Role of NABARD in Indian agricultural sector

Role of NABARD in Indian agricultural sector

Executive summary The parliament through Act 61 of 81 set up National Bank for Agricultural and Rural Development [NABARD] after the former chairman of Reserve Bank of India Shri. B. Sivaraman submitted a report to the Governor on November 28, 1979. The committee set up by Sivaraman reviewed the arrangements for Institutional Credit for Agriculture and Rural Development CRAFICARD. The objectives of NABARD was to be able to provide adequate assistance to the millions of farmers in rural India who were not being given any importance in the quick and ever rising economic boom that was happening with Indian markets and industries. The committee decided on the fact that the Agricultural sector deserved as much attention as the other sectors, it being a sources of economy that India largely depends on thus the committee realized that the huge credit that the sector would require to achieve any kind of development. There was a requirement for incorporation of the credit system and rural agricultural development. NABARD'S task was to be to promote innovations and encourage initiatives in the agricultural sector and also to promote substantial and equitable agricultural and the rural development which was long due to the Indian farmers through effective credit support and other services which would be required to attain its mission and also infrastructure and institutional building through the finance it would provide. Since the Reserve Bank of India already had multiple issues to deal with regarding financing, regulating and monitoring various financial sectors the RBI was not in a position to give its complete attentions to the sector of agriculture with the integration of credit financing. This project discusses about the Indian agriculture sector, its features its role in Indian economy and its developmental problem. The project concentrates on NABARD completely it discusses about it credit and other functions and its role in Indian agricultural sector.

IndexSr No.CONTENTS

1Design of study

2Introduction to NABARD

3NABARD funding, associates, subsidiaries & structure

4Introduction to Indian agriculture

5Agriculture in Indian economy

6Functions of NABARD

7Financial functions of NABARD

8Developmental functions of NABARD

9Supervisory functions

10Achievements of NABARD

11Conclusion

12 Bibliography &Webliography

Design of studyObjectives To study the role of agriculture in Indian economy. To know the problem faced by the Indian agricultural sector. To study the role and function of NABARD. To know about the credit facilities provided by NABARD.

Methodology This is project is completely based on secondary data. The project is completed by going through various books on Indian agriculture, role of NABARD in this field etc. The project is based on various references taken from books as well as various websites mentioned in the bibliography at the end.

Scope Within the scope of this project, the project will discuss the topic which is the relation of NABARD with Indian agriculture sector and will try to analyze through its various schemes and funds whether its legislative intent has been fulfilled.

CHAPTER 1

INTRODUCTION TO NABARD

INTODUCTION HISTORY MISSION COMPANY OBJECTIVES

1.1 introduction- national bank for agricultural and RURAL DEVELOPMENT NABARD is an apex institution accredited with all matters concerning policies, planning and operation in the field of credit for agriculture and economic activities in rural areas. NABARD operates throughout the country through its head office at Mumbai, 25 regional offices and sub-offices, located in the capitals of all states/union territories. It also has 4 training establishments. It takes measures towards institution building for improving absorptive capacity of the credit institutions, training of personnel, etc... it coordinates the rural financing activities of all institutions engaged in development work at all the field levels and maintains liaison with the Government of India, State Government, Reserve Bank o f India and other national level institutions concerned with the 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 project refinanced by it. It promotes research in the fields of rural banking, agriculture and rural development. Reserve Bank of India (RBI) combined diverse functions and duties including rural credit. RBI could not devote sufficient attention to the details of complex credit problems of integrated rural development in the midst of its multifarious and growing responsibilities in various other fields. This was the problem of RBI until 1981. In order to rectify this problem, National Bank for Agriculture and Rural Development (NABARD) was established in July 1982 on basis of the recommendations of the Sivaraman Committee (1978). Since then, NABARD has taken over and decentralized the RBIs functions in the sphere of rural credit for the promotion of agriculture, small scale industries, Cottage and village industries, handicrafts and other rural crafts and allied economic activities in rural areas. The NABARD, the apex bank has been envisaged as an organizational device to provide undivided attention, forceful direction and a pointed focus to the credit problems arising out of an integrated approach to rural development. On its establishment, NABARD has taken over from the RBI its refinancing functions in relation to State Co-operative Banks and Regional Rural Banks. The Bank is now the Co-coordinating agency in relation to the Central Government, planning Commission, State governments and institutions at all India and State levels engaged in giving effect to the various policies and programmes relating to rural credit. As a development bank for the rural sector, NABARD will have special responsibility to ensure that the training facilities for the bank staff engaged in rural lending are adequate. To the extent that the training schemes are sponsored and financed by the Agricultural Refinance and Development Corporation (ARDC), these will automatically stand transferred to NABARD. This is a field in which the RBI should continue to take active interest and take the necessary measures to strengthen the efforts of NABARD at improving and expanding the training facilities for project and programme lending. It took over the functions of erstwhile Agriculture Credit Department, Rural Planning and Credit Department, Rural Planning and Credit Cell of Reserve Bank of India and Agriculture Refinance and Development Corporation. The main functions of NABARD pertain lo policy development, coordination, research, training, etc., relating to rural credit. It provides refinance lo cooperatives, regional rural banks, etc. Moreover it makes loans and advances to stale governments for a period not exceeding more than 20 years to enable (hem lo subscribe directly or indirectly lo share the capital of cooperative credit societies. It also promotes research in agriculture and rural development through its research and development fund. It undertakes inspection of co-operative banks and RRBs and advises the government on related matters. NABARD undertakes monitoring and evolution of the projects financed by it. The NABARD maintains two funds; The National Rural Credit Fund (long-term operations) and the National Rural Credit Fund (Stabilization). The Central and State Governments contribute to the fund. The NABARD operates throughout the country through its 16 regional offices located in the capitals of all the major Stales and 3 sub offices, the paid-up capital of NABARD stood at Rs.2000 crore as on March 31, 2010. The profit after tax amounted to Rs.1558 crore during the year 2009-10 as against Rs. 1390 crore during the year 2008-09. Sources of Fund NABARD had a paid-up share capital of Rs. 100 crore, since this has been raised through stages to Rs. 5,000 crore. The NABARD is empowered to borrow from central government. It is also permitted to borrow foreign currency. It can also borrow long-term loans from any other authority or organisation or institution approved by the Board, It is empowered to issue bonds, debentures and other financial instruments.

