ANNUAL REPORT 2011-12

Letter of Transmittal

CHAIRMAN Ref.No.NB.Secy./ 748 / AR-1/2012-13

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT Plot: C-24/G, Bandra-Kurla Complex Post Box: 8121, Bandra (East) Mumbai - 400 051

12 July 2012 21 Ashadha 1934 (Saka) The Secretary Government of India Ministry of Finance Department of Financial Services New Delhi- 110 001 The Governor Reserve Bank of India Central Office Mumbai- 400 001 Dear Sir In pursuance of Section 48(5) of the National Bank for Agriculture and Rural Development Act, 1981, I transmit herewith the following documents : i. A copy of the audited Annual Accounts for the year ended 31 March 2012 alongwith a copy of the Auditors Report and
st

ii. Two copies of the Annual Report of the Board of Directors on the working of st National Bank during the year ended 31 March 2012.

Yours faithfully

Prakash Bakshi

Board of Directors
Dr. Prakash Bakshi Chairman

Directors appointed under Section 6(1)(b) of the NABARD Act, 1981

Shri J. K. Batish

Prof. Trilochan Sastry

Prof. M. L. Sharma

Directors appointed under Section 6(1)(c) of the NABARD Act, 1981

Shri H. R. Khan

Prof. Dipankar Gupta

Directors appointed under Section 6(1)(d) of the NABARD Act, 1981

Shri P . K. Basu

Shri S. Vijay Kumar

Shri Umesh Kumar

Directors appointed under Section 6(1)(e) of the NABARD Act, 1981

Shri K. Jayakumar

Shri D. B. Gupta

Shri Shaleen Kabra

Page No. NABARD at a Glance Key Data References Principal Officers Highlights .....................................................................................................................................................................................i I. Rural Economic Environment..........................................................................................................................................1 Economic Scenario ..............................................................................................................................................................1 Agriculture & Rural Economy ..............................................................................................................................................5 II. Business Operations........................................................................................................................................................19 Production Credit ......................................................................................................................................................19 Investment Credit ........................................................................................................................................................24 Financing Rural Infrastructure......................................................................................................................................33 Rural infrastructure Development Fund.......................................................................................................................34 New Business Initiatives............................................................................................................................................... 42 III. Development and Promotional Initiatives...................................................................................................................45 Credit Planning ...........................................................................................................................................................45 Farm Sector ................................................................................................................................................................45 Rural Non-Farm Sector................................................................................................................................................58 Financial Inclusion ......................................................................................................................................................59 Micro-Finance .............................................................................................................................................................62 NABARD Consultancy Services...................................................................................................................................67 Research and Development Activities..........................................................................................................................68 IV. Capacity Building of Client Institutions......................................................................................................................75 Institutional Development............................................................................................................................................75 Supervision of Banks ..................................................................................................................................................89 V. Organisation, Corporate Governance and Management ........................................................................................93 Management ..............................................................................................................................................................93 Human Resources Management .................................................................................................................................94 Administration and Other Matters................................................................................................................................96 VI. Financial Performance & Management of Resources ..........................................................................................101 Sources of Funds .....................................................................................................................................................101 Uses of Funds ...........................................................................................................................................................103 Income and Expenditure ..........................................................................................................................................105 Annual Accounts 2011-12 ...................................................................................................................................................107 Auditors Report .............................................................................................................................................. 108 Balance Sheet ................................................................................................................................................. 109 Profit and Loss Account .................................................................................................................................. 110 Schedules to Balance Sheet ............................................................................................................................. 111 Cash Flow Statement ....................................................................................................................................... 133 Consolidated Financial Statements 2011-12 .................................................................................................... 134 E-mail Addresses of NABARD Head Office Departments at Mumbai ............................................................... 140 Regional Offices/Cell/Training Establishments .................................................................................................. 141 Abbreviations .........................................................................................................................................................................143

Contents

Boxes
1.1: Measures adopted to Contain Inflation and Food Inflation................................................................... 4 1.2: Supply-side Constraints.................................................... 8 2.1: Rural Infrastructure Promotion Fund (RIPF)................... 42 2.2: Application Service Provider (ASP) Model of CBS................................................................. 43 3.1: Impact Evaluation Findings of Watershed Projects......... 46 3.2: New model in wadi........................................................ 48 3.3: Pilot Project on Mobile Kisan Credit Card...................... 49 3.4: UPNRM Projects A success story of Kamadhenu project in Chittoor district............................................... 56 3.5: Vocational training through micro-loan: PanIIT-NABARD model.................................................. 58 3.6: From Red Light to a Ray of light through JLG in Munger, Bihar..................................................... 64 3.7: Salient features of Scheme for Promotion of Women SHGs in backward districts of India and Left Wing Extremism Affected districts of India............................... 66 4.1: GoI Revival Package for STCCS : Impact Assessment Study............................................... 85

Tables
Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 1.6 : Economic Indicators............................................. 1 : Sectoral Growth Rates of GDP............................. 2 : Drivers/Causes of Inflation in India....................... 3 : Trends in Exports and Imports.............................. 5 : Trends in Rainfall and Water Storage.................... 6 : Compound Growth Rates of Area, Production, and Yield of Principal Crops during 1980-1990, 1990-2000 and 2000-2012 .......................................................... 7 : Requirement & Availability of Seeds in India........ 8 : Production and consumption of fertiliser.............. 9 : Agency-wise Ground level Credit Flow............... 10 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Table 4.6 Table 4.7 Table 4.8 Table 4.9 Table 3.6 Table 3.7 Table 4.1 Table 3.3 Table 3.4 Table 3.5 : The progress under FIF & FTTF......................... 61 : Progress of the Micro-Finance Programme......... 62 : Grant Assistance Extended to various Partners in SHG-Bank Linkage Programme........................................... 63 : Comparative Position of Income earned from Consultancy................................... 68 : Training of RFI Personnel................................... 72 : Growth of Short-Term Co-operative Credit Structure ................................................. 75 : Growth of Long-Term Co-operative Credit Structure.................................................. 76 : Working Results of Co-operative Banks ............. 76 : Accumulated Losses .......................................... 76 : Region-wise Working Results of SCB.................. 77 : Region-wise Working Results of DCCB .............. 77 : Region-wise Working Results of SCARDB ......... 78 : Region-wise Working Results of PCARDB.......... 78 : Composition of NPA of Co-operative Banks....... 79

Table 1.7 Table 1.8 Table 1.9

Table 1.10 : Sub-sector-wise Ground Level Credit Flow for Agriculture & Allied Activities................ 11 Table 1.11 : Production of Major Crops................................. 11 Table 1.12 : Production, Consumption and Exports of Major Plantation Crops ..................... 12 Table 1.13 : Area and Production of Major Horticulture Crops.............................................. 13 Table 1.14 : Agency-wise, Year-wise Kisan Credit Cards Issued ........................................... 15 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 : Short term refinance (production credit) for the last five years .......................................... 19 : Sanction of ST(SAO) Credit Limits to SCB for the year 2011-12.................................. 20 : Sanction of ST(SAO) Credit Limits to RRB for the year 2011-12.................................. 22 : Rates of Interest on Refinance............................ 24 : Agency wise disbursement of Refinance ........... 26 : Region-wise Disbursement of Refinance............. 27 : Sector-wise Disbursement of Refinance.............. 28 : Sector-wise Projects and Amounts Sanctioned under RIDF XVII.............................. 35

Table 4.10 : Percentage of Recovery of loans to Demand ............................................... 79 Table 4.11 : Frequency Distribution of Co-operative Banks According to Range of Loan Recovery Percentage................................. 80 Table 4.12 : Frequency Distribution of States/UTs according to Level of Loan Recovery of SCBs and DCCBs.............................................. 80 Table 4.13 : Frequency Distribution of States/UTs according to Levels of Loan Recovery of SCARDBs and PCARDBs............................... 81 Table 4.14 : Elected Boards under Supersession.................... 81 Table 4.15 : Indicators of Performance .................................. 86 Table 4.16 : Region-wise Working Results of RRB ................. 87 Table 4.17 : Frequency Distribution of States According to Levels of Recovery of RRB............ 87 Table 4.18 : Status of Financial Inclusion - RRB..................... 88 Table 5.1 Table 5.2 Table 6.1 Table 6.2 : Promotions effected during the year................... 95 : Total Staff Strength............................................. 95 : Sources of Funds.............................................. 101 : Uses of Funds................................................... 104

Table. 2.9 : Activity-wise Cumulative Sanctions.................... 37 Table 2.10 : Allocations, Sanctions and Disbursements.......... 38 Table 2.11 : Utilisation Percentage of RIDF (I TO XVII) ......... 39 Table 2.12 : Cumulative Economic and social benefits........... 39 Table 2.13 : State-wise Expected Benefits under RIDF........... 40 Table 3.1 Table 3.2 : Externally Aided on-going Projects..................... 53 : Progress under UPNRM...................................... 55

Charts
Chart 1.1 : Monthly Inflation Rates for Major Subgroups of WPI (2011-12)............................... 3 Chart 1.2 : Share of Agriculture & Allied Sector in Total Gross Capital Formation........................... 14 Chart 1.3 : GCF in agriculture as a percentage of GDP orinating in agriculture.......................... 15 Chart 2.1 : Financial Support by NABARD......................... 19 Chart 2.2 : Agency-wise Share in Refinance Disbursement..................................... 26 Chart 2.3 : Region-wise Share in Refinance Disbursement..................................... 27 Chart 2.4 : Tranche-wise Allocations - RIDF I to XVII.......... 34 Chart 2.4 : Sector-wise Cumulative Share in amount Sanctioned............................................ 36


Sources of Fund Capital 2012

NABARD AT A GLANCE
(` crore) 2011 Net Accretion 3,000 2,000 1,000 Uses of Funds 2012 2011 Net Utilisation Cash and Bank Balances Collateralised Borrowing and Lending Obligation 8,313 231 10538 228 (-)2,225 3

Reserves & Surplus

13,408

11,863

1,545

Investments in NRC(LTO) Fund 14,479 14,468 11 a) GOI Securities b) ADFC Equity c) AFC Equity NRC (Stabilisation) Fund 1,579 1,577 2 d) SIDBI Equity e) AICI Ltd. Deposits 291 277 14 f) NCDEX Ltd. & MCX Ltd. g) Nabcons Bonds and Debentures 38,584 26,788 11,796 h) Mutual Fund/VCF i) Biotech Venture Fund Borrowings from GoI 85 124 (-)39 j) Treasury Bills k) Commercial Paper Borrowings JNN Solar Mission 33 0 33 l) Non Convertible Bonds m) Equity Shares of Other Institution n) Debentures in Nature of Advance o) Certificate of Deposits Certificate of Deposits 1,281 137 1,144 2,147 36 1 48 60 34 5 0 26 58 1,037 375 1 2,548 19 1 48 60 18 5 390 10 0 1,862 225 1 (-)401 17 0 0 0 16 0 (-)390 16 58 (-)825 150 0

Foreign Currency Loan

503

503

12,344 13,461 (-)1,117 2,038 680 1,358

Loans and Advances a) Production & Marketing Credit b) Conversion of Production Credit into MT Loans c) MT & LT Project Loans 48,338 129 30,762 2 140 2,323 70,860 33,885 193 25,432 0 167 182 66,078 88 230 2,520 14,453 (-)64 5,327 2 (-)27 2,141 4,782 (-)16 (-)5 (-)50 23,203

Commercial Paper

2,245

6,448

(-)4,203

Term Money Borrowings

182

110

72

RIDF Deposits

75,107

67,878

7,229

d) Interim finance e) LT Non Project Loans

STCRC Fund

20,000

14,622

5,378

f) Other Loans g) RIDF Loans

Other Liabilities

6,345

5,546

799

h) Co-finance 72 (Net of Provision) Fixed Assets Others Assets Total 225 2,470

Other Funds

4,953

6,171

(-)1218

Total

1,82,075 1,58,872

23,203

1,82,075 1,58,872

KEY DATA REFERENCES

Particulars Unit Numerical Value 2010-11 2011-12

Amount (` crore) 2010-11 2011-12

Economic Indicators Overall GDP 1 % Growth 8.4 6.5 Agri GDP 1+ % Growth 7.0 QE 2.8 RE Share of Agri GDP in total GDP % 14.5 QE 13.9 AE South-west Monsoon % deviation from normal 2 1 GLC % increase 21.79 8.70 4,68,291 5,09,040 Foodgrains production million tonnes 244.80 252.60 3rd AE Oilseeds production million tonnes 32.50 31.20 3rd AE Sugarcane production million tonnes 342.40 345.70 3rd AE Cotton production million bales++ 33.00 35.00 3rd AE KCC Issued million 10.16 10.07 43,370 54,269 Development Initiatives Watersheds No. 66 41 FIPF- projects No. 45 41 Tribal development projects No. 126 98 374 291 FTTF No. of projects 512 395 45 45 Farmers Club No. of clubs 21,903 2,5243 NABARD-KfW Projects No. 8 8 41 136 RIF- promotional programmes No. of projects 122 108 11 8 REDP No. 3,327 9,852 12 13 SCC Issued lakh 1.20 0.94 514 496 FITF & FIF No. of projects - SHG Loan Disbursed* lakh 15.86 11.96 14,453 14,548 Consultancy Assignments - Contracted No. of projects 62 88 24.13 26.87 R&D Fund - Sanction No. of projects 1.09 17.67 Business Operations Financial Support by NABARD 60,483 82,339 Refinance - ST Credit ST (SAO) - SCB No. 21 23 23,759 33,996 - RRB No. 81 80 9,799.69 13,926 Weavers - SCB No. 3 3 216 190 ST (OSAO) - RRB 600 677 Refinance - Investment Credit 13,486 15,422 Farm Sector 5,055 6,525 NFS 3,446 3,574 SHG 2,545 3,073 Co-financing projects No. 8 3 12 14 RIDF Loans - Sanction No. of projects 41,779 18,162 18,315 20,701 - Disbursement 12,060 14,927 ^ Performance of RFI ST Co-operatives SCB in profit @ No. 29 29 491 521 DCCB in profit @ No. 324 317 1,691 1,457 LT Co-operatives SCARDB in profit @ No. 10 5 401 367 PCARDB in profit @ No. 295 329 401 367 ST Co-operatives - NPA Position SCB - NPA @ % to loan O/S 8.84 9.01 4,352 5,719 DCCB - NPA @ % to loan O/S 12.96 11.61 16,396 15,247 LT Co-operatives - NPA Position SCARDB - NPA@ % to loan O/S 45.06 44.81 5,648 6,116 PCARDB - NPA @ % to loan O/S 5187 51.96 4,889 4,834 RRB RRB in profit No. 75 79 2,421 2,469 RRB - NPA Position % to loan O/S 3.75 4.14 Inspection of banks@@ No. 302 319 CCB@@ No. 260 240 RRB@@ No. 42 48 Financial Performance & Management of Resources Total Working Funds 1,58,872 1,82,075

QE : Quick Estimate RE : Revised Estimate P : Provisional 1 : At Factor Cost at 2004-2005 prices + : Includes agriculture, forestry and fishing ++ : Of 170 kgs each @@ : Statutory Inspections ^ : inclusive of warehousing refinance to Banks @ : Data pertains to financial years 2009-10 & 2010-11 AE : Advanced Estimate. * : Data pertain to 2009-10 & 2010-11

PRINCIPAL OFFICERS
(31 March 2012) EXECUTIVE DIRECTORS

S. K. Mitra

V. Ramakrishna Rao

B. S. Shekhawat

CHIEF GENERAL MANAGERS (Rural Development Banking Service)

C.K. Gopalakrishna

P . Satish

K.C. Shashidhar (Kerala)

Dr. Venkatesh Tagat

P . Mohanaiah (Andhra Pradesh)

M.V. Ashok (Maharashtra)

K.K. Gupta (Odisha)

S. Akbar (Madhya Pradesh)

A. K. Srivastava

K. Muralidhara Rao

Dr. S. L. Kumbhare

J. G. Menon

V. Mohan Doss (Bihar)

Niraj Kumar Gupta

A. D. Ratnoo (Rajasthan)

K. S. Padmanabhan

R. Amalorpavanathan (BIRD, Lucknow)

Mahinder Kumar

N. Krishnan (Uttar Pradesh)

Dr. Rajender Singh

A. K. Mukhopadhyay (NRMC)

S. N. A. Jinnah (Karnataka)

K. Jindal (Punjab)

K. Sayeed Ali (Haryana)

H. R. Dave (Gujarat)

M. K. Mudgal

Smt.. L. Venkatesan (Tamil Nadu)

Dr. S. Saravanavel (Jharkhand)

A Lahiri

K. R. Nair

S. C. Rabra (Jammu & Kashmir)

Naresh Gupta (Himachal Pradesh)

S. K. Bansal (Chhattisgharh)

A. P . Sandilya

D. V. Deshpande (Bihar)

S. Selvaraj (Uttarakhand)

K. Venkateswara Rao

M. I. Ganagi

R. M. Kummur

G. R. Chintala (New Delhi)

Subrata Gupta

Jiji Mammen (Rajasthan)

S. Padmanabhan (West Bengal)

CHIEF GENERAL MANAGERS (Legal/Technical Service)

U. N. Srivastava (Legal)

Neeraj Kumar (Technical)

Dr. R. N. Kulkarni (Economic)

J. S. Pynadath (Technical)

OFFICERS-IN-CHARGE OF REGIONAL OFFICES/ CELL TRAINING INSTITUTIONS

R. K. Das (Mizoram)

M. M. Baheti (BIRD, Mangalore)

Dr. U. S. Saha (Nagaland)

Dr. S. D. Kulkarni (Goa)

R. K. Mishra (BIRD, Bolpur)

S. Athirstavel (Andaman & Nicobar Islands)

P . C. Chaudhri (Sikkim)

S. V. Nemlekar (Manipur)

N. Remesh (Tripura)

M. T. Wankhede (Meghalaya)

S. N. Chalia (Arunachal Pradesh)

Des Raj (Srinagar Cell)

Highlights
Economic Environment
1. Indian economy, one of the key drivers of global growth, had a relatively slower GDP growth at 6.5 per cent in 2011-12 which can be attributed to the slowdown in the world economy, as well as to domestic factors such as inflation, tight monetary policy and cutting back on the fiscal stimulus. Lower growth of 6.5 per cent in the economy was mainly on account of slippage in the manufacturing sector growth (3.9 per cent as against 7.2 per cent in 2010-11) as also agriculture sector (2.8 per cent against 7.0 per cent in the preceding year). With near double-digit growth, it was the services sector which held Indias growth performance together. 2. Growth of consumption expenditure and gross fixed capital formation in real terms was 6.0 per cent and 5.6 per cent, respectively, during 2011-12, compared to 8.1 per cent and 7.5 per cent, in 201011. Consumption expenditure grew, though at a lesser rate, mainly due to largely consistent private consumption. 3. Headline inflation, after remaining persistently high over the past two years showed signs of moderation towards the end of 2011-12. Financial year 2011-12 started off with a headline inflation of 9.7 per cent, which briefly touched double digits in September 2011, before coming down to 6.6 per cent in January 2012. The shift in the nature and causes of inflation in India was a natural fallout of the structural changes that the economy had undergone. Both domestic and global factors determined the inflationary trend. However, the inflationary pressures during 2011-12 in India was due to the interplay of a number of immediate and some underlying long-term factors such as high price of primary articles driven by vegetables, eggs and meat brought about by changing dietary pattern, increasing global commodity prices, etc. 4. Agricultural exports increased from `1,13,117 crore during 2010-11 to `1, 41,095 crore during 201112, registering a growth of 24.73 per cent. Increase in agricultural exports has been mainly due to higher i exports of basmati rice, raw tobacco, meat and meat preparations, castor oil and tea. 5. Moderate growth rate of agriculture (2.8 per

cent) was in the backdrop of several constraints which are long term in nature. Evidence shows that besides tackling low growth in the agriculture sector, dealing with high and increasing volatility in the wake of climate change, is going to be a major policy challenge. Moreover, Indian agriculture growth has been varying considerably at the state level, implying that uniform prescriptions across the states may not work. 6. Small farmers, who form 83 per cent of the

numbers, now operate about 41 per cent of the total area, indicating that the base of Indian agriculture is getting smaller. Estimates suggest that with 51 per cent share in the value of agriculture output, small holders contribute significantly to food security. Therefore, the biggest challenge today is ensuring that the small holders do not get marginalised and excluded from the benefits of the growth process. 7. Since a large part of agriculture depends on

rainfall, receiving 899.9 mm of rainfall which was 1.0 per cent more than the Long Period Average (LPA) during the South-West monsoon (June-September) 2011, was a positive feature. Reservoirs also showed normal levels of water availability. 8. Production of food grains during 2011-12 was

at an all time record level of 252.56 (3rd Advanced Estimate) million tonnes mainly due to increase in production of rice and wheat. This happened despite a decline in overall area under food grains during 2011-12 (1,254.92 lakh ha.) as compared to 2010-11(1,267.65 lakh ha.). The decline was due to a shortfall in the area under jowar in Maharashtra, Rajasthan and Gujarat; bajra in Maharashtra, Gujarat and Haryana; and in pulses in Maharashtra, Uttar Pradesh, Andhra Pradesh and Rajasthan. The area under coarse cereals and oilseeds has also come down as compared to the previous year.

9.

With urbanisation and economy growing in

` 5,09,040 crore as on 31 March 2012, achieving 107.2 per cent of the target. Commercial banks, Cooperative banks and Regional Rural Banks disbursed ` 3,68,616 crore, `86,185 crore and `54,239 crore, respectively, constituting 72 per cent, 17 per cent and 11 per cent of the total credit flow during 2011-12. 15. The share of Gross Capital Formation (GCF)

the range of 7 to 8 per cent, there has been a shift in the demand from cereals to non-cereal food items like pulses, edible oils, fruits, vegetables, dairy products, meat and fish. These accounted for 70 per cent of the wholesale price index (WPI) basket for primary food items. The food inflation during the year were largely due to the constraints experienced in increasing the supply of these commodities in the short run, as compared to their demand. 10. On the agricultural inputs side, seed sector

in agriculture & allied sector in total GCF over the past few years has been hovering between 6 and 8 per cent as compared to about 18 per cent observed in early 1980s, implying that the non-agriculture sectors have been receiving higher investment resulting in growth disparities. This is in line with the falling share of agriculture in the overall GDP , which is in conformity with the development patterns observed elsewhere. Yet keeping in view the high population pressure on agriculture, the need for substantial increase in investment felt. Capital in agriculture in is being increasingly formation agriculture

exhibited an improved performance. During 2010-11, 277.3 lakh quintals of certified/ quality seeds were distributed. Production of breeder and foundation seed reached 1.19 and 17.53 lakh quintals, respectively during 2010-11, registering 13.53 and 7.8 per cent growth over the previous year. 11. During 2010-11, an irrigation potential of

566.24 thousand hectares has been created by States from major, medium and minor irrigation projects under the Accelerated Irrigation Benefit Programme (AIBP). 12. Despite making efforts to develop irrigation,

( `1,42,254 crore in 2010-11) now primarily relies on private investment. Considering that public investment has an enabling effect on private investment, the stagnant share of the former is a matter of concern. 16. Kisan Credit Card (KCC) scheme introduced

ensuring adequate water availability for agriculture is becoming an increasingly important concern. The efficiency of surface water irrigation has been on the decline, while groundwater, the major source of irrigation, suffers from over-exploitation in most of the States resulting in steep decline in the groundwater table. 13. Nearly, 65 per cent of agriculture is rain-fed

in 1998-99 has facilitated smooth flow of credit to farmers. During 2011-12, 10.07 million KCCs were issued by banks with sanctioned credit limit of ` 54,269 crore. Of the 113.91 million credit cards issued cumulatively, commercial banks issued 53.06 million cards (46.58%) followed by Co-operative Banks with 43.66 million cards (38.33%) and Regional Rural Banks with 17.19 million cards (15.09%). 17. 8.0, Minimum Support Price (MSP) for common 14.73, 6.67, 10.41 and 13.79 per cent,

and located in resource poor regions. These regions are home to a majority of small and resource poor farmers whose contribution to food and nutrition security has been acknowledged. Therefore, there is a need for greater understanding of rain-fed agriculture and framework for its development. 14. Agriculture credit growth as a facilitator, has

paddy, wheat, arhar, moong and urad increased by respectively, during 2011-12 over 2010-11. There was no change in the MSP of cotton. The procurement of rice and wheat as on March 1, 2012 at 26.8 million tonnes and 28.3 million tonnes, respectively, represented a decline of (-) 21.63 per cent and increase of 25.78 per cent as compared to the corresponding date last year. ii

been consistent during the past few years. As against the target of `4,75,000 crore of credit flow to agriculture for 2011-12, the banking system disbursed

18. GDP.

The significance of agriculture sector in Its wide-ranging impact on reducing

growth is well-recognised The structural concer ns and other issues brought out above, have a critical bearing on the policies and per formance of NABARD.

India is not merely restricted to its contribution to pover ty, tackling inflation and achieving inclusive

Business Operations
19. The total financial support extended by per cent in Eastern Region and 55 per cent in the rest of the country. 23. With a view to augmenting ST-SAO Refinance NABARD during 2011-12 stood at `82,339.48 crore, registering a growth of 36.13 per cent over 2010-11.

Production Credit
20. The total production credit disbursed, as on 31 March 2012, was ` 48,981 crore. During 2011-12, ST-SAO credit limits were sanctioned to 23 SCBs aggregating `33,995.67 crore as compared to `23,759.34 crore to 21 SCBs during 2010-11. The credit limits included `3,171.70 crore for the Oilseeds Production Programme (OPP), ` 285.57 crore for National Pulse Development Programme (NPDP) and `1,106.47 Population crore for the SCBs Development reached a of Tribal (DTP). maximum

to farmers through the co-operative credit structure, a separate direct credit window facility was launched for well-functioning Central Co-operative Banks. In addition, NABARD sanctioned refinance to Regional Rural Banks and Public Sector Banks for financing Primary Agriculture Credit Societies (PACS) against promissory notes, subject to the Banks furnishing a declaration in writing setting out the purposes for which they have made loans and advances or any such reasons as may be required by NABARD. A credit limit of ` 79.47 crore was sanctioned to Public Sector Banks for financing PACS. 24. During 2011-12, NABARD sanctioned limits of

outstanding of `33,995.61 crore during 2011-12 with 100 per cent achievement level. 21. During 2011-12, ST (Weavers) credit limits

`13,925.66 crore to 81 RRBs under ST-SAO as against `9,799.69 crore sanctioned to 80 RRBs in 2010-11. The limit included `1,236.29 crore for Oilseeds Production Programme (OPP), ` 251.90 crore for Development of Tribal Population (DTP) and `27.91 crore for National Pulses Development Programme (NPDP). The maximum outstanding was `13,925.66 crore with 100 per cent achievement level under the limit sanctioned during 2011-12. Six RRBs in the North-Eastern Region were sanctioned credit limit of `104.94 crore, which was fully utilised by them. 25. RRBs were also provided additional refinance

aggregating ` 190.01 crore were sanctioned to three SCBs (Andhra Pradesh- ` 60.32 crore, Tamil Nadu` 122 crore & Puducherry` 7.69 crore) activities have for as production, Handloom procurement, Weavers marketing (HWG)

against ` 215.75 crore during 2010-11. So far, 4,624 Groups been formed in various States viz. Odisha (1,366), Andhra Pradesh (1,258), Assam (272), Bihar (82) Jharkhand (500), Madhya Pradesh (266), Uttar Pradesh (272), West Bengal (88) and in other States (520). Of these, 2,062 HWGs have been credit linked. 22. In order to enhance ground level credit for

of 10 per cent for 2011-12, only to enhance crop loans disbursed by them. Thus, RRBs were eligible for refinance upto 55 per cent of their crop loan disbursements in North-Eastern and Hilly Regions; upto 35 per cent in Eastern region and 30 per cent in the rest of the country.

crop loans by Co-operative Banks, it was decided to provide additional refinance of 10 per cent for the year 2011-12 only. Thus, SCBs were eligible for refinance upto 70 per cent of their crop loan disbursements in North-Eastern and Hilly Regions; 60

iii

26. Finance

In the Budget speech for 2011-12, the Minister announced that a Centrally

29.

NABARD continued to act as the nodal

agency for GoI package for restructuring of term loans of co-operative sugar mills. Out of `200.13 crore received from GoI towards interest subvention, ` 200.02 crore was disbursed to 76 co-operative sugar mills in Maharashtra and Odisha. NABARD also acted as the nodal agency for routing interest subvention to co-operative banks and RRB under Scheme for extending Financial Assistance to Sugar Undertakings 2007. Out of ` 383.59 crore received from GoI during the year 2011-12 towards interest subvention, ` 383.38 crore was released to 212 sugar mills operating in 11 States viz., Maharashtra, UP, AP , Tamil Nadu, Uttarakhand, Odisha, Madhya Pradesh, Gujarat, Goa, Punjab and Karnataka.

Sponsored Plan Scheme on Revival, Reform and Restructuring Package for Handloom Sector with a total outlay of ` 3,884 crore, be implemented by NABARD. The revival package includes waiver of overdue loans, capacity building, technology upgradation and introduction of Common Accounting System and Management Information System. So far, 19 States have given their consent to implement the package in their States out of which, tripartite agreement has been signed between GoI, NABARD and the Governments of Andhra Pradesh, Kerala, Uttarakhand, West Bengal and Karnataka. 27. The Ministry of Textiles (MoT), GoI vide its

notification dated 9 January 2012 issued operational guidelines for Institutional Credit component under the Integrated Handloom Development Scheme (IHDS) for the handloom sector in the country. NABARD has been designated as the implementing agency (@ for channelising per individual the Margin & Money Interest ` 4,200/weaver)

Investment Credit
30. During the year 2011-12, the refinance disbursement for investment credit for farm and non-farm sector activities was ` 15,421.70 crore as against the budget of ` 14,995.00 crore. During 2011-12, Commercial Banks have availed of refinance amounting to ` 8,433.75 crore, SCARDBs and SCBs have availed of refinance amounting to ` 2,444.93 crore and ` 1,192.29 crore, respectively and RRBs have availed of refinance amounting to ` 3,086.19 crore. The spatial distribution of refinance disbursement across regions indicated that a major share had been accounted for, by the States in the southern region (48.20%), followed by northern (15.7%), central (12.10%), eastern (11.60%), western (10.80%), and north-eastern region (1.60%). During 2011-12, the major share of refinance has been accounted for, by NFS (23.18%) followed by SHG (19.92%), (10.03%). 31. With effect from 2 September 2011, refinance Farm Mechanisation (13.84%), Animal Husbandry (10.18%) and Plantation & Horticulture

Subsidy (@ 3 per cent per annum for 3 years) components under the Package. The first instalment of ` 7.57 crore has been released by the MoT, GoI to be passed on to the banks. 28. scheme The continuance of the interest subvention was announced in the Union Budget

2011-12, making interest subvention available at 2 per cent per annum to public sector banks, co-operative banks and RRBs for deploying their own funds for crop loan upto ` 3 lakh per farmer, provided the ultimate borrowers were given loans at 7 per cent interest rate per annum. Additional subvention of 3 per cent was announced for 2012-13 to those farmers who repaid crop loans promptly within one year of disbursement. Interest subvention was given to NABARD for providing concessional refinance to SCBs and RRBs at 4.5 per cent interest rates. The Interest subvention for 2011-12 was estimated at ` 3,000 crore.

to SCARDBs was extended as term loans as against the earlier practice of contribution to floatation of debentures. Under the new system, all SCARDBs are eligible for refinance of 90 per cent of the eligible bank loan disbursed.

iv

Rural infrastructure Development Fund

32. The Corpus of the Fund has grown to `18,000 crore under Rural infrastructure Development Fund (RIDF) XVII (2011-12) from an allocated amount of `2,000 crore under RIDF I (1995-96), taking the cumulative allocation to `1,52,500 crore (which is inclusive of `18,500 crore under a separate window for funding rural roads under the Bharat Nirman Programme). The Union Budget for 2011-12, allocated an amount of `18,000 crore under RIDF XVII during 2011-12, out of which `2,000 crore has been exclusively dedicated towards creation of warehousing facilities in different States on a priority basis. 33. As on 31 March 2012, 18,162 projects

Kerala (95%), Haryana and Uttarakhand (93%), Tamil Nadu (92%) and Chhattisgarh (91%). 35. The The cumulative deposits received under RIDF total loan outstanding under RIDF as on

stood at `1,11,025.94 crore as on 31 March 2012. 31 March 2012, was `70,860.31 crore. 36. Consequent upon the change in bank rate

from 6 per cent to 9.5 per cent w.e.f. 13 February 2012, the rate of interest payable to NABARD by the State Governments has been fixed at the earlier bank rate viz., 6 per cent plus 0.5 per cent (i.e. 6.5 per cent) till 31 March 2012. Loan disbursements from RIDF to the State Governments on or after April 01, 2012 has been fixed at 1.5 per cent below the prevailing bank rate. 37. Among the new steps initiated in 2011-12 for Approvals (AA) from the State

involving a loan amount of `20701.12 crore were sanctioned under RIDF XVII. Of the total number of projects sanctioned, irrigation projects accounted for 27.50 per cent followed by rural road projects (24.20%), social sector projects (17.90%), rural bridges (12.90%) and agri related projects (9.70%). An amount of ` 1,493.82 crore was sanctioned for warehousing projects as at end of March 2012. Cumulatively, 4,62,229 projects were sanctioned since the inception of RIDF involving an amount of `1,42,470.65 crore as on 31 March 2012. Of the cumulative RIDF loans sanctioned as on 31 March 2012, 42 per cent went to agriculture and related sectors, including irrigation and power; 15 per cent to social sector projects like, health, education and rural drinking water supply; while the share of rural roads and bridges was 31 per cent and 12 per cent, respectively. 34. Taking into account phasing of the projects, had a total pool of projects of

quick grounding of RIDF projects, the receipt of Administrative Governments was made mandatory before submission of projects to NABARD for sanction; 20 per cent of RIDF was specifically allocated for social sector projects and steps initiated for on-line/web-based monitoring of RIDF projects. 38. NABARD set up the Rural Infrastructure

Promotion Fund (RIPF) with a corpus of ` 25 crore on 1 September 2011 for augmenting the skill sets and technical know-how of personnel engaged in the creation of rural infrastructure. The Fund also aims at creation of critical, low cost, last-mile rural infrastructure that would benefit the village community at large and form the basis for larger infrastructure projects under RIDF. The small investments under RIPF is expected to attract and make larger investments feasible under RIDF. As on 31 March 2012, 8 proposals amounting to `0.56 crore have been sanctioned under RIPF. 39. In the Union Budget 2011-12, Government of

under various tranches (RIDF I to XVII), State Governments `1,30,009 crore as on 31 March 2012. During the year, disbursements were made to the tune of `14,927 crore (inclusive of ` 759 crore sanctioned and released as refinance under Warehousing facilities to Banks). A state-wise analysis of ratio of disbursements to the approved phasing of sanctions reveals that Mizoram topped with 132 per cent, followed by Goa (106%), Meghalaya (100%), Manipur (96%), Maharashtra and

India (GoI) had made a dedicated allocation of `2,000 crore for financing warehousing under RIDF. As on 31 March 2012, total sanctions under the scheme, stood at `1,493.82 crore, to four State Governments viz., Bihar, Karnataka, Tamil Nadu and Puducherry. v

40.

