1

Project report on Nabard

2

DECLARATION

I hereby declare that this Minor Project Report titled “Project report on NABARD” submitted by me to Banarsidas Chandiwala Institute of Professional Studies, Dwarka

is a bonafide work undertaken during the period from 1st july 2016 to 22nd

September 2016 by me and has not been submitted to any other University or

Institution for the award of any degree diploma / certificate or published any time before.

Name: Mahesh Mandal

Enroll. No.: 02661201715

Date: / / 2016

3

Director: Date:

BONAFIDE CERTIFICATE

This is to certify that as per best of my belief the project entitled

“Project Repot on NABARD” is the bonafide research work carried out by …………….student of……………………., in partial fulfillment of the requirements for the Minor Project Report of the Degree of Bachelor

of Business Administration.

He has worked under my guidance.

Project Guide : Date:

Director: Dr. Shamsher Singh (Acting Director)

Date:

4

Acknowledgement

I have taken efforts in this project. However, it would not have been possible without

the kind support and help of many individuals and organizations. I would like to extend

my sincere thanks to all of them.

I am highly indebted ………………………………………………………………………….for their guidance

and constant supervision as well as for providing necessary information regarding the

project & also for their support in completing the project.

I would like to express my gratitude towards my parents & my mentor…………………….. for

their kind co-operation and encouragement which help me in completion of this project.

My thanks and appreciations also go to my colleague in developing the project and

people who have willingly helped me out with their abilities .

5

List of Table

Contents Page No.

Chapter 1 – Purpose of the study

1.1. Objective of the project report 6 1.2 Scope of the study 7

Chapter 2 - Introduction

2.1. About the organization (history & evolution) 9

2.2 Objective of the organization 12 2.3 Vision & Mission 13

Chapter 3 – Organization Profile

3.1 Organization Structure 15

3.2 Shareholding & Management 16 3.3 Programmes & Services offered 17

3.4 Awards & Achievements 18 3.5 Role & Contribution to Indian Economy 21 3.6 Key challenges/problems facing the organization 27

Chapter 4 – Recent Events

4.1 Recent Events/programmes conducted 29 4.2 Government Regulation 41

Chapter 5 – Findings & Conclusion

Bibliography 45

6

Chapter 1-

Purpose of the Study

7

1.1 Objective of the Study

To know about NABARD.

To give a glance at the working of NABARD.

To find out the role of NABARD in Indian economy.

To check the contribution of NABARD in economic growth.

To know the programs conducted by them.

8

1.2 Scope of the Study

This study focuses on the working of NABARD .It tells us about the main

purpose of establishment, major challenges faced by NABARD, strength and

weakness of NABARD .It guides us about the various programs run by NABARD

in rural areas .It shows the contribution of NABARD in the Indian economy.It

guides us the major problems of the Indian economy which leads to the

development of NABARD.

9

Chapter 2

Introduction

10

2.1 About the Organization

Government of India RBI, constituted a committee to review the arrangements for

institutional credit for agriculture and rural development (CRAFICARD) on 30

March 1979, under the Chairmanship of Shri B.Sivaraman, to review the

arrangements for institutional credit for agriculture and rural development.

The Committee, submitted on 28 November 1979, felt the need for a new

organisational device to focus to the credit problems arising out of integrated rural

development and recommended the formation of NABARD.

The Parliament, through Act 61 of 1981, approved the setting up of NABARD.

The bank came into existence on 12 July 1982 by special act by the parliament

and focusing to uplift rural India by increasing the credit flow for elevation of

agriculture and rural non-farm sector.

11

It transferred the:

- Agricultural credit functions of RBI.

- Refinance functions of the then Agricultural Refinance and Development

Corporation (ARDC).

NABARD was dedicated to the service of the nation by the late Prime Minister

Smt.Indira Gandhi on 05 November 1982.

NABARD was set up with an initial capital of 100 crore.

Consequently GOI 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%).

NABARD is an apex development bank in India.

