What is NABARD?
NABARD stands for National Bank For Agriculture and Rural Development. It is a government organization with its headquarters in Mumbai, Maharashtra. It was formed on 12th July 1982. The main motive behind establishment of this organization was working towards ‘development assistance’ and ‘poverty reduction’. The term ‘development assistance’ refers to the cooperation or financial aid provided by the government and other agencies to contribute to the overall development of the ‘developing countries’. This makes NABARD a ‘development finance institution’. It works closely in the field of credit for agriculture and other activities in the rural areas in India. NABARD has number of offices spread across the country having several departments with each of them assigned specific objectives and responsibilities.
Establishment of NABARD
Before NABARD came into existence, there existed an organisation called Agricultural Refinance and Development Corporation which was formulated with the view of providing refinancing facilities. Earlier RBI was actively linked and involved with agricultural finance which gradually started becoming difficult and the Agricultural Refinance and Development Corporation (ARDC) was unable to fulfill the requirements of refinance. Therefore, RBI decided to distance itself from the agricultural finance and that’s when a committee was set up under Mr.Sivaraman who was its chairman. The recommendations given by Sivaraman committee were accepted and that was followed by the formation of NABARD on 12th July 1982. The present Chairman of NABARD is: Dr. Harsh Kumar Bhanwala.
NABARD: Role & Functions
NABARD is the topmost development finance institution which deals with the development of rural areas of India. It is majorly responsible for sorting out the financial requirements of the rural India, especially the farmers. Some of the main responsibilities that NABARD is entrusted with are :
- NABARD provides refinance facility to the agricultural sector.
- It deals with the matters concerned with ‘policy,planning and operations’ in the agricultural sector and other developmental activities in rural India.
- It also takes care of the development of cottage industries, village industries, small scale industries and other rural industries.
- It also refinances the institutions that provide financial aid to the rural areas.
- It is also involved in training the institutions that are working towards the upliftment of the rural areas.
- It is also responsible for implementation of the programmes aimed at rural development.
- Regulation and supervision of the RRBs is another important role of NABARD. It supervises State Cooperative Banks (SCBs), District Cooperative Central Banks (DCCBs), and Regional Rural Banks (RRBs).
NABARD: Refinance Facility
Refinance as the name suggests is a finance facility provided ‘again’ by an institution to a borrower. It is the substitution of an existing loan with another loan on lower interest rates and different terms. To support the rural areas, NABARD provides refinance facility to promote capital infusion in the agriculture sector, with a repayment period of five years. These terms and conditions may vary according to the state or country. NABARD also receives its refinance funds from the World Bank and Asian Development Bank.
- NABARD has set up the Rural Innovation Fund with the help of Swiss Agency for Development and Cooperation.
- It has also initiated another scheme for banks which aims at rural development called Rural Infrastructure Development Fund (RIDF).
- Till now Rs 51,283 Crore has already been sanctioned for 2,44,651 projects.
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