NABARD

also

introduced

scheme

for

opportunities. To take advantage of these, building up institutions and arrangements based on principles of aggregation are essential. These would include co-operatives as well as producers organisations and its variants. The new business initiatives need to be viewed in the above context. 42. Financing Producers Organizations; creation of

providing refinance to banks, against loans extended by them to private entities and the agencies owned/ assisted by government, for creation of warehousing infrastructure. Refinance from NABARD was made available at an interest of 8 per cent for a period of 07 years (including a moratorium of 02 years). NABARD will also provide financial incentive to those borrowers, who repay their loans, along with interest, as per the repayment schedule prescribed by the financing bank. An aggregate amount of ` 759.07 crore was sanctioned and disbursed to banks. With this, the total sanctions against the allocation of ` 2,000 crore stood at ` 2,252.89 crore as on 31 March 2012.

new line of financial support for DCCBs; bringing co-operatives on a higher technology platform of Core Banking Solutions (CBS) to create a level playing field to compete with the other banks for business and growth; engaging with the Primary Agricultural Co-operative Societies (PACS) to convert them in to multi-service centers are all such initiatives which eventually have huge development potential and are inclusive in nature. The new business initiatives thus, are in tune with organisational strategy of business for development. 43. NABARD Infrastructure Development

New Business Initiatives

41. As part has for of set funding the new business initiatives, NABARD support up NABARD of rural Infrastructure infrastructure

Development Assistance (NIDA) to provide credit projects. Ensuring investments in agriculture in the eastern states was another important initiative. The focus of the new initiatives was on excluded areas and the small operators who will have to compete in the markets, which are quite demanding in terms of quality and food safety. Participating in these markets poses challenges, but they also bring more

Assistance (NIDA), a new line of credit support for funding of rural infrastructure projects, funds State owned institutions/ corporations both on-budget as well as off-budget for creation of rural infrastructure outside the ambit of RIDF borrowing. The cumulative sanctions under NIDA during the year 2011-12 was ` 890.85 crore and disbursement of ` 422.90 crore.

Development and Promotional Initiatives

Farm Sector
44. During the year, 41 watershed projects were sanctioned under the Watershed Development Fund, taking the cumulative number of such projects to 620, covering an area of 5.29 lakh ha. in 15 States, with a total commitment (loan and grant component) of `239.99 crore. Sixty one projects graduated to Full Implementation Phase (FIP), taking the number of such projects to 316. NABARD anchors four types of watershed development programmes in the country namely, (i) Indo-German Watershed Development vi Programme (IGWDP), (ii) Participatory Watershed Development Development Programme Fund (WDF), under (iii) Prime Watershed Ministers

package for distressed districts in four States and (iv) Integrated Watershed Development Programme (IWDP) in Bihar, supported by the Planning Commission. 45. Tribal Development Fund programme, in its of tribal communities, covering

7th year of implementation, has enhanced livelihood opportunities traditional tribal livelihoods such as bee keeping,

sericulture, organic wadis and mixed wadis (perennial fruit crops + creeper vegetables + spices). During the year, financial assistance of `290.63 crore was sanctioned for 98 projects benefiting 72,419 tribal families in 16 States. The cumulative sanction as on 31 March 2012 was `1,208.23 crore, covering 3,22,912 families in 415 projects across 26 States/ UTs. During the year, a new Wadi model was introduced in Alirajpur, Madhya Pradesh that generated income for the farmers from the first year of implementation by combining the mandap system of vegetable cultivation along with cultivation of perennial fruit crops. 46. During 2011-12, 41 projects were sanctioned

(16.52%) and Northern (12.43%) regions, while NER accounted for 2.75 per cent. 279 Farmers Clubs functioned as Business Facilitators/Business Correspondents and 761 Farmers Clubs as Self Help Promoting Institutions. 49. The Umbrella Programme on Natural

Resource Management (UPNRM), which aims to boost rural livelihoods by supporting community-managed sustainable natural resource management projects, has supported 104 projects in 16 States with disbursements to the tune of `131.89 crore. 50. A concessional refinance support scheme was

launched by NABARD during the year to facilitate institutional credit flow for key investments in the Eastern Region that have a direct bearing on enhancing crop productivity. The scheme provides refinance at a concessional rate of 7.5 per cent per annum to seven Eastern states, viz., Assam, Bihar, Chhattisgarh, Jharkhand, Odisha, West Bengal and Uttar Pradesh. The key activities for concessional refinance support under the scheme, include (a) Water Resources Development (b) Land Development (c) Farm Equipment and (d) Seed Production units. The total lending target of the banks for the financial year 201112 was `3,912 crore. 51. include During the year, two new initiatives for the Pilot project for Augmenting Farm

under Farm Innovation and Promotion Fund (FIPF) in 14 States with financial assistance of ` 56.53 crore including the project on Augmenting Farm Productivity in Balasore District in Odisha with a grant support of ` 48.08 crore phased over a period of three years. The Fund also supported the pilot testing of the unique mobile-enabled Kisan Credit Project (mKCC) project in Villupuram district of Tamil Nadu. The project enabled farmers to transact on their loan accounts with Pallavan Grama Bank using their mobile phones and enter into mobile supported cashless transactions with agriculture input dealers. 47. The Farmers Technology Transfer Fund

(FTTF), with a corpus of `100 crore, supports adoption of appropriate technologies by farmers. During the year, 395 proposals were sanctioned under FTTF in 29 States with financial assistance of `20.59 crore as grant. The cumulative disbursement was `44.59 crore. 48. With the launching of 25,243 new Farmers

augmenting farm productivity were launched. These Productivity in Select Districts and the Pilot Project for Augmenting Farm Productivity in Balasore District, Odisha. The Pilot Project for Augmenting Farm Productivity in Select Districts is a comprehensive package for augmenting farm production and productivity by addressing all interlinked components of farming viz., agricultural inputs, technology, credit, post-harvest management, value addition and marketing in a holistic manner. One district each has been selected in 11 States for implementation, viz. , Bihar (Bhojpur), Chattisgarh (Bilaspur), Haryana (Sirsa), Jharkhand (Deoghar), Karnataka (Belgaum), Maharashtra (Yavatmal), Madhya Pradesh (Shahdol), Odisha (Balasore), Rajasthan (Bikaner), Uttar Pradesh vii

Clubs during the year, the number of clubs reached 1,01,951 as on 31 March 2012. NGOs promoted maximum number of clubs (15,870) followed by co-operative banks (4,359), commercial banks (2,104), RRBs (2,103) and SAUs/KVKs/other agencies (807) during the year 2011-12. Eastern region had the highest share (24.99%) of clubs followed by the Central (24.83%), Southern (18.48%,) Western

(Azamgarh) and West Bengal (Nadia). The Pilot Project at Balasore District in Odisha has been sanctioned with a total financial outlay of `3,211.86 crore, including a grant component of ` 48.08 crore to be supported under the Farm Innovation Promotion Fund (FIPF), for a period of three years i.e., from 2012-13 to 2014-15.

to support development, promotional and Information and Communication Technology (ICT) interventions leading to financial inclusion are in operation in NABARD. As on 31 March 2012, the cumulative sanctions under FIF and FITF were `114.62 crore and ` 343.48 crore, respectively and disbursements `36.46 crore and ` 184.16 crore, respectively. This year, RRBs were supported for implementation of CBS and card based ICT solutions using the Application Service Provider (ASP) model and for holding financial literacy awareness camps in villages. 56. A Centre of Excellence for Rural Financial

Rural Non farm Sector

52. The Rural Innovation Fund, which facilitates innovative, risk-mitigating experiments with potential to promote livelihood opportunities in rural Farm, Non-Farm and micro-Finance sectors, supported 108 new innovative projects during the year. The cumulative projects supported under the Fund are 483 in number, as on 31 March 2011 of which, 150 have been completed and 67 are in advanced stages of implementation. 53. With the sanctioning of 9,852 REDPs/ SDPs

Institutions (CERFI) was set up during the year with the objective of embedding Aadhar numbers into the CBS platform of RRBs, for bringing about higher accountability and transparency in last- mile banking.

Micro Finance
57. The SHG-Bank Linkage Programme was given a renewed thrust with the launch of SHG-2. The focus of SHG-2 would be on voluntary savings, cash credit as a preferred mode of lending, scope for multiple borrowings by SHG members in keeping with repaying capacity, avenues to meet higher credit requirements for livelihood creation, SHG Federations as nonfinancial intermediary, rating and audit of SHGs as part of risk mitigation system and strengthening monitoring mechanisms. 58. The GoI communicated its decision of only

with grant support of `13.09 crore during 2011-12, NABARD has so far supported 27,711 REDPs/SDPs with grant of `96.45 crore, covering around 6.93 lakh unemployed rural youth. During the year, NABARD initiated a vocational training programme for blue collar entry level workers like masons, welders, cooks, technicians and drivers on a pilot basis in collaboration with the PanIIT Alumni Reach for India (PARFI), an organization created by IIT alumni. It is a loan-based approach to vocational training. 800 students have been trained through this model with a 100 per cent placement rate. 54. During the year, 94,479 Swarojgar Credit

sanctioning Cash Credit Limits to SHGs from 17 November 2011, so as to address the issue of delayed/ limited /non-approval of repeat loans to SHGs, to ensure cost effectiveness to clients and to provide greater operational flexibility to SHG clients. 59. During 2011, loans amounting to `14,547.73

Cards (SCC) with credit limit of ` 495.81 crore were issued for facilitating hassle-free credit for investment and working capital requirements of small/micro entrepreneurs. The cumulative total of SCC as on 31 March 2012 was 13.06 lakh, involving a credit limit of `5,445.32 crore.

crore were disbursed to 11,96,134 SHGs. As on 31 March 2011, there were more than 74.62 lakh savingslinked Self Help Groups (SHG) and more than 47.87 lakh credit-linked SHGs covering 9.7 crore poor households under the micro-finance programme. viii

Financial Inclusion
55. The Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund (FITF), dedicated

60.

During 2011-12, `33.31 crore was released

by involving an anchor NGO in each of the selected backward districts of the country. The NGO will serve not only as an SHPI, but also as a banking/business facilitator. The scheme will be implemented in 109 selected backward/LWE districts of the country. 66. As stated in the Budget Speech of 2011-12, a

under Micro-Finance Development and Equity Fund (MFDEF); of which, `28.68 crore was grant support for promotional activities and `4.63 crore for CS/RFA to MFIs, as against `29.95 crore and `17.43 crore, respectively, in the previous year. 61. An amount of `36.68 crore was sanctioned as

Women SHGs Development Fund with a corpus of `500 crore was created to empower women by promoting their Self Help Groups. This Fund will also support the objectives of Aajeevika i.e. the National Rural Livelihood Mission. It will empower women SHGs to access bank credit.

grant for promotion of 1.94 lakh JLGs across the country till 31 March 2012. During the year, banks disbursed a loan of ` 946.81 crore to 1,29,646 JLGs upto 31 March 2012 taking the cumulative loan disbursed to `2,092.10 crore for 2,70,691 JLGs. A unique project was sanctioned by NABARD during the year, to the Bihar Kshetriya Gramin Bank, Munger for promotion of two JLGs comprising sex workers, one for taking up tailoring activity and the other for opening a shop selling bangles. 62. During the year, 1,914 MEDPs were

NABARD Consultancy Services

67. During the year, NABCONS contracted 88 executed 125 assignments, including 6 assignments for a contract value of ` 26.87 crore. The company international visitors programmes. NABCONS earned `17.30 crore as professional fees on assignments executed, ` 0.43 crore as commission from mutual fund distribution and ` 2.62 crore as interest on investments, aggregating a total income of `20.35 crore.

conducted for 56,292 members on various locationspecific farm, non-farm and service sector activities. Cumulatively, 6,363 MEDPs had been conducted for 1,64,948 participants. 63. During 2011-12, NABARD Financial Services

Ltd., (NABFINS), disbursed loans to the extent of `213.58 crore to 6,915 SHGs through 67 Business Correspondents (BCs), taking the cumulative disbursement to `265.54 crore to 8,968 groups. Loans other than to SHGs were disbursed to the extent of `2.30 crore during the year, taking the cumulative of other loans disbursed to `5.25 crore. 64. The Centre for Micro-finance Research (CMR) undertook

Research and Development Activities

68. research During the year, `17.67 crore was utilised projects/studies (` 0.70 crore), seminars from the R&D Fund for supporting activities like ( `0.85 crore), training/summer placement ( `15.57 crore), NABARD Chair Professor Scheme (`0.48 crore) and other activities (`0.07 crore). As on 31 March 2012, the cumulative disbursement stood at `153.86 crore. 69. During 2011-12, five research projects

brought out two issues of its half-yearly journal, The Micro-finance Reviewand its sub-centres research on 41 prioritised themes during the year. Grant assistance of `199.33 lakh was released by NABARD during 2011-12 to CMR, taking the cumulative assistance to `560.01 lakh. 65. A new scheme for Promotion of Women SHGs

involving a grant assistance of `0.49 crore were sanctioned. Further, seven projects/studies sanctioned earlier were completed during the year. 70. crore During the year, grant assistance of ` 1.14 was sanctioned to various universities,

in backward and Left Wing Extremism (LWE) affected districts of India was formulated in association with the GoI, as a viable and self-sustainable model for promotion and financing of Women Self Help Groups ix

research institutes and other agencies for organising 139 seminars, conferences, symposia and workshops covering subjects/areas related to agriculture and rural development including Green Revolution-II,

Agri-Marketing, Micro Finance, Financial Inclusion, Sustainable Livestock and Poultry Development, Plant Genetic Biotechnology, Resources Conservation Security of and Animal Climate Water

and initiate suitable policy interventions by agencies concerned. 71. carved NABARDs development initiatives have been out under the overarching objective of

Change, Food Security, Organic Farming, Economic Reforms and Agriculture, Advances in Aquaculture, Regional Imbalance Inclusive Growth, SHG and Women Entrepreneurship and Coffee Research, etc. The grant support extended to the organisers enabled them to document the proceedings and publish background papers, thus facilitating wider dissemination of the recommendations/action points

sustainable inclusive growth of Indias development policy. To make a perceptible difference on ground, addressing the concerns of small operators and excluded areas and deploying technology upon finding space for location/product specific viable delivery models, which can be up-scaled have been the principles which have guided various development initiatives.

Capacity Building of Client Institutions

Institutional Development
72. During 2010-11, SCB as a group earned overall return of 6.9 per cent, while cost of funds worked out to 5.01 per cent, resulting in financial margin of 1.92 per cent (excluding miscellaneous income of 0.49 per cent). The average transaction cost and risk cost of SCB during the year worked out to 1.37 per cent and 0.39 per cent, respectively. SCB as a group earned a positive net margin of 0.71 per cent in 2010-11, compared to net margin of 1.06 per cent in 2009-10. 73. In the case of DCCB, the overall return on 75. RRBs were given a target of opening 2000 new branches by March 2012. In the current year, as on 31 March 2012, RRBs had opened 913 new branches, taking the cumulative number of branches of all RRBs to 16,914 spread over 635 districts in 26 States and one UT. It is now compulsory for all new branches to be equipped with CBS. CBS has been fully implemented in 80 RRBs. J & K GB has implemented CBS in 90 branches out of 184 branches. Kisan Kshetriya Gramin Bank (UP) has not been able to make any progress on CBS implementation in the bank, as it is linked to its merger with Aryavrat GB.

working funds was 7.62 per cent, while the cost of funds was 5.11 per cent, yielding a financial margin of 2.51 per cent (excluding miscellaneous income of 2.30 per cent). The average transaction cost and risk cost as percentage to working funds were 2.09 per cent and 1.37 per cent, respectively, during 2010-11. The DCCB as a group, earned a net margin of 1.41 per cent during 2010-11. 74. During 2011-12, financial assistance of `7.09

Supervision of Banks
76. During 2011-12, statutory inspections of 319 banks (31 SCBs, 240 CCBs and 48 RRBs) and voluntary inspections of 15 SCARDBs have been conducted as on 31 March 2012 as scheduled. The inspections brought out supervisory concerns relating to these institutions, which were communicated to the banks concerned, Registrar of Co-operative Societies (RCS), State Governments (in respect of co-operative banks) and Sponsor Banks (in respect of RRBs) for corrective action. 77. Pursuant to the recommendations of the

crore under Co-operative Development Fund (CDF) was sanctioned and ` 5.34 crore disbursed (including disbursements against sanctions of previous years). As on 31 March 2012, cumulative sanctions and disbursements were `105.26 crore and ` 92.91 crore, respectively. The balance in the Fund as on 31 March 2012 stood at `125 crore. x

Committee on Financial Sector Assessment (CFSA) (Chairman: Dr. Rakesh Mohan, the then Deputy

Governor of RBI), the RBI had revised the licensing norms for co-operative banks during October 2009. The number of licensed SCBs and CCBs stood at 24 and 222, respectively, as on 31 March 2011. During the year, RBI issued licenses to 4 SCBs and 82 CCBs, thus increasing the number of licensed banks

to 332 (28 SCBs and 304 CCBs) as on 31 March 2012. The number of scheduled SCBs remained unchanged States at 16. The problems in attaining by the licensing eligibility by co-operative banks in some were reviewed periodically Government of India.

Organisation, Corporate Governance and Management

78. The Board of Directors met seven times cadre. One programme each conducted by NBTC, ZTC and HO, Mumbai covering 31 ST/SC Group B staff. One pre-recruitment Training was conducted at IES, Bandra covering 84 SC/ST participants. 82. During the year, 20 staff members availed of during the year, while the Executive Committee and the Sanctioning Committee for loans under RIDF, met once and nine times, respectively. 79. The repositioning initiative of NABARD was

undertaken with a view to analyse existing financial products and services, types of existing development interventions both internally and through market survey and to design new products, services and networks. Further, the purpose was also to evaluate organisational structure, against repositioning of products and services and set up appropriate structure; system and processes re-engineering. 80. During the period ended 31 March 2012, 744

the facility of the Incentive Scheme for staff members to pursue professional studies. Various Courses being pursued by employees were CFA, CS and MBA from reputed institutions viz., C F Institute of USA and Institute of Company Secretaries of India, Sikkim Manipal University, etc. During the year, 177 officers completed the e-learning programme, Harvard Mentor 10 in collaboration with Harvard Business School, USA. 83. Total staff strength of the Bank as on 31

applications and 101 appeals were received and information provided. 20 hearings on appeals made to Central Information Commission were attended to. Workshops were conducted on Right to Information Act, 2005 through Video Conferencing for selected Regional Offices at HO. 81. During the year, 103 programmes were

March 2012 stood at 4552 of which 836 belong to Scheduled Castes (18.36 %) and 397 to Scheduled Tribes (8.72%). The staff strength of ex-servicemen and physically handicapped employees stood at 80 and 88, respectively, constituting 1.7 per cent and 1.9 per cent of the total staff strength. 84. Industrial relations in the Bank continued to

conducted by NBSC Lucknow covering 2,232 officers (2,049 from NABARD and 103 officials from RFIs) covering Programmes on Watershed Development, TDF, Microcredit, HRMS, Financial Inclusion, Appraisal and monitoring of Infrastructural projects etc. Further, 1,704 officers and 528 officers were trained in in-house and on-location programmes, respectively. During 2011-12, National Bank Training Centre (NBTC), Lucknow and Zonal Training Centre (ZTC), Hyderabad conducted 74 training programmes for 976 Group B and C staff. The College also conducted pre-promotional training programmes for Group B staff for promotion to higher grade in the officers xi

be harmonious during the year. Periodic discussions were held between the Management and the All India National Bank Officers Association and the All India NABARD Employees Association. Five meetings of the Grievances Redressal Committee and three meetings of the Appellate Committee were held during the year. Twenty one grievances and six appeals were received, of which 19 grievances and 6 appeals were processed. The Joint Consultative Committee (JCC) comprising representatives from Bank Management and National Bank Officers Association, met once

during the year to discuss HR issues. 85. Bank has taken steps in implementing IT

by

client

institutions

and

apprise

the

Top

Management of the status. During the year, ID conducted Inspection of 9 Regional Offices and 18 Head Office Departments. The concurrent audit of HO departments, continued to be outsourced to external auditors, while the Concurrent Audit of all ROs/Training Establishments were undertaken by the Concurrent Audit Cells (CAC) set up in the respective RO/TE. ID also inspected NABARD Subsidiaries, viz., Agri Business Finance Finance Ltd, Ltd, Hyderabad, Chennai, and Agri Development Financial NABARD NABCONS,

systems as per the IT roadmap. In continuation of the Banks efforts in this direction, in the financial year 2011-12, implementation of Human Resources Management System (HRMS) and Centralised Loan Accounting & Management System (CLMAS) was initiated after due system studies done in previous financial year. 86. During the year, as on 31 March 2012, the

Audit Committee of the Board (ACB) met four times, while the Risk Management Committee of the Board (RMCB) met thrice. The ACB reviewed the internal inspection/audit function in the institution - the system, its quality and effectiveness with focus on the follow-up of major areas of concern in housekeeping. The RMCB oversaw the functioning of Credit Risk Management, Asset and Liability Management, Operational Risk Management and other risks facing the bank and guided in devising the policy and strategy containing for integrated risk risk management of the for Bank. various exposures

Services,

Bangalore

Mumbai. The Inspection Reports and Flash Reports containing major areas of concern were placed before the MC and ACB for deliberation and guidance.

Visits of Parliamentary Committees

87. During the year, nine Parliamentary Committees on Subordinate Legislation, Government Assurances, Agriculture and Official Language for the Central Government have visited NABARD offices at Chandigarh, Shimla, Jaipur, Delhi, Guwahati, Dimapur, Imphal, Kolkata, Port Blair, Chennai, Ranchi, Patna, Bhopal and Mumbai.

Inspection Department continued to monitor defaults

Financial Performance & Management of Resources

88. The financial resources of NABARD increased March 2012. The amount of reserves and surplus increased to `16,408 crore on 31 March 2012 from `13,863 crore on 31 March 2011. 90. The total income of NABARD during the year to ` 1,82,075 crore, as on 31 March 2012, registering an increase of 14.60 per cent, over the previous financial year. During the year, total market borrowing of NABARD stood at ` 43,203 crore, constituting 23.73 per cent of the total resources of the Bank. 89. The paid up capital, as on 31 March 2012,

amounted to `10,979 crore as against `9,202 crore for the year 2010-11. The profit before tax and profit after tax stood at `2,252 crore and `1,635 crore, respectively, as on 31 March 2012, as compared to `1,824 crore and `1,279 crore, respectively, in the previous year. The average cost of borrowings (interest expenditure as a per cent of average borrowings) increased from 6.64 per cent per annum during 2010-11 to 6.96 per cent per annum during 2011-12.

stood at `3,000 crore against `2,000 crore on 31 March 2011, with the share of GoI being 99.33 per cent and that of RBI at 0.67 per cent. As per Union Budget 2011-12, Government of India infused `1,000 crore capital in NABARD, which was received on 31

xii

I
Rural Economic Environment
A. Economic Scenario
a. Gross Domestic Product
The Indian economy continued to be one of the key drivers of global growth, even with its slower Gross Domestic Product (GDP) growth at 6.5 per cent in 2011-12, compared to a growth of 8.4 per cent achieved in two previous years (Table 1.1). The slowdown can be partly attributed to global factors viz., the slowdown in the world economy, exacerbation of the euro zone crisis, hardening of crude oil prices in the international market, as well as to domestic factors, such as the imperatives of dealing with inflation by tightening monetary policy and cutting back on the fiscal stimulus. The slowdown is mainly on account of the sluggishness in industrial sector, which registered a growth rate of 3.9 per cent in the
Table 1.1: Economic Indicators Annual per cent change Particulars Overall GDP GDP from Agriculture & Allied Activities Foodgrain Production Industrial Production Inflation as measured by WPI Domestic Savings (as % of GDP) Capital Formation (as % of GDP) Fiscal Deficit (as % of GDP) Imports (% change) Exports (% change) Trade Balance (as % of GDP*) External Debt (as % of GDP*) 2009-10 8.4 1.0 (-)7.1 10.5 3.6 33.8 36.6 6.5 (-)5.0 (-)3.5 (-)2.8 18.1 2010-11 8.4 7.0 (QE) 6.8 7.8 9.4 32.3 35.1 4.8 28.2 40.5 (-)2.7 17.8 4.6 29.4 23.5 (-) 3.6 2011-12 6.5 2.8(RE)

financial year 2011-12 compared to 7.2 per cent in the corresponding period of the previous year. The growth in agriculture was 2.8 per cent, which is much lower compared to the high level of growth achieved during the previous year. With growth rate just short of double digits, service sector continues to be the mainstay of the economy holding Indias overall growth together. 1.2 the Increasing integration of Indian economy with world economy and greater integration of

agricultural sector with the overall economy has thrown up opportunities as well as challenges for agriculture, where concerns regarding food security and the subsidy regime continue to prevail. The sharp distinction between rural and urban is diminishing and a kind of ruralurban Some crux of of continuum this the is is emerging, in the while particularly with service sector occupying the lead in rural areas. areas. The captured is that, compositional shift in the consumption pattern in rural matter globalisation works through macro parameters, its impact is felt at the micro level and channels of its transmission need to be understood and accordingly responded to. 1.3 Sectoral analysis of growth rates has shown

the least inter-temporal variations. With the declining share of agriculture sector and consistent growth in the services sector, the variations in growth rate of GDP are lately being associated with the variations in the industry. The contributions of agriculture, industry and services to the GDP were 13.9, 27.0 and 59.1 per cent, respectively, during 2011-12 (Table 1.2). 1.4 An important feature of agricultural growth,

QE: Quick Estimates; RE: Revised Estimates; *: At current market prices Source: Economic Survey 2011-12; CMIE, April 2012; Central Statistical Organisation, GoI

unlike the overall economic growth pattern, is its volatility. The State of Indian Agriculture, Ministry of Agriculture 2011-12 reveals that the coefficient of variation (CV) of agricultural growth during 2000-01 1

Table 1.2: Sectoral Growth Rates of GDP (2004-05 prices) Sector Agriculture & Allied Industry# Services GDP at factor cost 2007-08 5.8 8.7 10.3 (16.4) (28.8) (54.8) 2008-09 (-)0.1 4.4 9.4 (15.7) (28.1) (56.2) 2009-10 1.0 8.4 10.5 (14.7) (28.1) (57.2) 2010-11(QE) 7.0 7.2 9.3 (14.5) (27.8) (57.7) 2011-12 (RE) 2.8 3.9 9.4 (13.9) (27.0) (59.1)

9.3 (100.0)

6.7 (100.0)

8.4 (100.0)

8.4 (100.0)

6.9 (100.0)

Figures in parentheses indicate percentage shares in GDP QE: Quick Estimates; RE: Revised Estimates #: Includes mining & quarrying, manufacturing, electricity, gas and water supply and construction Source: 1. Monthly Economic Report (March 2012), Ministry of Finance, GoI; 2. Economic Survey 2011-12

to 2010-11 was 1.6 compared to 1.1 during 1992-93 to 1999-2000. This is almost six times more than the CV observed in the overall GDP growth of the country, indicating that high and perhaps increasing volatility is a real concern. The volatility is likely to increase in the years to come in the wake of climate change, there by making it more challenging. Moreover, the Indian agriculture growth pattern has been highly varying across states, suggesting that uniform prescription may not work in propping agricultural growth as state level occurances measures up to the overall performance.

an overall growth of private final consumption expenditure that was in the range of 7.1 to 9.2 per cent during the period 2005-06 to 2010-11, the rates of growth of the consumption groups food, beverages, and tobacco and gross rent, fuel, and power have generally been lower. On the other hand, the growth rates of items and like furniture and and furnishing, transport communications,

miscellaneous goods and services have generally been higher. As a result, the composition of private final consumption expenditure in terms of shares underwent changes. 1.6 The Gross Domestic Savings (GDS), as a

b. Consumption, Savings and Investments

1.5 The growth in real terms of consumption expenditure and gross fixed capital formation works out to 6.0 per cent and 5.6 per cent respectively for the year 2011-12. The growth in these indicators in 2010-11 was 8.1 per cent and 7.5 per cent respectively. The rate of growth of private final consumption expenditure in real terms has been fairly consistent and did not decline significantly even when the growth rate was relatively lower, partly due to the inherent nature of private consumption that does not fluctuate as much as other demand-side components and partly on account of inflationary tendencies, which tend to reduce savings (on account of reduction in real interest rates) rather than affecting the consumption level in the economy. However, this consistency masks large variations between the various commodity groups. As against 2

proportion to GDP at current market prices (savings rate) is estimated to have declined from 33.8 per cent during 2009-10 to 32.3 per cent during 2010-11. While the private sector savings has declined from 33.6 per cent to 30.6 per cent, public sector savings increased from 0.2 per cent to 1.7 per cent during 2009-10 and 2010-11, respectively. This decline is accounted for by a reduction in private savings, primarily household savings in financial assets, and somewhat by a reduction in corporate savings. Public savings, on the other hand, registered an increase, thanks to fiscal consolidation. The reduction in the financial savings rate of households could be partly attributable to inflationary tendencies in the economy during the period that resulted in higher growth of private final consumption expenditure than of personal disposable income and partly to a reduction in real interest rate. The Gross Capital Formation

(GCF), as a proportion to GDP, is estimated at 35.1 per cent with the contribution of public and private sectors at 8.8 and 24.9 per cent, respectively during 2010-11. Within the private sector, the investment rate for the corporate sector declined from 12.7 per cent in 2009-10 to 12.1 per cent in 2010-11 while that of the household sector increased from 12.4 per cent to 12.8 per cent. Reduction in corporate investment could be attributed to global factors, with the global economy exhibiting signs of slowing down in the second half of 2010 as well as to domestic factors, namely increased cost of borrowing following the upward revision of interest rates in order to control inflation. Fixed investment as a ratio of GDP peaked in 2007-08 and registered a decline since then, falling from 31.6 per cent in 2009-10 to 30.4 per cent in 2010-11. in September 2011 before coming down to 6.6 per cent in January 2012 (Chart 1.1).

i. Drivers of Inflation in Recent Years

1.8 inflation The drivers and the measures to contain have been extensively analysed and

c. Inflation
1.7 Headline year-on-year wholesale price index (WPI) inflation, after remaining persistently high over the past two years, has started to show signs of moderation towards the end of the year 2011-12. Financial year 2011-12 started with a headline inflation of 9.7 per cent, briefly touched double digits

commented upon in recent times. The analysis showed that the shift in the nature and causes of inflation in India is a natural fallout of the structural changes that the economy has undergone. Both domestic and global factors determined the inflationary trend. However, the inflationary pressure in India during the

Table 1.3: Drivers/Causes of Inflation in India Category Products covered Food Inflation Foodgrains, fruits & vegetables, proteins (milk, eggs, meat, fish) Immediate/ Short term 9 Spike in global food prices 9 Weak monsoon 9 Crop losses 9 Supply shock Core Inflation Manufacturing, coal 9 Excess demand 9 Production short fall Energy Prices Petroleum products, crude oil, aviation fuel etc. The list is illustrative. 9 Supply shock 9 Global trends 9 Growing demand 9 Capital stock deficiency 9 Resource constraint Medium Term 9 Demand side driversincreased wages due to MGNREGA 9 Wastages Long Term/ Structural 9 Pricing (MSP) 9 Changing consumption pattern 9 Lack of storage and other infrastructure 9 Infrastructural bottlenecks 9 Stabilising exchange rates to smoothen volatility 9 Need for finding alternative sources of energy Implications 9 Nutritional security 9 Productivity issues 9 Supply chain Management

year was caused due to the interplay of a number of immediate and some underlying long term factors (Table 1.3). 1.9 The analysis also showed that the nature of

commodities need to change in favour of the ones facing the supply shock. the Box 1.1. The measures adopted to contain inflation and food inflation are summarised in

inflation was different from the earlier instances of prolonged inflation, basically because of the kind of shifts it was pointing towards. Moreover, the persistent nature of food inflation posed challenges for policy makers as monetary policy cannot have a direct and immediate bearing on food prices. But in view of the prolonged inflationary spells in recent years, using the monetary policy weapon was thought to be the appropriate policy response in order to prevent and control the spillover of the supply shock in food prices into a generalised inflationary pressure in the economy. In order to keep inflation under check, relative prices across categories of

d. Trade
1.10 Cumulative value of exports for the period April-March 2011-12 was ` 14,54,065 crore as against ` 11,42,921 crore over the same period last year, registering a growth of 27.22 per cent. Cumulative value of imports for the period April-March, 201112 was `23,42,216 crore as against `16,83,466 crore over the same period last year, registering a growth of 39.13 per cent. Agricultural exports increased from ` 1,13,117 crore during 2010-11 to `1,41,095 crore during 2011-12, registering a growth of 24.73 per cent. Increase in agricultural exports has been mainly

Box 1.1: Measures adopted to Contain Inflation and Food Inflation A. Fiscal and Administrative Measures per kg for Antyodaya Anna Yopjana (AAY)) and wheat ( a t `4.15 per kg for BPL and `2 per kg for AAY) since 2002.

