmental Organizations and other project proponents would be willing to contribute at least 10-15% of the project outlay by way of their share therein.

DEVELOPMENT OF WOMEN THROUGH AREA PROGRAMME (DEWTA):

Development of Women Through Area Programme (DEWTA) is an approach to promote women specific activities and clusters with the objective of generating employment through entrepreneurship and assisting in setting up of sustainable enterprises. The programme aims to address various needs of women, identified by women themselves, through capacity building, networking and convergence of services for focused implementation and visible impact.

WOMEN’S SELF-HELP GROUPS:-

Micro-finance initiatives of NABARD through its SHG-bank linkage programme has passed through various phases, viz., pilot testing (1992-95), mainstreaming (1996-1998) and expansion (1998 onwards) and has assumed the shape of a Micro-finance movement in the country. The programme has started making inroads in resource poor regions of the country as well. Its main features are:

(i) The VAs, NGOs and other Self Help Promotional Institutions (SHPIs) including a few banks who play the role of facilitator.

(ii) SHGs should be in existence for at least six months actively promoting savings and lendings amongst their members.

(iii) SHGs are normally informal groups.

(iv) The size of the group is not to exceed 20.

(v) Banks will finance the SHGs in proportion to the savings mobilized by the group. The proportion of savings to loan could vary from 1:1 to 1:4 (or) even more depending upon the assessment by the bank. NABARD provides 100% refinance assistance to banks.

RURAL WOMEN’S CLUBS:- NABARD encourages banks to form informal groups of farmers, artisans, etc. and even exclusively of rural women for propagating principle of “Development through Credit” (WDCs) inculcating repayment ethics and promoting people’s participation in the process of development. The assistance is available on selective basis for launching clubs for rural women, farmers, artisans, etc., at the rate of Rs.3000/- per\ club per year towards maintenance expenses to the designated Service Area Bank for three years. Clubs are formed for building up mutually beneficial relationships between banks and women borrowers, farmers, etc., in the village covered by the clubs. Such clubs, if run in association with VAs/NGOs, the VAs/NGOs are entitled for additional administrative grant to the extent of Rs.2000/- per club per annum for a period of three years. NABARD also extends maintenance expenses at the rate of Rs.3000/- per annum for three years to the clubs maintained by VAs/NGOs. Various training programmes have been designed for the benefit of rural women folk in the club areas which include training in farm/non-farm, service activities, income generating activities, women development programmes, etc., with the help of designated banks, VAs/NGOs.