1.2 HISTORY NABARD was established on the recommendations of Shivaraman Committee, (by act 61, 1981 of Parliament) on 12 July 1982 to implement theNational Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) ofReserve Bank of India and Agricultural Refinance and Development Corporation (ARDC). It is one of the premier agencies to provide credit in rural areas. NABARD is India's specialised bank for Agriculture and Rural Development in India. The initial capital of NABARD was Rs. 100 crore. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 March 2013, stood at 4000 crore with Government of India holding 3,980 crore (99.50%) and Reserve Bank of India 20.00 crore (0.50%). As on 31 March 2014, NABARD paid up capital stood at Rs.4700crore (Rs.4680Crore of GoI and Rs.20Crore of RBI). International associates of NABARD ranges from World Bank-affiliated organizations to global developmental agencies working in the field of agriculture and rural development. These organizations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimizing the agricultural process.

1.3 mission Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institutions development and other innovation initiatives. 1.7 Company NABARD created a non-banking financial company [NBFC] NABARD Financial Services [Nabfins] in 2007. As required by its networks NABARD created this institute to help address issues of transparency in accounting disclosure, high transaction costs, poor diversification of products, and high rates of interests. NABARDs ability to market the innovative credit dispersion is strongly enhanced through use of its network.

1.8 Objectives of NABARD The NABARD is an apex development bank which provides help for agricultural and rural development. It has been established with the following objectives:1. To give undivided attention and purposeful direction to integrated rural development;2. To act as a centre piece for the entire rural credit system at the national level;3. To act as a provider of supplemental funding to rural credit institutions;4. To arrange for investment Credit to small industries, village and cottage industries, handicrafts and other rural Crafts, artisans and farmers.5. To improve the credit distribution system by institution building, rehabilitation of credit institutions and training of bank personnel;6. To provide refinance facilities to State Land Development Banks (SLDBs), State Co-operative Banks, (SCBs), Regional Rural Banks (RRBs) and Commercial Banks (CBs) for development purposes in rural areas;7. To Co-ordinate the working of different agencies engaged in development work in rural areas at the regional level, and to have liaison with Government of India, RBI, State Government and other policy making institutions at the national level; and 1508. To inspect, monitor and evaluate projects getting refinance from the NABARD14. It was indeed a singular misfortune of the Indian Agricultural Banking System that it did not have a national level component at the top even after three and a half decades of countrys independence. The Reserve Bank of India set up a Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) which submitted its interim Report in November 1979. The CRAFICARD made recommendations for the establishment of NABARD as an apex institution for agricultural financing.

CHAPTER 2

NABARD- FUNDING, ASSOCIATES, SUBSIDARIES AND STRUCTURE

FUNDING ASSOCIATES SUBSIDARIES STRUCUTR2.1 Funding GOI & RBI provided initial capital of Rs.1, 000 million to start up the NABARD, which was enhanced to Rs.20, 000 million. Both these entities still provide significant financial contributions to NABARD and act not only as business oriented funders but also have decision-making power through shares in the organization and by decree in NABARDs constitution. NABARD receives funding from National Rural Credit Long Term Operations,[NRC-LTO] Fund & the NRC [stabilization] Fund, as well as from Bonds and Debentures. NABARD borrows from commercial banks, foreign currency loans, RIDF deposits, among other funds, and liabilities. These funds are primarily meant for carrying out business with the intent of accelerating the process of agricultural and rural development in India. Factors that significantly influence the success of NABARDs operations include continuing to receive funding from RBI, GOI, commercial banks, foreign currency loans etc. Committed financial backing the organization is critical for operations sustainability. The financial crisis during 2007-08 presented a precarious situation as funding worldwide was scaled back. NABARDs ability to perceive through such crisis and continue to cover their costs is a determining factor to pursue new initiatives and programs.

2.2 Associates NABARD has main eight international associates, which range from World Bank-affiliated organizations to global development agencies working in the field of agriculture and rural development. They are [i] World Bank Group & the International Development Association [ii] KfW of Germany [iii] Swiss Agency for Development & Cooperation [iv] Commission on European Community [v] Asian Pacific Agricultural Credit Association [vi] International Fund for Agricultural Development [vii] GTZ of Germany &[viii] Organization of Petroleum Exporting Countries. The associates play key role in funding projects and assisting in project implementation through sustained partnership. The associates offer financial and advisory support for implementing schemes that are aimed at uplifting the rural poor and making agricultural processes effective and yielding. Financial support and advisory role of World Bank Group and continuation of Memorandum of Understanding between NABARD & its associates would be a critical factor for successful program implementation and carrying out NABARDs mission.

2.3 Subsidiaries NABARD has two subsidiary organizations, viz, the NABARD Consultancy Services [NABCONS] and the Bankers Institute of Rural Development [BIRD]. NABCONS is engaged in providing consultancy services in all spheres of agriculture, rural development and allied areas. The Consultancy leverages on the core competence of the NABARD in the area of agricultural and rural development, especially multidisciplinary projects encompassing banking, institutional development, infrastructure, training etc. BIRD primarily acts as a training facility providing information needs of rural bankers through its topical training programs & seminars.

2.4 Organizational Structure of NABARD. The bank consists of a Board of Directors at the very top to maintain affairs and policy decisions who maintain control below them is an elected Chairman who is assisted by a Managing Director. There are two Executive Directors below the Managing Director who handles affairs. There are 26 Head Office Departments across the country which is then pared with 28 Regional Offices and 6 Training Establishments. There is also a Special Cell Sub-office at Srinagar in Jammu and Kashmir and 391 District Development Offices.[3]

CHAPETR 3

INTRODUCTION TO INDIAN AGRICULTURAL SECTOR

INTODUCTION PRESENT SCENARIO FEATURES

3.1 INTRODUCTION Agriculture Sector of Indian Economy is one of the most significant parts of India. Agriculture is the only means of living for almost two-thirds of the employed class in India. As being stated by the economic data of financial year 2006-07, agriculture has acquired 18 percent of India's GDP. The agriculture sector of India has occupied almost 43 percent of India's geographical area. Agriculture is still the only largest contributor to India's GDP even after a decline in the same in the agriculture share of India. Agriculture also plays a significant role in the growth of socio-economic sector in India. In the earlier times, India was largely dependent upon food imports but the successive stories of the agriculture sector of Indian economy have made it self-sufficing in grain production. The country also has substantial reserves for the same. India depends heavily on the agriculture sector, especially on the food production unit after the 1960 crisis in food sector. Since then, India has put a lot of effort to be self-sufficient in the food production and this endeavor of India has led to the Green Revolution. The Green Revolution came into existence with the aim to improve the agriculture in India. The services enhanced by the Green Revolution in the agriculture sector of Indian economy are as follows: Acquiring more area for cultivation purposes Expanding irrigation facilities Use of improved and advanced high-yielding variety of seeds Implementing better techniques that emerged from agriculture research Water management Plan protection activities through prudent use of fertilizers, pesticides, and cropping applications All these measures taken by the Green Revolution led to an alarming rise in the wheat and rice production of India's agriculture. Considering the quantum leap witnessed by the wheat and rice production unit of India's agriculture, a National Pulse Development Programme that covered almost 13 states was set up in 1986 with the aim to introduce the improved technologies to the farmers. A Technology Mission was introduced in 1986 right after the success of National Pulse Development Programme to boost the oilseeds sector in Indian economy. Pulses too came under this programme. A new seed policy was planned to provide entree to superior quality seeds and plant material for fruits, vegetables, oilseeds, pulses, and flowers. The Indian government also set up Ministry of Food Processing Industries to stimulate the agriculture sector of Indian economy and make it more lucrative. India's agriculture sector highly depends upon the monsoon season as heavy rainfall during the time leads to a rich harvest. But the entire year's agriculture cannot possibly depend upon only one season. Taking into account this fact, a second Green Revolution is likely to be formed to overcome the restrictions. An increase in the growth rate and irrigation area, improved water management, improving the soil quality, and diversifying into high value outputs, fruits, vegetables, herbs, flowers, medicinal plants, and bio-diesel are also on the list of the services to be taken by the Green Revolution to improve the agriculture in India.