Completed its 25 years on 12 July 2007.

12

History

NABARD was established on the recommendations of Shivaraman Committee, (by

Act 61, 1981 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 premier agencies providing developmental credit in rural areas.

NABARD is India's specialized bank for Agriculture and Rural Development in

India.

The initial corpus of NABARD was Rs.100 crores. Consequent to the revision in the

composition of share capital between Government of India and RBI, the paid up

capital as on 31 March 2015, stood at Rs.5000 crore with Government of India

holding Rs.4,980 crore (99.60%) and Reserve Bank of India Rs.20.00 crore (0.40%).

13

OBJECTIVES OF NABARD

NABARD was established in terms of the Preamble to the Act, "for providing credit for

the promotion of agriculture, small scale industries, cottage and village industries,

handicrafts and other rural crafts and other allied economic activities in rural areas with a

view to promoting IRDP and securing prosperity of rural areas and for matters connected

therewith in incidental there to".

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 major activities. Preparing of Potential

Linked Credit Plans for identification of exploitable potentials under agriculture and

other activities available for development through bank credit . Refinancing banks for

extending loans for investment and production purpose in rural areas. Providing loans to

State Government/Non Government Organizations (NGOs)/Panchayati Raj Institutions

(PRIs) for developing rural infrastructure. Supporting credit innovations of Non

Government Organizations (NGOs) and other non-formal agencies .Extending formal

banking services to the unreached rural poor by evolving a supplementary credit delivery

strategy in a cost effective manner by promoting Self Help Groups (SHGs)Promoting

participatory watershed development for enhancing productivity and profitability of

rainfed agriculture in a sustainable manner.On-site inspection of cooperative banks and

Regional Rural Banks (RRBs) and its-site surveillance over health of cooperatives and

RRBs role and functions.

14

VISION AND MISSION

VISION

To facilitate sustained access to financial services for the unreached poor in rural areas

through various micro Finance innovations in a cost effective and sustainable manner.

MISSION

Promote sustainable and equitable agriculture and rural prosperity through

effective credit support, related services, institution development and other

innovative initiatives

NABARD recorded high levels of performance in purveying rural credit

during 2014-15.

The aggregate assets held by NABARD rose to 2,13,170 crore as on 31 March

2015, an increase of 30,700 crore (17 %) compared to the position as on 31

March 2014

15

CHAPTER 3

ORGANISATION PROFILE

16

ORGANISATIONAL STRUCTURE

17

SHAREHOLDING AND MANAGEMENT

Initially, RBI held 72.5 per cent of equity in NABARD amounting to Rs 1450 crore.

The remaining shareholding of Rs 550 crore was with the Government of India. The

Union Cabinet in May 2008 approved the Reserve Bank's proposal to transfer its share

holding in NABARD to the Government of India. Accordingly, the Government of

India issued a notification on September 16, 2010 prescribing the proportion of

subscription/ownership of Government of India and Reserve Bank in NABARD as 99 per

cent and 1 per cent respectively. In terms of RBI circular dated 14th October, 2010, RBI

had divested its stake amounting to Rs 1430 crore (Rupees one thousand four hundred

and thirty crore) in National Bank for Agriculture and Rural Development (NABARD)

on October 13, 2010. With this, the Reserve Bank's holding in NABARD came down to

one per cent of shareholding in NABARD. In September, 2013, Government of India

gave an amount of Rs.700 crore towards Share Capital.Consequent to this the

shareholding of Government of India and RBI in the Paid up capital of NABARD as on

31 March 2014 was at 99.57 : 0.43.

18

Programmes & Services offered

Automatic refinance scheme (ARS)

The various schemes formulated over the years have been categorized into five distinct

and compact schemes.

1. Composite Loan Scheme (CLS)

Under this scheme refinance is given to meet the block and /or working capital

requirements of small/micro enterprises. Max. refinance of 10 lakh per unit.

2. Integrated Loan Scheme (ILS)

Under this scheme refinance is given to block capital and working capital for one

operating cycle. Max. Refinance of 15 lakh per borrower.

