Agro Money

National Bank for Agriculture & Rural Development

Genesis
National Bank for Agriculture and Rural Development (NABARD) was established in the year 1982 by an Act of Parliament and was entrusted will all matters concerning policy, planning and operation in the field of credit for agriculture and other economic activities in the rural areas. The Bill for setting up the Bank was passed by the Parliament in December, 1981 and National Bank came into existence on 12th July, 1982. Before that, this job was being done by Reserve Bank of India itself.

Objectives
NABARD works for progressive institutionalisation of the rural credit and ensures that the demands for credit from agriculture including the new and upcoming areas like floriculture, tissue culture, bio-fertilisers, sprinkler irrigation, drip irrigation etc. are met. It is also vested with the responsibility of promoting and integrating rural development activities through refinance.

Functions

• It helps in planning and operational matters related to credit for agriculture and allied activities, rural artisans, village industries and other rural development activities;
• It extends refinance to commercial banks for term loans in relation to agriculture and rural development;
• It provides short term credit to state cooperative banks, RRBs, and any other financial institution notified by RBI for a period not exceeding 18 months by way of refinance for agricultural operations, marketing of crops and marketing and distribution of agricultural inputs.
• It makes direct loan by way of refinance to all eligible institutions for a period not exceeding 25 years.
• It provides finance for production and marketing activities of rural artisans, cottage industries, small-scale industries, handicrafts etc. in the rural areas.
• It facilitates all eligible financial institutions for conversion of production loans into term loans in the times of natural calamities,
• It contributes to share capital and securities of eligible institutions and State Governments concerned with agriculture and rural development.
• It also helps State Governments to contribute to the share capital of eligible institutions working for rural development.
• It offers advice and guidance to State Governments, co-opertative federations and National Cooperative Development Corporation (NCDC) and functions in close contact with Central Government in matters related to agriculture and rural development.
• It coordinates and monitors all agricultural and rural lending activities with a view to tie up with extension and planned development activities in rural areas; and
• It conducts training, consultancy and research relating to agricultural finance and agricultural and rural development.

Management

The management of NABARD is vested in the Board of Directors which consists of a
Chairman, two directors from amongst experts in rural economics, three directors out of whom two be persons with experience in cooperative banking and one with experience in commercial banking, three directors from among the officials of the State Governments, and a Managing Director. Directors of the Board of Management are appointed by the Central Government in consultation with the Reserve Bank of India (RBI).

Sources of Funds

Authorised share capital of NABARD is Rs 500 crores and issues and paid up capital is Rs 100 crores. NABARD accrues additional funds from borrowings from the Government of India and any institution approved by the Government of India, issue and sale of bonds i.e. Rural Infrastructural Development Bond, borrowings from RBI, deposits from State Governments and local authorities and gifts and grants received.