3.2 PRESENT SCENARIO OF AGRICULTURAL SECTOR IN INDIA TheEconomic Survey 2014-15wasreleased in the Parliament byArunJailtley. It has highlighted various challenges and reforms in the agriculture sector. According to the survey,GDPdeclined to 15.2% during the Eleventh Plan and then further decreased to 13.9% in 2013-14. There also has been decrease in the number of cultivatorsfrom 127.3 million (Census 2001) to 118.7 million (Census 2011). According to the Economic Survey, growth rates of productivity in agriculture sector are far below global standards; productivity levels of rice and wheat have declined after the green revolution of the 1980s. Another issue is soil degradation due to declining fertilizer-use efficiency.Also, the food subsidy has increased substantially in the past few years. Food subsidy was Rs. 92,000 crore in 2013-14. With 60 per cent of the total food grains and oilseeds produced being grown in the kharif season, and with just about 35 per cent of arable area being irrigated, Indian agriculture is still dependent on rainfall. The second long-range forecast for the current year by the IMD for monsoon season indicates that the monsoon rainfall is likely to be 93 per cent of the LPA (model error 4 per cent), with 71 per cent probability of subnormal/deficit rainfall and 70 per cent occurrence of El Nino. The government has put in place contingency measures in about 500 districts. Currently, India is in an anomalous situation of being largely self-sufficient with large stocks of foodgrains on the one hand and registering high food inflation. On domestic and international marketing, the plethora of government interventions that were used to build a marketing set up have actually served as barriers to trade. Removing market distortions will create greater competition in markets, promote efficiency and growth and facilitate the creation of a national agricultural market.

3.3 FEATURES OF INDIAN AGRICULTURE Some of the outstanding features of Indian agriculture are mentioned as follows.1. Subsistence agriculture: Most parts of India have subsistence agriculture. The farmer owns a small piece of land, grows crops with the help of his family members and consumes almost the entire farm produce with little surplus to sell in the market. This type of agriculture has been practiced in India for the last several hundreds of years and still prevails in spite of the large scale changes in agricultural practices after Independence.2. Pressure of population on agriculture: The population in India is increasing at a rapid pace and exerts heavy pressure on agriculture. Agriculture has to provide employment to a large section of work force and has to feed the teeming millions. While looking into the present need of food grains, we require an additional 12-15 million hectares of land to cope with the increasing demands by 2010 A.D. Moreover, there is rising trend in urbanization. Over one-fourth of the Indian population lived in urban areas in 2001 and it is estimated that over one-third of the total population of India would be living in urban areas by 2010 A.D. This requires more land for urban settlements which will ultimately encroach upon agricultural land. It is now estimated that about 4 lakh hectares of farm land is now being diverted to non-agricultural uses each year.3. Importance of animals: Animal force has always played a significant role in agricultural operations such as ploughing, irrigation, threshing and transporting the agricultural products. Complete mechanisation of Indian agriculture is still a distant goal and animals will continue to dominate the agricultural scene in India for several years to come.4. Dependent upon Monsoon: Indian agriculture is mainly dependent upon monsoon which is uncertain, unreliable and irregular. In spite of the large scale expansion of irrigation facilities since Independence, only one-third of the cropped area is provided by perennial irrigation and the remaining two-third of the cropped area has to bear the brunt of the vagaries of the monsoons.5. Variety of crops: India is a vast country with varied types of relief, climate and soil conditions. Therefore, there is a large variety of crops grown in India. Both the tropical and temperate crops are successfully grown in India. Very few countries in the world have a variety of crops comparable to that produced in India.6. Predominance of food crops: Since Indian agriculture has to feed a large population, production of food crops is the first priority of the farmers almost everywhere in the country. More than two-thirds of the total cropped area is devoted to the cultivation of food crops. However, with the change in cropping pattern, the relative share of food crops came down from 76.7 per cent in 1950-51 to 58.8 per cent in 2002-03.7. Insignificant place to given fodder crops: Although India has the largest population of livestock in the world, fodder crops are given a very insignificant place in our cropping pattern. Only four per cent of the reporting area is devoted to permanent pastures and other grazing lands. This is due to pressing demand of land for food crops. The result is that the domestic animals are not properly fed and their productivity is very low compared to international standards.8. Seasonal pattern:India has three major crop seasons.(i) Kharif season starts with the onset of monsoons and continues till the beginning of winter. Major crops of this season are rice, maize, jowar, bajra, cotton, sesame, groundnut and pulses such as moong, urad, etc.(ii) Rabi season starts at the beginning of winter and continues till the end of winter or beginning of summer. Major crops of this season are wheat, barley, jowar, gram and oil seeds such as linseed, rape and mustard.(iii) Zaid is summer cropping season in which crops like rice, maize, groundnut, vegetables and fruits are grown. Now some varieties of pulses have been evolved which can be successfully grown in summer.

CHAPTER 4

AGRICULTURE IN INDIAN ECONOMY AGRICULTURE IN INDIAN ECONOMY INDIAS AGRICULTUTRAL DEVELOPMENT PROBLEM- LACK OF ACEES TO CREDIT

4.1 Agriculture in the national economy Agriculture forms the backbone of Indian economy despite concentrated industrialization in the last 5 decades; agriculture occupies a place of pride. Being the largest industry in the country, agriculture provides employment to around 5 of the total workforce in the country. The significance of agriculture in the economy can be best explained by considering the role of agriculture under different heads.

