NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

NABARD- AN ANALYTICAL STUDY OF ITS FUNCTIONING

A PROJECT
SUBMITTED TOWARDS THE FULFILMENT OF THE BANKING LAW COURSE TITLED -

BANKING LAW-

Submitted to: Dr. B.R.N Sharma

Submitted by: Ajayendra Kumar

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NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING Faculty, Banking law Roll no. 103
PAGE
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S.No
1. ACKNOWLEDGEMENT

PARTICULARS

2. RESEARCH METHODOLOGY

3. 4.

INTRODUCTION

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CHAPTERS: a) HISTORY & DEVELOPMENT OF NABARD b) NABARD AT A GLANCE c) STRUCTURE OF NABARD d) OBJECTIVES OF NABARD e) NABARD AFTER 25 YEARS f) ROLE AND FUNCTIONS OF NABARD
CREDIT FUNCTIONS DEVELOPMENT & PROMOTIONAL FUNCTION SUPERVISORY FUNCTION INSTITUTIONAL & CAPACITY BUILDING FUNCTION TRAINING UNTION

4.

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CONCLUSION
5. 28

BIBLIOGRAPHY

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

ACKNOWLEDGEMENT
I would like to take this opportunity to thank Dr. B.R.N Sharma, for his invaluable support, guidance and advice. I would also like to thank my parents who have always been there to support me. I would also like to thank the library staff for working long hours to facilitate us with required material going a long way in quenching our thirst for education.

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

RESEARCH METHODOLOGY
Aims and Objectives: The aim of the project is to present a detailed study of the topic NABARD- AN ANALYTICAL STUDY OF ITS FUNCTIONING through Case study, suggestions, different writings and articles.

Research Plan: The researcher has followed Doctrinal method.

Scope and Limitations: Though the topic NABARD-AN ANLYTACLE STUDY OF ITS FUNCTIONING is an immense project and pages can be written over the topic but because of certain restrictions and limitations I were not able to deal with the topic in great detail.

Sources of Data: The following secondary sources of data have been used in the project Case Study Articles/Journals/Law Reports Books Websites

Method of Writing and Mode of Citation:

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

The method of writing followed in the course of this research project is primarily analytical. The researcher has followed Uniform method of citation throughout the course of this research project.

INTRODUCTIONThe National Bank for Agriculture and Rural Development (NABARD) was set up in July 1982. It became the apex institution to play a pivotal role in the sphere of policy planning and providing refinance facilities to rural financial institutions and for augmenting their resource base1. National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India based in Mumbai, Maharashtra.[3] It has been accredited with "matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India". The paper analyses the role and function of NABARD in rural development. It also throws a light on NABARD's past and present performance and its major achievements in the rural and agricultural developments2. NABARD is working for the 360 degree development of rural India. Every year the financial assistance received by NABARD and the disbursement made out of it are increasing. The balance sheet size also increased from Rs.81220 crore to Rs.98706 crore & profit after tax from Rs.856 crore to Rs.1226 crore. In short we can say that NABARD is providing rural India all round assistance and proved to be an institution where "Growth with Social Justice" exists. 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. In discharging its role as a facilitator for rural prosperity NABARD is entrusted with Providing refinance to lending institutions in rural areas, Bringing about or promoting institutional development and, Evaluating, monitoring and inspecting the client banks. Besides this pivotal role, NABARD also acts as a coordinator in the operations of rural credit institutions, Extends assistance to the government, the Reserve Bank of India and other
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www.wikipedia.com. www.thelegalarticles.co.in

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

organizations in matters relating to rural development, Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development, helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development and acts as regulator for cooperative banks and RRBs. Some of the milestones in NABARD's activities are 3 Refinance disbursement under ST-Agri & Others and MT-Conversion/ Liquidity support aggregated Rs.16952.83 crore during 2007-08. Refinance disbursement under Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible financial institutions during 2007-08 aggregated Rs.9046.27 crore. Through the Rural Infrastructure Development Fund (RIDF) Rs.8034.93 crores were disbursed during 2007-08. With this, a cumulative amount of Rs.74073.41 crore has been sanctioned for 280227 projects as on 31 March 2008 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc. Under Watershed Development Fund with a corpus of Rs.613.71 crore as on 31 March 2008, 416 projects in 94 districts of 14 states have benefited. Farmers now enjoy hassle free access to credit and security through 714.68 lakh Kisan Credit Cards that have been issued through a vast rural banking network. Under the Farmers' Club Programme, a total of 28226 clubs covering 61789 villages in 555 districts have been formed, helping farmers get access to credit, technology and extension services.