3. Self Employment Scheme for Ex-servicemen (SEMFEX)

The scheme has been in operation since 15 January 1988 which is specially designed to

provide a comprehensive package of credit for encouraging ex-servicemen to undertake

agricultural and allied activities or to set up non-farm units in rural areas to earn their

livelihood for leading a dignified life. NABARD provides refinance assistance under

Automatic Refinance Facility (ARF) to eligible banks for a wide spectrum of

manufacturing, processing and service sector activities under RNFS (Investment Credit).

4. Soft Loan Assistance for Margin Money (SLAMM)

The scheme is to provide financial assistance to the prospective entrepreneurs who have

the requisite talent and skill of entrepreneurship but lack necessary monetary resources to

meet the margin requirements stipulated under relevant NABARD refinance schemes.

19

5. Small Road and Water Transport Operators (SRWTO)

Under this scheme the facilities for acquisition of transport vehicles, which are to be used

for transportation of farm produce/industrial products to rural/urban marketing centers

including passenger transport vehicle and water transport units. Margin money assistance

will be extended on a very selective basis up to 10% of the cost of the vehicle.

From these schemes ,the following benefits are derived:

Rural Housing

Housing in the rural areas, both agriculturist and non-agriculturists, combine the business

as well as dwelling needs and thereby leads to overall rural development, NABARD is

giving refinance (investment credit) to the eligible banks.

Renewable Energy

While addressing India’s energy security challenges, Ministry of New and Renewable

Energy (MNRE), Government of India and the Jawaharlal Nehru National Solar Mission

(JNNSM). In order to achieve this objective, the MNRE has launched a capital cum

interest subsidy scheme for creation of off-grid, decentralised solar powered energy

harvesting devices through application of photo voltaic technology for the purpose of

lighting, heating, etc. at the level of domestic and mini commercial applications.

NABARD is the nodal agency for giving feasibility and Refinance for eligible projects.

20

AWARDS AND ACHIEVEMENTS

After the setting up of NABARD, there has been considerable increase in the rural

finance and development of small scale and cottage industries. By way of short-term

credit, nearly Rs. 4,000 crores has been distributed during 90’s compared to Rs. 1,200

crores during 80’s.

By way of medium term finance, nearly Rs. 400 crores have been provided and they have

been utilized mainly by States affected by natural calamities. In long-term loan, more

than Rs. 240 crores have been sanctioned for contributing to the share capital of co-

operative institutions.

NABARD has also played a significant role in improving storage facilities for

agricultural commodities in the country. It has also promoted the export of agricultural

commodities which include vegetables and fruits. It has played a supplementary role in

sustaining Green Revolution in the country.

White Revolution and Blue Revolution in the form of increased milk production and

fisheries have also been contributed by the sustained efforts of NABARD. India stands

the top most country in the world in production of dairy milk

21

ROLE AND CONTRIBUTION TOWARDS INDIAN ECONOMY

Role

FINANCIAL FUNCTION

Refinance

Short term refinance:

For using high yielding varieties of seeds, fertilisers, insecticides and costly

agricultural implements

For increasing the production, productivity, marketing and raising the level of

surplus and savings.

Functions

Financial

Refinance

Direct finance

Developmental

Supervisory

22

Production Credit Department (PCD) deals with ST refinance facilities, for

various types of production, marketing and procurement activities, being provided

to client institutions.

Refinance is given 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.

A 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)

The ST limit would consist of different purposes:

Agriculture and Allied Activities

Marketing of crops

Fisheries Sector

Industrial Cooperative Societies (other than weavers)

Rural artisan including weavers members of PACS/LAMPS/FSS,

Purchases, Stocking and Distribution of Chemical Fertilisers and other

agricultural inputs on the basis of bank wise RLP for respective purposes.