1. Share of agriculture in total gdp : Two important facts must be emphasized here. Firstly, agriculture contributes even now a major share of national income in India. Secondly, the share of agriculture in national income however, has been on a downward trend and this is being taken up by the manufacturing and service sectors respectively. In a rapid developing country it is as it should be. Comparison can be made between the positions of agriculture in India with that of other countries as regards the share of agriculture in national income. Its seen that more developed the country is, lesser is the share of agriculture in its national income this can be seen from the contributions made in UK, USA, Canada and Australia, which are 2, 3, 4 and 5 percent respectively. India having not yet reached the stage of an advance economy, has an agricultural sector, which is still dominant one in the country.2. Share of agriculture in employment of the countryAgriculture dominates the Indian economy to such an extent that a very high proportion of working population in India is engaged in agriculture. Data provided by census of India reveals that 69% of total main workers were engaged in agriculture and allied activities. 3. Agriculture for industrial developmentIndian agriculture has been the source of supply of raw material to our leading industries. Cotton and jute, textiles, sugar, plantations- all these directly depend on agriculture output. There are many industries, which depend on agriculture industry. Many of our small scale and cottage industries like handlooms, oil crushing, etc. depend on agriculture for their raw materials.But then, in recent years, agriculture is losing its significance to industries such as iron and steel, engineering, chemicals, etc. However, in recent years, the importance of food processing industries is being increasing recognized both for generation of income and generation of employment. 4. Agriculture in international trade.Importance of Indian agriculture sector also rises from the role it plays in Indias trade. Agricultural products- tea, sugar, oilseeds, tobacco, spices, etc. constitutes the main items of export in India. Agricultural goods which are exported amount to 50% of our exports, and manufactures with agriculture content constitutes another 20%. The total comes to 70% of Indias export. This has great significance for economic development. For, increase exports help the country to pay for the increase exports of machinery and raw materials5. Agriculture in economic planningImportance of agriculture in the national economy is indicated by many facts. For e.g. agriculture is the main support for transport sector as railways and roadways secure bulk of their business form the movement of agricultural goods. Further it is seen that good crops implying large purchasing power with the farmers lead to greater demand for manufacturers and therefore better prices. In other word prosperity of farmers is also the prosperity of industries and vice versa. Agriculture growth has direct impact on poverty irradiation and an important factor in containing inflation, employment generation, etc. It is clear, that agriculture is the backbone of the Indian economy and the prosperity of agriculture can also stand for the prosperity of the economy. At the same time its true that the precipitate productivity in agriculture is less than in the industry. Many scholars thing that so long as the Indian economy is denominated by agriculture activates per capita income will not rise to an extent, which is necessary and desirable.6. Changing scenario of rural creditIndian rural credit structure is retarded all over the world as quite unique and innovative evolved over a period of last 8 decades it can perhaps the owner of the a very important constituent of the most complex rural economy I the third world countries. One of the distinguishing features had been its ability to adapt itself without much turmoil and stress, to the socio- economic dynamics of the rural scenario. One of the years it has developed into a multi-faceted structure to service almost the entire cross section of the rural population spread throughout the length and breadth of the country

4.2 India's Agriculture Development Problem:Lack of Access to Credit Itis one of the most pressing issues that hinderIndias rural population from progress is the lack of access tocredit.Farmerssuicidewithin theagricultural sectordoes not occur as a shocking matter as these poor citizens are deprived of monetary assistance when they are most in need.[1]A farmers cries for help have been ignored as the damaging effects from the absence of credit loans tickles down the population. Apart from thehealthcareof a farmer, the lack of access to credit also highly important as almost 80% the farmers own less than a hectare of land. The availability of credit allows farmers to be protected from the inflated costs faced inagricultureand also, improve the quality offertilizersand hence the output. Should the distribution of credit loans improve, theIndian governmentwould also find it easy to meet production targets and have a better control over prices of grains. Due to the critical shortage of agricultural output, India has to resort to banninggrainexportsand instead, drive up itsimportbills fromwheatcoming into the country. There has been so much attention focused on the industrial and services sector that the agricultural side has been largely neglected.The lack of credit loans coupled with improper government intervention had resulted in thelivelihoodof the farmers to go downhill.Ascommercial banksare not present in remote locations of India, where agriculture is supposed to thrive, it becomes an important limitation as the rural population has a strong dependence on it.Co-operative bankswhich have been set up previously were also doomed to fail as a result of badloansand a lack of funds. These commercial banks have their own set of worries, as defaults andcrop failuresare common in the sector. As such, they prefer lending out to areas where each farmer owns a much larger proportion of land and also, have betterirrigationsystems. However, that does not solve the problem as the smaller farmers (which forms a majority) issues remains unaddressed. There should be betterbankingsystems established that is accessible and affordable to every person. It is obvious that the benefits ofeconomic growthhave not been equally shared among all as the access to credit is not granted to all. Economic opportunities ought to be created for the marginalized groups to help inpoverty reductionandinequalityproblems. Further attempts made by the government to expand credit loans have ironically resulted in more cases ofpovertythan ever.The lack of access to formal credit thus places many constraints on agricultural output and also, the standards of living for the rural population thereby hindering their path to further economic andsocial development.

CHAPTER 5

FUCNTIONS OF NABARD

5.1 Functions of NABARD NABARD is a Development Bank with a mandate for providing and regulating credit and other facilities for the promotion and development 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 integrated rural development and securing prosperity of rural areas, and for matters connected therewith or incidental thereto.In discharging its role as a facilitator for rural prosperity, NABARD is entrusted with1. Providing refinance to lending institutions in rural areas2. Bringing about or promoting institutional development and3. Evaluating, monitoring and inspecting the client banksBesides 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 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 Acts as regulator for cooperative banks and RRBs The functions of NABARD are to provide assistance to agriculture dependent and to frame, plan and implement policies for the betterment of agriculture sector in return helping the people dependent on agriculture. The main functions of NABARD are as follows:

CHAPTER 6

FINANCIAL FUNCTIONS OF NABARD

REFINANCE DIRECT FINANCE

Financial functions 6.1Refinance6.1A Short term and medium term loans Modern agriculture, as distinguished from traditional cultivation, involves substantial investment of recurring nature for using high yielding varieties of seeds, fertilizers, insecticides and costly agricultural implements. In such a situation, arrangements for credit should go much beyond the simple provision of credit and must be linked operationally with productivity and other services. Production and productivity, marketing and raising the level of surplus and savings must, therefore, be the major functions of credit. The benefit of modern technology, the advantages of institutional credit, infrastructural arrangements etc., should accrue to all classes of farmers. Besides, on the supply side, there must be an arrangement for assessing the requirements of funds on the basis of actual cost and raising the resources therefore. It was in this context, the crop loan system or the production oriented system of lending was evolved and conceived as the most appropriate mechanism for mass disbursement of production credit. Production Credit Department (PCD) deals with short term refinance facilities, for various types of production, marketing and procurement activities, being provided to client institutions, as detailed below:1. Short Term (Seasonal Agricultural Operations)Refinance is provided for production purposes at concessional rate of interest to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs) by way of sanction of credit limits. Each withdrawal against the sanctioned credit limit is repayable within 12 months.2. Short Term Refinance to RRBs, PSBs and CCBs (directly) for financing PACS for their Seasonal Agricultural OperationsA new refinance product for financing of PACS through PSBs & RRBs, wherever Cooperative Banks are weak or not in a position to lend to PACS adequately, was introduced during last year. (2011-12)3. Short Term (Others)The ST (Others) limit would consist of different purposes viz. ST- Agriculture and Allied Activities, ST - Marketing of crops, ST- Fisheries Sectors, Industrial Cooperative Societies (other than weavers), ST- Labor Contract and Forest Labor Cooperative Societies including collection of Minor Forest produce. ST- Rural artisan including weavers members of PACS/LAMPS/FSS, ST- Purchases, Stocking and Distribution of Chemical Fertilizers and other Agricultural Inputs on the basis of bank wise RLP for respective purposes. The limit is sanctioned to SCBs and RRBs.4. MT Conversion.NABARD provides relief to farmers whose crops are damaged due to natural calamities, by way of conversion of current short term agricultural loans into medium term loans and rephasement / reschedulement of existing MT (Conversion) loans. Consolidated limit will be sanctioned to RRBs and SCBs in respect of eligible DCCBs

6.1B Long term loans Investment credit leads to capital formation through asset creation. It induces technological up gradation resulting in increased production, productivity and incremental income to farmers and entrepreneurs. This is a long-term refinance facility. The credit is normally provided for a period of 3 to 15 years. It is intended to create income generating assets in the following sectors:1. Agriculture and allied activities2. Artisans, small scale industries, Non-Farm Sector (Small and Micro Enterprises), handicrafts, handlooms, powerlooms, etc.3. Activities of voluntary agencies and self help groups working among the rural poor Eligible InstitutionsThe Institutions Eligible for Refinance are:1. State Co-operative Agriculture & Rural Development Banks (SCARDBs)2. Regional Rural Banks (RRBs)3. State Co-operative Banks (SCBs)4. Commercial Banks (CBs)5. State Agricultural Development Finance Companies (ADFCs)6. Scheduled Primary Urban Co-operative Banks (PUCBs)7. North East Development Finance Corporation (NEDFC)8. Non-Banking Financial Companies (NBFCs)

Purposes :1. Farm Sector :Agriculture and allied activities such as minor irrigation, farm mechanisation, land development, soil conservation, dairy, sheep/goat rearing, poultry, piggery, plantation/horticulture, forestry, fishery, storage and market yards, bio-gas and other alternate sources of energy, sericulture, apiculture, animals and animal driven carts, agro-processing, agro-service centres, etc.2. Non-Farm Sector :Artisans, Small & Micro Enterprises, handicrafts, handlooms, power looms, etc

Loan period: The loan period is a maximum of 15 years 6.2 DIRECT FINANCE

A. CREDIT FACILITY TO FEDERATIONS:

The marketing federations and cooperatives are playing a very important role in agribusiness and value/supply chain management of the various agricultural commodities including milk. The major activities undertaken by these institutions are procurement of agricultural commodities including milk, aggregation, storage and value addition in few select commodities like milk etc. and marketing. Large number of farmers, producers organizations and primary societies depend upon these institutions for marketing of their produce and for value added services like input supply, value addition and storage facilities. The marketing operations by these federations and cooperatives require seasonal and timely short term credit facility to support their day to day operations.

B. RURAL INFRASTRUCTURE DEVELOPMENT FUNDRural Infrastructure Development Fund (RIDF) was instituted in NABARD with an announcement in the Union Budget 1995-96 with the sole objective of giving low cost fund support to State Govts. and State Owned Corporations for quick completion of ongoing projects relating to medium and minor irrigation, soil conservation, watershed management and other forms of rural infrastructure.C. FINANCING AND SUPPORTING PRODUCER ORGANISATIONSNABARD has taken an initiative for supporting producer organizations, adopting a flexible approach to meet the needs of producers. In order to give a special focus, the Producers Organization Development Fund(PODF) has been set up wef 01 April 2011, with an initial corpus of50 crore . Any registered Producers Organization viz, Producers Company( as defined under Sec 581 A in part IXA of Companys Act 1956), Producers Cooperatives, registered Farmer Federations, MACS (Mutually aided cooperative society), industrial cooperative societies, other registered federations, PACS, etc. set up by producers are eligible under the fund. Support under PODF is provided as under:Credit Support is provided for financial intervention. Support in the form of grant, loans, or a combination of these is also available for capacity building & market interventions.D. Financing and Developing PACS into multi-service centresPACS being the registered cooperative society has been providing credit and other services to its members. It has been observed that PACS are generally meeting out the credit requirements of its members. However there is a need to provide other services to the farmers and hence PACS should be developed as a unit to meet all their needs. To ensure better returns on the agricultural produce, the farmers should not only be encouraged to use the latest technology to increase agricultural production but also to store their produce in a scientific way to minimise storage losses and provide pledge loan to bridge credit gap.In order to enable PACS to provide more services to their members and generate income for themselves, an initiative has been taken to develop PACS as multi service centres. This will enable PACS to provide ancillary services to its members and diversify its activities. Assistance under PODF is available to SCB/CCB/PACS for this purpose.PACS, being the registered cooperative society, has been providing credit and other services to its members. PACS are generally providing the following facilities to the members:i. Input facilities in form of cash or kind component to members.ii. Agriculture implements on hiring basis.iii. Storage facility.Some of the PACS are also assisting farmers in marketing of their produce. It has been observed that PACS are generally meeting out the credit requirements of its members. However there is a need to provide other services to the farmers. The PACS should be developed as a unit for meeting all the needs of the farmers. To ensure better returns on the agriculture produce, the farmers should not only be encouraged to use the latest technology to increase agriculture production but also to store their produce in a scientific way to minimise the storage losses and provide pledge loan to bridge credit gap.With the decrease in per capita landholding size over a period of time, it is not economical for the farmers to purchase the farm equipments. Moreover many new inventions have come in the recent years in the agriculture sector which needs to be brought to the farms. The use of the new technology & HYV will increase the productivity of the produce.It has also been observed that most of the farmers go in for distress sale of the produce as they are in the need of immediate credit. Further adequate storage capacity is not available in the rural area where even the small farmers can store their produce and avail pledge loan.

