National Bank for Agriculture and Rural Development (NABARD)

The Indian economy after independence was mostly agrarian. Following independence, the emphasis was mostly on the industrial and trade sectors of the economy to stimulate growth. However, since the vast majority of India’s population lives in rural areas, it is critical to promote rural financial operations. This is why the government established NABARD.

As the name indicates, NABARD is a development bank that mainly serves the country’s rural sector. It is, in reality, India’s leading development bank. It is among the most prominent institutions in the nation. NABARD is in charge of developing small and cottage enterprises, as well as other village or rural initiatives.

Established on July 12, 1982, with an initial capital of 100 crores. The bank would be supervised by a Board of Directors appointed by the Government of India. The headquarters of NABARD is in Mumbai, however it has several subsidiaries and regional sections.

NABARD is critical to the growth and effectiveness of the present rural finance system. Cooperative banks and Regional Rural Banks account for more than half of all credit in rural areas. NABARD regulates and supervises the operations of such banks. Over the years, NABARD has advocated for credit scheme creation to help rural communities fulfill their new credit obligations.

NABARD plays an important role in social innovation and initiatives in addition to providing rural finance needs. It collaborates with a variety of organizations on a number of innovative initiatives, including SHG-Bank connectivity and innovative water and soil conservation programs. Over the previous three decades, the institution has won the support and confidence of farmers and rural communities.

Functions of NABARD:

Let’s look at some of the organization’s primary functions. It primarily serves three roles: credit functions, development functions, and supervision duties.

Frames the country’s rural lending policy for all financing institutions.

The National Bank for Agriculture and Rural Development will provide funding and refinancing to banks and rural regional banks.

Identifying credit possibilities and developing credit programs for all districts.

It also enables all regional banks and institutions under its supervision to prepare their own credit strategies and policies.

Assists Regional Rural Banks in reaching an agreement with State Governments and other cooperative banks and organizations.

It will also monitor and track the execution and development of such programs.

Helps banks enhance their MIS systems, update their technology, develop human resources, and so on.

According to the Banking Regulation Act 1949, NABARD has to perform the examination of Regional Rural Banks and other Co-operative banks.

It interacts and advises with the RBI on issues like as granting new bank licenses, creating Rural Bank offices, and so on.

It will sometimes audit the investment portfolios of Regional Rural Banks and other State Co-op Banks.

Role

NABARD has played a key role in establishing rural, social innovations, and social businesses in the rural hinterlands. It has collaborated with approximately 4000 partner organizations to ground many of the interventions, including the SHG-Bank Linkage programme, the tree-based tribal communities’ livelihoods initiative, the watershed approach to soil and water conservation, crop productivity initiatives through the lead crop initiative, and the dissemination of information flow to agrarian communities through Farmer clubs. Despite all of this, it constantly ranks among the top 50 taxpayers. In their never-ending pursuit of ideas and answers, NABARD essentially reinvests all revenues in development. Thus, during three decades of working with rural communities, the organization had built up a significant amount of trust capital.[8]

• NABARD is the country’s most significant institution for the development of cottage, small-scale, and village industries, as well as other rural businesses.
• NABARD actively engages with associated economies and supports and promotes coordinated development.
• NABARD fulfills its duties by performing the following roles:- Acts as the primary funding agency for banks offering investment and production finance to support rural development initiatives.
• Takes institution-building actions to improve the absorptive capacity of the credit delivery system, such as monitoring, developing rehabilitation plans, reorganizing credit institutions, and training people, among others.
• Coordinates the rural finance operations of all institutions involved in developmental activity on the field level and maintains communication with the Government of India, state governments, the Reserve Bank of India (RBI), and other national level organizations associated with policy formation.
• Monitors and evaluates projects that it has refinanced.
• NABARD refinances the financial institutions that fund the rural sector.
• NABARD participates in the creation of institutions that benefit the rural economy.
• NABARD also monitors its client institutions.
• It governs entities that give financial assistance to the rural economy.
• It offers training facilities for institutions engaged in the subject of rural development.
• It governs and supervises cooperative banks and regional rural banks throughout India.
• NABARD has its headquarters in Mumbai, India.

The NABARD Regional Office [RO] is led by a Chief General Manager [CGMs], while the Head Office has numerous senior executives, including Executive Directors [ED], Managing Directors [MD], and the Chairperson. It has 336 District Offices around the nation, including one special cell in Srinagar. It also features six training facilities.

NABARD is well recognized for its ‘SHG Bank Linkage Programme’, which encourages Indian banks to lend to self-help groups (SHGs). SHGs have become an essential microfinance instrument in India, owing to the fact that they are mostly made up of underprivileged women. By March 2006, 22 lakh SHGs with 3.3 crore members needed to be connected to finance under this project.

NABARD also offers a portfolio of Natural Resource Management Programmes that include a wide range of topics such as Watershed Development, Tribal Development, and Farm Innovation, which are funded via specialized funding.