The limit is sanctioned to RRBs and SCBs

MT Conversion:

NABARD provides relief to farmers whose crops are damaged due to natural

calamities, by way of

conversion of current short term loans into medium term loans and

Re-phase / reschedule of existing MT (Conversion) loans.

Consolidated limit sanctioned to RRBs and SCBs in respect of eligible DCCBs.

23

Long term refinance

Loan Period: normally 3 to 15 years.

Investment credit leads to capital formation through asset creation.

It induces technological upgradation resulting in increased production,

productivity and incremental income to farmers and entrepreneurs

Artisans, small scale industries, Non-Farm Sector (Small and Micro Enterprises),

handicrafts, handlooms, power looms, etc.

Activities of voluntary agencies and self help groups working among the rural

poor

DIRECT FINANCE

1. Loans for food processing units in designated food parks

2. Loans to warehouses, cold storage and cold chain infrastructure

3. Credit facility to marketing federation

4. Rural infrastructure development fund

5. Direct lending to CCB’s

6. Financing and supporting producers organizations etc

Development role

1) Institutional development

2) Farm sector

3) Non farm sector

4) Financial inclusion

5) Micro credit innovations

24

6) Research and development

7) Core banking solution to cooperative banks

8) Climate change

9) Institutional development

10) Farm sector

11) Non farm sector

12) Financial inclusion

13) Micro credit innovations

14) Research and development

15) Core banking solution to cooperative banks

16) Climate change

Supervisory Role

As an apex bank involved in refinancing credit needs of major financial institutions in the country engaged in offering financial assistance to agriculture and rural development operations and programmes, NABARD has been sharing with the Reserve Bank of India

certain supervisory functions in respect of cooperative banks and Regional Rural Banks (RRBs).

As part of these functions, it

Undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks

(other than urban/primary cooperative banks) under the provisions of Banking Regulation Act, 1949.

Undertakes inspection of State Cooperative Agriculture and Rural Development

Banks (SCARDBs) and apex non-credit cooperative societies on a voluntary basis.

Undertakes portfolio inspections, systems study, besides off-site surveillance of Cooperative Banks and Regional Rural Banks (RRBs).

Provides recommendations to Reserve Bank of India on issue of licenses to

Cooperative Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks (RRBs).

Administering Credit Monitoring Arrangements (CMA) in SCBs and CCBs.

25

Contribution towards Indian economy

NABARD has been instrumental in grounding rural, social innovations and social

enterprises in the rural hinterlands. It has in the process partnered with about 4000 partner

organisations in grounding many of the interventions be it, SHG-Bank Linkage

programme, tree-based tribal communities’ livelihoods initiative, watershed approach in

soil and water conservation, increasing crop productivity initiatives through lead crop

initiative or dissemination of information flow to agrarian communities through Farmer

clubs. Despite all this, it pays huge taxes too, to the exchequer – figuring in the top 50 tax

payers consistently. NABARD virtually ploughs back all the profits for development

spending, in their unending search for solutions and answers. Thus the organisation had

developed a huge amount of trust capital in its 3 decades of work with rural

communities.[7]

1.NABARD is the most important institution in the country which looks after the

development of the cottage industry, small industry and village industry, and other rural

industries.

2.NABARD also reaches out to allied economies and supports and promotes integrated

development.

3.NABARD discharge its duty by undertaking the following roles :

1. Serves as an apex financing agency for the institutions providing investment and

production credit for promoting the various developmental activities in rural

areas

2. Takes measures towards institution building for improving absorptive capacity of

the credit delivery system, including monitoring, formulation of rehabilitation

schemes, restructuring of credit institutions, training of personnel, etc.

3. Co-ordinates the rural financing activities of all institutions engaged in

developmental work at the field level and maintains liaison with Government of

26

India, state governments, Reserve Bank of India (RBI) and other national level

institutions concerned with policy formulation

4. Undertakes monitoring and evaluation of projects refinanced by it.

5. NABARD refinances the financial institutions which finances the rural sector.

6. NABARD partakes in development of institutions which help the rural economy.

7. NABARD also keeps a check on its client institutes.

8. It regulates the institutions which provide financial help to the rural economy.

9. It provides training facilities to the institutions working in the field of rural

upliftment.

