About
NABARD plays a critical role in promoting rural development and agriculture in India. Established in 1982, it has grown into one of the most significant institutions for rural financial services and development. This guide will dive deep into its history, objectives, structure, functions, schemes, and challenges.
History of NABARD
NABARD was established on July 12, 1982, based on the recommendations of the Shivraman Committee to address the need for a specialized institution for agriculture and rural development financing. It was created by transferring the functions of the Agricultural Refinance and Development Corporation (ARDC), Rural Planning and Credit Cell (RPCC) of the Reserve Bank of India, and Agricultural Credit Department (ACD) to NABARD.
Its establishment was pivotal in improving the credit delivery mechanism in rural India.
NABARD’s Objectives
The objectives of NABARD focus on strengthening agriculture and rural infrastructure. Its main goals include:
- Credit Facilitation:
- Provide credit for agricultural and rural activities.
- Infrastructure Development:
- Aid in the development of rural infrastructure such as irrigation, rural roads, warehouses, and cold storage facilities.
- Rural Employment Generation:
- Promote industries that can create employment opportunities in rural areas.
- Financial Inclusion:
- Increase access to formal financial systems for rural communities.
- Regulation of Rural Financial Institutions:
- Supervise and regulate Regional Rural Banks (RRBs) and Cooperative Banks.
Organizational Structure of NABARD
The governance structure of NABARD ensures that its policies and initiatives are efficiently implemented.
- Board of Directors:
- The apex governing body is responsible for policy-making.
- Chairman and Managing Directors (MDs):
- Responsible for the day-to-day operations and implementation of decisions.
- Regional Offices:
- NABARD operates through regional offices in every state to ensure localized decision-making.
- District Development Managers (DDMs):
- They work at the district level, coordinating NABARD’s activities across rural areas.
- Training Institutes:
- NABARD has training institutes that conduct research and provide training programs for rural development.
Key Functions of NABARD
NABARD’s functions can be broadly classified into three categories:
1. Credit Functions:
- Refinance Assistance:
- NABARD provides refinance support to commercial banks, RRBs, and cooperative banks to ensure the availability of credit for agriculture and rural development.
- Direct Lending:
- NABARD lends directly to state governments and other agencies for rural infrastructure projects.
- Short-Term and Long-Term Credit:
- Provides both short-term loans for crop production and long-term loans for capital investments.
2. Developmental Functions:
- Capacity Building:
- NABARD offers training and capacity-building programs for rural entrepreneurs, SHGs (Self-Help Groups), and NGOs.
- Promoting New Technologies:
- It encourages the adoption of modern agricultural technologies for increased productivity.
- Watershed Development:
- NABARD works to conserve water and improve soil fertility through watershed management programs.
3. Supervisory Functions:
- NABARD monitors and regulates the functioning of cooperative banks and RRBs to ensure the safety of the rural credit system.
NABARD’s Role in Rural Infrastructure Development
One of NABARD’s most significant initiatives is the Rural Infrastructure Development Fund (RIDF). Established in 1995, RIDF finances rural infrastructure projects such as:
- Irrigation Systems:
- Building and maintaining dams, canals, and micro-irrigation systems.
- Rural Roads and Bridges:
- Ensuring better connectivity for rural areas to markets and cities.
- Rural Godowns and Cold Storage:
- Developing warehousing facilities to reduce post-harvest losses.
- Renewable Energy Projects:
- Supporting solar, wind, and biogas energy projects.
NABARD Schemes and Programs
- Kisan Credit Card (KCC):
- NABARD has played a significant role in implementing the KCC scheme, which provides farmers with access to credit for agricultural needs.
- Self-Help Group-Bank Linkage Program (SHG-BLP):
- Launched in 1992, the SHG-BLP is one of the world’s largest microfinance programs. It links rural SHGs with banks to provide them access to formal credit.
- Dairy Entrepreneurship Development Scheme (DEDS):
- NABARD promotes dairy entrepreneurship through financial support and training.
- Farmer Producer Organizations (FPOs):
- NABARD promotes the formation and development of FPOs to increase farmers’ bargaining power and profitability.
- Watershed Development:
- These programs aim to conserve water and improve soil health to enhance agricultural productivity.
- Tribal Development Fund (TDF):
- Aimed at the socio-economic development of tribal populations through sustainable agriculture and other rural livelihood activities.
NABARD’s Role in Climate Change and Sustainability
NABARD is actively involved in climate adaptation and sustainable development. It is the National Implementing Entity (NIE) for the Adaptation Fund and the Green Climate Fund (GCF). Its key initiatives include:
- Climate-Resilient Agriculture:
- Promoting practices that reduce vulnerability to climate change.
- Renewable Energy Projects:
- NABARD supports solar pumps, windmills, and other renewable energy initiatives for rural areas.
- Afforestation:
- NABARD works on forest conservation and tree plantation projects in rural regions.
NABARD’s Initiatives for Financial Inclusion
NABARD has taken several steps to promote financial inclusion and improve rural access to banking services:
- Financial Literacy Programs:
- Conducts awareness campaigns to improve rural communities’ knowledge of financial products.
- Banking Correspondents:
- Supports the deployment of banking correspondents to provide doorstep banking services.
- Microfinance Institutions (MFIs):
- NABARD promotes MFIs to provide credit to underserved populations.
Challenges Faced by NABARD
Despite its significant contributions, NABARD faces several challenges in fulfilling its mandate:
- Credit Accessibility:
- Many rural areas still rely on informal sources of credit due to the lack of banking infrastructure.
- Technological Barriers:
- The adoption of digital banking services in rural areas is slow due to poor internet connectivity and digital illiteracy.
- Climate Risks:
- Floods, droughts, and unpredictable weather events can hinder agricultural productivity.
- Infrastructure Gaps:
- Insufficient rural infrastructure remains a significant barrier to rural development.
NABARD’s Future Outlook
As India moves towards becoming a $5 trillion economy, NABARD will play a critical role in supporting agricultural growth and rural development. The institution is focusing on:
- Digital Transformation:
- Leveraging technology to improve rural banking services.
- Climate-Smart Agriculture:
- Promoting sustainable farming practices that mitigate the impact of climate change.
- Start-up Ecosystem:
- Supporting rural start-ups and entrepreneurs through financing and incubation programs.
- Gender Inclusion:
- NABARD is committed to empowering rural women through credit support and capacity-building programs.
Conclusion
NABARD’s role in India’s agricultural and rural development is unparalleled. Its various credit, development, and regulatory initiatives have significantly improved rural livelihoods, infrastructure, and financial inclusion. As it continues to evolve, NABARD’s focus on sustainability, innovation, and inclusivity will remain key to driving rural prosperity in India.