Reduction of import duties (for rice, wheat, onion, pulses, edible oils). Permitting import of certain products (viz., skimmed milk powder and other dairy products, duty free white/ refined sugar).

Suspension of futures trading in rice, urad, and tur. Allocation of wheat and rice under the Open Market Sale Scheme (OMSS),bulk sale, for distribution to BPL families at BPL issue price and for above poverty line (APL) families. Extension of the Scheme for distribution of subsidised imported edible oils through state governments/UTs

Removal of levy obligation in respect of all imported raw sugar and white/refined sugar. Ban on export of edible oils and pulses (with certain exceptions), non-basmati rice, wheat, onion (for short period of time),milk powders, casein and casein products.

B. Monetary Measures As part of the monetary policy review stance, the RBI has taken suitable steps with 13 consecutive increases in policy rates and related measures to moderate demand to levels consistent with the capacity of the economy to maintain its growth without provoking price rise. As per the most recent announcement of the RBI on 24 January 2011, the cash reserve ratio (CRR) has been cut by 50 basis points (bps) from 6.0 per cent to 5.5 per cent and repo rate and reverse repo rate have remained unchanged at 8.5 per cent and 7.5 per cent respectively.

Permitting export of edible oils in branded consumer packs of up to 5 kg subject to a limit of 10,000 tonnes. No change in tariff rate values of edible oils. Exports of onion calibrated through the mechanism of minimum export prices (MEP).

Maintaining the central issue price (CIP) for rice ( a t `5.65 per kg for below poverty line (BPL) and `3

(Source: Economic Survey 2011-12)

Table 1.4: Trends in Exports and Imports ( ` 000 crore) Year Total Exports Share of agri allied products (%) 10.2 10.3 9.9 9.0 10.0 9.9 9.9 Total Share of food Imports & allied products(%) 660.4 840.5 1012.3 1374.4 1363.7 1683.5 1677.4 3.3 3.5 3.0 2.1 3.7 2.9 3.1

(<2ha). Small farmers who form 83 per cent of the numbers, now operate about 41 per cent of the total area indicating that the base of Indian agriculture is small. Available estimates suggest that small holders about 51 per cent of the value of contribute

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

456.4 571.8 655.9 840.8 845.5 1142.6 1425.2

agriculture output and contribute significantly to food security. Therefore, ensuring that the small holders do not get marginalised and excluded from the benefits of the growth process is the biggest challenge today. Making them participate in the growth process not merely in the production stage but in the post production stage also will be necessary to include them, meaningfully.

Source: Economic Survey, Various Issues, Ministry of Commerce & Industry, GoI, CMIE, April 2012.

due to higher exports of basmati rice, unmanufactured tobacco, meat and meat preparations, castor oil and tea. The percentage share of agriculture and allied products in the total exports was 9.9 during 2011-12 as compared to 10.0 in 2009-10. The share of food & allied product imports in the total imports of the country also increased from 2.19 per cent in 2010-11 to 3.1 per cent in 2011-12 (Table 1.4).

b. Making Small Farmer participate 1.13 The shift towards consumer-driven markets

which is an integral element of market liberalisation and globalisation means that the small farmer is increasingly being asked to compete in markets that demand much more in terms of quality and food safety. As small farms tend to diversify into highervalue products, they must increasingly meet the requirements of these demanding markets, both at home and overseasand pose these changes threats offer to new small opportunities serious

B. Agriculture & Rural Economy

a. Structural changes in agriculture
1.11 The developments in the agriculture sector, during the year under report, can also be related to the longer term structural changes taking place in agriculture. 2005-06) The structural changes that occurred during the two agricultural censuses (2001-02 & further accentuated the predominance of small farming as reflected by an increase of 10 million operational holdings within just five years with no rise in the net cropped area. In fact, going by the trend, another 10 million operational holdings might have been added, putting pressure on the average area operated per farmer (holding) which was 1.23 hectares in 2005-06. 1.12 Another feature of this structural shift has

farmers. In the changed policy environment there is an urgent need to create and facilitate institutions like the Producers Organisations and other such arrangements, which can aid/ensure the transition of small farmers with the working of the market.

c. Rainfall situation
1.14 The country as a whole received 899.9 mm of rainfall, which was 1.0 per cent more than the Long Period Average (LPA) during the South-West monsoon (June-September) 2011 as compared to 2.0 per cent less than the LPA in the corresponding period last year. Central India and North-West India experienced excess rainfall over the LPA by 10.0 per cent and 7.0 per cent respectively. The southern peninsula received normal rainfall. North-East India received 14 per cent 5

been the rise in the area operated by small farmers

Table 1.5: Trends in Rainfall and Water Storage Particulars South-West Monsoon* 2009 A. Cumulative rainfall (% variation from normal) B. Number of Sub- Divisions with Normal/ Excess Rainfall Deficient/Scanty/No Rainfall C. Reservoir status (% of FRL$@) 2010 2011

d. Crop production
1.16 For five consecutive years, from 2004-05 to 2008-09, foodgrains production recorded an increasing trend. However, it declined to 218.11 million tonnes in 2009-10 due to severe drought conditions in various parts of the country. Normal monsoon in the subsequent year, 2010-11, helped the country reach a significantly higher level of 244.78 million tonnes of foodgrains production. As per the third Advance Estimates, production of foodgrains during 2011-12 is estimated at an all time record level of 252.56 million tonnes which is a significant achievement mainly due to increase in the production of rice and wheat. 1.17 There has been a decline in overall area under

(-)23 13 23 58.6

2 31 5 75.4

1 33 3 86.4

Normal: +/-19%; Excess: +20% or more; Deficient: -20 to -59%; Scanty: -60% or less; No Rain: -100% * : Cumulative position between 1 June and 30 September; $ : Full Reservoir Level in 81 major reservoirs (accounting for 67% of total reservoir capacity in the country) as at the end of the season @: As on 30 September in the case of SW Monsoon and 31 December in the case of NE Monsoon Source: Indian Meteorological Department, Economic Survey, Various Issues, CMIE April 2012

foodgrains during 2011-12 as compared to 2010-11. The area coverage under foodgrains during 2011-12 stood at 1,254.92 lakh ha compared to 1267.65 lakh ha last year. The lower area under foodgrains has been due to a shortfall in the area under jowar in Maharashtra, Rajasthan and Gujarat; bajra in Maharashtra, Gujarat and Haryana; and in pulses in Maharashtra, Uttar Pradesh, Andhra Pradesh and Rajasthan. Moreover, the area under coarse cereals and oilseeds has also come down as compared to the previous year. The area coverage under rice during 2011-12 was around 444.06 lakh ha which was 15.44 lakh ha more than the previous year. The area coverage under sugarcane during the current year has slightly improved to 50.81 lakh ha, higher by about 1.96 lakh hectares as compared to the previous year and the area under cotton has increased significantly to 121.78 lakh ha as compared to 112.35 lakh ha during 2010-11. An analysis of trends in indices of area, production, and yield of different crops during the period from 1980-81 to 2011-12 (base triennium ending (T.E.) 1981-82=100) indicates a mixed picture (Table 1.6). There is a need for renewed research efforts to boost production and productivity of food grain crops against the backdrop of plateauing growth 6

less rainfall than the LPA. At disaggregated level, 24 per cent of the districts received excess rainfall, 52 per cent normal rainfall, 23 per cent deficient rainfall, and 1 per cent received scanty rainfall. Out of the 36 subdivisions, 3 recorded deficient rainfall during the South-West the monsoon 26 in 2011. Out of the 33 remaining subdivisions, 7 recorded excess rainfall and remaining recorded normal rainfall (Table 1.5). 1.15 The total designed storage capacity at full

reservoir level (FRL) of 81 major reservoirs in the country monitored by the Central Water Commission (CWC) is 151.77 billion cubic meters (BCM). At the end of monsoon 2011, the total live storage in these reservoirs was 131.076 BCM, which was more than the live storage of 115.23 BCM at the end of monsoon 2010 and 102.759 BCM, which is the average of the last 10 years. Thus, by and large the rainfall situation and availability of water in the major reservoirs was normal. However, given the vagaries of the monsoon, augmenting irrigation potential is key to sustained growth in agriculture.

Table 1.6: Compound Growth Rates of Area, Production, and Yield of Principal Crops during 1980-1990, 1990-2000 and 2000-2012 (Base: TE 1981-82=100) 1980-81 to 1989-90 Area Rice Wheat Coarse Cereals Total Pulses Sugarcane Total Oilseeds 0.41 0.46 (-)1.34 (-)0.09 1.44 1.51 Production 3.62 3.57 0.40 1.52 2.70 5.20 2.85 Yield 3.19 3.10 1.62 1.61 1.24 2.43 2.74 1990-91 to 1999-2000 Area 0.68 1.72 (-)2.12 (-)0.60 (-)0.07 (-)0.86 (-)0.07 Production 2.02 3.57 (-)0.02 0.59 2.73 1.63 2.02 Yield 1.34 1.83 1.82 0.93 1.05 1.15 1.52 2000-01 to 2011-12* Area 0.04 1.22 (-)0.75 1.70 1.37 2.08 0.43 Production 1.72 2.37 3.01 3.47 1.96 4.45 2.32 Yield 1.68 1.14 4.39 1.91 0.58 3.39 2.91

Total Foodgrains (-)0.23

Source : Department of Agriculture and Cooperation. *: Growth rates are based on the second advance estimates (AE) 2011-12 released on 03 February 2012; Total oilseeds include nine oilseeds, cotton seed and coconut.

rate in yield levels of rice and wheat and growing popularity of coarse cereals and pulses as nutri-food. Both public and private-sector investment in research and development (R&D) in these crops needs to be encouraged.

patterns,

it

is

raises

lot

concern

especially

considering its bearing on inflation. 1.19 Some of the short-term, medium-term and

long-term measures that could be undertaken to achieve higher production and productivity in the agriculture sector, to ensure that the higher demand for food items is met, include measures related to supply response, storage, and marketing (Box 1.2).

e. Aligning agricultural production with the consumption basket

1.18 With the spread of urbanisation and the economy growing in the range of 7-8 per cent, there has been a shift in the demand from cereals to noncereal food like pulses, edible oils, fruits, vegetables, dairy, primary meat food and fish, which An now account of for food approximately 70 per cent of the WPI basket for items. examination consumption expenditure in the country during the period from 1987-88 to 2009-10 clearly reveals that there has been a shift in expenditure towards milk and milk products, egg, fish, meat and vegetables both in rural and urban areas; whereas, the share of consumption of cereals in the total food basket has gone down. The recent food inflation episodes have been attributed to the constraints in increasing the supply of these commodities as compared to their demand. This has led to an increasing pressure on their prices. As the agricultural production basket is still not fully aligned with the emerging demand

f. Inputs use in Agriculture

i. Seeds
1.20 Farmers generally need a genetically diverse

portfolio of improved crop varieties that are suited to a range of agro-ecosystems and farming practices and resilient Indian to climate involving of change. The Indian Seed State Programme Central/State Agricultural Governments,

Council

Research,

Agricultural Universities, Co-operatives and private sector has been addressing the issue of low seed replacement Development rate. and Besides, the of scheme for Strengthening Infrastructure

Facilities for Production and Distribution of Quality Seeds is being implemented since 2005-06 to ensure timely availability of quality seeds at affordable prices to farmers. During 2010-11, 277.3 lakh quintals of

Box 1.2: Supply-side Constraints Given the compositional shift in food basket of a common household and its impact on consumption demand, improved supply response is critical for ensuring price stability in food items. Extension programmes and guidance to farmers regarding fertilizer and insecticide usage and alternate cropping pattern based on soil analysis could be undertaken and intensified. As a strategy, regular imports of agricultural commodities in relatively smaller quantities with an upper ceiling on total quantity could be considered. The upper ceiling can be decided annually, relatively well in advance, after assessing the likely domestic situation in terms of production and consumption requirements. Setting up special markets for specific crops in states/ regions/areas producing those crops would facilitate supply of superior commodities to the consumers. Mandi governance is an area of concern. A greater number of traders must be allowed as agents in the mandis. Anyone who gets better prices and terms outside the Agricultural Produce Marketing Committee (APMC) or at its farm gate should be allowed to do so. For promoting inter-state trade, a commodity for which market fee has been paid once must not be subjected to subsequent market fee in other markets including that for transaction in other states. Only user charges linked to services provided may be levied for subsequent transactions. Perishables could be taken out of the ambit of the APMC Act. The recent episodes of inflation in vegetables and fruits have exposed flaws in our supply chains. The government-regulated mandis sometimes prevent retailers from integrating their enterprises with those of farmers. In view of this, perishables may have to be exempted from this regulation. Considering significant investment gaps in post-harvest infrastructure of agricultural produce, organised trade in agriculture should be encouraged and the FDI in multibrand retail once implemented, could be effectively leveraged towards this end. Government should step up creation of modern storage facilities for food grains.

Source: Economic Survey 2011-12

certified/ quality seeds were distributed. Breeder seed production and foundation seed production reached 1.19 lakh quintals and 17.53 lakh quintals, respectively during 2010-11, registering 13.53 and 7.8 per cent growth over the previous year. The requirement and availability of certified seeds during the last five years are given in the Table 1.7. Some important measures

to strengthen the seed sector include, improving policies and legislation for variety development and release as well as seed supply; enactment of flexible variety release legislation, strengthening capacity by creating a new generation of skilled practitioners to support enhanced breeding; working with farmers to explore the ways in which crops and varieties contribute to successful intensification; revitalising the

Table 1.7: Requirement & Availability of Seeds in India (lakh quintal) Year 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Requirement 180.74 207.28 249.12 290.76 330.41 Availability 194.31 250.35 279.72 321.36 353.62 Surplus (+)/ Deficient (-) +13.57 +43.07 +30.60 +30.60 +23.21

public sector and expanding its role in developing new crop varieties; supporting the emergence of local, private sector seed enterprises through an integrated approach involving producer organisations; linkages to markets and value addition, etc.

ii. Chemical fertilizers

1.21 Chemical fertilizers have played a significant

role in the development of the agricultural sector. Both production and consumption of chemical fertilizers has steadily increased over the years (Table 1.8). Under 8

Source: Department of Agriculture and Cooperation (DAC), Seeds Division, GoI.

Table 1.8: Production and consumption of fertiliser Production of Urea, DAP and Complex Fertilizers (lakh tonnes) Year Urea Di-ammo-iumphosphate Complex fertilizers 2009-10 211.12 42.46 80.38 2010-11 218.80 35.37 87.27 2011-12 222.88 39.41 90.69

area as a per cent of Gross cropped area has increased from 34 per cent in 1990-91 to 45.3 per cent in 2008-09. However, there are wide variations in irrigation coverage across states and across crops. Flagging efficiency levels of public surface irrigation schemes is causing a lot of concern and perhaps urgent institutional reforms, better management and maintenance only can hold the deteriorating performance. It may involve engaging water user associations and even by (main canals) at and the retail farmer unbundling the large distribution level). of water surface schemes into storage (dams), transmission (distribution Groundwater

Per Hectare Consumption of Fertilizers in Nutrient Terms (kg) Nitrogenous (N) Phosphatic (P) Potassic (K) Total (N+P+K) Per hectare consumption 150.90 65.06 33.13 249.09 127.2 155.80 72.74 36.32 264.86 135.76 165.58 80.50 35.14 281.22 144.14

irrigation, which is a biggest source of irrigation today, suffers from over-exploitation in most of the states. Excessive dependence on groundwater for irrigation purposes has several implications like steep decline in the groundwater table, drying up of a huge number of wells, low well productivity, rapid rise in well and pumping depths, deteriorating groundwater quality and salinity ingress in many areas. Free or low pricing of power for irrigation has primarily contributed to this problem. Major reforms in the power sector, improvement in the quality of power and availability of power are a precondition for improving the country. 1.23 The Government of India has taken up the overall groundwater situation in

Source: Department of Fertilizers. Ministry of Chemicals & Fertilizers, Directorate of Economics and Statistics, Department of Agriculture and Cooperation (DAC), GoI.

the Nutrient Based Subsidy (NBS) Policy, a fixed subsidy is announced on per kg basis of nutrient annually. An additional subsidy is also given for micronutrients. With the objective of providing a variety of subsidized fertilizers to farmers depending upon soil and crop requirements, the government has included seven new grades of complex fertilizers under the NBS. Under this scheme, manufactures/marketers are allowed to fix the maximum retail price (MRP). Farmers pay only 50 per cent of the delivered cost of P and K fertilizers, the rest is borne by the Government of India in the form of subsidy.

augmentation of irrigation potential through public funding and is assisting farmers to create potential on their own farms. Substantial irrigation potential has been created through major and medium irrigation schemes. The central government initiated the Accelerated Irrigation Benefit Programme (AIBP) from 1996-97 for extending assistance for the completion of incomplete irrigation schemes. Under this programme, projects approved by the Planning Commission are eligible for assistance. Under the AIBP, `50,380.64 crore of central loan assistance (CLA)/grant has been released up to 30 November 2011. As on 31 March 9

iii. Irrigation
1.22 context Water, a natural resource, is critical in the of increasing productivity and income

stabilization at the micro level and ensuring food security at the macro level. India, currently, has an overall irrigation potential of 140 million ha, out of which only about 109 million ha have been created, and around 80 million ha utilised. Gross irrigated

2011, 290 projects were covered under the AIBP and 134 completed. During 2010-11, an irrigation potential of 566.24 thousand ha is reported to have been created by states, from major/medium/minor irrigation projects under the AIBP . While the higher irrigation potential would help to augment production and productivity, assured remuneration from such production is vital for development of agriculture.

and `54,239 crore, respectively, sharing 72 per cent, 17 per cent and 11 per cent of the total credit flow during 2011-12 (Table 1.9). 1.26 During the period 2007-11, the GLC flow for

agriculture and allied activities registered a Compound Annual Growth Rate (CAGR) of 20.01 per cent. The growth rate in short term credit flow and term loans were 24.52 per cent and 12.11 per cent, respectively for the five-year period (2006-07 to 2010-11). Sub sector-wise, during 2010-11; High-tech agriculture witnessed the highest annual growth of 62.95 per cent, followed by Farm Mechanisation (25.36%), Animal Husbandry (24.49%) in GLC flow over 2009-10 (Table 1.10).

iv Rain-fed agriculture
1.24 which Sixty-five per cent of agriculture in India is require perhaps a completely different

undertaken in dry land and resource poor regions, orientation and approach. This is especially critical in the context of food security. As the emphasis has been largely on research and solutions for irrigated agriculture, priority needs to be given for building up greater understanding and creating a framework for development of rainfed agriculture and farmers depending on such land. These regions are home to majority of small and resource poor farmers.

g. Agricultural Production
i. Foodgrains & Non-foodgrains
1.27 According to the 3rd Advance Estimates, the

countrys foodgrain production during 2011-12 was estimated at 252.56 million tonnes as compared to 244.78 million tonnes (final estimate) during 2010-11, registering an increase of 3.2 per cent over the previous year. Overall, agriculture sector is expected to achieve a modest growth of 2.4 per cent in 2012-13. Livestock, forestry and fishing are expected to do well, while minor crops production is estimated to rise by 4.0 per cent. However, output of major crops is

v. Credit
1.25 As against the target of ` 4,75,000 crore credit

flow to agriculture for 2011-12, the banking system disbursed ` 5,09,040 crore as on 31 March 2012, achieving 107.2 per cent of the target. Commercial Bank (CB), Co-operative banks and Regional Rural Bank (RRB) disbursed `3,68,616 crore, `86,185 crore

Table 1.9: Agency-wise Ground level Credit Flow (` crore) Agency 2007-08 2008-09 2009-10 2010-11 2011-12 @ Growth Rate (%) @ 2007-11 # Co-op RRBs CBs Total 48258 25312 181088 254658 45966 26765 228951 301908 * 63497 35217 285800 384514 78007 44293 345877 468291 ** 86185 54239 368616 509040 18.40 22.48 20.13 20.01 2010-11 ^ 22.85 25.77 21.02 21.79 2011-12 ^ 10.48 22.46 6.57 8.70

#: Compound Annual Growth Rate; ^: Percentage change over the previous year. * Includes ` 226 crore by other agencies **: includes ` 114 crore by other agencies @: provisional Source: NABARD

10

Table 1.10: Sub-sector-wise Ground Level Credit Flow for Agriculture & Allied Activities (` crore) Sl Sector/Sub-Sector No. I. II. Crop Loan (ST-Production Credit) Term Loans (MT & LT Investment Credit) i. ii. Minor Irrigation Land Development 2006-07 2007-08 2008-09 2009-10 2010-11 Growth rate (%) 2006-11 ^ 138455 90945 8566 2285 10113 5266 8045 1424 21498 33748 229400 181393 73265 2840 2553 8303 5910 9034 1248 33325 10052 254658 210461 91447 3180 2887 8334 6045 10398 1281 41694 17628 301908 276656 107858 5197 3669 10211 6407 10260 1854 50797 19463 384514 335550 132741 4363 3615 12800 6610 12773 1931 82774 7875 468291 24.52 12.11 (-)7.18 13.66 7.02 5.50 11.09 10.57 36.59 (-)20.15 20.19 2010-11* 21.29 23.07 (-)16.05 (-) 1.47 25.36 3.17 24.49 4.15 62.95 (-)59.54 21.79

iii. Farm Mech iv. P & H v. Animal Husbandry vi. Fisheries vii. Hi-tech agriculture viii. Others$ Total (I + II)

Source: NABARD $ : Others include storage/market yards,forestry/waste land development, RIDF, bullock and bullock cartsand bio-gas ^: Compound Annual Growth Rate; *: Percentage change over the previous year.

projected to decline marginally by 0.6 percent in 2012-13, mainly because of a fall in output of nonfood crops. Production of non-food crops is projected to fall by 1.6 per cent in 2012-13, owing to lower output of cotton and sugarcane. During the year 2011-12, production of all the crops is estimated to be higher, the maximum increase being for cotton at 40.04 per cent followed by oilseeds (21.58%), coarse cereals (19.85%), pulses (18%), sugarcane (16.5%) and wheat (4.29%) (Table 1.11).

estimated coffee production for the year 2011-12 is 3.02 lakh tonnes, i.e., 0.97 lakh tonnes of Arabica and 2.05 lakh tonnes of Robusta.

Table 1.11: Production of Major Crops (Million tonnes) Year/Crops 2009-10 2010-11 2011-12 218.1 89.1 80.8 33.5 14.7 24.9 244.8 96.0 86.9 43.7 18.2 32.5
E

2012-13F 251.8 100.4 87.3 42.3 17.7 32.1

2011-12 (% change) 3.2 4.0 4.8 (-)3.6 (-)3.7 (-)4.3

ii. Plantation crops

1.28 Tea production in the country during 2010-11

Foodgrain of which Rice Wheat Coarse Cereals Pulses Non-food crops

252.6 99.8 91.1 42.0 17.5 31.2

has been estimated at 9.66 lakh tonnes as against 9.91 lakh tonnes achieved in 2009-10. Further, the export of tea from India during 2010-11 was 1.78 lakh tonnes as against 2.13 lakh tonnes in 2009-10. The estimated import of tea into India during 2010-11 was valued at `186.82 crore, which was lower by `27.62 crore compared to the previous year. 1.29 Coffee is cultivated in an area of around 4.0

Major oilseeds of which Groundnuts 5.4 Soyabeans 10.0 Rapeseed & Mustard 6.6 Cotton# 24.0 Sugarcane 292.3 Jute & Mesta* 11.8

8.3 12.7 8.2 33.0 342.4 10.6

6.9 13.1 7.6 35.0 345.7 11.6

8.0 12.8 7.6 32.2 342.5 11.7

(-)17.1 2.8 (-)6.6 5.9 1.0 10.2

lakh ha mainly confined to Southern India. The 11

E: 3rd Advance Estimates; F: Forecast; #: Million bales of 170 kgs each; *: Million bales of 180 kgs each; Source: CMIE, April 2012, Agricultural Statistical Division, Ministry of Agriculture, Government of India; Economic Survey 2011-12

1.30

India is the fourth largest producer of natural in 2010. The production of NR in

Schemes of the National Horticulture Board and Integrated Development of Coconut. 1.32 aims to The National Horticulture Mission (NHM), promote holistic development of the

rubber (NR) with a share of 8.2 per cent in world production 2011-12 is projected at 9.02 lakh tonnes, an increase of 4.6 per cent over 2010-11. India continues to be the second largest consumer of NR with 8.8 per cent share of world consumption in 2010. Consumption of NR in 2011-12 is projected at 9.77 lakh tonnes, an increase of 3.1 per cent over the previous year. Despite not having regions geographically best suited to growing natural rubber, India continued to record the highest productivity in the world with an average yield of 1,867 kg/ha. The production of Rubber (natural & synthetic) was 9.08 lakh tonnes during 2010-11 (April-February) as against 9.38 lakh tonnes during 2009-10. During 2010-11 (April-February), the estimated export of natural rubber was 29,851 tonnes against an import of 1,71,282 tonnes (Table 1.12).

under implementation in 372 districts of the country, horticulture sector through area based and regionally differentiated strategies. Under the scheme, a total area of 16.57 lakh ha has been brought under horticulture crops and an expenditure of `4,125.43 crore had been incurred upto 2009-10. Area and production under horticulture crops increased from 20.7 million ha and 214.7 million tonnes, respectively during 2008-09 to 20.9 million ha and 223.1 million tonnes, respectively during 2009-10 (Table 1.13).

h. Agriculture and Allied Sector

1.33 Agriculture and allied activities contributed for 14.6 per cent of GDP in 2010-11 with Agriculture

iii. Horticulture Crops

1.31 Development as the of horticulture for and has been in

accounting for 12.3 per cent, followed by forestry and logging at 1.5 per cent and fishing at 0.8 per cent. diversification providing

recognised employment

avenue

agriculture, addressing nutritional security, enhance opportunities export earnings. Among the various horticulture crops, fruits and vegetables form the single largest sub-sector constituting horticultural Horticulture about 92.3 per cent of the total horticultural production in the country. Schemes for development Mission, National include Bamboo National Mission,

i. Livestock and Poultry

1.34 Livestock sector plays a critical role in the

welfare of Indias rural population. It contributes 9.0 per cent to GDP and employs 8.0 per cent of the labour force. This sector is emerging as an important growth leverage of the Indian economy. As a component of agricultural sector, its share in GDP has been rising gradually, while that of the crop sector has

Table 1.12: Production, Consumption and Exports of Major Plantation Crops (lakh tonnes) Year Tea Production Consumption Exports 2006-07 2007-08 2008-09 2009-10 2010-11* 9.73 9.87 9.73 9.91 9.66 7.71 7.86 8.02 7.70 NA 2.18 1.85 1.90 2.13 1.78 Coffee Production Consumption Exports 2.88 2.62 2.62 2.90 2.99 0.85 0.90 0.94 0.94 0.94 2.49 2.19 1.97 1.95 3.22 Production 9.52 9.31 9.61 9.38 9.08 $ Rubber Consumption 10.91 11.58 11.64 12.43 12.78 $ Exports 0.57 0.60 0.47 0.25 0.29

NA: Not Available *: Estimated $: April 2010-February 2011 Source: Ministry of Commerce and Industry, GoI. Coffee Board, Tea Board and Rubber Board

12

Table 1.13: Area and Production of Major Horticulture Crops (Area in million ha and production in million tonnes) Year Fruits 2005-06 2006-07 2007-08 2008-09 2009-10* 5.3 5.6 5.8 6.1 6.3 Area Total Vegetables 7.2 7.5 7.8 7.9 7.9 Flowers 0.1 0.1 0.2 0.2 0.2 Horticulture 18.7 19.4 20.2 20.7 20.9 Fruits 55.4 59.6 65.6 68.4 71.5 Production Total Vegetables 110.1 115.0 129.3 129.1 133.7 Flower 0.7 38.0 44.5 47.9 66.7 Horticulture 181.8 191.8 211.2 214.7 223.1

*: 3rd Advance Estimates Source: Agricultural Statistics at a glance; various issues, NHB

been on the decline. In recent years, livestock output has grown at a rate of about 5.0 per cent a year, higher than the growth in agricultural sector. This enterprise provides a flow of essential food products, draught power, manure, employment, income, and export earnings. Distribution of livestock wealth is more egalitarian, compared to land. Hence, from the equity and livelihood perspective, it is considered as an important component of poverty alleviation programmes. 1.35 During 2010-11, the livestock sector

over 14 million people in 2010-11, apart from being a major foreign exchange earner.

i. Agro and Food Processing Sector

1.37 Agro and Food Processing sector is regarded as the promising sector of the Indian economy in view of its large potential for growth and its socio economic impact specifically on employment and income generation. Agro processing helps in better utilization and value addition of agricultural produce. The Vision Document 2015 by Ministry of Food Processing Industries has set a challenging target of trebling the size of processed food sector by 2015 through appropriate enabling policies. The export of processed foods including processed fruits and juices increased from `3,176 crore during 2008-09 to `3,255 crore during 2009-10.

contributed to 5.1 per cent of GDP and 28.0 per cent value of output from agriculture and allied activities. As per the 18th Livestock Census 2007, the livestock and poultry population in the country were 529.7 million and 648.8 million, respectively. The per capita availability of milk increased from 258 grams per day to 263 grams per day due to increase in milk production in the country by 3.68 per cent during 2010-11 over 2009-10. The per capita availability of eggs has been around 51 per annum during 2010-11.

j. Agricultural Marketing and Commodity Futures

1.38 Seventeen their (APMC) States/Union Agricultural Acts for Territories agricultural have market amended Committee Produce Marketing

ii. Fisheries
1.36 The fisheries sector contributed 0.7 per cent of in

reforms. Initiatives have been undertaken by GoI for setting up terminal market complexes for fruits, vegetables and other perishables in States that have amended their APMC Acts. Agricultural Marketing Information Network (AGMARKNET) provides internet connectivity to agricultural markets for establishing information network of prices and other market related information. 13 Agricultural commodities valued at

total GDP at factor cost and 5.0 per cent of GDP at factor cost from agriculture, forestry, and fishing the year 2010-11 (QE). Fish production increased from 3.8 million tonnes in 1990-91 to 8.29 million tonnes in 2010-11. Fishing, aquaculture, and allied activities are reported to have provided livelihood to

`8,614.58 crore and `306.65 crore were certified under Agmark for domestic trade and exports, respectively during 2009-10 as compared to `7,865.25 crore and `241.08 crore for the same during 2008-09. 1.39 Agriculture commodity futures market includes

pressure on agriculture for their sustenance, there is a need for substantial increase in investment in agriculture. Capital formation in agriculture ( `1,42,254 crore in 2010-11) now primarily rests on the private investment. But considering that public investment has an enabling effect on private investment, the stagnant share of public investment is a concern. 1.41 The investment rate in agriculture, as reflected

21 commodity exchanges in the country. The value of total trade in commodity futures market increased from `77,64,754 crore in 2009-10 to `119,48,942 crore in 2010-11 recording a growth of 53.86 per cent during the period. The value of agricultural commodities as a proportion to total trade in commodity futures market decreased from 15.68 per cent in 2009-10 to 12.18 per cent in 2010-11.

in the ratio of GCF in agriculture as a percentage to agri-GDP, however has substantially improved in the last decade which is a positive sign. In percentage terms in 1997-98 (beginning of ninth plan) it was 8.6 per cent which increased to 20.3 per cent in 2010-11 (Chart 1.3).

k. Capital Formation
1.40 The share of Gross Capital Formation (GCF) of agriculture & allied sector in total GCF has hovered between 6 to 8 per cent; whereas, it was around 18 per cent during the early 1980s, implying that the nonagriculture sectors are receiving higher investment as compared to agriculture & allied sector over the plan periods resulting in growth disparities (Chart 1.2). Though this is in line with the overall falling share of agriculture in the overall GDP and also conforms to the development process observed elsewhere in the developing world, keeping in view the high population

l. Composition of investment
1.42 While public investment in agriculture is critical and has a vital, enabling impact on the private sector investment, it forms not more than about 20 per cent of the total investment in agriculture. This means that it is the private sector investment which is mainly holding the agriculture growth together. Implications for sustaining this position are critical, especially when we keep in mind that the private sector response would be better to a more reformed incentive structure.