www.nabard.co.in

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

HISTORY AND DEVELOPMENT OF NABARD4Agriculture in India is the means of livelihood of almost two thirds of the work force in the country. It has always been INDIA'S most important economic sector. The 1970s saw a huge increase in India's wheat production that heralded the Green Revolution in the country. The increase in post -independence agricultural production has been brought about by bringing additional area under cultivation, extension of irrigation facilities, use of better seeds, better techniques, water management, and plant protection. Dependence on India agricultural imports in the early 1960s convinced planners that India's growing population, as well as concerns about national independence, security, and political stability, required self-sufficiency in food production. This perception led to a program of agricultural improvement called the Green Revolution, to a public distribution system, and to price supports for farmers. The growth in food-grain production is a result of concentrated efforts to increase all the Green Revolution inputs needed for higher yields: better seed, more fertilizer, improved irrigation, and education of farmers. Although increased irrigation has helped to lessen year-to-year fluctuations in farm production resulting from the vagaries of the monsoons, it has not eliminated those fluctuations5. The monsoons, however, play a critical role in Indian agriculture in determining whether the harvest will be bountiful, average, or poor in any given year. One of the objectives of government policy in the early 1990s was to find methods of reducing this dependence on the monsoons. The Department of Agriculture has a chief role to play in formulating policies based on crops, seasonal growth and importing technology to enhance the fertility of soil. There are special schemes for loans available for farmers. The government is backing the efforts of many farmers and their families. Education and newspapers are reaching the rural lands and todays farmer is recognized as an important player in providing the basic food for the entire

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www.legalservicesindia.com www.indianlawarticles.com

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

country6. Agriculture in India is improvising with collaboration in technology using tractors, fertilizers and also new methods to aid farming. Barren lands are researched and guidelines for funding the same are being allocated. Exhibitions on Rabi and kharif crops and model schemes are allocated to precisely boost sales and also promote export of local produce.

Rain fed farming, banking loans, education for the farmer are the chief initiatives by the Government to develop the life of rural farming lands. Agriculture is also looked with the motive of maintaining the ecological balance. Harvest preservation, marketing for agriculture produce, tertiary market up gradation is some of the plans followed by the agricultural department of India7. It has to be understood that the life of a farmer goes beyond tilling and yielding crops. Their standard of living has to be uplifted by small scale industries set up which will increase their income. Other facilities like shelter, drainage system, education and alternative employment will secure their future. The change is accepted well by farmers as India still believes in the phrase, Jai Jawan Jai Kisan. The spectacular story of Indian agriculture is known throughout the world for its multi-functional success in generating employment, livelihood, and food, nutritional and ecological security. Agriculture and allied activities contribute about 30% to the gross domestic product of India. With arable land area at 168 million hectares, India ranks second only to the U.S. in size of agriculture. A well-developed agricultural research system, a significant area of almost 60 million hectares under irrigation and an increasing productivity in major crops enable Indian agriculture to become a globally competitive player. The United Nations estimates that with assured irrigation, India's food grains output can increase SIX times within five years- enough to feed two planet Earths!

Achievements of Indian Agriculture: India is the largest producer of wheat in the world India is the largest producer of Rice in the world
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Visit the official website of Nabard. www.thehindu.co.in

NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

India is among the largest vegetable oil economies in the world India is the largest producer of Tea in the world India is the second largest producer of Fruits in the world India is the largest producer of Milk in the world India is the largest producer of Coffee in the world India is the largest producer of Cotton in the world

