National Bank for Agriculture and Rural Development (NABARD)

The National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India, established with the primary objective of fostering rural development and supporting agriculture and allied activities. NABARD plays a crucial role in providing financial and developmental support to rural areas, promoting inclusive growth, and ensuring sustainable agricultural practices.

History and Establishment

NABARD was established on July 12, 1982, by an Act of Parliament, replacing the Agricultural Credit Department and Rural Planning and Credit Cell of the Reserve Bank of India (RBI). The institution was set up on the recommendations of the Shivaraman Committee to address the specific credit needs of the agricultural and rural sectors.

Functions and Objectives

The key functions and objectives of NABARD include:

1. Credit Facilitation: NABARD provides credit support and refinancing to various financial institutions, including commercial banks, regional rural banks (RRBs), and cooperative banks. It ensures adequate credit flow to agriculture, rural infrastructure, and allied activities.
2. Promotion of Agriculture and Rural Development: NABARD plays a significant role in promoting rural development by providing financial assistance for various projects, such as watershed development, rural roads, and rural electrification.
3. Institution Building: NABARD promotes capacity building and strengthens the rural financial institutions to enhance their efficiency and outreach. It also supports the establishment of self-help groups (SHGs) and cooperatives.
4. Microfinance and Financial Inclusion: NABARD supports microfinance institutions (MFIs) and other institutions working for financial inclusion, enabling access to credit and financial services for the underprivileged sections of society.
5. Rural Infrastructure Development: NABARD provides financial support for the creation of rural infrastructure, such as irrigation projects, farm storage facilities, and rural markets.
6. Promotion of Sustainable Agriculture Practices: NABARD encourages sustainable and eco-friendly agricultural practices, promoting activities like organic farming and soil and water conservation.

Sources of Funds

NABARD raises funds through various sources, including:

1. Borrowings from the Government: The Government of India provides capital and loans to NABARD to enable it to fulfill its developmental objectives.
2. Bonds and Debentures: NABARD raises funds through issuing bonds and debentures in the domestic and international markets.
3. Loans from Banks and Financial Institutions: NABARD borrows from domestic and foreign banks and financial institutions to finance its operations.
4. Reserves and Surplus: NABARD accumulates reserves and surplus through its operations, which also contribute to its funding.

Impact on Rural India

NABARD’s initiatives and financial support have had a significant impact on rural India. It has facilitated the flow of credit to farmers, enabling them to invest in agricultural inputs, modern machinery, and technology. Additionally, NABARD’s focus on rural infrastructure development and promotion of sustainable practices has improved the overall productivity and livelihoods in rural areas.

Category: Agriculture Current Affairs • Economy & Banking Current Affairs