14

m. Kisan Credit Card Scheme

1.43 Kisan Credit Card (KCC) scheme introduced in 1998-99 has facilitated the flow of credit to farmers. During 2011-12, 10.07 million KCC were issued by banks with sanctioned credit limit of ` 54,269 crore. Of the cumulative 113.91 million Kisan credit cards issued as at the end December 2011, CBs issued 53.06 million cards (46.58%), followed by Co-operative Bank, 43.66 million cards (38.33%) and by RRBs 17.19 million cards (15.09%) (Table 1.14).

n. Agricultural Debt Waiver and Debt Relief Scheme

1.44 the The Scheme of Agricultural Debt Waiver and Union Budget 2008-09 to address the

Debt Relief (ADWDR) for farmers was announced in indebtedness of farmers and difficulties of the farming community, especially small and marginal farmers. NABARD implemented the Scheme as the nodal agency for co-operative banks and RRBs. About 192.59 lakh farmer borrowers of co-operative banks and RRBs are estimated to have benefited under the Scheme, of which 83.5 small per and cent, marginal were the farmers, major constituting

Table 1.14: Agency-wise, Year-wise Kisan Credit Cards Issued (As on 31 March 2012) (million) Year Co-operative Regional Commercial Banks Rural Banks Banks 2.29 2.09 1.34 1.75 2.81 2.96 1.41 1.77 1.42 1.95 1.77 1.99 17.19 4.81 4.61 5.83 5.31 5.58 5.12 53.06 Total

beneficiaries. Out of ` 29,240.12 crore received under the Agriculture Debt Waiver and Debt Relief Scheme 2008, the cumulative disbursements by NABARD was `29,099.33 covering 1.88 crore accounts of the farmer. The share of State Co-operative Bank (SCB), State Co-opetative Agriculture and Rural Development Bank (SCARDB) and RRBs stood at `18,282.30 crore, `3,843.37 crore and ` 6,973.66 crore, respectively.

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12*

8.51 8.47 8.59 9.01 10.16 10.07 113.91

Cumulative# 43.66

o. Interest Subvention Scheme

1.45 For encouraging timely and prompt repayment of crop loans, additional subvention of 3 per cent was 15

*: Data for commercial banks available up to 31 December 2011 #: Since inception of the Scheme, i.e., August 1998

announed to those farmers who would repay crop loans promptly within one year of disbursement. Aggregate interest subvention of `1,688.62 crore and `2,097.94 crore in 2009-10 and 2010-11, respectively, was provided by GoI. The Interest subvention for 2011-12 has been estimated at `3,000 crore.

The WBCIS is based on actuarial rates of premium but to make the scheme attractive, premium actually charged from farmers has been restricted to be on par with the NAIS. From kharif 2007-08 to kharif 2010-11, 195.33 lakh farmers over an area of about 278 lakh ha with sum insured of about `31,953 crore have been covered under the scheme. Claims to the tune of about ` 991 crore have been paid against the premium of about `2,868 crore. Detailed fund requirements as estimated by the implementing agency for these schemes for the year 2012-13 are to the tune of ` 2,200 crore.

p. Agricultural Insurance
1.46 With the aim of further improving crop insurance schemes, the Modified National Agricultural Insurance Scheme (MNAIS) is under implementation on pilot basis in 50 districts in the country from rabi 2010-11 season. Some of the major improvements made in the MNAIS are actuarial premium with subsidy in premium at different rates, all claims liability to be on the insurer, unit area of insurance reduced to village panchayat level for major crops, indemnity for prevented/sowing/planting risk and for post-harvest losses due to cyclone, on account payment up to 25 per cent advance of likely claims as immediate relief, more proficient basis for calculation of threshold yield, and allowing private sector insurers with adequate infrastructure. Only upfront premium subsidy is shared by the central and state governments on 50:50 basis and claims are the liability of the insurance companies. The scheme has been notified by 17 states in a total of 50 districts for rabi 2011-12 season. During rabi 2010-11, about 3.58 lakh farmers over an area of about 3.23 lakh ha have been covered, insuring a sum amounting to ` 694.06 crore. The claims amounting to ` 15.96 crore have been provided to 46,224 farmers. 4.89 lakh farmers have been covered over an area of 7.18 lakh ha insuring a sum amounting to `14.70 crore. 1.47 The Weather Based Crop Insurance Scheme

q. Support Prices, Procurement and Stock of Foodgrains

1.48 Though with economic liberalization and gradual integration with the world economy, relaxation of export controls on several agricultural products since 1991 have helped agricultural exports, there are still occasional interventions by the government (for example, export bans on wheat and rice, or limits on the stocking of grains by private trade that dissuade the private sector players from investing in the agrisystem). However, one of the main government interventions in the agricultural markets currently is its policy of Minimum Support For Prices (MSP) for of agricultural commodities. procurement

horticultural commodities which are perishable in nature and not covered under the Price Support Scheme, with a view to protect the growers of these commodities from making distress sale in the event of bumper crop during the peak harvesting periods when the prices tend to fall below the economic cost of production, a Market Intervention Scheme (MIS) is implemented on the request of a State /UT Government which is ready to bear 50 per cent loss (25% in case of North-Eastern States), if any, incurred on its implementation. 1.49 MSP for common paddy, wheat, arhar,

(WBCIS) is also being implemented as a central-sector scheme from kharif 2007 season. The scheme is intended to provide insurance protection to farmers against adverse weather incidence, such as deficit and excess rainfall, high or low temperature, and humidity that are deemed to adversely impact crop production.

moong, urad and cotton increased by 8.0, 14.73, 6.67, 10.41 and 13.79 per cent, respectively during 16

2011-12 over the year 2010-11. There has been no change in the MSP of cotton. The procurement of rice and wheat as on March 1, 2012 (kharif marketing season for rice and rabi marketing season for wheat) at 26.8 million tonnes and 28.3 million tonnes, respectively, represents a decline of (-) 21.63 per cent and increase of 25.78 per cent as compared to the corresponding date last year. The stock of foodgrains (rice and wheat) held by the Food Corporation of India (FCI) as on 01 February, 2012 at 55.25 million tonnes was higher by 17.2 per cent over the level of 47.17 million tonnes as on 01 February, 2012. The off-take of foodgrains (rice and wheat) under Targeted Public Distribution System (TPDS) and other schemes at 47.72 million tonnes during April-January 2011-12 was 9.96 per cent lower than that at 53.0 million tonnes during 2010-11.

markets, logistics and warehouse receipt systems, futures markets, and in infrastructure (such as cold storage facilities, quality certification, etc.) for imports and exports. This is particularly relevant for the high value segment that is currently hostage to high postharvest losses and weak farm-firm linkages. The introduction of the Model Act in 2003 was directed towards allowing private market yards, direct buying and selling and also to promote and regulate contract farming in high value agriculture. Although many states have adopted the new Model Act, with modifications, its impact on farmers in terms of better prices for their produce and a reduction in the high differences between farm harvest prices and consumer prices is not yet visible.

s. Storage Infrastructure
1.52 Around 30 per cent of fruits and vegetables grown in India (40 million tonnes) get wasted annually due to gaps in cold chain, infrastructure, insufficient cold storage capacity, unavailability of cold storages in close proximity to farms, poor transportation infrastructure etc. India wastes more fruits and vegetables than it consumes. Operating costs for Indian Cold Storage Units are over $60 per cubic metre per year compared to less than $30 in the West. Energy Expenses make up about 28 per cent of the total expenses for Indian cold storages compared to 10 per cent in the West (Source: PostHarvest Losses due to Gaps in Cold Chain in India A Solution, Maheswar.C) . This brings out the need to give focused attention to post harvest issues. Efforts at creating storage infrastructure should also keep in its radar that the benefits of this infrastructure accrues to the small and marginal farmers- a few NABARD in-house studies have pointed out that unless facilitating arrangements like pledge financing facilities, warehouse receipts, etc. are put in place, the benefits of the storage infrastructure may not accrue to small and marginal farmers.

r. Policy focus on post production stage towards a broad based food grains policy
1.50 The agricultural growth strategy for a long time focused mainly on production phase. In the context of food grains policy, concern has been raised about simultaneous occurrence of high food inflation and large food grains stocks in our granaries. It has been argued that, in creating a better food grains policy, it is imperative that the entire system of food grains production, procurement, release and distribution is looked at. 1.51 In this endeavour, besides improving storage

facilities, there is a need to redesign the mechanics of procurement and release of food grains to the market to ensure that the impact on prices is substantial in the desired direction. and An improvement to in marketing sector conditions encouragement private

participation can be achieved by reforming the APMC Acts. Appropriate changes in the APMC Acts can boost private sector investment in developing regularised

17

t. Union Budget 2012-13 and Agriculture

1.53 Given the crucial role of agriculture in the economy, Union Budget 2012-13 provided a boost to agriculture by enhancing the allocations to agricultural sector and to some key national projects for expansion of agricultural facilities. Recognising that farmers need timely access to affordable credit, the farm credit target has been raised from `4,75,000 crore in 2011-12 t o `5,75,000 crore in 2012-13. Continuation of interest subvention scheme for providing crop loans to farmers at 7.0 per cent interest and additional subvention of 3.0 per cent for prompt

repayment and making Kisan Credit Card a smart card which could be used at ATMs are some of the positive announcements. 1.54 The significance of agriculture sector in India

is not merely restricted to its contribution to GDP, but also by way of its close link to the objective of inclusive growth, its ability to impact poverty and its role in addressing the macro concern of inflation. The structural concerns and other issues brought out above, have a critical bearing on the policies and performance chapters. of NABARD, outlined in the later

18

II
Business Operations
The business operations of NABARD comprise (i) providing refinance support to State Co-operative Banks (SCB), Commercial Banks (CB), Regional Rural Banks (RRB), Scheduled Primary Urban Co-operative Banks (PUCB) and Agriculture Development Finance Companies (ADFC) to supplement their financial resources for enhancing credit flow to agriculture and rural sectors, (ii) co-financing viable projects with commercial Central banks, RRBs, Bank SCB & Non-Banking and Primary Finance Companies (NBFC), (iii) direct lending to Co-operative (CCB) Agricultural Credit Societies (PACS) by way of a shortterm multi-purpose credit product, (iv) financing for rural infrastructure projects by way of the Rural Infrastructure Development Fund (RIDF) and a new line of credit called the NABARD Infrastructure Development Assistance (NIDA), (v) refinancing banks against loans extended by them to private entities and agencies owned /assisted by the Government for creation of warehousing infrastructure and (vi) professional consultancy service in agriculture, allied activities and rural development to Government of India, State Governments, Banks/ Financial Institutions, Co-operative Institutions, Corporates, NGOs, International organisations and other clients provided by NABCONS. This chapter presents detail of the business operations and achievements of the Bank during the year. 2.2 The total financial support extended by

NABARD during 2011-12 stood at `82,339.48 crore, registering a growth of 36.13 per cent over 2010-11 (Chart 2.1).

Production Credit
A. Short-Term Refinance
2.3 NABARD refinances short-term loans given by Banks and RRBs for production, marketing and procurement activities. Increase in NABARDs Seasonal refinance Agricultural assistance under Short-Term to Operations ((ST-SAO)

Co-operative

Co-operative Banks and RRBs indicating credit limits sanctioned and maximum outstanding for the last five years can be seen from Table 2.1.

Table 2.1: Short term refinance (production credit) for the last five years (` crore) Year 2007-08 2008-09 2009-10 2010-11 2011-12 Credit Limits sanctioned 18291 19627 25661 34375 49013 Maximum outstanding 16352 (89.40) 17212 (87.70) 24715 (96.31) 34196 (99.48) 48981 (99.94)

a. State Co-operative Banks

(i) Support for Seasonal Agricultural Operations
2.4 NABARD refinances SAO activities including

preparation of land for sowing, usage of farm inputs and labour by way of a consolidated limit to SCBs on behalf of the DCCBs in its jurisdiction. The quantum

Figures in the parentheses refer to percentage share

19

of refinance assistance to Co-operative Banks was linked to their net Non Performing Assets (NPAs) and their compliance with Sec. 11(1) of B R Act, 1949 (AACS). The region-wise refinance eligibility of SCBs during 2011-12 is provided in Table 2.2. With GoIs new initiative named Bringing Green Revolution to Eastern India (BGREI) comprising the States in the Eastern Region and 28 districts of Eastern Uttar Pradesh, it was decided to extend the facility of additional refinance of 5 per cent to SCBs in this region during 2011-12. 2.5 In order to enhance the ground level credit for

in the NE Region, Jammu and Kashmir, Sikkim, Andaman and Nicobar Islands, Himachal Pradesh and Uttarakhand, the quantum of refinance provided to SCBs was enhanced to maximum 70 per cent of their crop loan disbursements with relaxation in eligibility criterion. This was higher by 15 per cent from the maximum level of 55 per cent during 2010-11. 2.6 With a view to augmenting ST-SAO Refinance

to farmers through the co-operative credit structure, it has been decided to launch a direct separate credit window facility for good working Central Co-operative Banks under Section 21 (1) (i) read with Section 21 (2) and Section 33 of NABARD Act 1981. In addition, NABARD will also sanction refinance to Regional Rural Banks and Public Sector Banks for financing PACS under Section 21 (1) and Section 21 (4) of NABARD Act 1981 against promissory notes, subject to the Banks furnishing a declaration in writing setting out the purposes for which they have made loans and advances and such other reasons as may be required by NABARD. A credit limit of `79.47 crore was sanctioned to Public Sector Banks for financing PACS to provide crop loan to farmers under the scheme. 2.7 During 2011-12, ST-SAO credit limits were

crop loans by Co-operative Banks, it was decided to provide additional refinance of 10 per cent to all the regions thus providing refinance of 55 per cent and 60 per cent of the crop loan disbursements to general areas and the Eastern region (Bihar, West Bengal, Odisha, Jharkhand, Chhattisgarh and 28 districts of (Eastern Uttar Pradesh) respectively, for the year 2011-12. DCCBs the This refinance was available to SCBs which were inspection complying report with of criterion: NABARD working in other than NER & Hilly States on behalf of (i) Section 11(1) compliant (ii) Rated as A or B as per latest (iii) Continuously in profit for the last 3 years & (iv) CD Ratio of 70 per cent and above (as on 31 March 2011). With a view to increasing the credit flow

sanctioned to 23 SCBs aggregating `33,995.67 crore as compared to `23,759.34 crore to 21 SCBs during 2010-11. The credit limits included `3,171.70 crore for the Oilseeds Production Programme (OPP), ` 285.57 crore for National Pulse Development Programme (NPDP) and `1,106.47 crore for the Development of Tribal Population (DTP). SCBs reached a maximum outstanding of `33,995.67 crore during 2011-12 with 100 per cent achievement level. 2.8 While SCBs in northern region (Haryana,

Table 2.2: Sanction of ST(SAO) Credit Limits to SCB for the year 2011-12 Region/States NE/Hilly Region/ A & NIslands Eastern Region Rest of India Net NPAs (%) Upto 15 Above 15 Upto 10 Above 10 Upto 10 Above 10 Eligible quantum of refinance (%) 70 65 50 45 45 40

Himachal Pradesh, Punjab and Rajasthan) accounted for 32 per cent share, SCBs in southern region (Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu), western region (Gujarat and Maharashtra) and central regions (Madhya Pradesh, Uttarakhand and Uttar Pradesh) accounted for 24, 17 20

NE : Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura Hilly Region : Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim Eastern Region : Bihar, West Bengal, Chhattisgarh, Jharkhand, Odisha and 28 Districts of Eastern Uttar Pradesh.

and 16 per cent shares, respectively, of the aggregate credit limits sanctioned. Eastern region (Bihar, Chhattisgarh, Odisha and West Bengal) accounted for 11 per cent. The share of refinance availed of by the co-operative banks in the NER continued to be low despite relaxations. However, the aggregate limits sanctioned to Assam, Meghalaya, Nagaland and Sikkim SCBs more than doubled from ` 7.00 crore in the year 2010-11 to ` 18.58 crore in the year 2011-12. The limits were fully utilised.

also. Refinance assistance for weavers is also routed through commercial banks to co-operative societies for production and marketing of handloom products made by individual weavers, handloom weaver groups and master weavers. Scheduled Commercial Banks having Net NPA not exceeding 3 per cent of net loans and advances outstanding as on 31 March 2011 and in profit in 2009-10/2010-11 and without accumulated losses, were considered eligible for refinance. In addition, refinance is provided to RRBs and Commercial banks to meet the working capital requirement of Mutually Aided Co-operative Societies

(ii) Support for Short Term (Others)

2.9 This includes short-term refinance for

(MACS) and Producer Groups. Short term credit was also available to SCBs and scheduled commercial banks for financing working capital requirements of State Handloom Development Corporations for production/procurement and marketing of handloom products. The Interest Rate on refinance to client institutions for the year 2011-12 for Weaver Sector was revised from 8.5 per cent to 9.75 per cent w.e.f. 29.7.2011 and further revised to 10.0 per cent w.e.f. 14.11.2011 (for CBs w.e.f. 28.11.2011), keeping in view the hardening of the interest rates. 2.11 During 2011-12, ST (Weavers) credit limits

agriculture purposes, allied activities, marketing of crops, pisciculture, working capital requirements of industrial co-operative societies (other than weavers)/ labour contract and forest labour co-operative societies (including collection of minor forest produce) and rural artisans (including weaver members of PACS/LAMPS/ FSS)/ procurement and distribution of agricultural inputs and STLabour Contract Co-operatives engaged in civil work in rural areas. The SCBs with net NPA not exceeding 10 per cent, as on 31 March 2010, were considered eligible for refinance. Relaxations in NPA norms extended to North Eastern regions in the case of ST-SAO was made applicable for ST-Others also. The assessment norms hitherto followed, for different purposes continued. A consolidated ST (Others) limit of `145.00 crore was sanctioned to Haryana and Tamil Nadu SCBs and the extent of utilisation was 85 per cent.

aggregating `190.01 crore were sanctioned to three SCBs (Andhra Pradesh- `60.32 crore, Tamil Nadu- `122 crore and Puducherry - `7.69 crore) for production, procurement, marketing activities as against `215.75 crore during 2010-11. The maximum outstanding during 2011-12 was `204.54 crore which includes previous year outstanding as against ` 198.14 crore in 2010-11. Due to weakness in both credit and noncredit co-operative credit system, many states having major concentration of handloom activities (NE states, Odisha, Kerala, West Bengal, UP and Karnataka) have not been able to avail of refinance facilities from NABARD. However, the situation is likely to improve upon the implementation of the Revival, Reform and Restructuring Package for the handloom sector and inclusion of the support for the institutional credit under the Integrated Handloom 21

(iii) Support to weavers

2.10 Refinance assistance is made available to SCBs

on behalf of eligible DCCBs to meet the working capital requirements of primary, apex and regional weavers societies. The refinance assistance is linked to their net NPA, with relaxations for eastern and north eastern regions. Consolidated limits were sanctioned to SCBs on behalf of eligible DCCBs. Relaxations in NPA norms as extended to Eastern and NER in the case of ST-SAO continued to be made applicable for weavers sector

Development Scheme (IHDS) of the Ministry of Textiles (MoT) of the GoI. So far, 4,624 HWGs have been formed in various states viz., Odisha (1,366), Andhra Pradesh (1,258), Assam (272), Bihar (82) Jharkhand (500), Madhya Pradesh (266), Uttar Pradesh (272), West Bengal (88), and in other states (520). Of these, 2,062 HWGs have been credit linked.

RRBs working in other than NER & Hilly states subject to conditions that the Net NPA would be less than 5 per cent and CD Ratio of 70 per cent and above as on 31 March 2011. 2.14 and With a view to increasing the credit flow in the Nicobar Islands, Himachal Pradesh and

NE Region, Jammu and Kashmir, Sikkim, Andaman Uttarakhand, the quantum of refinance provided to

b. Regional Rural Banks

2.12 NABARD provides Short Term refinance support to Regional Rural Banks (RRBs) for financing Seasonal Agricultural Operations (SAO) and Other than SAO (OSAO) activities. The quantum of refinance to RRB is linked to their net NPAs. The details of region-wise refinance available to the banks are provided in Table 2.3. Additional refinance assistance of 5 per cent is provided to RRBs functioning in the Eastern States and the 28 districts of Eastern Uttar Pradesh, covered under the BGREI scheme of the Government of India. 2.13 In order to further enhance the crop loan

RRBs was enhanced to maximum 55 per cent of their crop loan disbursements with relaxation in eligibility criterion. This was higher by 15 per cent from the maximum level of 40 per cent during 2010-11. 2.15 During 2011-12, NABARD sanctioned limits of

` 13,925.66 crore to 81 RRBs under ST-SAO as against ` 9,799.69 crore sanctioned to 80 RRBs in 2010-11. The limit included `1,236.29 crore for Oilseeds Production Programme (OPP), `251.90 crore for Development ` 27.91 crore of for Tribal Population Pulses (DTP) and National Development

Programme (NPDP). Uttar Pradesh received the largest share of credit limit sanctioned of `2,442.14 crore under ST (SAO) for RRBs, followed by Andhra Pradesh (`2,017 crore), Rajasthan ( `1,575 crore), Karnataka (` 1,175 crore) and Kerala ( `1,084.40 crore). The maximum outstanding was `13,925.66 crore with 100 per cent achievement level under the limit sanctioned during 2011-12. Six RRBs in the North Eastern Region were sanctioned credit limit of ` 104.94 crore, which was fully utilised by them. 2.16 NABARD sanctioned consolidated limits to

disbursements by the RRBs, it was decided to provide additional refinance of 10 per cent to all the regions thus providing refinance of 40 per cent and 45 per cent of the crop loan disbursements to general areas and the eastern region of the country, respectively, for the year 2011-12. This refinance was available to

Table 2.3: Sanction of ST(SAO) Credit Limits to RRB for the year 2011-12 Net NPAs (%) of RRB NE/Hilly Region/ A & N Islands Eastern Region Rest of India
NE: Arunachal Pradesh, Nagaland and Tripura

Eligible quantum of refinance (%) 55 50 35 30 30 25

Meghalaya, Mizoram,

Upto 10 Above 10 Upto 5 Above 5 Upto 5 Above 5

Assam, Manipur,

RRBs for ST-OSAO to the extent of 60 per cent of their Realistic Lending Programme (RLP) for eligible purposes like marketing of crops, fisheries, approved purposes like production and marketing activities of artisans (including handloom weavers), village/cottage/ tiny sector industries, financing persons belonging to the weaker sections engaged in trade/business/service activities including distribution of inputs for agriculture and allied activities. RRBs having Net NPA upto 22

Hilly Region : Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim Eastern Region: Bihar, West Bengal, Chhattisgarh, Jharkhand, Odisha and 28 Districts of Eastern Uttar Pradesh

5 per cent were eligible for refinance. The aggregate limit for ST-OSAO sanctioned during 2011-12 was `677.00 crore, against `600.00 crore in the previous year. The maximum utilisation was `653.00 crore.

agency for channelising the Margin Money & Interest Subsidy components under the Package. Margin Money assistance will be provided @ `4,200/- per individual weaver, their SHGs & JLGs so as to raise borrowings from the Banks/Financial Institutions including RRBs, SCBs/DCCBs. disbursal will be provided Interest Subsidy @3 to weaver/eligible

B. Other Initiatives
a. Revival, Reform and Restructuring Package for Handloom Sector
2.17 Finance In the Budget speech for 2011-12, the Minister announced that a Centrally

per cent per annum for 3 years from the date of first institutions by the GoI so that they may avail credit facility at subsidised rate. However, Interest Subsidy will not be available from the date of the loan account turns NPA even within the period of 3 years. The Package will be monitored at All India and State Level Monitoring Committees. The first instalment of `7.57 crore has been released by the MoT, GoI to be passed on to the banks.

Sponsored Plan Scheme on Revival, Reform and Restructuring Package for Handloom Sector with a total outlay of `3,884 crore will be implemented by NABARD, starting with the current financial year. This scheme aims at revival of handloom sector by waiver of overdue loans along with its capacity building, technological up gradation, introduction of Common Accounting System (CAS) and Management Information System (MIS). The focus of the assistance under the Package is to ease the existing chocked credit lines to the handloom sector, with fresh flow of credit, to be supported by 3 per cent interest subvention and credit guarantee through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) floated by Small Industries Development Bank of India (SIDBI). So far, 19 states have given their consent to implement the Package in their states out of which tripartite agreement has been signed between GoI, NABARD and the Governments of Andhra Pradesh, Kerala, Uttarakhand, West Bengal and Karnataka so far.

c. Interest Subvention to Farmers

2.19 The continuance of the interest subvention scheme was announced in the Union Budget 2011-12. Interest subvention was made available at 2 per cent per annum to public sector banks, co-operative banks and RRBs for deploying their own funds for lending crop loan upto ` 3 lakh per farmer, at an interest rate of 7 per cent p.a. or less. Additional subvention of 3 per cent was announced to those farmers who would repay crop loans promptly within one year of disbursement. Thus the effective interest rate paid on crop loan by such farmers would be 4 per cent. Interest subvention was given to NABARD by GoI for providing concessional refinance to SCBs and RRBs at 4.5 per cent interest rate. Aggregate interest subvention of ` 1,688.62 crore and `2,097.94 crore under the interest subvention scheme 2009-10 and 2010-11, respectively, was provided by GoI to NABARD, Co-operative Banks and RRBs. The Interest subvention for 2011-12 has been estimated at `3,000 crore and so far an amount of `424.96 crore has been received from GoI. The total amount disbursed by GoI during the year under various interest subvention schemes is ` 2,111.52 crore. 23

b. Comprehensive Package for the Handloom Sector

2.18 The Ministry of Textiles (MoT), GoI vide its Notification dated 9 January 2012 issued operational guidelines for Institutional Credit component under the Integrated Handloom Development Scheme (IHDS) for the handloom sector in the country. NABARD has been designated as the implementing

Table 2.4: Rates of Interest on Refinance (per cent) Sl. No. 1 2 3 4 5 6 7 Purpose SAO ST (Others other than weavers) ST (Weavers Primary and Apex/ Regional Weavers Cooperative Societies.) ST Weavers - Financing of Primary Weavers Cooperative Societies ST-Other than SAO loans (ST- OSAO) ST - Working capital requirements of SHDC MT (Conversion) loan Agency i) SCB/RRB ii) CCB & PACS through RRB / CB (PSB) SCB SCB Scheduled Commercial Banks RRB SCB & Scheduled Commercial Banks SCB/RRB Interest Rate 4.5 4.5 10.0 10.0 10.0 10.0 10.0 7.25 (minimum)

d. GoI Package for Sugar Industry

2.20 NABARD continued to act as the nodal

from GoI during the year 2011-12 towards interest subvention, ` 383.38 crore was released to 212 sugar mills operating in 11 States viz., Maharashtra, UP, AP, Tamil Nadu, Uttarakhand, Odisha, Madhya Pradesh, Gujarat, Goa, Punjab and Karnataka.

agency for GoI package for restructuring of term loans of co-operative sugar mills. Out of ` 200.13 crore received from GoI towards interest subvention, ` 200.02 crore was disbursed to 76 co-operative sugar mills in Maharashtra and Odisha. NABARD also acted as the nodal agency for routing the interest subvention to co-operative banks and RRB under Scheme for extending Financial Assistance to Sugar Undertakings -2007. Out of ` 383.59 crore received

e. Interest Rates on Refinance Assistance

2.21 and The rates of interest on Short Term/Medium Scheduled Commercial Banks during Term (ST/MT) refinance to Co-operative Banks, RRB 2011-12 are indicated in Table 2.4.

Investment Credit
2.22 NABARD refinances term loans given by Banks, Regional Rural Banks and refinance. The eligibility criteria for refinance for the year 2011-12 continued to be linked to Net NPA in case of Commercial Banks, SCBs, PUCBs and RRBs and recovery for the SCARDBs. However, for the current year SCBs, SCARDBs and RRBs were classified under four categories based on their Net NPA/ Recovery position as against five categories during 2010-11 for the purpose of deciding their eligibility for availing of refinance. SCBs with Net NPA above 20 per cent or Audit Classification of C/D; SCARDBs with recovery of less than 30 per cent or Audit Classification of C/D; and RRBs with net NPA above 15 per cent and those with accumulated losses 24 Commercial

Cooperative Banks for farm and non-farm sector activities. These loans have a currency of 3-15 years and include advances for farm investments, allied activities, small and micro enterprises, agro-processing, organic farming, non-conventional energy and rural housing.

A. Refinance Policy and Eligibility Criteria

2.23 The refinance policy for 2011-12 laid down the eligibility criteria for banks to avail of NABARD

and not complying with 42(6) (a) (1) of RBI Act, 1934, were not considered eligible for availing refinance during the year. 2.24 Commercial Banks/ PUCBs/ NEDFi with Net

other than A) alternative security like pledge of Government Securities or Fixed Deposit Receipts issued by Scheduled banks/ good working SCB (in the event of Government Guarantee not forthcoming), was considered subject to fulfillment of certain terms and conditions as prescribed by NABARD. Refinance to all SCARDBs was against Government guarantee.

NPA exceeding 3 per cent were not eligible for availing refinance during the year. NBFCs registered with RBI, having AAA rating from a SEBI approved agency and with Net NPA not exceeding 3 per cent, were eligible for refinance. Refinance was provided to Commercial Banks, SCBs and RRBs at 100 per cent of the eligible bank loan for all activities under thrust areas. With effect from 2 September 2011, refinance to SCARDBs was extended as term loans as against the earlier practice of contribution to floatation of debentures. Under the new system, all SCARDBs are eligible for refinance of 90 per cent of the eligible bank loan disbursed.

D. Interest Rates on Refinance

2.27 During the year, the rate of interest was revised five times in the range of 8.25 to 11.25 per cent depending upon the type of agency and quantum of refinance. The revised interest rate on refinance to CBs and RRBs against loans to MFIs for on-lending to clients was 3 per cent less than that being charged by banks subject to the minimum interest rates prevailing for various agencies in various regions of the country.

B. Special Package for North Eastern and Other Regions

2.25 For increasing the credit flow to the States in the Eastern Region (West Bengal, Odisha, Bihar, Jharkhand and Andaman & Nicobar Islands), North Eastern Region (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura including Sikkim), Hilly States (Jammu & Kashmir, Himachal Pradesh and Uttarakhand), Lakshadweep and Chhattisgarh, NABARD continued to (i) apply uniform interest rate on refinance to all client institutions in the north eastern region, (ii) extend 5 per cent relaxation in recovery norms for SCARDBs and relaxation in Net NPA norms by 5 and 3 per cent, respectively, for SCBs and RRBs and (iii) provide refinance at 100 per cent of the eligible bank loan for all client institutions except SCARDBs for all purposes.

a. Concessional rate of interest for Eastern Region

2.28 For ensuring investments in agriculture for enhancing production and productivity of crops in the Eastern Region, comprising of the States of Assam, Bihar, Jharkhand, Chhattisgarh, Odisha, West Bengal and Eastern UP (covering 28 districts of UP), banks were eligible for 100 per cent refinance at a concessional interest rate of 7.50 per cent for specified eligible activities during 2011-12 and 2012-13 after achieving minimum target in key activities viz. Water Resources Development, Land Development, Farm Equipments, Seed Production and under group mode to SHGs/ JLGs for Tractor financing. During the year, an amount of ` 128.71 crore was disbursed under the above scheme by various banks.

E. Refinance Support
2.29 During the year 2011-12 the refinance disbursement was ` 15,421.70 crore as against the budget of ` 14,995.00 crore.