Indian Agriculture by its sheer size can dictate global markets directly and indirectly. Majority of rural population still is dependent on agriculture for their livelihood and over 600 million farmers involved in agriculture related activities. India has 52% of cultivable land and varied climates. With sunshine round the year its the worlds best country to grow crops round the year. Due to Urbanization and rapid growth in the metropolis there is increased demand in the food supply. Too many layers of middlemen, weak supply chain, lack of proper information to the farmers, are some of the factors leadings to wastage and inefficiencies in food supply chain and gives opportunity to improve by using IT and collaborations though Farm to Fork Strategy. Agriculture Growth Rate in India GDP had been growing earlier but in the last few years it is constantly declining. Still, the Growth Rate of Agriculture in India GDP in the share of the country's GDP remains the biggest economic sector in the country. India GDP means the total value of all the services and goods that are produced within the territory of the nation within the specified time period. The country has the GDP of around US$ 1.09 trillion in 2007 and this makes the Indian economy the twelfth biggest in the whole world. The growth rate of India GDP is 9.4% in 2006- 2007. The agricultural sector has always been an important contributor to the India GDP. This is due to the fact that the country is mainly based on the agriculture sector and employs around 60% of the total workforce in India. The agricultural sector contributed around 18.6% to India GDP in 2005. Agriculture Growth Rate in India GDP in spite of its decline in the share of the country's GDP plays a very important role in the all round economic and social development of the country. The Growth Rate of the Agriculture Sector in India GDP grew after independence for the government of India placed special emphasis on the sector in its five-year plans. Further the Green revolution took place in India and this gave a major boost to the agricultural sector for irrigation facilities,
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provision of agriculture subsidies and credits, and improved technology. This in turn helped to increase the Agriculture Growth Rate in India GDP. The agricultural yield increased in India after independence but in the last few years it has decreased. This in its turn has declined the Growth Rate of the Agricultural Sector in India GDP. The total production of food grain was 212 million tones in 2005- 2006 and the next year it declined to 174.2 million tones. Agriculture Growth Rate in India GDP declined by 5.2% in 2007- 2008. The Growth Rate of the Agriculture Sector in India GDP grew at the rate of 1.7% each year between 2008- 2009 and 2009- 2010. This shows that Agriculture Growth Rate in India GDP has grown very slowly in the last few years. Agriculture Growth Rate in India GDP has slowed down for the production in this sector has reduced over the years. The agricultural sector has had low production due to a number of factors such as illiteracy, insufficient finance, and inadequate marketing of agricultural products. Further the reasons for the decline in Agriculture Growth Rate in India GDP are that in the sector the average size of the farms is very small which in turn has resulted in low productivity. Also the Growth Rate of the Agricultural Sector in India GDP has declined due to the fact that the sector has not adopted modern technology and agricultural practices. Agriculture Growth Rate in India GDP has also decreased due to the fact that the sector has insufficient irrigation facilities. As a result of this the farmers are dependent on rainfall, which is however very unpredictable. Agriculture Growth Rate in India GDP has declined over the years. The Indian government must take steps to boost the agricultural sector for this in its turn will lead to the growth of Agriculture Growth Rate in India GDP. Keeping in view the above mentioned purposes for the improvement of agricultural sector in India NABARD is set up by the Government of India as a development bank with the mandate of facilitating credit flow for promotion and development of agriculture and integrated rural development. The mandate also covers supporting all other allied economic activities in rural areas, promoting sustainable rural development and ushering in prosperity in the rural areas. With a capital base of Rs 2,000 crore provided by the Government of India and Reserve Bank of India , it operates through its head office at Mumbai, 28 regional offices situated in state capitals and 391 district offices at districts8.

www.reservebankofindia.co.in

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NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

It is an apex institution handling matters concerning policy, planning and operations in the field of credit for agriculture and for other economic and developmental activities in rural areas. Essentially, it is a refinancing agency for financial institutions offering production credit and investment credit for promoting agriculture and developmental activities in rural areas.

ABOUT NABARD9NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premiere agencies to provide credit in rural areas. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI) under the Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD). The Indian Parliament through the Act 61 of 1981 approved the setting up of NABARD. The Bank which came into existence on 12 July, 1982, was dedicated to the service of the Nation by the Honble Prime Minister, Smt Indira Gandhi on 5 November, 1982. NABARD is set up by the Government of India (GoI) as a development bank with the 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, as also for matters connected therewith and incidental thereto. Its subscribed and paid-up Capital was Rs.100 crore which was enhanced to Rs. 500 crore, contributed by the Government of India (GOI) and RBI in equal proportions. Currently it is Rs. 2000 crore, contributed by GoI (Rs.550 crore) and RBI (Rs.1450 crore). The Management of NABARD vests with the Board of Directors. The Board of Directors of

