Provision

NABARD is a regulatory body mandated with the regulation of regional rural banks and apex cooperative banks in India. It operates under the Ministry of Finance.

NABARD: Origin

• Objective: It has been constituted for “matters concerning policy, planning, and operations in the field of credit for agriculture and other economic activities in rural areas in India“.
• Setting Up: It came into existence to implement the National Bank for Agriculture and Rural Development Act 1981.
  • Based on the recommendations of the B. Sivaramman Committee, NABARD replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of the Reserve Bank of India, and the Agricultural Refinance and Development Corporation (ARDC). 
• Collaborators:  World Bank-affiliated organizations and global developmental agencies working in the field of agriculture and rural development are collaborators of NABARD.
• Schemes Implemented by NABARD
  • New Agricultural Marketing Infrastructure (AMI) sub-scheme of ISAM
  • Agri Clinics and Agri-Business Centres Scheme (ACABC)
  • Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity
  • Stand-Up India
  • Special Credit Linked Capital Subsidy Scheme (SCLCSS)
  • Interest Subvention Scheme

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NABARD: Structure and Composition

• Structure: It is governed by a Board of Directors, who are appointed by the Union government. It includes;
  • The Chairperson;
  • The Managing Director;
  • 3 directors from amongst experts in rural economics, rural development, small-scale industries, and cottage industries, individuals having experience in the working of co-operative banks, regional rural banks, or commercial banks;
  • 3 directors from out of the directors of the Reserve Bank;
  • 3 directors from amongst the officials of the Central Government;
  • 4 directors from amongst the officials of the State Government.

NABARD: Functions

• Implementation of Aid Projects: NABARD implements rural development projects of the World Bank, Asian Development Bank, commercial banks (CBs), and other financial institutions approved by RBI. 
• Supervises Small Banks: It supervises the functioning of the State Cooperative Banks (StCBs), District Cooperative Central Banks (DCCBs), and Regional Rural Banks (RRBs).
• Sustainable Growth: It indulges itself in activities of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development, and Farm Innovation.
• Village Economic Prosperity: It facilitates credit flow for the promotion and development of agriculture, cottage, and village industries. 
• Support Rural Innovation: It has managed to attract funds for Rural Innovation, which involves funds designed to support innovative, risk-friendly, unconventional experiments in agriculture and related fields.
• Training Facilities: It provides training facilities to all the institutions that are working towards rural upliftment or want to do so in the future.
• Monitoring and Evaluating a Project: It has the responsibility of monitoring and evaluating the project or activity taking place in a rural area.
• Rural Infrastructure Fund: It is obtained out of the shortfall in lending to the priority sector by scheduled commercial banks and implemented by NABARD.
• Warehouse Infrastructure Fund (WIF): Using the facilities of NABARD, the union government provides loans to meet the requirements for scientific warehousing infrastructure for agricultural commodities in the country.

NABARD: Significance

• Rural Inventions: NABARD has been the main agent in grounding rural, social innovations and social enterprises in the rural hinterlands of the country.
• Tax-payer: It features as one of the top 50 taxpayers consistently, bringing in huge amounts of revenue to the exchequer.
• Non-profit Motive: It re-invests back all the profits for development spending. This makes NABARD an institution working without profit motive.
• Close Relation with Rural Communities: It has managed to develop a huge amount of trust capital due to its work with rural communities.
• Target Self-Help Groups: It is known for its initiative to encourage India’s banks to lend to self-help groups (SHGs), which are known to be harbingers of rural economic growth.

NABARD: Initiatives

• Tribal Development Programme: The Integrated Tribal Development Programme is implemented by NABARD, under which projects are funded through the Tribal Development Fund (TDF), aiming to provide sustainable livelihoods to tribal families of the country.
• Kisan Credit Card Scheme: The scheme has been designed by NABARD to enable farmers to meet their credit requirements for agriculture and allied activities.
• Climate Change Fund: The fund was constituted from the profits of NABARD to address the impacts of climate change towards fostering sustainable development. 
  • It supports activities that relate to climate change impacts, adaptation and mitigation measures, awareness creation, knowledge sharing, and facilitating sustainable development.
• EShakti: “EShakti” is a project developed by NABARD for the digitization of all members of the Self Help Group (SHG) in India.
  • It seeks to bring all SHG members under the fold of financial inclusion thereby enabling access to a wider range of financial services.

NABARD: Criticism 

• Non-participation of RBI: The snapping of ties between RBI and NABARD through the transfer of equity to the government has weakened any role or participation RBI can have in its activities.
• Rising Cost of Financing: It cannot operate in the way it used to as the cost of financing has gone up.
• Unequal Funding: Funding offered by NABARD is not equal across the country. The northeastern states get only a small share of the NABARD’s credit funds. 
• Bureaucratization: It’s fast movement towards bureaucratization of the organization has led to further delays in the implementation of projects. 

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Conclusion 

NABARD has made a significant contribution to advancing India’s agricultural and rural development by offering both financial and non-financial methods, using the services of rural cooperative banks and regional rural banks.