C. Security Norms
2.26 For release of refinance to SCARDBs and SCBs (not scheduled and having audit classification

25

Table 2.5: Agency wise disbursement of Refinance (` crore) Agency 2009-10 Target SCARDBs SCBs CBs RRBs PUCBs ADFCs/NABFINS Total 2290.00 1040.50 6085.50 1879.00 5.00 11300.00 Disb 2221.30 1251.95 6057.19 2457.46 16.14 5.05 12009.08 % Share 18.50 10.43 50.44 20.46 0.13 0.04 100.00 Target 2160.00 1340.00 7052.00 2288.00 85.00 55.00 12980.00 2010-11 Disb 2351.85 1356.62 7348.49 2287.84 84.87 56.20 13485.87 % Share 17.44 10.06 54.49 16.96 0.63 0.42 100.00 Target 2445.00 1205.00 8030.00 3035.00 60.00 220.00 14995.00 2011-12 Disb 2444.93 1192.29 8433.75 3086.19 54.08 210.46 15421.70 % Share 15.85 7.73 54.69 20.01 0.35 1.37 100.00

a. Agency-wise Disbursements of Refinance

2.30 During 2011-12, Commercial Banks have and SCBs have availed of refinance

central

(12.10%),

eastern

(11.60

%),

western

(10.80%), and north eastern region (1.50%) (Table 2.6 and Chart 2.3).

availed of refinance amounting to ` 8,433.75 crore, SCARDBs amounting to `2,444.93 crore and `1,192.29 crore, respectively and RRBs have availed of refinance amounting Chart 2.2). to `3,086.19 crore (Table 2.5 and

c. Sector-wise disbursements
2.32 During 2011-12, the major share of refinance has been accounted by NFS (23.18 %) followed by SHG (19.92 %), Farm Mechanisation (13.84 %), Animal Husbandry (10.18%) and Plantation & Horticulture (10.03%) (Table 2.7).

b. Spatial Distribution of Refinance

2.31 The spatial distribution of refinance

F. Co-financing
2.33 ` 155.55 During the year, an amount of ` 1.91 crore crore for 35 ongoing projects under was disbursed taking the cumulative disbursement to co-financing.

disbursement across regions indicated that major share had been accounted by the states in the southern region (48.30%), followed by northern (15.7%),

26

Table 2.6: Region-wise Disbursement of Refinance (` crore) Region Target Northern North Eastern Eastern Central Western Southern Total 2790.00 210.00 1185.00 1680.00 935.00 4500.00 11300.00 2009-10 Disb. 2419.87 139.85 891.07 1478.60 1111.79 5967.89 12009.08 % Share * 20.20 1.20 7.40 12.30 9.30 49.70 100.00 Target 2835.00 266.00 1392.00 1718.00 965.00 5804.00 12980.00 2010-11 Disb. 2810.70 265.82 1405.35 1928.63 1253.64 5821.73 13485.87 % Share * 20.80 2.00 10.40 14.30 9.30 43.20 100.00 Target 2928.00 258.00 1415.00 1927.00 1598.00 6869.00 14995.00 2011-12 Disb. 2426.37 232.86 1783.53 1867.05 1671.16 7440.73 15421.70 % Share * 15.70 1.50 11.60 12.10 10.80 48.30 100.00

*: % share of the total disbursement during the year Northern: Haryana, Himachal Pradesh, Punjab, Rajasthan, J&K, Delhi and Chandigarh North Eastern: Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim Eastern: Bihar, Jharkhand, Odisha, West Bengal and Andaman &Nicobar Islands Central: Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Uttarakhand Western: Gujarat, Goa, Maharashtra, Dadra & Nagar Haveli and Daman & Diu Southern: Andhra Pradesh, Karnataka,Kerala, Tamil Nadu, Puducherry and Lakshadweep Islands

G. Capital Investment Subsidy Schemes

2.34 NABARD continued to serve as nodal agency for implementation of various Capital Investment Subsidy Schemes (CISS) of the GoI, for routing of subsidy admissible under the schemes, monitoring the progress of the scheme and coordinating with banks, State Governments & the GoI. The schemes were as follows: (i) Construction of Rural Godowns

(ii)

Development/ Marketing Standardisation

Strengthening

of

Agriculture and

Infrastructure,

Grading

(iii)

Establishment of Agri-Clinic and Agri-Business Centres

(iv) (v)

Bihar Ground Water Irrigation Scheme Scheme for installation of Solar Off-Grid and Decentralised Applications

(vi)

National Project on Organic Farming

27

Table 2.7: Sector-wise Disbursement of Refinance (`crore) Purpose Target Minor Irrigation Land Development Farm Mechanisation Plantation & Horticulture PF/SGP/AH-Oth Fisheries Dairy Development Forestry Storage Godown & Market Yard SGSY Non Farm Sector SC/ ST-AP SHG Others Total 660.00 976.00 2194.00 362.00 230.00 132.00 570.00 38.00 143.00 274.00 2852.00 91.00 803.00 1975.00 2009-10 Disb 496.73 303.67 1714.66 377.40 349.79 54.62 725.35 6.46 187.22 151.50 3465.99 2.30 3173.56 999.82 Share % 4.1 2.5 14.3 3.1 2.9 0.5 6.0 0.1 1.6 1.3 28.9 0 26.4 8.3 100.0 Target 909.00 1168.00 1817.00 579.00 266.00 149.00 649.00 52.00 172.00 322.00 3115.00 130.00 795.00 2857.00 2010-11 Disb Share % 920.61 295.69 1762.98 698.39 402.37 47.45 918.11 9.57 170.79 228.84 3446.40 12.63 2545.36 2026.68 6.8 2.1 13.0 5.2 3.0 0.4 6.8 0.1 1.3 1.7 25.6 0.1 18.9 15.0 100.0 2011-12 Target 1071.00 1243.00 1714.00 750.00 536.00 160.00 975.00 21.00 429.00 0 4298.00 0 3642.00 156.00 Disb % Share 660.51 504.07 2134.51 1547.50 680.20 91.88 889.88 15.97 157.47 211.98 3574.21 4.26 3072.59 1876.67 4.28 3.27 13.84 10.03 4.41 0.60 5.77 0.1 1.02 1.37 23.18 0.03 19.92 12.17 100.00

11300.00 12009.08

12980.00 13485.87

14995.00 15421.70

*: % share of the total disbursement during the year

(vii)

Eight schemes relating to Animal Husbandry Sector, viz:

Government of India. It aims at creation of scientific storage facilities for rural farmers; thereby helping them to avoid wastage, product deterioration and distress sales. With effect from 20 October 2011, the maximum capacity admissible for subsidy under the scheme was revised by the MoA, GoI from 10,000 MT to 30,000 MT. During the year subsidy of ` 148.68 crore was released in respect of 2,950 units (cumulatively `798.51 crore for 22,665 units).

a.

Establishment/ Slaughter Houses

Modernisation

of

Rural

b.

Integrated Development of Small Ruminants and Rabbits

c.

Establishing Poultry Estates and Mother Units for Rural Backyard Poultry

d. e. f. g. h.

Salvaging and Rearing Male buffalo calves Utilisation of Fallen Animals Pig Development Dairy Entrepreneurship Development Scheme Poultry Venture Capital Fund (Subsidy)

(ii) Agricultural Marketing Infrastructure, Grading and Standardisation

2.36 This scheme aims at establishing and

strengthening infrastructure for marketing, grading, standardisation and quality certification of produce in the agriculture and allied sectors. The scheme is reform-linked and is being implemented by the DMI, GoI in States/UTs that have amended their Agricultural Produce Market Committee (APMC) Act to facilitate direct marketing, contract farming and setting up of

(i) Rural Godowns

2.35 The scheme is being implemented by the of Marketing and Inspection (DMI),

Directorate

28

agricultural

produce

markets

in

the

private

and

state,

with

NABARD

channelising

the

admissible

cooperative sectors. The scheme provides for a creditlinked, back-ended subsidy @ 25 per cent of the approved capital cost, with a ceiling of `50 lakh, for projects taken up by individuals, farmers, farmers groups, companies, cooperatives, NGOs and State Agencies. In case of North Eastern states, hilly and tribal areas and entrepreneurs belonging to SC and ST categories, the rate of subsidy is 33.33 per cent subject to an upper ceiling of `60 lakh. The Scheme became operational with effect from 20 October 2004. During the year, the APMC Act was amended in the states of Mizoram and Uttarakhand. With this, 24 states and 4 Union Territories have amended their APMC Act as on date and were eligible to receive subsidy assistance for projects under the scheme. In 2011-12, subsidy amounting to `166.80 crore was released in respect of 877 units (cumulatively `440.83 crore for 5,369 units).

subsidy amounting to 45 per cent of the project cost. The Minor Water Resources Department, Government of Bihar serves as the nodal department for implementation of the project. During the year, 16,589 units were sanctioned under the scheme for which a subsidy of `35.02 crore was released to the banks by NABARD. Cumulatively `83.32 crore has been released as subsidy so far for 50,655 units. In order to facilitate easy monitoring of this scheme, NABCONS, a subsidiary of NABARD has commissioned a webbased MIS.

(v) Scheme for installation of Solar Off-Grid and Decentralised Applications

2.39 The subsidy cum refinance scheme under the Nehru Solar Mission (JNNSM) was

Jawaharlal

launched by the Ministry of New & Renewable Energy (MNRE), GoI in November 2010, to encourage replacement of non-renewable energy sources like fossil fuels, kerosene and diesel with solar energy to meet energy requirements. The scheme was revised as the Capital Subsidy for Solar Lighting & Small Capacity Photo Voltaic (PV) Systems with effect from 15 March 2012 and the earlier Capital Subsidy cum Refinance scheme closed on 12 March 2012. The scheme for Solar Lighting & Small Capacity PV Systems provides for capital subsidy of 40 per cent of the project cost. 2.40 There is no change in the Capital Subsidy

(iii) Agri-Clinics and Agri-Business Centre

2.37 The scheme was launched in April 2002 with

the objective of supplementing public extension by facilitating agricultural graduates to provide fee based extension services to farmers. The TFO ceiling has been enhanced from ` 10 lakh to `20 lakh for individual projects (`25 lakh for extremely successful projects) and from `50 lakh to `100 lakh for group projects. During the year, an amount of `5.54 crore was released in respect of 147 units (cumulatively `10.92 crore for 537 units).

(iv) Bihar Ground Water Irrigation Scheme

2.38 The Bihar Ground Water Irrigation Scheme

cum Refinance scheme for installation of Solar Water Heating Systems. The entrepreneur has the option to avail of either subsidy or bank loan at concessional rate of interest at 5 per cent p.a for Commercial Banks and RRBs. The scheme covers projects specifically approved by the Project Approval Committee of the MNRE. During the year an amount of `51.83 crore was released including subsidy and refinance in respect of 45,030 units (Cumulatively ` 55.44 crore was released in respect of 54,017 units).

(BIGWIS), promoted by the Planning Commission, was introduced in Bihar in 2009-10 to provide irrigation to 9.28 lakh hectare of agricultural land of the State by installing 4.64 lakh units of shallow tubewells/ dugwells with pumpsets, over a period of three years. The scheme envisages coverage of all the districts in the state. It is implemented through all Commercial Banks and Regional Rural Banks in the

29

(vi) National Project on Organic Farming

2.41 The National project on Organic Farming is a central Sector Scheme introduced in the 10th Five Year Plan for promotion of organic farming in the country. The scheme was modified in 2011-12 to exclude vermin-hatchery. The quantum of eligible subsidy is to the extent of 25 per cent to 33.33 per cent of project cost subject to a ceiling of `60 lakh. During the year, subsidy of ` 1.56 crore was released in respect of 12 units. 688 units. As on 31 March 2012, cumulatively `14.01 crore was released in respect of

end subsidy to the extent of 25 per cent of the outlay (33.33 % in NE States hilly areas and SC/ST beneficiaries) is being provided by GoI, through NABARD to the banks for financing rearing/breeding of sheep and goat and rearing of rabbit under the scheme. During the year, subsidy amounting to `7.00 crore was released for 1,066 Sheep/Goat rearing units (cumulatively `8.59 crore for 1,370 units).

c. Establishment of Poultry Estates and Mother Units for Rural Backyard Poultry
2.45 The Scheme aims at establishment of poultry estates having up to 100 broiler/ layer units on the lines of industrial estates, where common infrastructure facilities, inputs supply and marketing arrangements would be provided. As on 31 March 2012, two projects have been sanctioned for establishment of Poultry Estates in Odisha and Sikkim. The Rural Backyard Poultry component of the scheme intends to promote rearing of low input breeds that can survive in rural areas and is intended for BPL beneficiaries. As on 31 March 2012, GoI has sanctioned 899 Mother Units in Kerala, Bihar, Madhya Pradesh, Andhra Pradesh, West Bengal, Nagaland, Karnataka, Punjab, Maharashtra and Uttar Pradesh under the scheme.

(vii) Schemes under Animal Husbandry Sector

2.42 The implementation of eight schemes relating to Animal Husbandry Sector launched by GoI during 2009-10 and 2010-11 continued in the current year also. A State Level Sanctioning and Monitoring Committee (SLSMC) has been constituted by the State Animal Husbandry Department in association with NABARD in each State for sanctioning of subsidy/ interest subsidy/ interest free loans under these schemes and also monitoring their progress.

a. Establishment/ Modernisation of Rural Slaughter Houses

2.43 As per GoI guidelines, the scheme is to be Andhra Pradesh and Meghalaya, for implemented on a pilot basis in three states, viz., Uttar Pradesh, establishing and modernising slaughter houses in rural areas. Credit linked back end subsidy up to a maximum of ` 2.00 crore has been made available for establishment/ modernisation of rural slaughter houses, projects for by-products utilisation, cold storage and cold chain and certification of quality. As on 31 March 2012, cumulatively `0.10 crore was released for establishment of one unit under the scheme.

d. Scheme for Salvaging and Rearing Male buffalo calves

2.46 to The scheme was launched in 2010-11 by GoI farmers, NGOs, partnership firms and assist

corporate bodies for rearing male buffalo calves for meat production and recovery of hides. Under the scheme, 100 per cent interest subsidy on short term loan is provided for rearing up to nine male buffalo calves. Back ended capital subsidy at 25 per cent of the outlay (33.33% in NE and hilly areas) is provided for establishment of commercial and industrial units.

b. Integrated Development of Small Ruminants and Rabbits

2.44 The scheme aims at encouraging commercial rearing of sheep, goat and rabbits by farmers. Back 30

e. Utilisation of Fallen Animals

2.47 The scheme, launched during 2010-11, aims at improving the quality of hides and skins from fallen

animals and to convert other by-products into value added items. It also aims and to reduce/ check to environmental pollution bird-hit hazards

purchase of milking machines/ milk testers/ bulk milk cooling units/ processing equipment, establishment of dairy product transportation facilities, cold chain and dairy marketing outlets/ dairy parlours. During the year, subsidy worth `114.36 crore for 27,319 units (cumulatively `124.05 crore for 29,297 units) was released.

aircrafts. Under the Scheme for establishment of Carcass Utilisation Centre (CUC) and Bone crushing unit, 90 per cent and 50 per cent of the TFO respectively are provided as back ended capital subsidy. The scheme will also facilitate compliance to the Infectious & Contagious Diseases in Animal Act 2009, wherein, proper disposal of carcasses of animals is mandatory. During the year, the State Level Sanctioning and Monitoring Committee (SLSMC), West Bengal has sanctioned subsidy amounting to `2.61 crore for establishment of two CUCs.

h. Poultry Venture Capital Fund (Subsidy)

2.50 The earlier Poultry Venture Capital Fund (Interest Free Loan) Scheme was modified as Poultry Venture Capital Fund (Subsidy) with effect from 1 April 2011 by replacing the interest free loan and interest subsidy with capital subsidy. The modified scheme was launched for encouraging poultry farming activity, especially in non-traditional States, improving production of poultry products which have ready market all over the country, providing quality meat in to consumers areas in hygienic poultry conditions dressing and and improving hygienic sale of poultry meat and products urban through marketing outlets. Under the scheme, back-ended capital subsidy is available at the rate of 25 per cent (33.33% for SC/ST farmers and NE States including Sikkim) of the outlay for establishment of Breeding farms for low input technology birds like turkey, emu, etc., central grower units, hybrid layer (chicken) and broiler units, feed mixing plants, transport vehicles, retail outlets, poultry dressing plants, cold storage for poultry products, units, large feather processing processing units, units, Emu etc. processing

f. Pig Development
2.48 The scheme was launched in 2010-11 for encouraging commercial pig rearing by farmers so as to improve the performance of native breeds through cross-breeding. Under the scheme, 25 per cent back ended capital subsidy is available (33.33% in NE States, including Sikkim and hilly areas) for pig breeding/ rearing/ fattening units. Similarly, 50 per cent of the outlay as back ended capital subsidy is provided for retail outlets/ facilities for live stock markets. During the year, subsidy amounting to ` 6.26 crore was released for establishment of 1,634 pig rearing units. Cumulatively subsidy amounting to ` 7.75 crore has been released for 1,873 units.

g. Dairy Entrepreneurship Development

2.49 The scheme was launched in 2010-11 for encouraging modern dairy farms to produce clean milk and heifer rearing farms to conserve good breeding stock. The scheme also aims at upgrading traditional technology to handle milk on a commercial scale and bringing about structural changes in the unorganised dairy sector so as to facilitate initial processing of milk at the village level itself. Under the scheme, backended subsidy amounting to 25 per cent (33.33% for SC/ST farmers) of the outlay is being provided for establishment of small dairy units, heifer rearing units, 31

Subsidy amounting to ` 4.36 crore was released for establishment of 189 units.

H. Evaluation Studies
2.51 During the year, 6 Evaluation/Commodity Specific/Special Studies were conducted. A study on Coping Mechanism conducted in Bidar and Kolar districts of Karnataka pointed out that rainfall fluctuations resulting in drought / flood and price instability were the two major concerns of the agricultural households in the dryland areas. To recoup

the loss in income due to agricultural shocks, the farmers kept milch animals, reared sheep and goat, reduced family expenditure and borrowed from SHGs, relatives, friends and moneylenders. Asset poor households and vulnerable/older farmers were found to cope less with risks because of lack of resources, education and health. Since rainfall variability was found to be one of the major problems faced by the farmers, water availability can be improved upon by tapping towards the potential irrigation facilities and encouraging farmers towards precision farming/move changing cropping pattern. Tripartite arrangement for marketing between farmer, industry/ wholesaler and bank/cooperative society will reduce farmers distress to a certain extent. 2.52 Commodity Specific Study on cumin was in of Banaskanthta cumin. and Surendranagar cultivation was

ICT based BC model as on 31 December 2011. Seventy appointed one by Business various Correspondents in sample (BCs) district banks

(Panipat) had opened 21,810 No Frills accounts and issued 12,989 smart cards. Study on Financial Inclusion population in Una district 2000) of Himachal in Pradesh state, indicated that, out of 48 unbanked villages (having over identified the designated banks had extended banking services in

43 villages (90%) by end of January 2012. Four of the villages were covered by opening new branches whereas 39 were covered under BC model. A total of 13,944 No Frills Accounts were opened and pension distributions in 11,299 accounts were done through the BCs in the sample district (Una). The study revealed that though the BC model has improved access to financial services, the issues like low business volume, credibility gap, inactive accounts, inadequate infrastructure, lack of sound revenue model, etc. are need to be assessed so as to make them viable and sustainable in the long run. 2.54 A Study on Agricultural Credit : An Analysis for

conducted management

districts of Gujarat to analyse the supply chain Cumin profitable with return per rupee on cultivation being `2.08. The average productivity at 717 kg/ha. was, much lower poor than seed the productivity Lack of of frontline irrigation and non demonstration facilities, (1,250 kg/ha.)

replacement

rate

into Trends in Disbursement and Outstanding districts i.e., Aurangabad (Maharashtra),

adoption of weed, disease and pest management, etc. were the main reasons for the same. Marketable surplus of the commodity was 98 per cent, being a seed spice crop. Majority of the marketable surplus was sold in regulated markets and only 5 per cent was sold to village traders. The producers share in the consumers rupee was 71 per cent in regulated markets and 68 per cent with traders. High export potential of the crop demands international quality standards in pre harvest (farm practices) and post harvest stage (processing and storage) operations. 2.53 Study on Financial Inclusion in Hayana 1,670

period from 2007-08 to 2010-11 was taken up in five Ujjain (Madhya Pradesh), Patiala (Punjab), West Godavari (Andhra Pradesh) and Burdwan (West Bengal). The study looked into various aspects of agricultural credit such as coverage of small and marginal farmers, disbursement, outstanding, short term, long term, etc. pertaining to 50 branches and around 4,500 borrowers. While the coverage of small and marginal farmers appeared to be adequate, consistent with their respective shares in the numbers and area operated, the study confirmed certain macro concerns like credit growth leading to more of deepening and less widening and also low and declining share of investment credit. The study clearly brought out that agriculture credit variations can be captured only at disaggregated level as it becomes increasingly difficult

revealed that out of 1,838 villages (with more than 2,000 population) identified in the state, villages (91%) were covered under banking fold either through brick and mortar branch or through

32

to make generalisations as variations / area specific issues exist at each level, may it be state, district, branch as well as credit agency. Available technology should make it possible to generate granular data for capturing monthly disbursements and outstanding so that the seasonality of agriculture (which varies and is changing) is not lost, while monitoring agriculture credit. The insight into various aspects of agricultural credit can be made only when authentic granular information about disbursement, outstanding and repayment of credit for agriculture at branch level is maintained as well as made available for further policy formulation. 2.55 A Study on Graduation of SHGs was the

farming needs.

About 38 per cent of the SHG

members took up additional activity, after joining SHGs. Graduation level of an SHG or its members was measured as a two dimensional index, individual savings account and micro-enterprises being the two dimensions. At disaggregated level, two-fifth the SHG members did not graduate in terms of savings dimension. Training emerged as an important factor in determining the level of graduation of an SHG. Further, building strong SHGs based on savings and financial discipline can help more and more members to graduate.

I. Investment Specific Studies

2.56 During 2011-12, 19 Investment Specific Studies and 2 Special Studies covering farm and rural non-farm sectors were conducted by the Regional Offices. The studies were conducted with the objective of assessing the potential of selected investments in the district/ state, examining adherence to the techno economic specifications, assessing the adequacy of the loan amount provided by the banks, estimating the benefits accruing from the investment, identifying the constraints at the field level in the implementation of schemes, etc. Major findings and recommendations of the studies are being forwarded to the banks for suitable action.

conducted in Karnataka and Odisha to measure extent of graduation of SHGs, study involved and identify

the process

the factors that can promote

graduation process. The Study based on 240 sample SHG members and 40 control households indicated that modal value of members saving was `80 per month while the range of saving was between `30 to `200. About three-forth of SHG members were tapping loans for productive purposes. Considerable proportion of SHG members was dependent on nonSHG loans for consumption needs and equally sizeable proportion availed non-SHG loans for meeting

Financing Rural Infrastructure

2.57 The government has set-up Rural new line of credit for rural infrastructure projects. Considering the intensity of the storage problem in rural area, the Government of India (GoI) made a dedicated allocation of ` 2,000 crore for financing warehousing under the RIDF during 2011-12. This chapter deals sanctions/disbursements under RIDF, RIPF and NIDA. Infrastructure Development Fund (RIDF) to improve rural infrastructure through NABARD. In addition, so as to provide more credit and grant, NABARD created (RIPF) a Rural and Infrastructure designed Promotion the Fund also NABARD

Infrastructure Development Assistance (NIDA), a

33

Rural infrastructure Development Fund

2.58 The RIDF was instituted in NABARD after an of water logged areas animal husbandry, plantation and horticulture, seed, agriculture and horticulture farms, forest development, cold fishing harbour/jetties, riverine fisheries; market yards, godowns, marketing infrastructure; storages; grading/certifying mechanisms; testing laboratories; hydel projects (up to 10 MW); village knowledge centres; infrastructure for IT in rural areas; desalination plants in coastal areas; and setting up of KVIC industrial estates/centres. The loans are provided at 95 per cent of project cost to all States. announcement was made to this effect in the Union Budget of 1995-96 with the sole objective of giving low cost fund support to State Governments and State-Owned Corporations for quick completion of ongoing projects in medium and minor irrigation, soil conservation, watershed management and other forms of rural infrastructure.

A. Allocations
2.59 The Corpus of the Fund has grown to `18,000 crore under RIDF XVII (2011-12) from an allocated amount of `2,000 crore under RIDF I (199596), taking the cumulative allocation to `1,52,500 crore which is inclusive of ` 18,500 crore under a separate window for funding rural roads under the Bharat Nirman Programme. The Union Budget for 2011-12, allocated an amount of ` 18,000 crore under RIDF XVII during 2011-12, out of which ` 2,000 crore has been exclusively dedicated for creation of warehousing facilities in different States on a priority basis. The successive allocations to the RIDF in the Union Budgets have been presented in Chart 2.4.

(ii) Social Sectors

2.62 The Social sector include drinking water projects; public health institutions; construction of toilet blocks in existing schools, especially for girls and Pay & Use toilets in rural areas, and construction of anganwadi centres. The loans for the above sectors are provided at 90 per cent of project cost for NER & Hill States and at 85 per cent to all other States.

(iii) Rural Connectivity

2.63 Rural Connectivity projects include rural roads & rural bridges and a loan for this sector is being provided at 90 per cent of the project cost to NER & Hilly States and at 80 per cent to all other States.

B. Sectors/Activities
2.60 In accordance with the GoIs instructions, only ongoing irrigation, flood protection, and watershed management projects were financed under RIDF I, adopting a last mile approach to facilitate completion of the projects delayed on account of budgetary constraints. The financing of rural road & bridge projects was started during RIDF II. The coverage of RIDF was broad-based in the subsequent tranches and at present, a wide range of 31 activities, as approved by the GoI, is being funded under the RIDF. These 31 activities are classified broadly under three categories, (i) Agriculture and related sectors, (ii) Social Sectors and (iii) Rural connectivity as detailed below:

(i) Agriculture and related Sectors

2.61 These include irrigation projects, soil conservation, flood protection, watershed, reclamation 34

C. RIDF XVII Terms and Conditions

2.64 Out of the allocated amount of ` 18,000 crore (including `2,000 crore for warehousing) under RIDF XVII during 2011-12, `16,000 crore was assigned to the States on the basis of allocative norms with weights, viz., rural population (20%), geographical area (20%), rural infrastructure development index (20%), availing of sanction (5%), disbursements (20%) in the past tranches and rural Credit Deposit (CD) ratio (15%) as prescribed by the Project Sanctioning Committee (PSC). As all funding through RIDF is project- specific and project-based, the projects pertaining to eligible sectors are submitted to NABARD by the State Governments. These are later on prioritised based on the State Governments priorities and placed before the PSC for sanction. 2.65 As was the practice in the earlier tranches, the

the Bank Rate (6%). Bank rate has changed from 6 to 9.50 per cent w.e.f 13 February 2012. However, RBI has allowed the State Governments to pay at the previous Bank Rate plus 0.5 percent, i.e. 6.5 per cent to NABARD till 31 March 2012. Loan disbursements from RIDF on or after April 01, 2012 will be at 1.5 per cent below the prevailing Bank rate.

D. Review of Performance
(i) Sanctions and Disbursements
2.67 As on 31 March 2012, 18,162 projects involving a loan amount of `20,701.12 crore were sanctioned under RIDF XVII. Of the total number of projects sanctioned, irrigation projects accounted for 27.50 per cent followed by rural road projects (24.20 %), social sector projects (17.90%), rural bridges (12.90 %) and agri related projects (9.70%). An amount of ` 1,493.82 crore was sanctioned for warehousing projects as at end of March 2012 (Table 2.8). 2.68 Since the inception of RIDF in 1995-96, 17

implementation phase for projects sanctioned under RIDF XVII is spread over 3-5 years. The maximum phasing in the case of major and medium irrigation projects and other stand-alone projects involving RIDF loan of `50 crore and above is five years. The quantum of actual drawal of funds by a State Government, however, depends upon the pace at which it implements the projects. NABARD provides funds on reimbursement basis, except for the initial 20 per cent of the project cost (30% in North-East) which is given as mobilisation advance. Each drawal by the State Government is treated as a separate loan and is repayable over a seven years period including a two years moratorium. Excepting the mobilisation advance, subsequent drawls are made on reimbursement basis. Depending on the drawls by State Government, NABARD places demands for deposits on the banks based on the bank-wise allocation made by RBI. 2.66 State Governments borrowings under RIDF

Tranches of RIDF have so far been implemented. The tranche XVII was being implemented during the year, 2011-12. While tranche I to X were closed earlier, tranche XI was closed as at end-March 2012. For projects sanctioned under RIDF XII and XIII, the implementation period has been extended until 31 March 2013 to enable State Governments to complete on-going projects and avail of reimbursement of

Table 2.8: Sector-wise Projects and Amounts Sanctioned under RIDF XVII (As on 31 March 2012) Sector No. of Projects 2717 860 6294 3311 5 3857 1118 18162 Share in Amt Total No. Sanctioned (%) (` crore) 14.7 4.7 34.1 17.9 0.0 22.5 6.1 100.0 5686.32 2663.97 5011.57 3707.11 127.15 2011.18 1493.82 20701.12 Share in Total Amount (%) 27.5 12.9 24.2 17.9 0.6 9.7 7.2 100.0

are governed by Article 293 (3) of the Constitution under which GoI determines its borrowing powers from the market and financial institutions during a year. The rate of interest payable by NABARD on deposits from commercial banks under RIDF-XVII is 35

Irrigation Rural Bridge Rural Roads Social Sector Power Ag. related Warehousing Total

expenditure

incurred

there

against.

Cumulatively,

2.71

Taking into account phasing of the projects,

4,62,229 projects were sanctioned since the inception of RIDF involving an amount of ` 1,42,470.65 crore as on 31 March 2012. Of the cumulative RIDF loans sanctioned as on 31 March 2012, 42 per cent went to agriculture and related sectors, including irrigation and power; 15 per cent to social sector projects like, health, education and rural drinking water supply; while the share of rural roads and bridges was 31 per cent and 12 per cent, respectively (Chart 2.5). 2.69 roads, A significant number of rural infrastructure bridges, watershed area management, development, flood primary

under various tranches (RIDF I to XVII), State Governments had a total pool of projects of ` 1,30,009 crore as on 31 March 2012. A state-wise analysis of ratio of disbursements to the approved phasing of sanctions (Table 2.11) reveals that Mizoram topped with 132 per cent, followed by Goa (106%), Meghalaya (100%), Manipur (96%), Maharashtra and Kerala (95%), Haryana and Uttarakhand (93%), Tamil Nadu (92%) and Chhattisgarh (91%).

(ii) Deposits/Repayments
2.72 under The RIDF cumulative stood at deposits and repayments crore and `1,11,025.94

projects covered so far related to irrigation, rural protection, command

schools, public health, rural drinking water, citizen information centres, agro-forestry, etc. Cumulatively, the number of projects and amount sanctioned, activity-wise, is presented in Table 2.9. 2.70 As per the phasing of projects under various

` 35,919.23 crore respectively, as on 31 March 2012. During the year, an amount of `15,241.32 crore was received as deposits from commercial banks. An amount of `8,012.24 crore was received from state governments towards repayment of RIDF loans during 2011-12. The outstanding loans under RIDF have also been rapidly increasing over the years indicating better implementation of the projects and availability of more infrastructural facilities in rural areas. The total RIDF loan outstanding, as on 31 March 2012, was ` 70,860.31 crore.

tranches (RIDF I to XVII), the total amount sanctioned was ` 1,30,009 crore. Against this the disbursements aggregated `1,13,924 crore, about 88 per cent of the amount sanctioned (Table 2.10). During the year, disbursements were made to the tune of `14,927

crore (inclusive of `759 crore sanctioned and released as refinance under Warehousing facilities to Banks).

E. Monitoring of RIDF Projects

2.73 Monitoring of RIDF projects under implementation are imperative for ensuring timely completion and quality of assets being created. Though the primary responsibility of monitoring of RIDF projects vests with State Governments, NABARD also undertakes monitoring of RIDF projects by exception. This two-pronged monitoring approach results in better implementation of projects, as various constraints are identified, reviewed and sorted out at regular intervals. The High Power Committee (HPC) at State level has proven to be an effective mechanism for monitoring and in ensuring speedy and timely completion of projects. The HPC chaired by the Chief/ Finance Secretary of the State, meets quarterly to review the pace of project implementation.