www.Nabard.co.in

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NABARD-AN ANALYTICAL STUDY OF ITS FUNCTIONING

NABARD comprises the Chairperson, Managing Director, representatives of RBI, GoI, State Governments and Directors nominated by the GoI. NABARD is a specialized financial institution in the field of agriculture and rural development. It has been designed specifically as an organizational device for providing undivided attention, forceful direction and pointed focus, to the credit problems of rural sector. Half of NABARDs capital was contributed by RBI and other half by the government. It has enough financial resources to support agricultural and rural development programs. NABARD operates through its Head Office at Mumbai, 28 Regional Offices located in the State Capitals, a Sub Office at Port Blair and 1 special cell located at Srinagar and 360 District Offices. NABARD has on its roll around 2968 professionals supported adequately by a number of other staff. State Co-operative Banks (SCBs): The SCBs are a link between the co-operative organizations with the RBI, NABARD and the state governments. They have to co-ordinate, control and regulate the working of Central Cooperative Banks (CCBs) and also provide financial and other resources and investment channels to the CCBs. District Central Co-operative Banks (DCCBs): The DCCBs are responsible to finance the Primary Agriculture Credit Societies (PACS) and other regional co-operative societies. Membership of DCCBs is open to all types of co-operative societies and individuals. DCCBs are governed by a board of 12-15 in number, elected by members generally for a period of 3 years. Primary Agriculture Credit Societies (PACS):

PACS are the societies which provide credit to the borrowers for short and medium term credit for agriculture and allied activities. They cover generally a small area of 200 hectares. PACS also provide backward and forward integration.

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STRUCTURE OF NABARD10-

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www.Nabard.co.in

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OBJECTIVES OF NABARD11NABARD 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"12. The rural financial system in the country calls for a strong and efficient credit delivery system, capable of taking care of the expanding and diverse credit needs of agriculture and rural development. More than 50% of the rural credit is disbursed by the Co-operative Banks and Regional Rural Banks. NABARD is responsible for regulating and supervising the functions of Co-operative banks and RRBs. In this direction NABARD has been taking various initiatives in association with Government of India and RBI to improve the health of Co-operative banks and Regional Rural Banks13. 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 : 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. 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. The Bank will also provide direct lending to any institution as may approved by the Central Government. The Bank will have organic links with the Reserve Bank and maintain a close link with in. Facilitating credit flow for agriculture, rural infrastructure and rural development.

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Visit the official website of Nabard. www.indiabusiness.nic.in 13 www.planningcommision.nic.in

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Promoting and supporting policies, practices and innovations conducive to rural development. Strengthening rural credit delivery system through institutional development. 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. THE PRESENT POSITION OF NABARD (NABARD TODAY)14Initiates measures toward 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. Coordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with the government of India , State governments, the Reserve Bank of India and other national level institutions concerned with policy formulation Prepares, on annual basis, rural credit plans for all the districts in the country. These plans form the base for annual credit plans of all rural financial institutions Undertakes monitoring and evaluation of projects refinanced by it Promotes research in the fields of rural banking, agriculture and rural development Functions as a regulatory authority, supervising, monitoring and guiding cooperative banks and regional rural banks

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www.legalserviceindia.com.

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NABARD TODAY(25 YEARS OF DEDICATION TO RURAL PROSPERITY)

NABARD completed 25 years of its eventful and trailblazing existence on 12 July 2007. Established in 1982, by an Act of Parliament, NABARD's mandate was to provide focused and undivided attention to the development of rural India by facilitating credit flow for promotion of agriculture and rural non farm sector. Emphasizing this in no uncertain terms, its mission statement underscores NABARD's goal to "promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives". NABARD's functions can be classified into 4 major categories viz. Credit Planning, Financial Services, Promotion and Development, and Supervision. Under Credit Planning NABARD prepares Potential Linked Credit Plan (PLP) annually for each district of the country by assessing potential available in agriculture and rural sector. This serves as a guide for banks and Government agencies to prepare their own investment and credit plans in the district and state. Under its Financial services, it refinances commercial, co-operative and regional rural banks for lending to on farm and non-farm activities. This includes farm activities like minor irrigation, animal husbandry, farm mechanization, forestry, fisheries, land development, horticulture, plantation and medicinal crops and non-farm like rural industries, artisans, handicrafts, handlooms, rural housing, rural tourism and agro processing. Refinance is provided by NABARD for both long term investment credit as well as short term production credit for crop loans and working capital for non-farm activities. A nationwide network of 28 regional offices at the state capitals, a sub-office at Port Blair and 391 district development offices are at hand to cater to this awesome task. Clearly NABARD's benevolent hand has been silently at work in supporting rural resurgence in various ways and its stakes are quite enormous. A glance at the figures will give a fair idea. It has channelised a whopping Rs. 1,21,000 crore under its investment credit programme and RIDF since inception, which includes Rs. 8795 crore disbursed during 2006-07. Under production credit the Bank sanctioned limits of Rs. 12570 crore during 2006-07. NABARD has effectively brought in a number of innovations in the rural credit domains. To quote a few: Formation and Linkage of Self Help Groups, Farmers Clubs, Rural Infrastructure Development Fund, Watershed Development, Kisan Credit Card, District Rural Industries Project, Cluster

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Development Programme and Rural Innovation Fund.

