The National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India, established on July 12, 1982, through the National Bank for Agriculture and Rural Development Act, 1981. NABARD’s primary mandate is to promote sustainable agriculture and rural development by providing and regulating credit and other facilities.
Objectives of NABARD
- Agricultural Development: To support agricultural production and promote modern farming techniques.
- Rural Development: To enhance the rural infrastructure and improve the quality of life in rural areas.
- Financial Inclusion: To facilitate access to financial services for rural populations.
- Institutional Development: To strengthen rural financial institutions.
Key Functions of NABARD
- Refinance Facility
- NABARD provides refinance support to financial institutions like commercial banks, regional rural banks (RRBs), and cooperative banks for their lending to agriculture, small-scale industries, cottage and village industries, handicrafts, and other rural crafts.
Example:
- Institution: XYZ Cooperative Bank
- Purpose: Refinance for lending to small farmers
- Outcome: XYZ Cooperative Bank receives funds from NABARD, enabling it to provide affordable credit to small farmers for purchasing seeds, fertilizers, and equipment.
- Developmental Role
- NABARD undertakes various developmental and promotional activities to support agriculture and rural development. This includes training programs, capacity building, and research and development.
Example:
- Project: Watershed Development Program
- Location: Drought-prone areas in Maharashtra
- Outcome: NABARD’s watershed development initiatives improve water conservation and management, enhancing agricultural productivity and sustainability in the region.
- Supervision of Rural Financial Institutions
- NABARD supervises cooperative banks and RRBs to ensure their financial health and stability. It conducts inspections, audits, and provides guidance for better management practices.
Example:
- Institution: ABC Regional Rural Bank
- Outcome: NABARD conducts regular audits and provides training to ABC Regional Rural Bank’s staff, improving its operational efficiency and financial performance.
- Infrastructure Development
- Through various funds like the Rural Infrastructure Development Fund (RIDF), NABARD finances infrastructure projects in rural areas, including roads, bridges, irrigation systems, and schools.
Example:
- Project: Construction of Rural Roads
- Location: Uttar Pradesh
- Outcome: Funding from NABARD’s RIDF facilitates the construction of rural roads, improving connectivity and access to markets for farmers and rural communities.
- Microfinance and SHG-Bank Linkage Program
- NABARD promotes the Self-Help Group (SHG)-Bank Linkage Program to provide microfinance to poor households, especially women, for income-generating activities.
Example:
- Group: Women’s Self-Help Group in Tamil Nadu
- Loan Amount: ₹1,00,000
- Purpose: Setting up a small dairy business
- Outcome: The SHG receives a loan from a bank linked through NABARD, enabling its members to start a dairy business, improve their livelihoods, and empower women in the community.
- Credit Planning and Monitoring
- NABARD prepares district-level credit plans to ensure an adequate and timely flow of credit to the agriculture sector. It monitors the implementation of these plans to achieve the desired outcomes.
Example:
- District: Raipur, Chhattisgarh
- Plan: Annual Credit Plan for Agriculture
- Outcome: The district’s annual credit plan identifies the credit needs of farmers and coordinates with local banks to ensure timely disbursement of loans for various agricultural activities.
- Direct Finance
- In addition to refinance, NABARD provides direct finance for projects involving agriculture and rural development, including warehousing, cold storage, and food processing units.
Example:
- Project: Construction of Cold Storage Facility
- Location: Punjab
- Loan Amount: ₹50,00,000
- Outcome: NABARD provides direct finance for the construction of a cold storage facility, helping farmers store their produce and reduce post-harvest losses.
Key Schemes and Initiatives of NABARD
- Pradhan Mantri Krishi Sinchai Yojana (PMKSY)
- Aims to enhance water use efficiency in agriculture by promoting micro-irrigation techniques like drip and sprinkler irrigation.
Example:
- Location: Rajasthan
- Outcome: Farmers in water-scarce areas adopt micro-irrigation systems, leading to better water management and increased crop yields.
- Rural Infrastructure Development Fund (RIDF)
- Provides low-cost finance to state governments for rural infrastructure projects, including roads, bridges, schools, and irrigation systems.
Example:
- Project: Construction of a Rural Health Center
- Location: Bihar
- Outcome: Funding from RIDF facilitates the construction of a health center, improving healthcare access for rural populations.
- NABARD Infrastructure Development Assistance (NIDA)
- Offers flexible financial solutions for infrastructure projects that may not be covered under RIDF.
Example:
- Project: Development of a Solar Power Plant
- Location: Karnataka
- Loan Amount: ₹1,00,00,000
- Outcome: NABARD’s assistance supports the development of a solar power plant, promoting renewable energy in rural areas.
- Climate Change Adaptation Projects
- NABARD is the National Implementing Entity (NIE) for projects funded by the Green Climate Fund (GCF) and Adaptation Fund (AF) to address climate change impacts.
Example:
- Project: Climate-Resilient Agriculture Practices
- Location: Andhra Pradesh
- Outcome: Farmers adopt climate-resilient practices, such as drought-resistant crops and water conservation techniques, enhancing their resilience to climate variability.
Summary
NABARD plays a vital role in promoting agriculture and rural development in India through its financial assistance, developmental programs, and supervisory functions. It supports a wide range of activities, including agricultural production, rural infrastructure development, microfinance, and climate change adaptation. By working closely with financial institutions, government agencies, and rural communities, NABARD ensures the sustainable development of rural India, improving the livelihoods and quality of life for millions of rural inhabitants.