36

Table. 2.9: Activity-wise Cumulative Sanctions (As on 31 March 2012) No. Sanctions RIDF XVII No. 2717 2691 15 10 1 7154 6294 860 3311 303 0 126 338 20 2524 5 0 5 4975 0 304 31 178 77 23 14 105 0 0 0 8 0 664 1 0 0 0 70 2382 0 0 1118 18162 Cumulative (I-XVII) Amount 5686.32 2625.73 725.93 2105.03 229.63 7675.54 5011.57 2663.97 3707.11 2781.15 0.00 247.70 273.00 204.00 201.26 127.15 0.00 127.15 3505.00 0.00 585.04 24.89 460.94 58.09 13.64 68.78 120.86 0.00 0.00 0.00 4.79 0.00 302.62 6.94 0.00 0.00 0.00 65.43 299.16 0.00 0.00 1493.82 20701.12 No. 237137 234463 322 313 2039 101932 86372 15560 88698 10887 19986 12904 17474 3258 24189 766 687 79 33694 5633 2382 2420 683 2633 1623 165 4034 29 1 5 1544 7 7071 22 12 297 41 98 3621 8 249 1118 462229 Amount 42586.38 21517.80 5808.54 13227.73 2032.31 61522.56 44766.42 16756.14 20923.25 12625.19 1393.10 1680.01 3578.83 324.44 1321.68 2273.68 1195.44 1078.24 15164.80 1520.89 3968.78 1924.91 1405.59 604.44 720.00 412.25 468.70 438.94 10.00 41.37 197.68 17.19 1033.51 27.07 49.72 73.13 2.55 126.05 428.04 116.40 83.77 1493.82 142470.65 Ach.(%) 29.89 15.10 4.08 9.28 1.43 43.18 31.42 11.76 14.69 8.86 0.98 1.18 2.51 0.23 0.93 1.60 0.84 0.76 10.66 1.07 2.79 1.35 0.99 0.42 0.51 0.29 0.33 0.31 0.01 0.03 0.14 0.01 0.73 0.02 0.03 0.05 0.00 0.09 0.30 0.08 0.06 1.05 100.00

I 1 2 3 4 II 1 2 1 2 3 4 5 6 IV 1 2 V 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Irrigation sector Minor Medium Major Micro Irrigation Roads & Bridges Roads Bridges Drinking Water Primary/Middle Schools Public Health S.Sch/Colleges/Ru.Service Centre Pay & Use Toilets Anganwadi Centres Power Sector System Improvement Mini Hydel Other Agriculture Soil conservation Flood protection Watershed Development Drainage Forest Development Rural Market/Yard/Godown Fishing harbour/jetties Rain W.Hvstg. CADA Inland Waterways Food Park Seed / Agri / Hoti. farms Cold Storage Animal Husbandry Rubber Plantation Meat Process Riverine Fisheries Rural Library Citizen Information Centres Vill.Know.Centre/E-Vikas Kendras Rural Industrial Estates/Centres Comprehensive Infrastructure Warehousing/Rural Godowns Grand Total

III Social Sector

37

Table 2.10: Allocations, Sanctions and Disbursements (As on 31 March 2012) Tranche Allocation Cumulative Amount (` in crore) Sanctioned Closed Tranches (I to XI ) Ongoing Tranches XII XIII XIV XV XVI XVII Warehousing Sub-total Bharat Nirman G. Total 10000 12000 14000 14000 16000 1600 02000 84000 18500 152500 10377 12596 14723 15638 18202 19207 2253 * 92996 18500 161729 10377 12594 14674 9390 11000 2271 970 * 61276 18500 130009 8368 9982 10738 9459 7747 3809 1118 * 51221 18500 113924 81 79 73 101 70 168 115 * 84 100 88 50000 50233 Phased 50233 Disbursed 44203 % Utilised 88

*inclusive of `759 crore sanctioned and released as Refinance under Warehousing Facilities to Banks

2.74

NABARD

undertakes

monitoring

with

the

RIDF because of their weak implementing apparatus. Training and capacity building is thus central to the implementation of RIDF. Various constraints in implementation of RIDF could be overcome through training and capacity building of officials/staff involved directly/indirectly in the implementation of RIDF. With a view to overcoming this limitation, four Regional Business Meets were organised by NABARD in four major regions during 2011-12. Similarly, 48 regional awareness workshops have been carried out by Regional Offices for State Government officials of Finance and other implementing Deparments, other project implementing agencies and user groups/ agencies.

objectives of (i) facilitating timely physical completion of the projects, (ii) avoiding cost overruns, (iii) ensuring compliance to the approved design and quality parameters and (iv) identifying new investment opportunities. Monitoring of RIDF projects is carried out through desk review based on periodic returns and field visits. With a view to ensuring smooth implementation of projects, designated officers from the Head Office and Regional Offices at the state level and the DDMs at the district level undertake regular field visits to monitor the progress of projects. During the year, 5,499 projects were monitored through field visits. Major observations/ issues were being taken up with the implementing Department the pace of and departments State quality of as also the for Finance improving execution. Governments the

project

G. Economic/Social Benefits of RIDF Projects

2.76 The rural infrastructure projects have their own special features like (i) large capital requirement, (ii) high sunk cost, (iii) a large proportion of the cost to be irrevocably committed upfront before the project becomes operative, (iv) long gestation periods, (v) returns slow to pass on, (vi) sector is sensitive to local social, political and cultural environment and policy changes and (vii) the services produced/ generated non tradable. The excess services generated 38

F. Capacity Building Support

2.75 RIDF projects involve several processes such as project identification, area survey, project design, preparing detailed project reports (DPRs), mid-term appraisal both technical and economic, monitoring and evaluation, quality testing, etc. Infrastructure deficient States have comparatively lower off-take of

Table 2.11: Utilisation Percentage of RIDF (I TO XVII) (As on 31 March 2012)

(` Crore) Sl. States No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Andhra Pradesh Karnataka Kerala Tamil Nadu Puducherry South Zone Goa Gujarat Maharashtra West Zone Sanctions 14358 7173 4572 9829 380 36312 449 10902 9495 20846 Phasing 12424 5885 2894 7992 180 29375 356 8852 6673 15881 2462 2671 3381 4278 7481 10253 1867 32392 1562 8284 9846 4375 2725 5130 6179 18409 711 1743 109 399 196 532 823 332 4847 110750 18500 759 130009 Drawn Utilisation (%) 10014 4980 2751 7353 133 25231 376 7947 6336 14659 2284 2312 2982 3810 6227 8930 1740 28285 1418 6354 7771 3064 2374 4143 5247 14828 616 1477 105 400 258 338 471 225 3890 94665 18500 759 113924 81 85 95 92 74 86 106 90 95 92 93 87 88 89 83 87 93 87 91 77 79 70 87 81 85 81 87 85 96 100 132 64 57 68 80 85 100 100 88

efficiency of agriculture in the form of improving the credit absorbing capacity, enhancing the productivity of crops and livestock, generating employment and increasing farmers income, etc. This would make a direct attack on minimising the incidence of rural poverty. 2.77 By financing incomplete agriculture

development projects, the RIDF gives rise to significant potential benefits such as (i) unlocking of sunk investment already made by the State Governments, (ii) creation of additional irrigation potential, (iii) generation of additional employment for the rural people, (iv) contribution to the economic wealth of the State economy, (v) improved connectivity to villages and marketing centres, (vi) improvements in quality of life through facilities in education, health and drinking water supply. Cumulative Economic and social benefits generated as on 31 March 2012 is presented in Table 2.12 & 2.13.

Haryana 3528 Himachal.Pradesh 3537 Jammu & Kashmir 4108 Punjab 5129 Rajasthan 9729 Uttar Pradesh 11999 Uttarakhand 2929 North Zone 40958 Chhatisgarh Madhya.Pradesh Central Zone Bihar Jharkhand Odisha West Bengal East Zone Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Tripura Sikkim North-East & Sikkim RIDF Total Bharat Nirman Warehousing Ref. Grand Total 1939 10248 12187 6011 3905 7059 8526 25501 758 2335 329 601 387 709 1070 476 6666 142471 18500 759

Table 2.12: Cumulative Economic and social benefits (As on 31 March 2012) SI. Particulars No. 1 2 3 4 5 6 Irrigation potential (lakh ha.) Rural Roads (kms.) Rural Bridges (mts.) Rural Market Yards/Godowns (MTs) Gross Domestic Product (`Crore) Recurring Employment (No.of jobs) Non Recurring Employment: A. B. Irrigation (lakh mandays) Rural Roads and Rural Bridges (lakh mandays) 30097.76 41098.51 24228.44 Additional Benefits 204.07 354344 796899 325270 24580 8543283

C. Others (lakh mandays) 7 Power Sector A. B. Hydel Power Generation (MW) System Improvements to minimize T & D Losses (lakh units/ year)

161730

212.83 22315

cannot be stored or exported and deficiency in service cannot be bridged by imports barring certain exceptions. There is a felt need for development of rural infrastructure for increasing the productivity and 39

Social Sector (People /Students benefited) A. B. Health Centres (lakh) Primary & Secondary Schools (lakh) 615.83 100.06 1250.60

C. Rural Drinking Water Supply (lakh)

Table 2.13: State-wise Expected Benefits under RIDF (As on 31 March 2012) No. State Irri (ha) 1 2 3 4 5 6 7 8 9 Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh 2383278 0 317317 617591 352200 68601 1257981 957912 109716 133787 73571 472951 244362 1332453 655034 19550 147782 2990 179826 838038 375349 511556 421644 134947 360034 88725 4939634 243075 3166925 20406829 Potential Bridges (m) 48321 2600 55127 28227 31603 1410 4346 2969 19164 15000 68043 41886 30659 43274 54143 0 7427 283 10683 74009 327 9593 2905 5353 58809 30331 49458 16188 84762 796899 Roads (km) 31871 1010 836 4453 4567 258 20124 2512 8376 11082 8334 36948 4244 14905 24506 0 1986 693 2153 5744 275 10017 51071 3798 35425 1436 26610 9904 31206 354344 2670 0 348 702 475 45 1210 1835 398 190 210 1121 501 3610 1435 29 15 3 16 1777 1 756 738 343 319 23 4175 175 1461 24580 Value Prodn. (` crore) Recurring Employment (Nos.) 1953055 0 102400 231766 69622 5288 1321098 167267 415157 97849 90742 123784 79863 1063279 270236 8808 3706 1976 4107 441162 1110 179092 98671 609 281594 380 730755 27500 772409 8543283 Non-recurring Emp. (Lakh Mandays) Irri. 5383 0 84 341 849 97 1574 735 660 237 303 1708 367 3392 3127 20 234 12 305 1897 352 714 1268 36 594 97 2564 305 2844 30098 RR& RB 5545 233 882 1306 496 158 990 413 640 1359 1167 2868 779 1703 2354 0 403 65 498 2580 55 965 2760 312 3930 516 2198 1196 4727 41099 Others 3378 64 220 615 42 8 1091 196 321 197 544 946 463 493 193 147 73 23 279 277 121 1268 2560 371 1642 929 1608 229 5930 24228

10 Jammu & Kashmir 11 Jharkhand 12 Karnataka 13 Kerala 14 Madhya Pradesh 15 Maharashtra 16 Manipur 17 Meghalaya 18 Mizoram 19 Nagaland 20 Odisha 21 Puducherry 22 Punjab 23 Rajasthan 24 Sikkim 25 Tamil Nadu 26 Tripura 27 Uttar Pradesh 28 Uttarakhand 29 West Bengal Total

H. RIDF Implementation: Deficiencies

2.78 As compared with the closed tranches (I-XI), the RIDF fund under ongoing tranches are more judiously distributed across states, with a larger share going to the less developed and NE States. There is also more balanced investment across the sectors. The State-wise targets for RIDF sanctions and disbursements were set more rationally, in transparent and participatory manner. However, quite a few 40

deficiencies have been observed in implementation of RIDF. 2.79 RIDF is a substantial and cost effective source

of fund for the State Governments for investment in rural infrastructure, the demand for which always surpasses its supply. Lakhs of projects in irrigation, rural connectivity, and other vital sectors are being financed from RIDF. However, there is no long-term and assured fund flow for RIDF. The ability of the State Governments to raise resources is restricted by

the borrowing limit imposed upon it under article 293(3) of Constitution. Once an RIDF project is sanctioned, the State Governments have to match their funds with the phasing of the project so as to implement the project within the prescribed timeframe. The availability of funds is largely contingent upon the borrowing limit under article 293(3) of the Constitution. The State Governments therefore need to earmark adequate funds in their Budgets and their borrowing plans for completing the RIDF projects.

infrastructure organisational

cannot

be

bridged NABARD

by is

the

State at

Governments due to their limited resources and structure. looking leveraging private resources by implementing specific projects under the public-private participation (PPP) model. NABARD is in the process of forming partnerships with private entities for bringing private sector competence and funds into the realm of rural infrastructure through a separate window called NIDA. 2.83 During 2011-12, many new steps were

2.80

The RIDF, with its diversified projects, entails

the participation of many State Govt. Departments. For timely completion of RIDF project, the staff of various State Government Departments need to be adequately trained in handling techno-financial appraisals of projects under RIDF. Further, State Governments need to maintain a shelf of projects, in the order of priority. Inadequate planning at the grass root level and mid-term change of priorities has been found to hamper the grounding of projects. 2.81 RIDF directly contributes to creation of

initiated for the quick grounding of RIDF projects, based on the recommendations of the PSC. Receipt of Administrative Governments for Approvals each (AA) has from been State made project

mandatory before submission of projects to NABARD for sanction. As projects in the social sector are accorded less priority as compared to irrigation, agriculture and rural connectivity projects, 20 per cent of RIDF allocation has been specifically allocated for social sector projects. Action has also been initiated for on-line/web based monitoring of RIDF projects. The small investments made under RIPF (Box 2.1) would attract and make feasible larger investments under RIDF. Consultations/discussions have been in progress with the Centre for Development of Telematics (C-DACs), Pune for development of on-line software funded by RIPF.

physical infrastructure and capital formation in rural areas. The outstanding loans under RIDF have rapidly increased in the past five years, indicating better implementation of the projects. However, each drawal from the RIDF has a shorter repayment period of 7 years, with two years moratorium. This, many State Governments, view as an impediment in the smooth implementation and financing of RIDF projects. The time lags in announcement of RIDF tranche in the Union Budget in February and projects by process each allocation of the bank-wise funds by RBI, to actual submission of RIDF State Governments and their appraisal year. The State Governments are and sanction adds up to inordinate delay in the normally able to ground the projects only in the postmonsoon period, thereby virtually losing the first year of the project.

I. Warehousing
2.84 In the Union Budget 2011-12, Government of India (GoI) had made a dedicated allocation of `2000 crore for financing warehousing under the RIDF. As on 31 March 2012, total sanctions under the scheme, stood at ` 1493.82 crore, to four State Governments viz., Bihar, Karnataka, Tamil Nadu and Puducherry. 2.85 In addition, NABARD also introduced a

I. Looking Ahead
2.82 Despite lakhs of projects in irrigation, rural connectivity, and other vital sectors being financed under RIDF, it is felt that the gigantic gap in rural 41

scheme for providing refinance to banks, against loans extended by them to private entities and the agencies owned/assisted by government, for creation of warehousing infrastructure. Refinance from NABARD was made available at an interest of 8 per cent for a

Box 2.1: Rural Infrastructure Promotion Fund (RIPF) NABARD set up a Fund titled the Rural Infrastructure Promotion Fund (RIPF) in 2011 with a corpus of `25 crore for augmenting the skill sets and technical know-how of personnel engaged in creation of rural infrastructure. The Fund was established to address many of the constraints faced by the State Governments in the implementation of RIDF projects such as inadequate planning and poor technofinancial appraisal of projects, improper monitoring and evaluation, inexperienced Departmental staff engaged in the implementation of the project etc. The RIPF also aims at creation of critical, low cost, last-mile rural infrastructure that would benefit the village community at large and would form the basis for larger infrastructure projects under RIDF. The small investments made under RIPF would thus attract and make feasible larger investments under RIDF. The RIPF knowledge will provide grant support for conducting sharing workshops, national/ international creation of experimental infrastructure projects by Gram Panchayats (GPs), SHGs/SHG Federations, Farmers Clubs/ FC Federations and NGOs and villages under VDPs. The guiding principle for the operation of RIPF will be to solely support the programmes/ activities that are carried out for promotion of rural infrastructure. The Fund, effective from 01 September 2011, has received 15 proposals pertaining to exposure visits, evaluation studies and creation of experimental projects, out of which 8 proposals amounting `0.56 crore have been sanctioned as on 31 March 2012. Two evaluation studies, i.e., one on Flood Protection Projects in Uttar Pradesh to Indian Institute of Management (IIM), Lucknow and another on Irrigation Projects supported under RIDF in Karnataka to Centre for Multi-Disciplinary Research (CMDR), Dharward have been sanctioned. Similarly, four exposure visit projects by senior and middle level State Government officials from Himachal Pradesh, Odisha, Andhra Pradesh and Assam have been sanctioned. One check dam project has also been sanctioned as an experimental infrastructure project in Andhra Pradesh.

exposure visits for senior level bank/State functionaries, exchange of technical experts, conduct of evaluation and other potential mapping studies and surveys as also

period of 7 years (including a moratorium of 2 years). NABARD will also provide financial incentive to those borrowers, who repay their loans, along with interest, as per the repayment schedule prescribed by the

financing bank. An aggregate amount of `759.07 crore was sanctioned and disbursed to banks. With this the total sanctions against the allocation of `2,000 crore stood at `2,252.89 crore as on 31 March 2012.

New Business Initiatives

2.86 As part of the new initiatives and expansion of its development and promotional roles, NABARD is supporting; i) Producers Organisation by releasing finance to them, ii) Direct lending to CCBs for short term multi- purpose credit and (iii) Support to PACS for developing into multi-service centre (iv) Core Banking Solutions for co-operative banks and (v) Setting up of NABARD Infrastructure Development Assistance (NIDA) to provide credit support for funding of rural infrastructure projects. Organisations Development Fund with an initial corpus of `50 crore. During the year, 13 projects were sanctioned to Producers Organisations and 70 projects to PACS, respectively with an assistance of `32.29 crore and `7.75 crore, respectively. The cumulative sanction under the fund was ` 40.04 crore.

ii. Direct Lending to CCBs

2.88 NABARD has been traditionally providing refinance support to Co-operative Banks through SCBs. The implementation of the revival package for Co-operative Banks as per Vaidyanathan Committee recommendations has enabled CCBs to raise financial resources 42 from sources other than the SCB.

i. Producers Organisation Development Fund

2.87 In order to support and finance Producers NABARD set up the Producers Organisations,

Accordingly, NABARD has designed a Short Term Multipurpose Credit Product for financing the CCBs directly. The product is being offered to financially strong i.e. A & B category CCBs. As on 31 March, 2012, `1,547 crore of loans was sanctioned to 26 DCCBs of which ` 937.74 crore was disbursed.

Box 2.2: Application Service Provider (ASP) Model of CBS In ASP model, the cooperative banks would be responsible for setting up the infrastructure facilities within the branch, HO and other service outlets (PCs, printers, branch servers, UPS, LAN, switch, etc.), and its regular maintenance. The CBS vendor will be responsible for developing and customising the CBS and other application software, setting up and maintaining the Data Centre/ Disaster Recovery centres and the network connection from banks to the Data Centre/Disaster Recovery centres including user training, regular maintenance and support of related hardware and software and data migration support. The final payment structure is a monthly fee, to be paid by the bank directly to the vendor on per month per service outlet (branch, training establishment, administrative unit, etc) basis. In this model, the bank doesnt have to go in for heavy initial investment as in the case with ownership model thus making it a more viable option for small banks like the DCCBs. The banks are thus using the computing facility as a service on a monthly payment basis.

iii. Developing PACS into Multi-service Centres

2.89 PACS being registered cooperative societies

have been providing credit and other services to its members. It has been observed that PACS are generally meeting only the credit requirements of its members. In order to enable PACS to provide more services to their members and generate income for themselves, an initiative has been taken to develop PACS as Multi service Centres. This will enable PACS to provide ancillary services to their members and diversify its activities. Assistance under PODF is available to SCBs/CCBs/PACS for this purpose. 2,335 PACS have been developed as Multi-service Centres so far through various interventions from NABARD.

2.91

It is expected that the complete roll-out in all

the 162 banks will be over by 31 December 2012. As on 31 March 2012, 162 DCCBs across 10 states viz , Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh & Tamil Nadu (being implemented by TCS), Bihar, Haryana, Maharashtra, Punjab and Uttar Pradesh (being implemented by WIPRO) are covered under CBS project.

iv. Core Banking Solutions for Co-operative Banks

2.90 With changes in banking scenario and to

remain competitive in the market, it is imperative for Co-operative banks to implement the Core Banking Solutions (CBS). largest banking Information CBS is the meeting point of the services segments, and the cutting edge ever advancing

Technology

v. NABARD Infrastructure Development Assistance

2.92 NIDA is a new line of credit support for funding of rural infrastructure projects. NIDA will fund State owned institutions/ corporations both on-budget as well as off-budget for creation of rural infrastructure outside the ambit of RIDF borrowing. The assistance under NIDA is available on flexible interest terms with longer repayment period not exceeding 15 years (2-3 years repayment holiday). At the end of March 31, 2012 the major projects sanctioned under NIDA were:

Communication Technology. It provides the banking customers with the right products at the right time through the right channels 24 hours a day, 7 days a week through a multi location, multi branch network. NABARD has engaged TCS and WIPRO for implementation of the project on ASP Model (Box 2.2). In addition, NABARD also extends project management and advisory support to the DCCB during roll-out of the product.

43

I. lakh

Project for construction of Warehouses of 1.06 MT storage capacity to Karnataka State

VI.

Two Lift irrigation project to Krishna Bhagya

Jala Nigam Ltd, Karnataka involving a term loan of ` 244.08 crore. The project is expected to irrigate about 40,000 ha of dry land in Bagalkot district of Karnataka. VII. Three projects involving term loan of ` 354.39

Warehousing Corporation. An amount of `29 crore has been disbursed. The project aims at improving storage infrastructure for foodgrains. II. Project for establishment of substation and its

associated transmission systems at Hura in Purulia Dist in West Bengal to West Bengal State Electricity Transmission Company involving a term loan of `92.64 crore of which `3.56 crore was disbursed. The project aims at supplying quality power to the agriculture sector specially and rural areas in general. III. Two solar capacity power of 2 plants MW to project Gujarat with State

crore to Tamil Nadu Generation and Distribution Company (TANGEDCO) for rehabilitation of power distribution network damaged by Cyclone THANE. The cumulative sanctions under NIDA during the year 2011-12 was `890.85 crore and disbursement of ` 422.90 crore.

generation

2.93

With

the

base

of

agriculture

becoming

Electricity Corporation Ltd. involving term loan of `16.97 crore. The sites identified for the projects are unique. One of the sites is the area used for filling fly ash from the Thermal Power Plants and the other Canal area of Narmada Project. The Solar Panels cover on the canal may reduce the evaporative loss of water. This provides a potential for utilising the canal area for setting up solar power plants. IV. Pradesh Project for establishment of five substations in and augmentation/modification of other and

increasingly smaller (nearly 83 % of holdings are small who operate 41% of the area), it is inevitable that small operators will have to compete in the markets that demand much more in terms of quality and food safety. Participating in these markets poses challenges, but they also bring more opportunities. To take advantage of these, building up institutions and arrangements based on principles of aggregation are essential. These would include cooperatives as well as producers organisations and its variants. The new business initiatives need to be viewed in the above context. 2.94 Creation of new line of financial support for

Medak, Ananthapur and Karimnagar districs of Andhra associated transmission systems on three line, viz. the Nizamsagar-Banswada, Manubollu-Sullurpet Minpur-Jogipet lines to Transmission Corporation of Andhra Pradesh Ltd. involving a term loan of ` 140 crore. The project aims at supplying quality power to the agriculture sector and rural areas. V. Solar Power project with five MW power

DCCBs; bringing cooperatives on a higher technology platform of CBS to create a level playing field to compete with the other banks for business and growth; engaging with the PACS to convert them in to multi service centers are all such initiatives which eventually have huge development potential and which are inclusive in nature. The new business initiatives thus, are in tune with organisational strategy of business for development.

generation capacity was sanctioned to Gujarat Power Corporation Ltd. involving a term loan assistance of `42.75 crore.

44

III
Development and Promotional Initiatives
NABARDs development initiatives on-going and new; diverse in coverage and inclusive in nature are presented in this chapter. Programmes of the Government of India and the State Governments, implemented in association with the Banks for the development of agriculture and rural sectors are also discussed.

Credit Planning
A. Potential Linked Credit Plans
3.2 NABARD prepares Potential Linked Credit Plans (PLPs) for all districts in the country every year. The PLP outline the credit potential in agriculture, allied sectors and rural development projects in the district. The PLPs serve as an important tool for banks in their credit planning excercise. During the year, PLPs were prepared for the 625 districts in India. The sector-wise credit projections captured in the PLPs were utilised for arriving at the credit target for agriculture and allied sector in particular and priority sector as a whole for the year, 2012-13. The SFP presents a comprehensive picture of the potential available in various sectors of the rural economy, critical infrastructure gaps to be filled and linkage support to be provided by various State Government Departments. Credit Seminars were also organised by NABARD in all States/UTs, where discussions on bridging of infrastructural gaps for facilitating greater flow of credit to the rural economy were held with the officials of the State Government departments, stakeholders. financial institutions and other

C. District Level Offices

3.4 NABARD has 405 District Development Manager (DDM) offices across the country which focuses on credit planning, monitoring and developmental and promotional activities in these districts. In addition, 98 districts are tagged to specific DDM districts.

B. State Focus Paper

3.3 State Focus Papers (SFP) were prepared by the Regional Offices of NABARD for all the States and Union Territories (UTs) based on the district-level PLPs.

Farm Sector
A. Watershed Development
3.5 NABARD promotes participatory watershed development projects with the aim of enhancing the productivity and profitability of rainfed agriculture in a sustainable manner. It anchors four watershed development programmes in the country covering over 1.78 million ha. These programmes are: Indo-German Watershed Participatory Development Watershed Programme Development (IGWDP) in Maharashtra, Andhra Pradesh, Gujarat and Rajasthan, Programme under Watershed Development Fund (WDF) in 15 States, Prime Ministers package for distressed districts in four States, and Integrated Watershed Development 45 Programme (IWDP) in Bihar, supported by the

Planning Commission. 3.6 The Participatory Watershed Development

programme aims at consolidating isolated, successful watershed programmes under a national programme. The programme is financed by the Watershed Development Fund established in NABARD in 19992000 with an initial corpus of ` 200 crore. The Fund was augmented over the years by way of interest differential earned under RIDF and interest accrued on the unutilised portion of the Fund. As on 31 March 2012 it has a total corpus of `1,806.03 crore.

3.7

During the year, 41 watershed projects were

` 41.76 crore, respectively. Under the participatory watershed sum of development programme for Bihar component of Rashtriya Sam Vikas Yojana (RSVY), a `17.74 crore was disbursed during the year. The cumulative disbursement, as on 31 March 2012, stood at `51.83 crore. The Impact Evaluation findings of watershed projects is given in Box 3.1.

sanctioned, taking the cumulative number of such projects to 620, covering an area of 5.29 lakh ha. in 15 States, with a total commitment (loan and grant component) of `239.99 crore. Sixty one projects graduated to Full Implementation Phase (FIP), taking the number of such projects to 316. 3.8 The Prime Ministers Relief package is

3.10

NABARD will be routing its support for

implemented in 31 distressed districts of Andhra Pradesh, Karnataka, Kerala and Maharashtra for developing 15,000 ha. of watershed annually over two years in each of these districts. The cumulative area under this programme is 9.44 lakh ha., with financial commitment of `1,023 crore. As on 31 March 2012, a cumulative amount of `429.19 crore was released. 3.9 The watershed projects are entirely grant based in non-distressed districts.

enhancement of livelihood and agriculture productivity under its watershed development programme through its subsidiaries ABFL, NABFINS and ADFT. This arrangement is being pilot tested by way of a project implemented in three districts of Andhra Pradesh (Chitoor, Rangareddy and Adilabad) through ABFL. The project sanctioned under WDF, has a financial requirement of ` 6 crore, i.e., `2 crore for each district. The project will be implemented through good working MACS. Another Pilot Project for financing watershed plus activities in three watersheds of Chitoor district was sanctioned to ABFL with a loan component of ` 99 lakh which will be utilised for on-lending to Rahstriya Seva Samiti (RASS) for implementation of watershed plus activities.

based in distressed districts while the assistance is grant-cum-loan loans worth During the year, grant assistance of `201.13 crore and `5.29 crore were disbursed under these watershed projects. The cumulative disbursements under these components were ` 556.14 crore and

Box 3.1: Impact Evaluation Findings of Watershed Projects (A) Kannamangala Watershed, Chickballapur District in Karnataka watershed; cotton (38%), maize (38%) and red gram (35%) in Shivarvenkatpur; cotton+redgram (153%), maize (11%) and kharif paddy (31%) in Kakatiya watershed and cotton (34%), wheat (34%) and kharif paddy (32%) in Shettihadapnur.

Between 2002 and 2009, cropped area (Rabi) increased from 157 ha. to 443 ha to 35 ha. and (182 % increase), orchards from 88 ha. to 149 ha., wastelands reduced from 85 ha. fallow land reduced by 485 ha. There was no decline in the water table.

Among the watersheds, the real income change was highest (48%) in Shettihadapnur watershed followed by Kakatiya (40%), Lakshmipur (15%) and Shivarvenkatpur (13%).

(B) Mid Course Impact Evaluation Study of Four IGWDP watersheds in Andhra Pradesh

There was employment generation of 73,217 person days. Water storage capacity stood at 35,114 CuM. Crops which registered higher productivity levels were Cotton (32%) and vegetables (29%) in Lakshmipur

The extent of migration has reduced in all the four watersheds. The level of reduction was the highest in Kakatiya (52%) followed by Shettihadapnur (35%), Lakshmipur (35%) and Shivarvenkatpur (22%).

46

B. Village Development Programme

3.11 The Village Development Programme (VDP) envisages identification of development needs in consultation with the village community and delivering an integrated package of promotional and developmental initiatives for holistic development of the village. Under Phase-I of the Programme, 877 villages spread across 25 States were identified through 493 Project Implementing Agencies (PIA) including Non Governmental Organisations (NGO), Farmers Club and Krishi Vigyan Kendras (KVK). The programme was completed in 631 villages and is under different stages of implementation in 178 villages. Implementation of 68 VDPs were discontinued/ withdrawn due to withdrawal by PIAs, non involvement of village community, etc. The programme has been upscaled with the launch of Phase II from April 2010 which envisages coverage of 1,540 villages. Under this phase, the programme is being implemented through 457 PIAs in 1,026 villages spread across 26 States. 3.12 Outcome of the Village Development

Conduct of awareness and skill development programmes on crop specific package of practices, Integrated Nutrient Management (INM)/Integrated Pest Management (IPM), organic farming, use of certified seeds, nursery development, promotion of SRI, etc., led to considerable knowledge-building in the village community.

Promotion of allied sector livelihood activities such as Dairy, Poultry, Fisheries and Non-Farm sector activities such as cloth painting, embroidery, carpentry, promoting SHGs, petty and led business, nurturing Clubs to Kirana shops was JLGs, These achieved by conducting workshops, MEDPs and activity-based and VDCs. of

Farmers

interventions

generation

part-time

livelihood activities in the agriculture and allied sectors, formation/revival of Dairy Co-operatives and Milk Collection of rural Centres, marketing Setting outlets up and establishment

establishment of market linkages in most villages. Hundred per cent financial inclusion was brought about by the opening of No-Frills accounts, issuing to all farmers, purveying of investment credit and issuing of GCC. In all VDP villages, crop loans, investment credit for allied and non-farm sector activities and attendant financial services improved considerably. Training Programmes and workshops held under VDP led to greater convergence of Line Departments, of KVKs subject and matter scientists also RFAs. 80 to 90 per cent of women folk of the villages were empowered through various programmes. Migration of villagers became almost non-existent from the pre-development stage of 20 to 30 per cent. Agriculture specialists,

Programme (VDP) Phase I : VDP interventions in several villages have visibly impacted the lives and living standards of the village community across the country. Success stories include, Kapurtunga Village in Raigarh district, Chhattisgarh; Irlapadu Village in Nellore district, Andhra Pradesh and Kalliganur Village in Gadag district, Karnataka. The salient interventions and their impact in the villages are as follows : Comprehensive soil testing and crop-specific

package of practices, covering 100 to 150 farm fields in each village led to judicious and needbased changes use in of fertilizers, crop diversification, improved seed cropping pattern,

Community-based

organisations such as NGOs, SHGs, FCs, JLGs as

replacement, use of low cost compost/ vermicompost. This in turn resulted in reduction in cost of cultivation, varying from 10 per cent to 20 per cent. Productivity in majority of the villages for lead crops improved between 20 per cent to 40 per cent and income enhancement ranged from 30 per cent to 50 per cent.

47

Convergence of Gram Panchayats with district administration under VDP led to infrastructure development by way of development of internal roads, solar lighting, drainage channels, maintenance of farm ponds, rain water harvesting structures, construction of drinking water tanks, village school, community buildings and sanitation units.

C. Tribal Development Fund

3.13 The integrated by tribal development through has the project Tribal implemented NABARD

Development Fund (TDF)

wadi (a small

orchard) as the core component. The TDF programme, in its 7th year of implementation, has enhanced livelihood opportunities for tribal communities, covering traditional tribal livelihoods (such as bee keeping, sericulture), organic wadis and mixed wadis (perennial fruit crops + creeper vegetables + spices) (Box: 3.2). During the year, financial assistance of ` 290.63 crore ( `274.11 crore as grant and `16.52 crore as loan) was sanctioned for 98 projects benefiting 72,419 tribal families in 16 states. The cumulative sanction as on 31 March 2012 was `1,208.23 crore, covering 3,22,912 families in 415 projects across 26 States/UTs. During the year, the Fund disbursement was `162.02 crore ( `156.98 crore as grant and ` 5.04 crore as loan). The cumulative disbursement under the fund as on 31

Health camps, literacy campaigns and educational activities, sanitation and drinking water led to improvement in living standards and awareness levels of the village community.

VDP also led to integration of various NABARD programmes, like WDF, TDF, NFS- SDPs, MCIDSHGs, JLGs, MEDPs, FIPF, FTTF and FCP in the villages which ensured optimum utilisation of resources, making NABARD a household name in these villages.

Box 3.2: New model in wadi

A new Wadi model was introduced by NABARD in

Alirajpur district of Madhya Pradesh to enable farmers to earn from the very first year of project implementation. The conventional wadi model, based on cultivation of perennial fruit crops start generating income for the farmers from the fourth year onwards.

shade-crops such as turmeric grown under the manadap, generate an income of `25,000-30,000 in OctoberNovember. Thus, an income of `35,000-45,000 is obtained from 0.25 acre of land within a few months of the commencement of the wadi project.