Self Help Groups (SHGs): One of the major success stories of NABARD, the SHG Bank linkage programme started as a pilot project in 1992 with 500 SHGs. SHGs comprise homogeneous groups of poor people who have voluntarily come together mainly with the idea of overcoming their common problems of low social and economic status. SHGs enable the poor, especially the women from the poor households, to collectively identify, prioritize and tackle the problems they face in their socio economic environment. By pooling their meager resources and using them for lending among themselves, they develop the habit of thrift and the skill of credit appraisal, before getting mature enough to access a loan from banks, which is called credit linkage. Starting with small loans for consumption they soon graduate to bigger loans for setting up of income generating micro-enterprises. Today, NABARD's SHG Bank Linkage Programme boasts of over 26 lakh SHGs and 3.9 crore households influencing the lives of over 16 crore poor population. During the year 2006-07 alone, as many as 458591 groups were credit linked.

Farmers Clubs A popular intervention among both farmers and Bankers, the farmers Club concept was envisaged as an experiment in social engineering, a forum to bring the rural banker and the borrower closer and to propagate the principles of development through credit. Farmers Club is an informal group of 15-20 farmers, one per village, which acts as a medium for accessing and disseminating awareness of modern methods of farming and technological advancements in agriculture in its area. Financial support is provided by NABARD for opening and maintenance of Clubs as well as for organizing training programmes in the respective villages. With corporates and food chains looking for supply chain linkages of farm produce, Farmers Clubs may have an important role to play in joint production and marketing of farm produce. As on 31 March 2007 , there were Farmers Clubs in 534 districts covering 48763 villages.

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Rural Infrastructure Development Fund (RIDF): Deficient Rural infrastructure hinders both social and economic development. Economists have explicitly emphasized on the direct correlation between the index of infrastructure development and rural development. NABARD's support to State Governments through RIDF since 1995-96 has brought about a sea change in the shape of upgraded infrastructure in rural areas. Rural roads and bridges under RIDF have improved market access to farmers; check dams and irrigation structures have augmented their water resources. Even drinking water projects and health centres have been supported under the Fund. NABARD so far has sanctioned Rs. 61539 crore for 2,44,025 projects under the Fund. A cumulative position of sector-wise sanctions as on 31 st March 2007 : Irrigation: Rs. 20637 crore, Rural connectivity: Rs. 26935 crore for rural road network and bridges, Power: Rs. 1434 crore Social Sector: Rs. 6988 crore Others: Rs. 5547 crore. A separate window has been created for rural connectivity with villages of population less than 500, with a corpus of Rs. 4,000 crore to support the Bharat Nirman project.

Watershed Development: In a comprehensive effort to enhance productivity of dryland through conserving soil, rainwater and irrigation, NABARD embarked on perfecting its experiments in creating a sustainable cost effective solution to the water harvesting techniques in rural areas. Building on its experience with the KFW funded watershed development programme in Maharashtra , NABARD established a Watershed Development Fund with an initial corpus of Rs. 200 crore in 1999-2000 which now stands at Rs. 602.76 crore. The programme is now being replicated in 124 districts of 14 States.

Tribal Development and WADI approach : With over 8% of the population comprising tribals largely dependent on forests, livestock and agriculture, NABARD found a holistic approach by addressing production, processing and marketing of the produce with WADI as the core of the programme. WADI (small orchard) was found to be an effective tool for arresting migration of tribals from their native habitat. The WADI model evolved out of concerted efforts made in association with Bhartiya Agro Industries Foundation (BAIF). The project also envisages other development interventions like environment, gender and health. Having completed 10 years in Gujarat and 5 years in Maharashtra, the programme has touched 275111 families in 410 villages.
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Women and Development Women constitute one third of the labour force. In order to give focus to women in various development activities and increase their access to Bank credit, schemes like Assistance to Rural women in Non-farm Development (ARWIND), Assistance for Marketing of Non- Farm Products of Rural Women (MAHIMA), Development of Women through Area Programme (DEWTA) have been designed to provide exclusive support to women in rural areas.