CHAPTER 7

DEVELOPMENTAL FUNCTIONS OF NABARD

INSTITUIONAL DEVELOPMENT FARM SECTOR FINANCIAL INCLUSION RESEARCH AND DEVELOPMENT

Developmental functionsA. Institutional DEVELOPMENT Institutional Department has been initiating various programmes and initiatives for strengthening of cooperatives since 1982. The following major initiatives and supports are being provided to Rural Credit Cooperatives to attain our goal for evolving a sustainable Rural Financial System to enhance ground level credit flow to farmers and others in rural areas.B. farm sector

I. FARM SECTOR developments FSDD has been recently carved out of the erstwhile Development Policy Department - Farm Sector. The Department's core function is implementation of various farm sector initiatives aimed at conservation and management of natural resources, accelerating ground level credit flow by Rural Financial Institutions, incremental agricultural production and productivity, generating rural employment and raising the standard of living of rural poor through credit and grant. The implementation of these programmes evolved over a period of time through various policy initiatives is the responsibility of the Department. Dealing with the operational issues emerging while implementing, monitoring the programmes and providing feedback for policy framing/improvement is a part of the task assigned to the Department. The important tasks portfolios handled by FSDD are grouped under four verticals, the details are furnished belowMajor Functional Areas of the Department Farm Sector Promotional FundOVERVIEW Appreciating importance of innovation under Farm Sector, dissemination and transfer of technology for increasing productivity of crops and other farming activities, DPD supports various initiatives for facilitating better access of farmers to various agencies providing inputs, technology, credit, extension, market, etc,. Support is also provided for facilitating adoption of technologies, package of practices by farmers by setting up demonstration units on recent technologies. To cater to interventions under technology transfer and dissemination NABARD has created Farm Technology Transfer Fund (FTTF) in the year 2008 out of its operating profit. The corpus under the fund stood at`.41 crore as on 01 April 2014. As on 30.09.2014, assistance of`13.44 crore was disbursed for various interventions under FTTF taking the cumulative disbursement to`187.89 crore.Various activities being supported under FTTF are as follows:1. Holistic Development of Villages through Village Development Programme (VDP)2. Pilot Project on Augmenting Productivity of Lead Crops3. Pilot Project on System of Rice Intensification (SRI)4. Support under Pilot Project for Technology Transfer, Credit Counselling and Market Advocacy through Farmers Clubs (Master Farmers)5. Support to Farmers' Training and Rural Development Centres (FTRDCs)6. Support for Capacity Building for Adoption of Technology (CAT)7. Farmers' Club Programme

Producers Organisation Development Fund (PODF) Producers organisational development funds NABARD has taken an initiative for supporting producer organizations, adopting a flexible approach to meet the needs of producers. In order to give a special focus, the Producers Organization Development Fund(PODF) has been set up wef 01 April 2011, with an initial corpus of 50 crore . Any registered Producers Organization viz, Producers Company( as defined under Sec 581 A in part IXA of Companys Act 1956), Producers Cooperatives, registered Farmer Federations, MACS (Mutually aided cooperative society), industrial cooperative societies, other registered federations, PACS, etc. set up by producers are eligible under the fund. Support under PODF is provided as under: Credit Support is provided for financial intervention. Support in the form of grant, loans, or a combination of these is also available for capacity building & market interventions. Since most of the Producers Organisations are having low capital base, scope for NABARD's intervention under PODF has been enhanced to support Producers Organisations for contribution to share capital.1. IntroductionA. Indian producers are unable to realize optimal value from their produce and progress further due to fragmentation of land holdings and lack of organization. India has over 12.5 crore farmer households of which over 85% are small and marginal farmers with land holdings of less than 2 hectares. The average size of land holding is 1.33 hectare/ farmer household. Due to this fragmentation and disorganization, it is not economically viable for the farmers not only to adopt latest technology but also to use high yielding varieties of inputs like seeds and fertilizers. They are also unable to realize good value from their marketable surplus by individually selling their produce.B. On the other hand in case of non-farm sector activities,the handloom weavers & artisans are not able to compete with their products in the market due to poor quality & obsolete designs.C. Through better organization,producers can utilize scale to procure inputs at a lower price, and gain more selling power for their produce/product. Forming a producer organization can also provide access to timely and adequate finance, build capacity and provide linkages to markets.D. NABARD has, therefore, decided to set up a separate fund titled "Producers Organization Development Fund" (PODF) to tackle the issues of non availability of timely credit, capacity building of producers & strengthening of the Producers Organizations and market tie-ups. The Fund has been created in NABARD with an initial corpus of 50 crores from out of its operating surplus for the year 2010-11.

2. Objectives of the FundProducers Organization Development Fund (PODF) will be used to support Producers Organizations across three levers, viz. credit support, capacity building & market linkage. The objective of the fund is to meet end to end requirements of Producers Organization as well as to ensure their sustainability & economic viability.3. Guiding PrincipleThe guiding principles for the operation of PODF are broadly as indicated below:

Producers Organization registered under any Statute of Law are eligible. The activities may fall within the domain of agriculture, allied sectors &Non Farm Sector only. Producers Organization should be formed by the primary producers of agriculture & NFS activities. The activities eligible to be funded should relate to production and/or other related activities like harvesting, storage, processing, packaging and/ or marketing of the produce/ product or in combination of the above activities. The fund will be used for providing loan to carry out the economic activity and mix of grant and loan for capacity building market linkages. The Fund could also be used for developing producers organization through necessary capacity building The activity should result in product improvement and/ or increase in production. The proposals should lead to creation of sustainable employment opportunities (direct/ indirect). Policy goal is to improve rural livelihoods through community based and sustainable interventions The Producers Organization will act for the benefit of the producers. The shares of the producers cannot be sold to non producers at any time. If existing member desire to leave the organisation, his shares can only be purchased either by existing producers or by enrolling a new primary producer. Pro-poor (improves employment, reduces poverty, improves access to credit, information, entitlements) Community participation (ownership/ management/empowerment) Integrated approach (need-based and flexible, convergence with other schemes / programmes)