The wadi (perennial fruit crop) planting commences in

June-August period. The wadi families also benefit from vegetable/ pulses inter-cropping, from which they are able to realise an income of `25,000- 30,000. Therefore, in the new wadi model, farmers generate an income of `50,000 60,000 in the very first year of project implementation.

The new Wadi model combines the mandap system of

vegetable cultivation along with cultivation of perennial fruit crops. The mandap system supports two types of vegetables-creeper vegetables grown along the bamboo supports and GI canopy of the mandap and crops such as turmeric and ginger that are grown in the shade of the mandap. The mandap occupies 0.25 acre in a one acre plot, while 0.75 acre is used for the wadi plantation. The mandaps are erected by March and creeper vegetables grown in summer. The creeper vegetables generate an income of `10,000-15,000 in the summer months. The

Some farmers have even realised an income of `1.5 lakhs

in the first and second years by adopting innovative approaches and improved varieties. The new wadi approach has helped farmers to achieve financial stability in a short period and has successfully checked migration to a great extent.

48

March 2012 was

` 368.85 crore (` 360.07 and grant

sanctioned under FIPF in 14 States with financial assistance of `56.53 crore as grant. Major projects sanctioned during the year cover various activities including the following:

and `8.78 crore as loan).

D. Farm Innovation and Promotion Fund

3.14 (FIPF) The Farm Innovation and Promotion Fund provides resource support to innovative

Pilot project for mobile enabled Pallavan m-Kisan Credit Card, Villupuram district, Tamil Nadu by Pallavan Grama Bank (Box 3.3)

ventures in the Farm Sector. The Fund, created from the operating profits of NABARD in 2004-05, with an initial corpus of ` 5 crore, has grown to `50.00 crore as on 31 March 2012. During 2011-12, 41 projects were

Pilot project for promotion of seed business ventures by Small farmers through seed village plus approach in Assam, Bihar, Chhattisgarh,

Box 3.3: Pilot Project on Mobile Kisan Credit Card The mobile enabled Kisan Credit Card (m-KCC), was launched as a pilot project accounts with the in Villupuram district in Tamil a RRB Nadu on 2nd October 2011. It covers farmers having KCC Pallavan Grama Bank (PGB), sponsored by the Indian Bank. The project enables farmers to transact on their loan accounts with PGB by using their mobile phones as an interface. To make this possible, the mobile phones of farmers and vendors/ BCs with the PGB provider. The transactions are performed are registered through a and with Paymate, the technical service and PIN, using an KCC. The share of benefit accrued due to reduction in transaction cost indicated that 69 per cent benefit accrued to the farmer followed by bank at 25 per cent and input dealer at 6 per cent. Reduction in transaction cost to the system as a whole, in percentage terms, was maximum for farmers (1.44 %), followed by Banks (0.41%) and input dealer (0.10%). 2. Technology enabled card would ensure greater

penetration of KCC and better financial inclusion. 3. Returns per m-KCC (`679) are more than the costs per m-KCC (`157) indicating viability and sustainability of the project. The Study reported the following benefits to stakeholders: Farmer:

combination of secured SIM card

Interactive Voice Recording (IVR)/ SMS system. Thus, the farmers can avoid visiting the branch to transact on their loan accounts. The farmers are also given the benefit of using the mobile interface for entering into cash-less transactions with agriculture input dealers. For this purpose, the agriculture input dealers have to open an account with the bank and have their mobiles registered with Paymate. The farmer can place orders over their mobiles with the input dealers and have their loan accounts debited for the amount. The project will cover 5,000 KCC account holders in 3 years. A total of 5,946 farmers have been registered with m-KCC. A quick study of the m-KCC project that : 1. The number of transactions ranged between 2-5 under mobile enabled KCC vis-a-vis single withdrawal under undertaken by the

Savings due to reduced number of trips to the bank Reduced interest burden as the farmer was drawing funds
as and when required, instead of withdrawing the entire loan in a lump sum during his visit to the bank

Reduction in price or cash discount on input purchase

Bank :

Better end use of the kind component of credit Savings due to fewer transactions in cash New merchant business
Input dealers :

Indian Institute of Banking & Finance (IIBF), Mumbai reveals

Instant payment Increase in business Less credit risk

49

Odisha, Rajasthan.

Jharkhand,

Madhya

Pradesh

and

Sustainable

Water

Management

through

integrated performance management of pumping systems in Pune district of Maharashtra.

Lac Rearing on Palash Trees in Korba district, Chhattisgarh.

Augmenting sea weed production in Chilka, Puri district, Odisha.

Project on Permaculture, Karur district, Tamil Nadu.

for betelvine plantations, Theni

Bio-efficacy

studies

on

Nemato

Gro

in

Introduction of Adoptable, Low cost innovative technology district, Tamil Nadu.

Tiruchirapalli district, Tamil Nadu.

Dissemination Tamil Nadu.

of

Veterinary

herbal

healing

techniques for livestock in Sivaganga district of

Participatory Research and implementation of technology on protected cultivation of Capsicum and Paprika, Thiruvarur district, Tamil Nadu.

Production,

procurement,

distribution

and

processing of organic milk in Solan district of

Standardisation Farming

of

Fisheries in

based

Integrated and

Himachal Pradesh.

Technology

Pittoragarh

Champawat, Uttarakhand.

Popularising T & D

Cross Breed of Pigs in

Ramgarh district of Jharkhand.

Pilot project for Augmenting Farm Productivity in Balasore district in Odisha.

Development of Lac Production System using High Density Ber Plantations in Ranchi district of Jharkhand.

Innovations in Summer Groundnut production, Kannauj district, Uttar Pradesh.

Farmers in

Training/Awareness Madhya

Programmes Pradesh,

on

E. Farmers Technology Transfer Fund

3.16 The Farmers Technology Transfer Fund (FTTF) was set up in 2008 with a corpus of ` 25 crore sourced from the operating profits of NABARD for facilitating farmers for adoption of appropriate

Commodity Exchange at Gramin Suvidha Kendra Maharashtra, Gujarat, Karnataka, Rajasthan and Uttar Pradesh. 3.15 Cumulatively, 164 projects have been

sanctioned as on financial assistance

31 March 2012, with financial Of this, 72 projects with `3.69 crore have been of

technologies. The Fund has been augmented to `100 crore from 1 April 2010. During the year, 395 proposals were sanctioned under FTTF in 29 States with financial assistance of `20.59 crore as grant. The disbursement during the year was `44.59 crore. Some of the major proposals sanctioned are as follows: Special Relief package for arecanut/ vanilla

support of `68.45 crore.

completed. Some of the major completed projects are:

Sustainable upscaling of weather based districts, Gujarat.

crop

insurance in Ahmedabad, Anand and Patan farmers in Uttara Kannada district of Karnataka.

Seed Kerala.

purification,

multiplication

and

area Sustainable Sugarcane Initiative (SSI) in 10 districts of Tamil Nadu.

expansion of Navara rice in Palakkad district of

50

Development producer

of

institutions of

for

promoting in

(24.83%), Southern (18.48%,) Western (16.52%) and Northern (12.43%) regions, while NER accounted for (2.75%). As FCs coordinate with banks for ensuring credit flow and forging better bank-borrower relationship, the RBI has permitted banks to engage FCs as Business Facilitators (BF). As on date, 279 FCs are functioning as Business Facilitators/Business Correspondents. Farmers Clubs have also been acting as Self Help Promoting Institutions (SHPI) and 761 FCs have promoted 17,321 Self Help Group (SHG) of which 9,642 SHGs have been credit linked. FCs have also promoted and credit linked 268 Joint Liability Group (JLG). Farmers Clubs are provided with information on weather, market prices, crop advisory services through SMS on mobile phones and 36,654 connections have been provided to farmers / Farmers Clubs as on 31 March 2012, as part of an ICT initiative. Five Farmers Training and Rural Development Centre (FTRDC) have been provided grant assistance aggregating to ` 57.97 lakh under FTTF as on 31 March 2012. 3.18 A NABARD initiated pilot project for

companies

farmer

produces

Andhra Pradesh. Agriculture Knowledge Management System in Goalpara district of Assam. Seed village programme in various States. Support to Farmers Club for online marketing of their produce in Goa. IKSL-NABARD Mobile Phone Centric Initiative for Empowerment of Farmers in 9 districts of Gujarat. Integrated Fish Farming in Ranchi district, Zero tillage in Wheat cultivation in Godda district of Jharkhand. Zero Budget Natural Farming in Alappuzha district of Kerala. Commercial Floriculture in Champawat district of Uttarakhand. Developing Agricultural Entrepreneurs in

development of specialised cadres of farmers from amongst the members of Farmers Clubs, in the areas of Technology Transfer, Credit Counselling and Market Advocacy is underway. As on 31 March 2012, 31 projects have been sanctioned with a grant assistance of ` 62.65 lakh in 15 States viz., Arunachal Pradesh, Kerala, Bihar, Haryana, Jharkhand, Karnataka, Punjab, Maharashtra, Meghalaya, Odisha,

Vegetable Seed production in New Delhi.

F. Farmers Club Programme

3.17 Farmers Clubs are grassroots level informal forums of farmers. These Clubs facilitate farmers in accessing credit, extension services, technology and markets. NABARD sees Farmers Clubs as change agents at the grassroots level. The target of forming one lakh Farmers Club (FC) by the end of XI plan period was achived with the formation of 25,243 new Farmers Clubs, taking the total number of clubs to 1,01,951 as on 31 March 2012. Agency-wise, NGOs promoted maximum number of clubs (15,870), followed by co-operative banks (4,359), CBs (2,104), RRBs (2,103) and SAUs/KVKs/other agencies (807) during the year 2011-12. The region-wise distribution of clubs indicated that the Eastern region had the highest share (24.99%), followed by the Central

Sikkim, Tamil Nadu, Uttar Pradesh, Uttarakhand and West Bengal. So far 443 farmers have been trained as Master Farmers. They have imparted training to 5,109 farmers through 593 training programmes. As on date, 50 Federations of Farmers Clubs are operating in 14 States while 8,232 FCs in 3 States were registered as legal entities. NABARD has entered into an MoU with the Mahatma Phule Krishi Vidyapeeth, (MPKV), Rahuri in Maharashtra, for preparation of CDs/VCDs/ Brochures/Pamphlets on agriculture and allied activities for use by farmers, formation of Farmers Scientists Forum arranging training and exposure visits for

51

adoption of technology, implementing the Seed Village concept together for with the State in Department seeds, of Agriculture self-sufficiency thereby

Gram Swarozgar Yojana (SGSY) by GoI in 2006-07 for implementation in Sultanpur and Raebareli districts of Uttar Pradesh. The project aims at covering 8,000 Below Poverty Line (BPL) families under Multi-activity Approach for Poverty Alleviation (MAAPA) and 15,000 financially very needy youth under Demand Driven Skill Development (DDSD) through Livelihood Advancement Business School (LABS) in the two districts. The cost of the project is `14.97 crore for Sultanpur and ` 14.90 crore for Raebareli. NABARD is

ensuring quality of seeds and effecting cost saving of seeds, promoting NABARDs Farmers Clubs through KVKs and other activities leading to agriculture and rural development.

G. Capacity Building for Adoption of Technology

3.19 The Scheme for Capacity Building for Adoption of Technology (CAT) uses training and exposure visits as a means of sensitising farmers on adoption of new/ innovative methods of farming. During the year, 339 exposure visits of 9,197 farmers were arranged in collaboration with select research institutes, KVKs and SAUs. The areas covered were precision farming, hi-tech agriculture, tissue culture banana, fodder development, organic farming, drum seeding, sustainable agriculture practices, vegetable cattle seed management, multiplication, etc. pisciculture,

the

project

holder

while

BAIF

and

Dr.

Reddy

Foundation are the implementing agencies for the two components. The project period of both the projects is over. However, in order to take the activities already initiated to a logical conclusion, the agencys request for extension of the project implementation period upto March 2013 has been recommended to the Government. During 2011-12, `0.51 crore and `1.72 crore were released to Sultanpur and Raebareli districts, respectively, taking the cumulative disbursement to ` 9.49 crore and `9.44 crore.

I. Externally Aided Projects

3.23 NABARD received `96.93 crore and disbursed an amount of ` 130.82 crore as grant/loan assistance during the year under the KfW supported externally aided projects. Further, an amount of `3.59 crore was disbursed as grant assistance as against ` 1.77 crore received from GIZ under UPNRM and RFI Programme (Table 3.1).

H. Government Projects
3.20 NABARD continued to implement/coordinate the following area specific projects of the Government of India (GoI).

i. Cattle Development Projects (CDP)

3.22 under NABARD is the co-coordinating agency and CDP, project supervision and monitoring. facilitator for channelising and utilisation of funds Against a total financial outlay of `27.22 crore, GoI released `25.39 crore; with utilisation at `25.37 crore. While 100 Cattle Development Centres have been established in each State, 16 District Dairy Farmers Associations have been formed in Uttar Pradesh and 13 in Bihar.

a. Adivasi Development Programme in Gujarat and Maharashtra

3.24 The KfW-NABARD-V-Adivasi Development Programme in Gujarat is implemented in Valsad and Dangs districts through BAIF since 1994-95, with an outlay of `67.25 crore. The focus of the programme is wadi, (a small orchard of mango and cashew nut), with components of soil conservation, water resources development, women/landless family development and health. The programme has covered 13,663 families

ii. Special Project on Livelihood Based Development

3.22 The Special Project on Livelihood Based Development was sanctioned under Swarnajayanti

from 162 villages, as against

a target of 10,000

families. A total area of 12,732.5 acre was brought

52

Table 3.1: Externally Aided on-going Projects (As on 31 March 2012) (` Lakh) Sl. Name of the Project No. Effective from Closing date External assistance (million) Disbursements made by NABARD During 2011-12 Cumm. Upto 31.03.12 8980.15 Amount received by NABARD During 2011-12 Cumm. upto 31.03.12 8994.57

1. KfW-NABARD i. V-Adivasi Development Programme in Gujarat* ii. IX-Adivasi Development Programme in Maharashtra

23 Dec 1994

31 Dec 2011

13.29 Grant) (+ 1.5 Suppl. 14.32

584.92

523.63

2 June 2000

31 Dec 2011

352.00

7928.87

441.18

8037.03

iii. Indo-German Watershed Development Programme in Andhra Pradesh iv. Indo-German Watershed Development Programme in Maharashtra (Phase III) v. Indo-German Watershed Development Programme in Gujarat

15 July 2002

31 Dec 2013

8.69

1373.25

3964.27

929.48

3363.77

27 Aug 2005

31 Dec 2012

19.94

2611.64

11295.50

2024.05

10519.61

17 Feb 2006

31 Dec 2015

9.20

645.00

1461.87

573.79

1363.70

vi. Indo-German Watershed Development Programme in Rajasthan vii. Adivasi Development Programme in Gujarat (Phase II)* viii. KfW-Sewa Bank Project

7 Dec 2006

31 Dec 2016

11.00

620.53

1493.23

546.84

1188.96

28 March 2006 28 June 2002

31 Dec 2014 31 Dec 2013

7.00 4.09

combined figures given at item (i) above 291.88 1243.01 294.83 1255.57

2. KfW-Umbrella Programme for Natural Resources Management (UPNRM) i. ii. FC Loan FC Grant 16 Sept 2009 16 Sept 2009 16 Sept 2009 30 Dec 2014 30 Dec 2014 FC Loan : 15.00 6275.51 16.09 @@ 311.57 12473.45 32.21 669.42 4099.26 (-)64.01 @ 323.90 9510.50 33.11 697.31

iii. Grant for Accompanying Measures

FC Grant : 1.4 31 Dec 2014 FC Grant for Accompanying Measures : 3.00 8.5 12.5 (of which 0.1 is FC component)

3. Technical Component (TC)xx.Assistance from GIZ i ii GIZ UPNRM TC GIZ-RFIP 26 Jul 2010 1 Jan 2009 31 Dec 2014 31 Dec 2013 62.51 296.89 116.57 463.34 51.40 125.20 143.93 303.78

FC - Financial Cooperation SEWA - Self Employed Womens Association @: An amount of `66.91 lakh was received from KfW during 2011-12, an amount of `130.92 lakh pertaining to service charge of FC loan claimed inadvertently from KfW during 2009-10, 2010-11 and 2011-12 and booked under FC grant, was adjusted to Accompanying Measures (as advised by KfW). Hence the balance is shown as negative. The cumulative receipt of FC grant also reflects this transaction. @@: Includes only the disbursement made under FC grant and the service charges thereon. The service charges for FC loans included during the previous years have been removed from the cumulative FC disbursement figures.

53

under wadi, against the target of 10,000 acre. Phase I of the programme stands closed on 31 March 2011. Phase II (2006-2014) is under implementation, for which, KfW has sanctioned a grant assistance of 7 million (approx. ` 38.15 crore), covering 4,700 families in these districts. Under this Phase, as on 31 March 2012, 5,922 families have been identified, 5789.5 acre of wadi established and 253 wadi tukadis (group of 8-10 wadi holders) formed. The Adivasi Development Programme in Maharashtra was implemented in Nashik and Thane Districts since 2000 with KfW assistance of 14.32 million ( ` 82.22 crore). 13,848 families have been covered by the project as against a target of 13,000 families and wadi area coverage reached 12,293.5 acres as against a target of 10,000 acres. The programme was closed on 31st December, 2011.

Gujarat and Rajasthan. KfW, Germany has committed a grant assistance of euro 8.69 million (about `48.66 crore) under IGWDP Medak and in Andhra Warangal). Pradesh Thirty for eight rehabilitation of watersheds in four districts (Adilabad, Karimnagar, projects covering an area of 4,16,436 ha. are being implemented under this programme. Of these, 36 projects of euro have 2 been million completed (about `11 and two were terminated. KfW has approved an additional amount crore) towards Complementary Measures Programme for capacity building of stakeholders. RODECO, an international consulting agency, was associated with the programme till December 2011 to support the capacity building issues of projects of IGWDP-AP. During the year, grant assistance of `13.73 crore was disbursed taking the cumulative release to `39.64 crore. 3.27 The IGWDP in Gujarat envisages

b. IGWDP-Maharashtra, Andhra Pradesh, Gujarat and Rajasthan

3.25 The Indo-German Watershed Development (IGWDP), introduced is in an Maharashtra integrated Watershed Programme and

rehabilitation of watersheds in four districts (Dahod, Panchmahal, Sabarkantha and Vadodara) with a commitment of Euro 9.2 million (approx. `51.52 crore). Thirty three projects covering an area of 37,884 ha. are being implemented under this programme. Of these, 26 projects are in FIP, one project in Feasibilty Study Report (FSR) stage and 6 projects are in Capacity Building Phase (CBP) stage. A Programme Management Unit (PMU) has been set up at Dahod to oversee the implementation from close quarters with the help of three consultants. SHG federations have been constituted in two watersheds and provided support for on-lending to women SHGs formed in the project villages. During the year, grant assistance of `6.21 crore was disbursed taking the cumulative release to `14.93 crore. 3.28 KfW, Germany had committed grant assistance

under the bi-lateral aid agreement between the Indian German Governments, by programme implemented Village

Committee (VWC) in association with NGOs for regeneration of natural resources and Phase I (19902000) and Phase II (2001-2007) of the programme were successfully completed, covering 95 watersheds on 1.02 lakh ha. At present, the Phase III (20052012) of the programme is under implementation, which was started in January 2005. Under Phase III (2005-12), 114 watershed projects have been sanctioned since 2005, covering an area of 11,07,916 ha. in 18 districts of Maharashtra. Of these, 10 projects have been completed, 4 terminated and 100 projects are in Full Implementation Phase (FIP) stage. During the year, grant assistance of `26.12 crore was disbursed, taking the cumulative disbursement to `112.96 crore. 3.26 In addition to Maharashtra, the IGWDP has

of euro 11 million (about `61.60 crore) under the IGWDP for watershed development in five districts of Rajasthan (Banswara, Chittorgarh, Dungarpur, Pratapgarh and Udaipur). Thirty Five projects covering an area of 35,745 ha. are being implemented under this programme, of which 20 projects are in FIP,

been extended to three States; viz., Andhra Pradesh,

54

9 projects in FSR stage, 3 projects in CBP stage and 3 projects were terminated. A Programme Management Unit (PMU) has been set up at Udaipur to oversee the implementation from close quarters with the help of four consultants. During the year, grant assistance of `6.20 crore was disbursed taking the cumulative release to `14.93 crore.

December 2009 and is expected to be completed by December 2013. The cumulative amount disbursed under this project to SEWA Bank upto 31 March 2012 stood at `1,255.57 lakh.

d. Umbrella Programme on Natural Resource Management

3.30 The Umbrella Programme on Natural Resource Management (UPNRM) is a loan-cum-grant based Indo-German programme being implemented since 2007-08 by NABARD in collaboration with KfW and GIZ. It aims to boost rural livelihoods by supporting community-managed sustainable natural resource management projects. It is a shift from (i) project- based to programme-based funding and (ii) grant-based to loan-based funding. The total fund envisaged under the programme is ( and 19.40 million from KfW, 30.90 million 8.50 million from GIZ

c. KfW-NABARD - SEWA Bank Capitalization of Rural Financial Intermediaries

3.29 The objective of KfW-NABARD-SEWA Bank Capitalization of Rural Financial Intermediaries is to improve the access of the rural and urban poor women to micro credit in Ahmedabad and Gandhinagar Districts of Gujarat State by establishing a rural department in SEWA Bank, opening Extension Counters (ECs) and enabling outreach of credit to rural and urban clientele. While SEWA Bank is the Project Executing Agency, NABARD serves as the Financial Channelising Agency. The Board of Management of the project consist of representative of NABARD-Head Office, implementing RO of NABARD and Managing Director-SEWA Bank. The project intends to transfer the lending operations of Rural District Associations (RDA), which presently function like federated entities in two districts. The project commenced its operations in July 2007. implementation phase of the project The full began in

3.00 million from NABARD). The progress

under UPNRM is given in the Table 3.2. 3.31 and An amount of 6.181 million as Financial 0.101 million as FC grant

Co-operation (FC) loan,

0.496 million as Accompanying Measures (AM)

were received from KfW and `0.514 crore from GIZ under Technical Component (TC) during the year. The cumulative FC Loan, FC grant and AM received from KfW were 15.00 million, 0.258 million and 1.103 million, respectively. A success story of UPNRM proposal is detailed in the Box 3.4.

Table 3.2: Progress under UPNRM (As on 31 March 2012) ` crore No. of Projects Amount During the year During the year Cumulative 40 104 Loan Grant Total 53.88 3.32 57.28 Sanctioned Cumulative Loan Grant Total 199.92 13.03 212.95 Amount Disbursed During the year Loan Grant Total 62.86 3.17 66.03 Cumulative Loan Grant Total 124.83 7.06 131.89

Implementing agency: NGO, MFI, Producers Companies, Private Limited Companies and Co-operatives16 States covered under UPNRM (Andhra Pradesh, Bihar, Gujarat, Karnataka, Maharashtra, Odisha, Tamil Nadu, Kerala, West Bengal, Himachal Pradesh, Madhya Pradesh, Uttarakhand, Jharkhand, Uttar Pradesh, Arunachal Pradesh and Rajasthan) and one UT (A & N Islands)

55

Box 3.4: UPNRM Projects A success story of Kamadhenu project in Chittoor district To give a fillip to the milk procurement and marketing activities at Chittoor, the District Rural Development Agency (DRDA) in association with two private dairies BMCUs were manned by established Bulk Milk Chilling Units (BMCUs) in 82 places. Four of the two Mandal Mahila Samakhya (MMS), Mandal level SHG Federations (2 each) that collected milk from women dairy farmers at the grass roots level. The Dairies paid the MMS chilling charges of `0.65 per litre of milk. On account of low milk availability from the members of MMS, only around 1/3rd of the installed capacity of the BMCUs were utilised. DDM, NABARD in consultation with the DRDA (Chittoor) prepared UPNRM projects for these two MMS in the district. The interventions covered in the UPNRM project included purchase of quality animals by the women members along with requisite investments for raising green fodder; grant support to the MMS for providing veterinary services, azolla cultivation, motorised chaff cutters in villages, capacity building for farmers and organising animal health camps in their area of operation. The financial assistance sanctioned was `104.14 lakh (`92.46 lakh as loan and `11.68 lakh as AM) to both the projects. The impact was substantial and milk procurement increased from 233 to 500 per cent in the 4 BMCUs. Three of the 4 BMCUs which were to be closed or merged had completely turned around and are presently running in profits. In September 2011, coinciding with the centenary celebrations of the district, the Honble Chief Minister of Andhra Pradesh directed the District administration to increase milk procurement by the MMS to around 5 lakh litres per day from the existing 2.2 lakh litres. Accordingly, the DRDA (Chittoor) in consultation with NABARD, prepared a detailed project report (based on the successful UPNRM project model) covering 65 BMCUs and presented the same to the bankers forum. The bankers welcomed these proposals and process is on in 111 branches of 11 banks in the district. The project was officially launched on 21 September 2011. As on 31 March 2012, around 13,500 SB accounts were opened, loan documentation completed for more than 12,800 cases and loan sanctioned for 11,723 units with credit flow estimated at `73.8 crore. Thus, a small initiative under UPNRM was accepted by the banking community as a profitable portfolio, and mainstreamed, benefitting a larger rural population.

J. Policy and Promotional Interventions-Financing Agricultural Investments in the Eastern Region Concessional Refinance Support
3.32 With a view to facilitating institutional credit flow for key investments that have a direct bearing on enhancing crop productivity in the Eastern Region, NABARD introduced a concessional refinance support scheme for this region. The scheme envisages extending refinance support at a concessional rate of 7.5 per cent per annum (p.a) and covers seven states in the Eastern Region, viz., Assam, Bihar, Chhattisgarh, Jharkhand, Odisha, West Bengal & Uttar Pradesh (28 districts). The key activities qualifying for concessional refinance support under the scheme, include (a) Water Resources Development (b) Land

Development (c) Farm Equipment and (d) Seed Production units. 3.33 The total lending target of the banks for the

financial year 2011-12 was `3,912 crore. With a view to ensuring adequate credit flow for the selected activities, the minimum lending level against the targets was prescribed for banks to become eligible for the concessional refinance. Minimum level for the year 2011-12, was fixed at 50 per cent of the target allocated for Commercial Banks and 25 per cent for RRBs and Co-operative Banks. Under this scheme, NABARD also extended support to the banks for related interventions like forming and linking JLGs, organising sensitisation meets for the branch officials of implementing banks, training and capacity building needs of entrepreneurs identified under the scheme.

56

K. New Initiatives
a. Pilot Project for Augmenting Farm Productivity in Select Districts
3.34 This project has been designed by NABARD, package for augmenting by addressing farm all at the behest of the Ministry of Finance, as a comprehensive production and productivity

ICT medium, post production facilities including marketing linkages & storage Areas of convergence along with the financial implications for a period of three years.

3.35

The Pilot Project at Balasore District in Odisha

has been sanctioned with a total financial outlay of `3,211.86 crore, including a grant component of `48.08 crore to be supported under the FIPF, for a period of three years i.e., from 2012-13 to 2014-15. The project was formally launched on 24 April 2012.

interlinked components of farming as an economic activity, viz., agricultural inputs, technology, post-harvest marketing components livelihood in management, a holistic comprise development value manner. addition The in credit, and project

interventions including

agriculture in

extension, crop management, marketing of produce, interventions animal husbandry and financial inclusion. The project aims at strengthening the support systems available to farmers in respect of major crops and activities in the identified districts by involving public and private sector organisations on a Public Private Participation (PPP) mode and dovetailing resources of various Government agencies. Accordingly, one district has been selected in each of the identified 11 states for the implementation of the captioned project, viz., Bihar (Bhojpur), Chhattisgarh (Bilaspur), Haryana (Sirsa), Jharkhand (Deoghar), Karnataka (Belgaum), Maharashtra (Yavatmal), Madhya Pradesh (Shahdol), Odisha (Balasore), Rajasthan (Bikaner), Uttar Pradesh (Azamgarh) and West Bengal (Nadia). NABARD has prepared project reports keeping in view the following important factors:

b. Pilot Project on Augmenting Productivity of Lead Crops

3.36 This was launched by NABARD in 2009-10 with the objective of increasing the yield of lead crops by adopting sustainable agricultural practices, effecting reduction in cost of production and facilitating value addition, so as to improve the standard of living of the rural farming community. The project is being implemented using the cluster approach. Each cluster comprises five villages and 4-6 such clusters per state have been selected for implementation of the project. As on 31 March 2012, 50 projects covering 250 villages were launched with a financial commitment of `21.58 crore and disbursement of ` 6.09 crore has been achieved.

c. System of Rice Intensification

3.37 System of Rice Intensification (SRI) is a combination of simple agronomic and management practices that improves productivity. A project of 150 Model Units covering 28,800 ha. and 84,000 farmers, was launched in June 2010 in 13 identified States for implementation over a period of three years, with total financial outlay of `25.68 crore. Cumulatively, 175 units have been sanctioned with a Total Financial Outlay of `25.19 crore and an amount of ` 15.60 crore have been disbursed. The project is implemented in an area of 22,503 ha. covering 97,000 farmer in 2,380 villages across 12 States.

Lead crops covering 80 per cent or more cropped area and one or two major allied activities

The existing backward and forward linkages Problem constraints in increasing the production and productivity

Availability of partners and their roles Models of extension that would work for the district

57

Rural Non-Farm Sector

A. NABARD-SDC Rural Innovation Fund
3.38 Fund NABARD constituted the Rural Innovation (RIF) with a corpus of `140 crore in Cumulative grant assistance of ` 16.90 crore has been sanctioned for 383 rural haats across 23 States till now.

collaboration with the Swiss Agency for Development and Cooperation (SDC) Farm, Non-Farm and in 2005-06. The Fund experiments in sectors with supports innovative, risk mitigating micro-Finance

C. Rural Entrepreneurship Development Programmes and Skill Development Programmes

3.40 For generating self-employment and wage employment opportunities in rural areas, NABARD has been supporting Rural Entrepreneurship Development Programmes (REDP) and Skill Development Programmes (SDP) since the early 1990s. As on 31 March 2012, 9,852 REDPs/ SDPs with an amount of ` 13.09 crore were sanctioned. Cumulatively, 27,711 REDPs/SDPs with grant support of `96.45 crore have been supported which are estimated to have covered around 6.93 lakh unemployed rural youth. includes RUDSETI and/or support type extended to RUDSETI (Rural the This (Rural Self year,

potential to promote livelihood opportunities in rural areas. During the year, 108 new innovative projects were sanctioned support of `7.94 crore, taking the cumulative number to 483. With these projects, the cumulative commitment made until 31 March 2012 has reached `57.22 crore (up from `49.28 crore as on 31.3.2011). An amount of `10.24 crore has been disbursed during the year for 483 projects taking the cumulative disbursements to `43.23 crore. Of this 150 projects have been completed and 67 projects are in the advance stages of implementation.

Development & Self Employment Training Institute)/ institutions/R-SETIs expenditure. During Employment Training Institutes) for incurring capital recurring NABARD had started a vocational training on a pilot basis with collaboration of PanIIT Alumni Reach for India (PARFI), an organisation created by IIT alumni (Box 3.5).

B. Strengthening of Rural Haats

3.39 As rural haats (local markets) play an important role in rural economy, NABARD launched the Scheme for Strengthening of Rural Haats in 1999. Under the scheme, grant support of ` 3.71 crore was sanctioned to 76 rural haats during 2011-12.

Box 3.5: Vocational training through micro-loan: PanIIT-NABARD model

In a first-of-its-kind-intervention, NABARD and PanIIT

Alumni Reach For India (PARFI), an organisation created by IIT alumni, have come together to pilot a loan-based approach to vocational training of blue-collar entry level workers like masons, welders, cooks, technicians and drivers. NABARD provides Revolving fund-assistance to PARFI, which, further on-lends to NGOs who select poor rural youth and finance them with a vocational education loan at 8.5 per cent p.a. The loan for the training is

guaranteed by the mother of the trainee. The mother needs to be a member of SHG/JLG so that social and peer pressure would ensure timely repayment of loan.

NABARD has sanctioned `4.76 crore towards training of

8,000 youth over 3 years. As of January 2012, over 800 students have been trained through this model with a 100 per cent placement rate.

The initial experience shows that this model can be upscaled.

58

D. Cluster Development
3.41 NABARD has been implementing the Cluster Programme under the National Development

E. Marketing/Other initiatives
3.43 NABARD recognises the importance of developing marketing opportunities for the highly unorganised rural producers, especially artisans. In order to directly linking rural producers with markets, NABARD supports their participation in Melas/ Exhibitions. During 2011-12, 537 marketing events/ exhibitions/melas across the country were supported with grant assistance of ` 2.84 crore. NABARD continued to co-sponsor the Saras Mahalaxmi Fair at Mumbai, wherein 130 artisans and 61 agencies from 28 States participated in a 15-day long exhibition. This year, for the first time, payment through credit card was permitted to enhance the quantum of sales.