District Rural Industries Project (DRIP): NABARD launched DRIP, an integrated area-based credit intensification programme, in collaboration with Government, banks and other development agencies with district specific focus. It was introduced in 1993-94 with the objective of creating sustainable employment opportunities in 106 districts all over the country. Rural Entrepreneurship Development Programme (REDP): In order to generate employment in rural areas, it was felt necessary to develop the entrepreneurial skills of the rural youth. REDP is a promotional programme supported by NABARD to motivate and train educated unemployed rural youth, to set up their own enterprises. So far, 2.32 lakh persons have been trained under the programme under 7792 REDPs.

Rural Marketing: A number of marketing interventions have been made for marketing of rural non-farm products since marketing is a key factor in the sustainability of any such endeavour. With the financial support of NABARD under its promotional programmes like Rural Haats, Rural Marts, participation in fairs, exhibitions and marketing melas, rural artisans and entrepreneurs can get a larger market for their produce and showcase their talent to urban and upcountry markets. Revival of Short-Term Rural Co-operative Structure (STCCS) NABARD is the implementing agency for the Revival package for the STCCS which mean the State Coop. Banks, District Coop. Banks and the Primary Agricultural Coop. Societies. (PACS). The revival package has been approved by the Govt. of India based on the recommendations of the Vaidyanathan Committee. NABARD has had dialogues with State Govts. and so far 10 states have
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executed MOU with GoI and NABARD. Apart from being on the national, state and district level implementing committees, NABARD has designed guidelines and training manuals for the special audit of PACS under the Package.

Rural Innovation Fund: In association with Swiss Agency for Development and Cooperation (SDC), NABARD has constituted the NABARD SDC Rural Innovation Fund (RIF) to support innovative projects in Farm, Non-Farm and Micro-Finance Sectors leading to creation of livelihood opportunities for the poor. Government and Non-Government Institutions, corporate bodies, financial institutions and individuals can avail funding support for activities involved in development of new products, processes, prototypes, technology etc. which have the poor in their focus. NABARD Consultancy Services (NABCONS) NABCONS is a wholly owned subsidiary of NABARD, which has established itself as a dependable and professional consultancy services provider in agriculture and allied activities. As on 31 March 2007 ,it has cumulatively contracted 487 national and international assignments involving consultancy fee of Rs.25.49 crores.

Co-Financing It has been the experience that Banks are wary of taking credit risk of financing high tech/large scale/ export oriented agricultural projects or those involving sunrise technologies. To instill confidence in banks and ensure credit flow to such projects, NABARD has entered into agreements for co-financing with 14 commercial banks. During 2006-07, seven projects were sanctioned with bank loan of Rs. 145.03 crore and NABARD's share of Rs. 72.42 crore. Floriculture, organic farming, milk processing, ethanol production and agro processing are among the projects sanctioned so far.

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FUNCTIONS OF NABARD15

CREDIT FUNCTIONNABARD's credit functions cover planning, dispensation and monitoring of credit. This activity of NABARD involves Framing policy and guidelines for rural financial institutions Providing credit facilities to issuing organizations, Preparation of potential-linked credit plans annually for all districts for identification of credit potential and Monitoring the flow of ground level rural credit. Under the NABARDS Credit Function the following prograammes are conducted. Credit Planning16 Preparation of district-wise credit plans annually that indicate exploitable potential available for development through bank credit under agriculture, allied activities, Rural Non-Farm Sector etc. Preparation of State Focus Paper based on district credit plans. Monitoring the flow of ground level credit. Issuing policy and operational guidelines to rural financial institutions (RFIs).

Financial Services
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Refinancing RFIs for providing loans for investment and production purposes in rural areas. Loans to State Governments for strengthening of cooperatives and also developing physical and social infrastructure in rural areas. Support for micro-credit innovations of Non-Governmental Organizations (NGOs) and other non-formal agencies. Monitoring and Evaluation of financed projects, models and practices in credit

www.Nabard.org Visit the official website of Nabard.