10. It regulates the cooperative banks and the RRB’s, and manages talent acquisition

through IBPS CWE.

NABARD's refinance is available to state co-operative agriculture and rural development

banks (SCARDBs), state co-operative banks (SCBs), regional rural banks (RRBs),

commercial banks (CBs) and other financial institutions approved by RBI. While the

ultimate beneficiaries of investment credit can be individuals, partnership concerns,

companies, State-owned corporations or co-operative societies, production credit is

generally given to individuals. NABARD has its head office at Mumbai, India.

NABARD Regional Office[RO] has a Chief General Manager [CGMs] as its head, and

the Head office has several top executives viz the Executive Directors[ED], Managing

Directors[MD], and the Chairperson.It has 336 District Offices across the country, one

special cell at Srinagar. It also has 6 training establishments.

NABARD is also known for its 'SHG Bank Linkage Programme' which encourages

India's banks to lend to self-help groups (SHGs). Largely because SHGs are composed

mainly of poor women, this has evolved into an important Indian tool for microfinance.

By March 2006, 22 lakh SHGs representing 3.3 core members had to be linked to credit

through this programme.[8]

NABARD also has a portfolio of Natural Resource Management Programmes involving

diverse fields like Watershed Development, Tribal Development and Farm Innovation

through dedicated funds set up for the purpose.

27

Key challenges faced by NABARD

1. NABARD is facing the problem of inadequate finance. They are dependent on

NABARD to collect finance for their further operation. Poor rural people are unable to

save anything due to poverty and low per capita income. The low level of saving of these

customer create obstacle for NABARD to collect sufficient deposits.

2. High over dues and poor recovery of loan is one of the biggest concern affecting the

functioning of NABARD. Reasons being poor access of granting loan, insufficient and

untrained staff, unproductive or less productive use of credit, inadequate production,

poor marketing facilities and improper channel of recovery system.

3. There is also a problem of regional imbalance in banking facilities provided by

NABARD.

They are creating this problem by concentrating their branches in some specific states

and districts & loose other prospective group of customers.

4. NABARD is suffering from the problem of heavy loans because of low repaying

capacity of their customer, untrained staff, low level of deposits and heavy sanction of

loan without checking the creditworthiness of their customers.

5. These banks have still not played a significant role in poverty alleviation of the

country. Although various efforts have been made in this regard but lack of economic

infrastructure, poor marketing strategies, poor knowledge of customers, low production,

low awareness about savings have created many hurdles for NABARD.

6. Lack of proper co-ordination between NABARD and other financial institution like

commercial banks, NABARD and other co-operative bank has badly affected the

performance of these banks.

28

Chapter 4

Recent Events

29

Recent Events/programme conducted

NABARD conducts Financial Literacy Awareness Programme

Fig

A leaflet on financial literacy being released at the awareness programme organised by

NABARD at Edanganasalai village in Salem district on Sunday.

The National Bank for Agriculture and Rural Development (NABARD) as a part of its

34th “Foundation Day” celebrations, conducted a Financial Literacy Awareness

Programme (FLAP) at Edanganasalai village in Magudanchavady block on Sunday.

The programme was organised in co-ordination with banks, local administration and

NGO Best Empowerment Services Trust (BEST).

Farmers, members of women self-help groups and joint liability groups (JLGs), students

and general public attended the programme.

30

A. Bhama Buvaneswari, Assistant General Manager (DD), NABARD, Salem, briefed

about the need for conducting the programme. She explained about the various loan

products available from the banking channel and also the need for taking up

supplementary activities like dairying; sheep / goat rearing, etc. and the Government of

India subsidy schemes available.

K. Sivalingam, president, Edanganasalai Town Panchayat, insisted that people make use

of the banking sector for improving their livelihood.

