National Bank for Agriculture and Rural Development

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 coordinates 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.

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 organization 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 approve by the Central Government.
4. The Bank will have organic links with the Reserve Bank and maintain a close link within.

Organisational Structure

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;

Provides recommendations to RBI on the opening of new branches by State Cooperative Banks and RRBs. It coordinates 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.

Development of women received the 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 bypass 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 strategy for empowering women, based on the prescription of the National Policy for Empowerment of Women, included:

1.  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.
2. 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
3. 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 microcredit mechanisms or micro-financial institutions or strengthening the existing ones. In this context, expansion of the activities of Rashtriya Mahila Kosh has received special attention with adequate financial support in the Tenth Plan. Efforts are made to draw lessons from the success stories of various voluntary organizations which have already established their credentials in the field of microcredit 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 an active catalyst for empowering women economically.

Assistance to Rural Women in Non-Farm Development

This scheme has the 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 the organization of groups, sensitization, training and other related expenditures. In case, the sponsoring agency provides services such as the supply of raw materials, quality control, marketing, etc., such services are undertaken by it, are also eligible for financial assistance under NABARD’s credit linked promotional schemes, viz., Mother Units/Common Service Centres.

Assistance for Marketing of Non-Farm Products of Rural Women

In this scheme, the objective is of extending credit and credit linked promotional assistance to agencies dealing with the 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 refinancing, i.e., 100% refinance to Rs.10 lakh promotional grant. The ceiling on the 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 up to Rs.10 lakh by way of refinancing and 100% through refinancing support. The ratio of the 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

Development of Women Through Area Programme (DEWA) 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.

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:

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 a 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 to 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.