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DEVELOPMET AND PROMOTIONAL FUNCTION-

Credit is a critical factor in development of agriculture and rural sector as it enables investment in capital formation and technological upgradation. Hence strengthening of rural financial institutions, which deliver credit to the sector, has been identified by NABARD as a thrust area. Various initiatives have been taken to strengthen the cooperative credit structure and the regional rural banks, so that adequate and timely credit is made available to the needy. In order to reinforce the credit functions and to make credit more productive, NABARD has been undertaking a number of developmental and promotional activities such as:Help cooperative banks and Regional Rural Banks to prepare development actionsplans for themselves 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 Regional Rural Banks and the sponsor banks to enter into MoUs specifying their respective obligations to improve the affairs of the Regional Rural Banks in a stipulated timeframe Monitor implementation of development action plans of banks and fulfillment of obligations under MoUs. Which Provide financial assistance to cooperatives and Regional Rural Banks for establishment of technical, monitoring and evaluations cells. Provide financial support for the training institutes of cooperative banks 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 Farmers clubs Provide financial assistance to cooperative banks for building improved management information system, computerization of operations and development of human resources

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SUPERVISORY FUNCTION-

NABARD has been entrusted with the statutory responsibility of conducting inspections of State Cooperative Banks (SCBs) District Central Cooperative Banks(DCCBs) and Regional Rural Banks (RRBs) under the provision of theBankingRegulation Act, 1949. In addition, NABARD has also been conducting periodic inspe ctionsof state level cooperative institutions such as State CooperativeAgriculture and Rural Develop ment Banks (SCARDBs), Apex Weavers Societies,Marketing Federations, etc. on a voluntary basis. Although the prime objective of the statutory inspections is to ensure general safety

of public deposits, NABARD, through these statutory inspections, has been simultaneouslyendeavor ing for further developing and strengthening the above institutions to enablethem to play a far more effective and efficient role in meeting the rural creditr equirements. The general banking environment emerging out of the financial sector reformsintroduced by GOI/ RBI has also since been extended to cover cooperative banks andRRBs. While the capital adequacy normhas not yet been made applicable to thesebanks, the other prudential norms viz., inco me recognition, asset classification andprovisioning, which were made applicable by Reserve Bank of India to the commercial banking sector have been extended to cover

SCBs and DCCBs since 1996-97 and to SCARDBs in 1997-98. These norms had already been extended to RRBs since1995-96. The exposure of these institutions to the prudential norms also called for asuitable strategy to be adopted by the NABARD to help these banks to adjust to the new financial discipline.

Broad Powers and Functions of the Board of Supervision are(i) Giving directions and guidance in respect of policies and on matters relating tosupervision and inspection, reviewing the inspection findings, suggesting appropriate measures (ii) Reviewing the follow-up action taken by Department of Supervision (DoS) on matters of frauds and internal checks and control. (iii) Identifying the emerging supervisory issues in the functioning of cooperative banks/RRBs such as NPAs recovery, investment portfolio, credit monitoring system, management practices, frauds, etc. (iv) Suggesting necessary follow-up measures
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(v) Recommending appropriate training for Inspecting Officers of NABARD for imparting necessary skills and knowledge (vi) Suggest measures for strengthening of DoS (vii) Recommend issue of directions by RBI (viii) Oversee the quality of inspections carried out and the reports issued (ix) Review the information generated through off-site surveillance and other supplementary vehicles, action taken thereon (x) Undertake any other functions entrusted from time to time by the Board of Directors of NABARD. The Board of Supervision, since its formation on 20 November 1999, has held 31 meetings till10 January 2007 and reviewed the financial position of Cooperative Banks and RRBs. Based onthe observations of BoS, authorities concerned have been apprised of the weaknesses.

INSTITUTIONAL AND CAPACITY BUILDING FUNCTION-

Institutional and capacity building is also one of the important functions of NABARD. We can summarize these functions of it as follows Help cooperative banks and RRBs to prepare development actions plans for themselves 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 Provide financial assistance to cooperatives and RRBs for establishment of technical, monitoring and evaluations cells. Provide organization development intervention (ODI) through reputed training institutes like Bankers Institute of Rural Development (BIRD), Lucknow, National Bank Staff College, Lucknow, College of Agriculture Banking, Pune, etc. Provide training for senior and middle level executives of commercial banks, RRBs and cooperative banks. Help cooperative banks and RRBs to prepare development actions plans for themselves 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
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Monitor implementation of development action plans of banks and fulfillment of obligations under MoUs. Provide financial assistance to cooperatives and RRBs for establishment of technical, monitoring and evaluations cells. Provide organisation development intervention (ODI) through reputed training institutes like Bankers Institute of Rural Development (BIRD), Lucknow, National Bank Staff College, Lucknow, College of Agriculture Banking, Pune, etc. Provide financial support for the training institutes of cooperative banks Provide training for senior and middle level executives of commercial banks, RRBs and cooperative banks Create awareness among the borrowers on ethics of repayment through Vikas Volunteer Vahini/farmer's clubs Provide financial assistance to cooperative banks for building improved management information system, computerization of operations, development of human resources, etc. NABARD AND ITS ROLE IN TRAINING17-