J. Ravichandran, Lead District Manager, spoke on the need for saving and also

highlighted on the insurance and pension schemes of the Central Government.

M. Venugopal, General Manager, Pallavan Grama Bank and P. Ravikumar, CRO, Salem

District Central Co-operative Bank, explained the need for saving, insurance and pension

and informed about the various savings products of their respective banks.

Schemes

A. K. Palanivelrajan, Counsellor, Financial Literacy Centre, Indian Bank, explained in

detail about the various government schemes. The Chief Manager - Financial Inclusion

Chidambareshwaran and the FLC Counsellor of Pallavan Grama Bank explained about

the functioning of the FLC at their Head Office, Salem.

R. Santhanam, Principal, Indian Bank Self Employment Training Institute (INDSETI),

addressed the gathering and explained to them the various training camps being

conducted in the Institute for the benefit of the rural people and the guidance offered by

the Institute in helping the trainees take up self-employment by availing bank credit.

V. Mohan, Branch Manager, Pallavan Grama Bank, Magudanchavady branch disbursed

the loans sanctioned to various Joint Liability Groups promoted by BEST. K. Kannagi,

Managing Trustee, BEST, also spoke.

31

A leaflet in Tamil on various aspects of financial inclusion including the recently

launched social security schemes were distributed to the participants and the local public.

Training of Trainers, LDMs, Bank officers for Stand-Up India

Arrange for handholding support for trainee borrowers

Liaise with banks for follow up in potential cases through the LDM

Coordinate with LDM for easing bottlenecks

Assist the SLBC and DLCC in reviews and monitoring

Organize events, as frequently as necessary and at least once in each quarter, for

experience sharing etc. amongst stakeholders

1. Rupee to RuPay

NABARD supported cooperative banks and RRBs for issuing RuPay Kisan Credit Cards

(KCC) to farmers and provided point-of-sale terminals to agri-input suppliers to allow

farming community to benefit from the dynamics of a cashless system.

The first RuPay KCC card

32

Launched by Dr Prakash Bakshi, Chairman, NABARD

Issued by : Raigad District Central Co-operative Bank at Alibag, Maharashtra

On: May 2013.

In 2013-14, 15 lakh RuPay debit and 6 lakh RuPay Kisan cards were issued by

RRBs while 6 cooperative banks began issuing RuPay kisan cards.

2. Cellphone Extension

SMS-based crop advisory, weather forecasts and mandi prices

Under the Farmers’ Technology Transfer Fund (FTTF), NABARD in co-

ordination with the Reuters Market Light

to enhance farm productivity

to members of Farmers’ Clubs in 13 states.

33

3. Empowering Rural Women

Fig

Self Help Group Bank Linkage Programme

rural households -> Self Help Groups -> Banking System

world’s largest micro-credit programme

• ~103 million rural households

• 7.96million Self-Help Groups (SHGs).

next level - SHG 2 will focus on livelihoods and women SHGs in the Left Wing

Extremism-affected districts.

4. Rural Infrastructure Key to Rural Development

34

Fig

Under Rural Infrastructure Development Fund (RIDF), NABARD financed 5.08

lakh projects in 29 states with a loan assistance of Rs 1,62,083 crore.

Result:

o 3.56 lakhs kms of rural roads

o 8.10 lakh meters of rural bridges

o 200 lakh hectare of additional irrigated area.

o 28,699 anganwadi centers

o 19,986 primary schools

o 12,912 public health facility centers

o launching of 12,170 drinking water schemes in rural India.

35

5. Financial Inclusion for Promoting Inclusive Growth

Fig

Financial Inclusion Fund (FIF) promoting financial literacy through

• audio-visual medium,

• folk arts

• setting up of Financial Literacy Centers by RRBs & Co-operative Banks.

Financial Inclusion Technology Fund (FITF)

• helped RRBs migrate to Core Banking Solutions (CBS) platform

• supported ICT-based Business Correspondent model

6. Promoting farm productivity

36

fig

Farm Innovation and Promotion Fund (FIPF)

Systemic Rice Intensification (SRI) method of cultivation of paddy and lead

crops

enhancing farm productivity and reducing the cost of cultivation through a pilot

project involving 1.42 lakh farmers in 13 states.