Financing and Developing PACS into multi-service centrePACS being the registered cooperative society has been providing credit and other services to its members. It has been observed that PACS are generally meeting out the credit requirements of its members. However there is a need to provide other services to the farmers and hence PACS should be developed as a unit to meet all their needs. To ensure better returns on the agricultural produce, the farmers should not only be encouraged to use the latest technology to increase agricultural production but also to store their produce in a scientific way to minimise storage losses and provide pledge loan to bridge credit gap.In order to enable PACS to provide more services to their members and generate income for themselves, an initiative has been taken to develop PACS as multi service centres. This will enable PACS to provide ancillary services to its members and diversify its activities. Assistance under PODF is available to SCB/CCB/PACS for this purpose.PACS, being the registered cooperative society, has been providing credit and other services to its members. PACS are generally providing the following facilities to the members:i. Input facilities in form of cash or kind component to members.ii. Agriculture implements on hiring basis.iii. Storage facility.Some of the PACS are also assisting farmers in marketing of their produce. It has been observed that PACS are generally meeting out the credit requirements of its members. However there is a need to provide other services to the farmers. The PACS should be developed as a unit for meeting all the needs of the farmers. To ensure better returns on the agriculture produce, the farmers should not only be encouraged to use the latest technology to increase agriculture production but also to store their produce in a scientific way to minimise the storage losses and provide pledge loan to bridge credit gap.With the decrease in per capita landholding size over a period of time, it is not economical for the farmers to purchase the farm equipments. Moreover many new inventions have come in the recent years in the agriculture sector which needs to be brought to the farms. The use of the new technology & HYV will increase the productivity of the produce.It has also been observed that most of the farmers go in for distress sale of the produce as they are in the need of immediate credit. Further adequate storage capacity is not available in the rural area where even the small farmers can store their produce and avail pledge loan.

PACS can play an important role in providing these facilities to the farmers. To increase the business portfolio of PACS so as to make it a self sustainable entity, it is essential that the PACS should provide additional services like providing agriculture implements on hiring basis, enabling collective purchase of inputs, having good quality storage capacity as per Negotiable Warehouse Receipt System, etc.Accordingly, the following facilities can be taken up by PACS to the farmers:1. Agro-Storage centre:Upgradation of the existing storage facility or construction of new godown along with sorting/ grading unit as per Negotiable Warehouse Receipt System. This will enable them to issue warehouse receipts. Based on these receipts, the farmers can get loan against the crop stored and can cultivate the next crop. Thus the farmers will be facilitated to get better price by holding the crops without affecting the fund flow position.2. Agro-service Centre:Purchase of hi-tech agro-implements like power tiller, land leveler, rotary slasher, movers, seed driller, multi crop planter, paddy transplanter, sprayers, combine harvester etc. depending upon the requirements of members. The earning will be from the rental of these equipments.3. Agri-processing centre: Primary Processing: Sorting, grading unit, waxing/ polishing unit, pre-cooling chambers, etc. Secondary Processing: Value addition to produce e.g. Mini rice mill, attachaki, horticulture produce processing etc.4. Agri -information centre :Testing lab for soil & water, creating panel of experts for providing services on payment basis, knowledge dissemination centre, arrange training to farmers. The testing lab & expert guidance will be available to farmers at a cost.5. Agri-Transportation & Marketing Facilities :Procurement of produce, Direct market linkage after aggregation and/ or processing, setting up of rural mart etc. The PACS, which are either in the area of marketing or intend to undertake this activity, may create this channel to facilitate the farmers in marketing. Watershed development programs Watershed Development Fund1. GenesisThe Union Finance Minister, in his budget speech for 1999-2000 had announced the creation of a Watershed Development Fund (WDF) in National Bank for Agriculture and Rural Development (NABARD) with broad objectives of unification of multiplicity of watershed development programmes into a single national initiative through involvement of village level institutions and PFAs. In pursuance thereof, WDF has been created in NABARD with a contribution of100 crore each by Ministry of Agriculture, Government of India (GoI) and NABARD.2. ObjectivesThe objective of the Fund is to spread the message of participatory watershed development. The Fund will be utilised to create the necessary framework conditions to replicate and consolidate the isolated successful initiatives under different programmes in the government, semi-government and NGO sectors. Thereby, all the partners involved viz., watershed community, central and state government departments, banks, agricultural research institutions, NGOs and NABARD can act in concert to make a breakthrough in participatory watershed development. WDF is proposed to be operationalised in close coordination with the Central and State Ministries as a continuum of their efforts but with a distinct identity.

3. Impact of watershed development program Watershed Development Projects implemented by NABARD has resulted in creation replicable models of participatory watershed development has helped in augmentation of natural resources and improvement in livelihood of watershed communities. Major impact of the watershed implementation in various programmes as observed based on impact evaluation studies are given below: Rise in ground water level Drinking water scarcity in villages has been overcome Local employment generation has improved, reducing off season migration Increase in agricultural productivity and production - maize (28%), jowar / bajra (50%), ground nut (18%), pulses (36 to 42%) Dairy activity has received a fillip Demand for credit has gone up (estimated potential6420 crore) Women empowerment and reduction in drudgery; large number of women SHGs formed and credit linked (about 12840 SHGs) Secondary impact improved housing, health and education (schools)

II. Farm sector policy development Farm Sector Policy Department (FSPD).Farm Sector Policy Department (FSPD) is carved out of the erstwhile Development Policy Department with primary focus on formulation of appropriate policies concerning agriculture and allied sector activities, natural resources management, climate change, etc., within the overall policy frame work of Government of India. The important objectives of the policies are towards drawing appropriate operational guidelines for implementation of such policies through credit, promotional and developmental interventions. Towards these objectives, the Department is also rendering necessary technical advisory services in agriculture and allied sectors through Central and Regional Technical Advisory Groups (C-TAG and R-TAGs).

C. Financial inclusion Indian economy in general and banking services in particular have made rapid strides in the recent past. However, a sizeable section of the population, particularly the vulnerable groups, such as weaker sections and low income groups, continue to remain excluded from even the most basic opportunities and services provided by the financial sector. In order to address the issues of financial inclusion, the Government of India constituted a Committee on Financial Inclusion under the Chairmanship of Dr. C. Rangarajan. The Committee submitted its finalreportto Hon'ble Union Finance Minister on 04 January 2008. The Committee on Financial Inclusion has defined Financial Inclusion as"the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.Core Business of Department The core activities of the Department are to carry forward the agenda of financial inclusion of the excluded population at the national level as per the framework described by the Report of the Committee on Financial Inclusion in general and operationalising the Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF), in particular. The implementation is under the guidance of the two Advisory Boards set up for FIF and FITF respectively.D. Research and development Established by the Bank, in accordance with the provisions of the NABARD Act 1981, the Research and Development (R&D) Fund aims at acquiring new insights into the problems of agricultural and rural development through in-depth studies and applied research and trying out innovative approaches backed up by technical and economic studies. The R&D Fund is utilised for formulating policies on matters of importance to agricultural operations and rural development, including facilities for training, dissemination of information and promotion of research by undertaking techno-economic studies and other surveys in the fields of agriculture, rural banking and rural development. Corpus of the R& D Fund is50 crore.Grant support for:0. Research projects and studies.0. International, National and Regional Seminars/ Conferences/Symposia, Workshops, etc.0. Occasional Papers and cost of other publications.0. Chair Units.0. Providing training for personnel of constituent banks.0. Summer Internship Programme.Training Institutes Supported Under R&D Fund1. CAB, Pune,1. BIRD, Lucknow, Mangalore & Bolpur1. IIBM, Guwahati1. National Institute of Rural Banking (NIRB), Bangalore

CHAPTER 8

SUPERVISORY FUNCTIONS

FUNCTIONS OBJECTIVES OF SUPERVISION PROCESS

SUPERVISROY FUNCTIONS Section 35(6) of the Banking Regulation Act, 1949, empowers NABARD to conduct inspection of State Cooperative Banks (SCBs), Central Cooperative Banks (CCBs) and Regional Rural Banks (RRBs). In addition, NABARD has also been conducting periodic inspections of state level cooperative institutions such as State Cooperative Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies, Marketing Federations etc., on a voluntary basis.