The provisions of the Act as stated below very clearly indicate the nature and scope of the developmental mandate of the Bank and its role in training and capacity building with the underlying belief that the process of development cannot be accomplished by credit/refinance alone. Section 38 of the NABARD Act provides that the Bank shall: Maintain expert staff to study all problems relating to agriculture and rural development and be available for consultation to the Central Government, the Reserve Bank, the State Governments and the other institutions engaged in the field of rural development. Provide facilities for training, for dissemination of information and the promotion of research including the undertaking of studies, researches, techno-economic and other surveys in the field of rural banking, agriculture and rural development. Provide technical, legal, financial, marketing and administrative assistance to any person

17

www.indianbanksinfo.com

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engaged in agriculture and rural development activities. May provide consultancy services in the field of agriculture and rural development and other related matters in or outside India, on such terms and against such remuneration, as may be agreed upon. In this context, the role of training in NABARD and the role played by it for capacity building in client institutions, partner agencies and other developmental agencies is important. For maintaining 'Expert Staff', the bank needs to provide continuous exposure to its officers and staff for upscaling their knowledge and skills in core areas. However, in the initial years the Bank had recruited expert staff from various technical disciplines and created a separate cadre of officers. These officers were involved in formulating, appraising, monitoring and evaluating different agricultural projects implemented by different credit agencies. These officers, irrespective of their academic background, were imparted similar type of training as all other officers. Their placements and the regular job rotations helped in grooming them to take up assorted assignments, get involved in a variety of roles and functions including credit, developmental, promotional, supervisory and necessary support and information for decision making. The Bank also had access to their specialised skills which were utilised whenever needed. In pursuance of the Bank's mandate as stated in the Act, the Bank provides training facilities for the RFIs and agencies involved in rural development through BIRD and the two RTCs. With a view to broadbase the training and capacity building efforts, the Bank encourages the RFIs to set up their own training systems and provides these training institutes the necessary support to conduct meaningful and quality training. Options and avenues for strengthening the training interventions at the client level are continuously examined so that the human resources in these institutions are developed to take on the challenges, reckon with the competition, improve customer service, expand outreach, develop suitable products and thereby contribute to rural development.

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CONCLUSIONNABARD is set up by the Government of India (GoI) as a development bank with the 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, as also for matters connected therewith and incidental thereto. "Growth with Social Justice" has been the basic objective of the Development Planning in India since independence. Since the beginning of planned development, the Government through Five Years Plans made significant strides in developing rural India. The National Bank for Agriculture and Rural Development (NABARD) was set up in July 1982. It became the apex institution to play a pivotal role in the sphere of policy planning and providing refinance facilities to rural financial institutions and for augmenting their resource base. Its subscribed and paid-up Capital was Rs.100 crore which was enhanced to Rs. 500 crore, contributed by the Government of India (GOI) and RBI in equal proportions. Currently it is Rs. 2000 crore, contributed by GoI (Rs.550 crore) and RBI (Rs.1450 crore). The Management of NABARD vests with the Board of Directors. The Board of Directors of NABARD comprises the Chairperson, Managing Director, representatives of RBI, GoI, State Governments and Directors nominated by the GoI. As we analyse the data it shows that NABARD is working for the 360 degree development of rural India. Every year the financial assistance received by NABARD and the disbursement made out of it are increasing. The balance sheet size also increased from Rs.81220 crore to Rs.98706 crore & profit after tax from Rs.856 crore to Rs.1226 crore. In short we can say that NABARD is providing rural India all round assistance and proved to be an institution where "Growth with Social Justice" exists.

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BIBLIOGRAPHY
1. http://www.nabard.org/nabardrolefunct/nabardrole&functions.asp 2. http://www.nabard.org/introduction.asp 3. http://www.nabard.org/nabardataglance.asp 4. http://slbc.bih.nic.in/adwd-relief.htm

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