7. Tech-savvy Co-operative Banks

Fig

working towards a fully tech-enabled environment for Co-operative Banks

by helping them adopt the CBS platform on par with commercial banks and RRBs.

37

8. The Power of Green

Fig

NABARD’s green initiatives range from

• financing India’s first 1MW canal-top solar-power project under

NABARD Infrastructure Development Assistance (NIDA) in Gujarat

• installing rooftop solar-power units for energy generation and

conservation at its head office.

promoted use of solar energy in rural areas under

• Umbrella Programme for Natural Resources Management (UPNRM)

• Jawaharlal Nehru National Solar Mission (JNNSM)

38

9. Fruits of Development for Tribals

Fig

To provide sustainable livelihoods to marginalized tribal families

implemented a horticulture-based “Wadi” programme.

covered 3.63 lakh acres benefiting 4.15 lakh tribal families living in hills and

forests in 26 states.

10. Government-sponsored Programmes:

39

Fig

A big Draw NABARD has implemented several government-sponsored subsidy

programmes that include :

• rural godowns,

• agri-market infrastructure,

• small ruminants,

• dairy, poultry, piggery,

• rural slaughter houses, etc., helping the beneficiaries in a big way.

40

Government regulations

The Indian government is considering giving the National Bank for Agriculture and Rural

Development (NABARD), a development bank that formulates the credit and banking

policy for the rural sector, more supervisory powers over microfinance institutions

(MFIs) in India.

The Micro Financial Sector (Development and Regulation) bill, which was first raised in

2007, is set to be passed in the upcoming parliament session as the Indian Finance

Ministry is putting the bill on a fast track. Under the proposed bill, all non profit MFIs

will be brought under the jurisdiction of NABARD. The Finance Ministry is also

considering bringing non-banking finance corporations (NBFCs), a structure used by

MFIs, under NABARD.

“The state governments are not equipped to handle supervision and a sector supervisor is

the need of the hour,” says Matthew Titus, executive director of MFI Sa-dhan, an Indian

microfinance industry association. Citing an unspecified source within the Indian

government, an article on the Economic Times [1] newspaper website claims that the

Finance Ministry would not include a 24 -percent cap on interest rates in the bill.

According to the website of NABARD, non-governmental organizations that act as MFIs

are currently not regulated as financial institutions. On the other hand, non profit MFIs

are under the supervision of the Reserve Bank of India (RBI) under the Companies Act,

while microfinance cooperatives and NBFCs are under the supervision of state

governments and RBI respectively.

The Indian MFIs reporting data for 2009 to the Microfinance Information Exchange

(MIX), the microfinance information clearinghouse, have an aggregate loan portfolio of

USD 4.6 billion, total assets of USD 5.1 billion and 26.4 million active borrowers.

About the National Bank for Agriculture and Rural Development (NABARD):

41

The National Bank for Agriculture and Rural Development (NABARD) is a development

bank in India that formulates the credit and banking policy for the rural sector, supervises

and conducts on-site inspections of cooperatives and regional rural banks and promotes

the development of microfinance activities in the rural sector. NABARD is charged with

the oversight of the Microenterprise Development Programme (MEDI), which focuses

exclusively on the development of microenterprises. In 2010, NABARD set a fiscal year

target of INR 3,750 billion (USD 80.3 billion) for credit disbursement via commercial

banks, state cooperative banks, state cooperative agriculture and rural development banks

and other eligible financial institutions up from INR 3,250 billion (USD 69.6 billion) the

previous year.

42

CHAPTER 5

Findings & Conclusion

43

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 multip le 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 non credit 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.

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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 backward

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BIBLIOGRAPHY

For completing this project report, I have taken help from the following site:

www.nabard.com

www.google.com/nabard