8.1 Objectives of Supervision1. To protect the interest of the present and future depositors.1. To ensure that the business conducted by these banks is in conformity with the provisions of the relevant Acts/Rules, regulations/Bye-Laws.1. To ensure observance of rules, guidelines, etc., formulated and issued by NABARD / RBI/ Government.1. To examine the financial soundness of the banks and1. To suggest ways and means for strengthening the institutions so as to enable them to play more efficient role in purveying rural credit.

8.2 Supervisory process

(i) On-Site Inspection Onsite inspection of banks is carried out on a periodic basis. Besides the Head Office, certain regional/controlling offices and some branches are covered during inspection so as to ensure a minimum coverage of advances.

The On-Site Inspection focuses on solvency, liquidity and operational health of the bank. While the compliance to the inspection findings is followed up in the usual course, NABARD addresses supervisory letters to the management of the banks, State Government, sponsor bank, etc., highlighting the major areas of supervisory concern that need immediate rectification, holds supervisory discussions to draw up an action plan, that can be monitored. All the inspected banks are rated as per supervisory rating based on CAMELSC concept.

(ii) Supplementary AppraisalSupplementary Appraisal/Portfolio Studies are also undertaken by NABARD, wherever warranted.(iii) Off-Site Surveillance and Monitoring As a part of the new strategy of supervision, a system of `Off-site Surveillance' has been introduced as a supplementary tool to on-site inspection. Its objectives are to obtain and analyse critical data on a continuous basis, to identify areas of supervisory concern and to issue early warning signals on risky areas requiring further action by banks. The system basically envisages desk scrutiny of operations of Cooperative Banks and RRBs through a set of statutory and non-statutory returns. While the periodical statutory on-site inspections attempt an overall evaluation of the performance of the banks within a stipulated period, off-site surveillance envisages continuous supervision, which will supplement the on-site inspections.

Chapter 9

achivements of nabard

ACHIEVEMENTS OF NABARD: NABARD has been performing in the positive side since its inception in the end of the financial year on March 2011 the total production credit disbursed was Rs. 34196 crore. For the year of 2010-2011 the refinance disbursement under the Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible financial institution was Rs. 13485.87 crore The Rural Infrastructure Development Fund (RIDF) Rs. 12060.04 crores was disbursed during 2010-11. A cumulative amount of Rs.121488.40 crore has been sanctioned for 444162 projects as on 31 March 2011 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc and as of 31 March 2011, 579 projects in various districts of 14 states benefited under the Watershed Development Fund which had a balance of Rs.1847.69 crore. Due to the Bank's efficient functioning farmers can now enjoy hassle free access to credit and security through 1009.30 lakh Kisan Credit Cards that have been issued through a vast rural banking network. During 2010-11, 72.6 lakh KCC were issued by banks with a sanctioned limit of Rs.43370 crore. Under various funds and programmes such as the Tribal Development Fund, cumulative sanction amounted to Rs. 917.60 crore for 317 projects covering 2.5 lakh families. During 2010-11 financial assistance of Rs. 373.97 crore was sanctioned for 126 projects benefiting 94,163 tribal families, the Farmers' Club Programme, during the year 21903 clubs were launched, taking the total to 76708 clubs as on 31 March 2011 helping farmers get access to credit, technology and extension services and across 25 states The Village Development Programme was implemented in 801 villages. The other very successful funding was under the Farm Innovation and Promotion Fund (FIPF), which cumulatively has 123 projects in various states, involving financial support of Rs.11.65 crore which was sanctioned on 31 March 2011. There 512 innovative projects across 27 states with grant assistance of Rs. 44.97 crore which were sanctioned during 2010-11 under Farmers Technology Transfer Fund (FTTF). The micro finance programme sanctioned more than 69.53 lakh savings linked SHGs and more than 48.51 lakh credit linked SHGs covering 9.7 crore poor households as on 31 March 2011.

CONCLUSION The parliament created the NABARD act and the Apex bank in order to aid the rural farmers that had long been neglected by the Government. There was such an imitative to uplift industries and capital market that these agricultural sectors were being grossly neglected. Even the apex bank of the country the Reserve Bank of India was so knee deep in other responsibilities and duties that it could not give adequate assistance to the rural farmer and their population which mostly comprised of artisans, small business owners and small other small enterprises. There was a need of adequate funding to these sectors in order for them to develop and flourish like the other sectors that the Indian Government was giving undivided attention to. Thus this led to the formation of the Rural Apex bank now known as NABARD. The apex rural bank was able to form the relation between credit deliverance and the agricultural sector. The rural bank has been successful in creating multiple funds and schemes in order to aid the rural farmer. The essential point to note here is that the bank not only facilitates the funding to the farmer but also makes them self-sufficient by training personnel in order to better understand modern techniques of farming which only propagates the growth and development relating to rural economies. With the help of the RBI the apex rural bank is also responsible for formulating policies to further benefit the agricultural farmers and the rural poor. The bank realizes the potential of the agricultural sector and terms noncredit worthy farmers as credit worthy ones, these farmers were long rejected by other financial institutions due to the lack of guarantee on their credit. But recent statistics will show that the farmers have lived up to the confidence instilled in them and are actually creating profit and are now operating hassle free when it comes to financing their activities. Various schemes and funds allow farmers to innovate and create new methods and inventions that help them in their field and this is solely because of the investments done by the rural bank.The bank not only helps in credit delivery to the farmers but also to the state government and NGOs and cooperative banks as well, this proves that when given the opportunity the rural bank can diversify in other sectors. Recent development shows that NABARD is all for modern and hi tech technology to enhance the productivity of the farmer such as genetic modification techniques. The statistic will only show that the Rural Bank is doing much better and is far more efficient to its clientele than most corporate and other Financial Institutions hence proving not everything "rural" is backwards

BIBLIOGRAPHY:

Websites:www.nabard.org.www.indiafinace.org.www.indiatimes.com.Www. economictimes.indiatimes.com.www.indiamicrofinance.com

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