Programme on Rural Industrialisation (NPRI) from 1999-2000. As on 31 March 2012, 120 clusters across 110 districts in 22 States have been approved. These include 57 handloom clusters, 43 handicraft clusters, 7 Rural Tourism, 7 food processing clusters, 2 each of Leather, stages of Blacksmiths and 2 NPRI clusters, and one implementation. During 2011-12, 07 each of Bee Keeping. All the clusters are in different participatory clusters were approved. As many as 23 clusters are being supported in the North Eastern region alone and large numbers of clusters are being developed in backward States like Chhattisgarh, Jharkhand, Odisha and Madhya Pradesh. For smooth implementation and monitoring of the initiative, 5 capacity building programmes/ workshops were organised for the participants from banks, government departments, NGOs, etc., during 2011-12. 3.42 As a part of the programme, grant-cum-loan

F. Swarojgar Credit Card Scheme

3.44 Swarojgar Credit Card (SCC) Scheme was introduced in September 2003 for providing adequate and timely credit to small artisans, handloom weavers, other micro-entrepreneurs, SHGs, etc., from the banking system in a flexible, hassle free and cost effective manner. During the year, facilitating working hassle-free capital credit for of 94,479 SCCs investment small/ and micro having credit limit of `495.81 crore were issued for requirements

including venture like assistance was sanctioned during the year amounting to `120.35 lakh. A sum of `331.95 lakh was disbursed during the year towards implementation programme. of the Cluster Development

entrepreneurs. `5,445.32 crore.

The cumulative number of SCCs

issued was 13.06 lakh involving credit limit of

Financial Inclusion
3.45 Two dedicated funds, the Financial Inclusion investments in meeting the cost of technology Fund (FIF) and the Financial Inclusion Technology Fund (FITF) were set up in NABARD during 2007-08, in keeping with the recommendations of the Rangarajan Committee on Financial Inclusion for providing timely and adequate credit to vulnerable groups at an affordable cost. The Financial Inclusion Fund (FIF) supports developmental and promotional interventions leading to financial inclusion and Financial Inclusion Technology Fund (FITF) supports adoption aimed at promoting financial inclusion. The corpus of each fund is `500 crore, to be contributed by the GoI, RBI and NABARD in the ratio of 40:40:20 in a phased manner over five years. As on 31 March 2012, the contribution to these Funds stood at `79.32 crore (FIF) and ` 130.49 crore (FITF). The Funds are managed by NABARD as per the directions given by the Advisory Board for FIF and FITF. The Advisory Board met thrice during the year.

59

A. Policy initiatives
3.46 I. The following policy initiatives were taken Financial Inclusion by RRBs through BC model using card based ICT Solution ASP Model for Financial Inclusion (ICT) Support from FITF - It has been decided to support the RRBs implementing ICT through Application Service Provider (ASP) Model. II. Support for CBS to weak RRBs from FITF It has been decided to support the identified weak RRBs for CBS implementation through ASP Model III. Holding of Financial incurred by Literacy RRBs Awareness for holding during the year:

iii. Establishment of Financial Literacy and Credit Counseling Centre (FLCC)

by Lead Banks 3.49 Under the scheme, support is being provided

from FIF for establishment of FLCCs by Lead Banks in 256 excluded districts and 10 disturbed districts. As on 31 March 2012, `10.71 crore has been sanctioned to Lead Banks in 128 districts of 12 States viz., Assam, Bihar, Manipur, Meghalaya, Rajasthan, West Bengal, Uttar FLCCs. Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Gujarat for setting up

iv. Financial Literacy through Audio Visual medium Doordarshan

3.50 Grant assistance of `3.28 crore was provided from FIF to Doordarshan for producing and directing a half an hour financial literacy programme in Hindi, to be telecast in six centres (DD Kendras of Lucknow, Bhopal, Patna, Jaipur, Raipur and Ranchi). The programme has already been telecasted by the Bhopal, Ranchi, Jaipur and Patna Kendras, whereas the work is under progress in Lucknow and Raipur Kendras.

Camps by RRBs - NABARD will reimburse expenditure financial literacy awareness camps in each of the 2000+ villages allotted to them from the Financial Inclusion Fund (FIF) at the applicable rate (100% or 80% of actual cost depending upon the State) subject to a maximum of `10,000 per programme.

B. Major Projects
i.
3.47

Support for CBS for weak RRBs

Under the scheme of support to 28 identified

v.
3.51

Micro Pension Model Support to Invest India Micro Pension Services

NABARD extended support to the extent of to Invest India Micro

weak RRBs for CBS installation, proposals were received from 27 RRBs as on 31 March 2012, against which assistance was sanctioned to 26 RRBs for `216.52 crore with disbursements amounting to `139.54 crore.

` 2.25 crore from the FIF

Pension Services to pilot test a micro pension model among SHG members in 8 districts of 4 States, viz., Odisha, Uttar Pradesh, Bihar and Tamil Nadu. The project aims at covering 40,000 rural poor under the old-age pension scheme. So far, `1.74 crore have been released covering 16,395 persons.

ii.
3.48

Application of ICT Solution in BC/BF models by RRBs

The projects involve application of ICT based

solutions by RRBs in their BC model so as to enable them to cover all the villages in their jurisdiction. As on 31 March 2012, grant assistance of `107.07 crore has been sanctioned to 53 RRBs under FITF as against which disbursements were of the order of `40.52 crore.

vi. Engaging Farmers Club as BF by RRBs

3.52 Financial of support RRBs in is being extended having by NABARD for Farmers Clubs acting as Business Facilitators villages 2000+ population in their command areas. As on 31 March

60

2012, `2.08 crore sanctioned to 22 RRBs in 12 States from FIF.

especially SC and ST, minorities and the displaced. `46.97 lakh had been utilised during 2011-12 for activities conducted by NABARD in the seven States of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.

vii. Engaging SHGs as BC/BF by RRBs

3.53 Support is available from the FIF to RRBs for engaging Authorised functionaries of well run SHGs linked to Banks to act as BC / BF, with the purpose of extending financial services in semi-urban and rural areas in their command area. As on 31 March 2012, 8 RRBs were sanctioned `43.81 lakh for training of authorised functionaries of well-run SHGs in 6 States.

E. GIZ-NABARD Rural Financial Institutions Programme (RFIP) Component IV

3.57 NABARD a and Deutsche on Gesellschaft (GIZ) Needs fr and Internationale conducted Zusammenarbeit study together

viii. Geographical Information System for financial Inclusion

3.54 NABARD has sanctioned and released `21.71 lakh to National Informatics Centre for development of web-based GIS Application for assessing the reach and extent of banking in India and also development of a web- based MIS for capturing the banking facility.

Remittance

Opportunities in India. The study address the issues of improving financial services for domestic migrants by improving delivery channels, especially through Business Correspondents upgrading payment systems for small value money transfer and strengthening financial institutions for providing adequate remittance facilities as well as other financial services through enhanced financial education. The study covered four specific and remittance corridors: and Gujarat-Southern remittance that in

C. Fund Utilisation
3.55 As on 31 March 2012, the cumulative sanctions under FIF and FITF were ` 114.62 crore and `343.48 crore respectively and disbursements `36.46 crore and `184.16 crore, respectively. The year-wise achievements are given in Table 3.3.

Rajasthan, Eastern UP-Mumbai, Odisha-Hyderabad/AP intra-state The migration study Maharashtra. concluded sending

remittances could be faster, easier and more secure, when the significant problems of sending money through the formal banking system over long distances - which migrants and the recipients in India are currently facing is removed. The component IV of the RFIP aims at involving more number of service providers for remittances. The identification of area/ institution for launching the pilot project is in progress.

D. NABARD-UNDP Collaboration for Financial Inclusion

3.56 UNDP-NABARD Financial Inclusion Fund was established in NABARD to provide better access to financial products and services for reducing risks and enhancing livelihood opportunities for the poor,

Table 3.3: The progress under FIF & FTTF (As on 31 March 2012) (` in crore) Name of the Fund 2008-09 S FIF FITF Total 1.30 4.22 5.52 D 0.36 0.09 0.45 2009-10 S 18.36 17.08 35.44 D 7.99 1.67 9.66 2010-11 S 19.00 101.11 120.11 D 9.21 54.01 63.22 2011-12 S 75.96 221.07 297.03 D 18.90 128.39 147.29 Cumulative up to March 2012 S 114.62 343.48 458.10 D 36.46 184.16 220.62

S : Sanctions, D: Disbursements

61

F. Centre of Excellence for Rural Financial Institutions

3.58 Head A meeting was held on 16th February, 2012 in Office between Shri Nandan Nilenkani,

promise to bring the much required transparency, speed and ease of operations into last mile banking. Accordingly, NABARD, has set up CERFI (Centre of Excellence for Rural Financial Institutions) with its basic responsibilities being propagation of APB and AEPS among rural financial institutions for all kinds of cashless transactions and new KCC operations. It will also document and disseminate the benefits, procedure, financial implications and time frame for adoption of AEPS by rural financial institutions. RRBs will be targeted in the first phase while CCBs with CBS platform will be covered in the second. An MOU is being signed among NABARD, UIDAI and NPCI to provide a formal outline to this collaborative effort.

Chairman, UIDAI (Unique Identification Authority of India) and Dr. Prakash Bakshi, Chairman, NABARD to discuss the ways in which these institutions can collaborate to increase the outreach of financial inclusion. It was desired therein that NABARD, as a key player in the field of financial inclusion, earmark a core team of its officers for furthering the outreach and acceptance of Aadhar Payments Bridge (APB) and AEPS (Aadhaar Enabled Payments System) which

Micro Finance
3.59 The NABARD SHG-Bank linkage programme, cost-effective and various micro-finance activities such as formation and linkage of SHGs through SHPIs, training and capacity building of stake holders, capital and soft loan assistance to MFIs, livelihood propagation, studies, documentation, etc. During 2011-12, `33.31 crore was released of which `28.68 crore was grant support for promotional activities and `4.63 crore for CS/RFA to MFIs, as against `29.95 crore and ` 17.43 crore, respectively, in the previous year. has proved to be a decentralised

the fastest growing microfinance initiative in the world. As on 31 March 2011, there were more than 74.62 lakh savings-linked Self Help Groups (SHG) and more than 47.87 lakh credit-linked SHGs covering 9.7 crore poor households under the micro-finance programme. The progress of the micro-finance programme is given in Table 3.4.

A. Micro-Finance Development and Equity Fund

3.60 The Micro-finance Development and Equity Fund (MFDEF) is being utilised for promotion of

B. Support to Partner Agencies

3.61 to NABARD continued to extend grant support RRBs, DCCBs and Individual Rural NGOs,

Table 3.4: Progress of the Micro-Finance Programme (As on 31 March 2011) (` crore) Sl. No. Particulars 2010 Number 1 2 3 Loans disbursed during the year Loans Outstanding Savings Accounts with Banks 1586822 (267403) 4851356 (1245394) 6953250 (1693910) Amt 14453.30 (2198.00) 28038.28 (6251.08) 6198.71 (1292.62) Self Help Groups 2011 Number 1196134 (240888) 4786763 (1285714) 7461946 (2022649) Amt 14547.73 (2480.37) 31221.16 (7829.38) 7016.30 (1817.12) Micro Finance Institutions (MFI)* 2010 Number 779 (88) 1659 (146) Amt 10728.49 (2665.75) 13955.74 (3808.20) 2,011 # Number 469 (2) 2315 (139) Amt 8448.96 (843.77) 13730.62 (3041.76)

Figures in parentheses indicate the share of SHG covered under SGSY*: Actual Number of MFI provided with bank loans would be lower, as several MFI availed loans from more than one bank#: Figures in parentheses indicate the assistance of SIDBI to MFI

62

Volunteers (IRV) for promoting and nurturing quality SHG. New SHPI were identified even while continuing support to the existing ones. During the year, grant assistance of `37.94 crore was sanctioned to various agencies for promoting and credit linking 94,482 groups, taking the cumulative assistance sanctioned to `184.17 crore to 6.76 lakh groups (Table 3.5). As on 31 March 2012, an amount of `55.28 crore was released resulting in formation of 4.17 lakh SHGs. The number of SHGs credit linked till March 2012 was 2.66 lakh.

for promoting, credit linking and federating of SHG in select districts of UP, in association with participating banks and implementing NGO. As on 31 March 2012, 36,128 SHG were promoted, of which 22,614 were credit formed. linked. In addition, 1,238 Cluster Level Federations and 45 Block Level Federations were

(ii) Priyadarshini Project

3.64 The Women Empowerment and Livelihood Programme of 1,08,000 being envisages poor holistic and six Programme in Mid Gangetic Plains also called Priyadarshini empowerment programme districts women in

C. Training and Capacity Building of Stakeholders

3.62 various Linkage NABARD is continuously imparting training to partners and stakeholders such as of SHG-Bank NGOs, Programme bankers,

adolescent girls through formation of 7,200 SHGs. The originally implemented including four districts in UP (Bahraich,

Raebareili, Shravasti and Sultanpur) and two districts in Bihar (Madhubani and Sitamarhi), now covers seven The districts eight consequent long to the bifurcation assisted of by Sultanpur district (UP) into Sultanpur and CSM Nagar. year Programme International Fund for Agriculture Development (IFAD) and GoI to the extent of US $ 30 million and US $ 2.73 million, respectively, has a total outlay of US $ 32.73 million. NABARD is the Lead Programme Agency for implementing the programme. 3.65 NABARD has engaged the Resource NGO for

government officials, SHG members and trainers. During 2011-12, NABARD has trained 1.77 lakh officials of various agencies and cumulatively 28.38 lakh officials have been trained. NABARD in association with GIZ has initiated the process of revising the content, coverage of training modules. Training needs of all the stakeholders are being assessed for the purpose.

D. Special Initiatives in Backward Region

(i) Rajiv Gandhi Mahila Vikas Pariyojana
3.63 NABARD continued to support the Rajiv Gandhi Mahila Vikas Pariyojana (RGMVP), a special initiative of the Rajiv Gandhi Charitable Trust (RGCT),

the purpose of capacity building of the Programme Staff and Field NGOs for the implementation of the programme at the grass root level. During the year, the Field NGOs have set up 39 Community Service Centres (12 in Bihar and 27 in Uttar Pradesh for the

Table 3.5: Grant Assistance Extended to various Partners in SHG-Bank Linkage Programme (As on 31 March 2012) (` lakh) Agency Sanctions during 2011-12 No. DCCB RRB NGO FC IRV Total 7 3 166 4 1 181 Amt. 118.50 96.75 3573.75 0.73 5.20 3794.93 No.of SHGs 4740 3810 85571 61 300 94482 Cumulative Sanctions No. 115 123 3013 811 72 4134 Amt. 857.81 542.19 16200.59 83.16 733.58 18417.33 No.of SHGs 71695 53145 499909 7689 43223 675661 Cumulative Progress Amt. released 289.19 197.10 4882.31 73.81 86.03 5528.44 SHG s formed 47515 56070 283007 17356 13105 417053 SHG s linked 31744 36852 181196 9694 6860 266346

63

purpose of social mobilisation and formation of SHGs). The Field NGOs have formed total 3,410 SHGs during 2011-12, including 1,659 SHGs in Uttar Pradesh and 1,751 SHGs in Bihar. For the purpose of capacity building of Programme Staff, the Resource NGO, SERP has conducted six Orientation Training Programmes.

Munger district of Bihar with support from NABARD is given in Box 3.6.

(ii) Micro-Enterprise Development Programme

3.67 NABARD had launched the Micro-Enterprise

Development Programme (MEDP) during 2005-06 for skill upgradation and development of sustainable livelihoods/venturing into micro-enterprises by members of matured SHG. During the year, 1,914 MEDPs were conducted for 56,292 members on various location-specific farm, non-farm and service sector activities. Cumulatively, 6,363 MEDPs had been conducted for 1,64,948 participants.

E. Scaling -up of Micro-Finance Programme: Special Initiatives

(i) Financing of Joint Liability Groups
3.66 An amount of `36.68 crore was sanctioned as

grant for promotion of 1.94 lakh JLGs across the country till 31 March 2012. During the year, banks disbursed a loan of `946.81 crore to 1,29,646 JLGs upto 31 March 2012 taking the cumulative loan disbursed to ` 2,092.10 crore for 2,70,691 JLGs. The success story of JLGs formed by sex worker in

F. Pilot Projects SHG - Post Office Linkage Programme

3.68 The project was launched in 2006 in five districts of Tamil Nadu (i) to examine the feasibility of utilising vast network of Post offices in rural areas in

Box 3.6: From Red Light to a Ray of light through JLG in Munger, Bihar The dark realities of flesh trade and the unfortunate lives of the sex workers who live an economically and socially excluded and deprived life was no different in case of Munger district of Bihar. Due to lack of awareness on alternative options and resources available, most of these sex workers find it difficult to come out of this profession. But there was a ray of hope for some of them in Munger district of Bihar when NABARD sanctioned a project to Bihar Kshetriya Gramin Bank (BKGB), Munger for promotion of JLG in eight districts including Munger. Consequently, an NGO Panaah Ashram, which was working in the field of education for the children of sex workers of Munger, got in touch with Munger branch of BKGB and two JLGs were formed among the sex workers. These groups were sanctioned `80,000/each for undertaking livelihood activities. Now, one group named as Ekta JLG 1 is engaged in tailoring activity and the other, named, Ekta JLG 2 has opened a shop for selling bangles. Now each member of the JLG is earning on an average of seasons. `2,500 `3,500 per month and also their incomes increase substantially during marriage and festive Gulabi, one of the JLG members, says that she did not believe earlier that any formal institution from the Government sector would ever come to their world and help them. But she was amazed when bank offered them loans for economic activities. Julee another JLG membersays that earlier they had to borrow from money lenders in case of emergencies but the rate of interest was very high from 76 per cent to 120 per cent per annum. Now with the bank loan available to them @11 per cent p.a. they do not have to go to such money lenders who happened to exploit them otherwise too. Geeta another member of JLG, who also teaches in the school being run for the children of Red Light area, says that the social and psychological emancipation is even greater than the economic benefits of the alternate professions. These JLG members have now started living a life of dignity and self respect. Moreover, it augurs well for their next generation too who are happily taking their baby steps towards the mainstreamed developmental process. Efforts are being made to cover more such women under the JLG in the district.

64

disbursement of credit to rural poor and (ii) to test the efficacy of Department of Posts (DoP) in providing micro finance services to the rural clients. NABARD sanctioned RFA to the tune of `300.00 lakh for onlending to SHGs on an interest sharing basis. As against the RFA released, `37.12 lakh was outstanding at DoP level as on 31 March 2012. A total of 2,189 SHGs have opened saving accounts, of which 1,259 SHGs have been credit linked by various Post Offices, with cumulative loan disbursed amounting to `3.65 crore as on 31 March 2012. The project was closed on 31 March 2012. The project is also being implemented in Meghalaya with `5.00 lakh sanctioned to Indian Post for on-lending to SHGs in East Khasi Hills district.

(ii) Centre for Micro-finance Research

3.70 The Centre for Micro-finance Research (CMR) established by NABARD in BIRD in 2008 and four sub-centres in Guwahati, Patna, Chennai & Jaipur continued to conduct research on various themes of micro-finance across the country, for bringing out policy initiatives that would improve the design and delivery of various micro-finance products. The CMR brought out two issues of its half-yearly journal The Micro-finance Review during the year. Grant assistance of `199.33 lakh was released by NABARD during the year to CMR, taking the cumulative assistance to ` 560.01 lakh. The sub-centres of CMR in Guwahati, Patna, Chennai and Jaipur undertook research on 41 prioritised themes, of which 20 research studies were completed and 14 reports published/uploaded on BIRDs website for the benefit of all stakeholders.

G. Other Developments
(i) NABARD Financial Services Ltd.
3.69 an The MFI, Karnataka NABARD Agriculture Financial Development Services Ltd., Finance Company Ltd. (KADFC) was restructured into viz., (NABFINS), during 2007, to promote the microfinance Sector. NABARD is the major stakeholder, other share holders being, Government of Karnataka, Canara Bank, Union Bank of India, Federal Bank and Dhanalakshmi Bank. The paid up Share Capital as on 31 March 2012 was `42.08 crore. crore to 6,915 SHGs (BC) through taking the During 2011-12, 67 Business cumulative NABFINS disbursed loans to the extent of `213.58 Correspondents

H. New Developments / Initiatives

a. Re-launching SHG Bank Linkage Programme: SHG-2 Background
3.71 financial Over the years, of the SHG-Bank Linkage poor Programme (BLP) has emerged as a viable model for inclusion hitherto unreached households particularly in rural areas. The Programme has brought in a lot of encouraging and positive features like increase in loan volume to SHGs, definite shift in the loan utilisation pattern of SHG members, gradual increase in income level of SHG members, sound recovery performance of SHG loans, significant reduction in the transaction costs for the banks and the borrowers, etc. However, skewed growth of SHGs in certain regions of the country had narrowed the growth process of the programme. In this background, it was decided to revisit the SHG-BLP for identifying the shortcomings and incorporate suitable changes to give the programme a renewed thrust and direction. The purpose and intent of re-launching the programme named, SHG-2, was to focus on a few issues like creating space for voluntary savings, positioning cash credit as preferred mode of lending,

disbursement to `265.54 crore, to 8,968 groups. Loans to agencies other than SHGs to the extent of `2.30 crore were disbursed during the year taking the cumulative other loans disbursed to ` 5.25 crore. During the year, rate of interest on loans to SHGs was revised upwards from 12.0 per cent to 13.5 per cent per annum on reducing balance. NABFINS follows a client friendly model, with credit disbursements made and repayment collected at the door step of the clients. During the year, it opened 17 district offices NABFINS and appointed 36 BCs taking the number of total offices to 31 and BCs to 67, respectively. the year. 65 availed refinance of ` 200 crore from NABARD during

scope for providing multiple borrowings by SHG members matching with their repaying capacity, creating avenues to meet higher credit requirements for livelihood creation, supporting SHG Federations as non-financial intermediaries, rating and introducing audit of SHGs as part of risk mitigation system, strengthening monitoring mechanisms, etc. A National Colloquium of bankers, senior Government officials, NGOs and thought leaders of micro finance was held at Mumbai on 21 February 2012 to discuss the scope and content of SHG-2. The guidelines of SHG-2 have since been issued by NABARD to the concerned stakeholders.

a banking / business facilitator, tracking, monitoring these groups and also being responsible for loan repayments. To begin with, the scheme is being implemented in 109 selected backward/LWE districts of the country. Some of the salient features of the scheme are given in Box 3.7.

c. Cash credit limit to SHGs

3.73 The GoI communicated its decision of only Cash Credit Limits to SHGs from 17 sanctioning

November 2011 so as to address the issue of delayed / limited or non-approval of repeat loans to SHG, to ensure cost effectiveness to clients and provide greater operational flexibility to SHG clients. The groups in turn, are to extend loans to their members as per the extant guidelines of RBI and NABARD. The SHGs are to ensure payments of interest on monthly basis on the cash credit availed by them. Earlier, the SHGs were being sanctioned term loans by banks depending on the quantum of savings made by the group. The tenure of such loans was upto a period of three years. However, often, the groups tended to prepay such loans leading to a situation where the groups were not sanctioned fresh loans/repeat loans. Therefore, even for their emergent needs these SHGs were depending

b. Scheme for Promotion of Women SHGs in backward districts of India And Left Wing Extremism (LWE) Affected districts of India
3.72 A scheme in association with GoI has been formulated to bring out a viable and self sustainable model for promotion and financing of Women Self Help Groups by involving an anchor NGO in each of the selected backward districts of the country. This project is an attempt at having NGO-SHPI to work not merely as an SHPI for promoting and enabling credit linkage of these groups with banks, but also serving as

Box 3.7: Salient features of Scheme for Promotion of Women SHGs in backward districts of India and Left Wing Extremism Affected districts of India i. The LDM in consultation with the DDM, NABARD and due approval of DLCC in each of the district can identify more than one NGO/support agency, with clear geographical demarcation of areas for implementation of the scheme. ii. The scheme would be implemented primarily through two nodal bank branches, having CBS facility, in each block of the identified districts. iii. The concerned bank branch will enter into a MoU with the identified NGO. iv. The identified NGOs will be eligible for grant assistance of `10,000 per SHG from WSHG Fund. v. All loans to new SHGs promoted will preferably be under the cash credit mode. vi. DDM, NABARD will arrange need based awareness and capacity development programmes for key stakeholders under the project. vii. A Service Charge of 5% per annum on monthly average loan outstanding shall be paid by the bank to the respective NGOs to meet the administrative, transaction and risk cost of the NGOs.

66

on various alternate options like MFIs, etc. The introduction of cash credit is thus aimed at smoothening the consumption & working capital needs of the SHGs during the initial years as well as to a certain extent, in subsequent years. This will offer the following benefits :

The SHGs will be encouraged to save regularly as their drawable limit will be enhanced every year based on their actual saving.

The cash credit system will lead to frequent circulation of loan amount among the members thereby satiating their frequent credit needs.

The system will provide considerable flexibility to the SHGs for meeting their emergency needs

d. Women Self Help Group (WSHG) Fund

3.74 Budget The Union Finance Minister announced in his Speech 2011-12, a Women SHGs

The SHGs will be able to reduce their cost of borrowing.

The

banker

will

be

freed

from

frequent

Development Fund with a corpus of `500 crore has been created to empower women by promoting their Self Help Groups. This Fund will also support the objectives of Aajeevika i.e. the National Rural Livelihood Mission. It will empower women SHGs to access bank credit.

documentation and dealing with high number of transactions as the loan limit will be sanctioned over a period of three to five years based on the projected savings of the group.

NABARD Consultancy Services

3.75 NABARD Consultancy Services (NABCONS)

B. Business Process Re-engineering

3.77 NABCONS has set for itself an ambitious business target of contracting assignments of ` 100 crore during the financial year 2012-13. With a view to achieve this target, NABCONS has embarked upon an exercise of re-engineering its business processes by establishing verticals for its key business activities such as Infrastructure and Engineering, Food and Agroprocessing, Monitoring & Evaluation, Agriculture and Rural Development, etc. International The Business and Administration, re-engineering process

is a wholly owned company promoted by NABARD. NABCONS operates from its offices located in all Regional Offices of NABARD towards a vision of being a trusted business advisor in the field of agriculture and rural development. NABCONS provides professional consultancy services in agriculture, allied sectors and rural development to Government of India, State Governments, Banks/ Financial Corporates, Institutions, Co-operative Institutions,

NGOs, International organisations and other clients.

A. Financial Achievements
3.76 During the year, NABCONS contracted 88 executed 125 assignments including 6 assignments for a contract value of ` 26.87 crore. The company international visitors programmes. NABCONS earned `17.30 crore as professional fees on assignments executed, ` 0.43 crore as commission from mutual fund distribution and `2.62 crore as interest on investments aggregating a total income of `20.35 crore. Further, NABCONS is also in advanced stages of submitting bids for several prestigious assignments.

coupled with engagement of specialists is expected to diversify the business portfolio. NABCONS has also made a beginning in IT related assignments with the prestigious Bihar Ground Water Irrigation Scheme (BIGWIS) assignment for Government of Bihar.

C. India Africa Institute of Agriculture and Rural Development

3.78 India The Ministry of External Affairs, Government Africa Institute of Agriculture and Rural of India has selected NABCONS for establishing the

67

Development

in

country

to

be

selected

in

E. Business Highlights
3.80 During the year, NABCONS established business relationship with several new clients such as Small Farmers Agri-Business Consortium (SFAC) in diverse areas. A major private sector bank has approached NABCONS to equip them for enhancing credit flow to agriculture. Under the Border Area Development Programme (BADP), new States such as Sikkim, Uttar Pradesh and Rajasthan have been added for monitoring of various infrastructure projects.

consultation with the African Union. This initiative is a follow up of the announcement made by the Honble Prime Minister during the Africa India Forum Summit held in Addis Ababa in May 2011. The Institute will cater to the training needs of Bankers, Government Officials, Rural Financial Institutions, MFIs, NGOs and other stakeholders in agriculture and rural development. NABCONS is expected to establish the Institute and manage it for 3 years before handing it over to the host country.

D. North East Region, Jammu & Kashmir

3.79 NABCONS of is engaged in third party under monitoring infrastructure development

F. Comparative Position of Income earned from Consultancy

3.81 A comparison of income earned from consultancy by Institutions such as IIMs, AFC is given in table 3.6.
Table 3.6: Comparative Position of Income earned from Consultancy (` lakh) Sr. No. Institute 1 2 3 4 IIM Indore IIM Ahmedabad AFC NABCONS 2009-10 278.85 2024.92 3042.84 997.35 2010-11 679.84 NA 4977.95 1481.03

Special Programme Assistance (SPA) in the states of Arunachal Pradesh, Nagaland, Sikkim and Jammu and Kashmir. During the year 2011-12, NABCONS earned an income of ` 464.61 lakh in NER and `118.81 lakh in J & K from such assignments by ensuring effective utilisation of investment worth `23,230 lakh in NER and `5,940 lakh in J & K.

Research and Development Activities

3.82 The Research and Development (R&D) Fund Chair Professor Scheme ( `0.48 crore) and other activities (`0.07 crore). Cumulative disbursement stood at ` 153.86 crore as on 31 March 2012. was set up in NABARD in 1982-83 as mandated by NABARD Act 1981. The Fund provides financial support to select agencies for promoting applied research projects/studies, training and upgrading skills of personnel of client institutions and disseminating research findings. The corpus of the Fund has been pegged at `50 crore since being 2004-05, replenished with the expenditure incurred through

B. Sanctions under the Fund

i.
3.84

Research Projects/Studies
During 2011-12, five research projects

appropriation of profits during the year.

involving a grant assistance of `0.49 crore were sanctioned. Further, seven projects/studies sanctioned earlier were completed during the year. given below. 3.85 An Economic Analysis of Yield Gaps in A brief summary of findings of these completed studies is

A. Utilisation of the Fund

3.83 During the year, `17.67 crore was utilised from the fund for supporting activities like research projects/studies (` 0.70 crore), seminars (`0.85 crore), training/summer placement ( `15.57 crore), NABARD 68

Principal Crops in Various Regions of India conducted

by Centre for Development Research, New Delhi reported that among Cereals, the yield gaps were highest for Jowar (212.04%) and lowest for Wheat (28.22%). Amongst Pulses, it was highest for Green Gram (225.41%) and lowest for Bengal Gram (115.39%). For Sugarcane, the yield gap was 31.66%. Amongst Fibre crops, it was very high for Cotton (495.46%) and very low for Jute (20.88%). Amongst Oilseeds, it was highest for Sunflower (180.84%) and lowest for Rapeseed & Mustard (24.41%). Amongst Vegetables the yield gap was highest for Onion (172.92%) and lowest for Potato (57.56%). Underdeveloped blocks showed higher yield gaps for all crops compared to developed blocks and, the crop yield gaps of marginal and small farmers were found to be higher than medium and large farmers. Credit had a positive and significant relationship, via fertiliser route, with yield of most crops. Paddy and Wheat responded well to credit. Positive correlation between credit taken and crop productivity was observed at farm level in all four states surveyed. Farmers reported non-availability of institutional credit as a major constraint to crop yield improvement on their farms. Several constraints for bridging the yield gaps such as water shortage, shortage of skilled labour, lack of power supply, etc., were identified by the study. 3.86 Study on Impact Assessment of Micro-credit in

as internal funds. Performance of SHGs receiving repeat doses of credit were better as compared to others. Around 56 percent of SHG members had taken up micro entrepreneurial activity, in farm and nonfarm sectors, as a result of their association with SHGs. Hence, the household income as well as expenditure of the members increased significantly. The study for recommended refresher extended promotional visits, support training, exposure

experience sharing meetings for SHGs; standardisation of dispensing credit with promotional activities by different agencies; formation of District Level Monitoring Committee on SHGs to monitor, supervise and provide guidance to the self help movement in the district; training with modules suiting local conditions; and, greater role for SHPIs. 3.87 An inquiry into the Nature and Extent,

Problems and Prospects of Floriculture An integrated Study of Flower Production in the State of West Bengal by Kolkata Girls College revealed that the cost structure not only varied across flowers but also varied across districts for the same flowers. Labour cost is a major item in general, though for gladiolus, it is land preparation. Packaging methods are very primitive and sample producers are neither trained nor have the resources to undertake smart formal packaging. The study did not find any definite pattern in prices over time though they reflected the importance of relative elasticities of demand and supply. Farmers have diverted land from paddy to flowers due to higher returns. Major constraints to flower production in the state have been institutional factors, natural factors and infrastructure related factors. The study stresses the need to train farmers, provide finance, develop and modernise the marketing channels. 3.88 An action research for organising small

Alleviating the Poverty of Rural Poor in Keonjhar District of Odisha, studied 236 credit linked SHGs and their members numbering 2,753. The motivating factor of people in forming into SHGs is possibility of additional employment and income. Most of the SHG members, averaging to 12 per group, belonged to lower socio-economic groups. Dependency on moneylenders declined considerably after the spread of SHGs in the district. The rate of savings per month per member was `60 per month, collected in 4 instalments. Loan to savings ratio was 4.41:1 Majority of the SHGs were charging `24 to `36 per annum as interest for a loan of ` 100 while the transaction cost worked out to 10 to 15 per cent. Uniform interest rate is charged on bank loans as well

producers into community owned, paced association taken up in Rayagada, a tribal Odisha district, funded by NABARD brought out a manual that can guide replication of such experiments elsewhere. The action research brought out clearly that sustainability of the community wrests on: (a) the sustainability of the 69

weakest in the system, (b) developing the trust and cooperation among the members within the community, (c) developing competence of local facilitators to systematically and responsibly operate the community enterprise system (CES) known as Nava Jyothi CES. The core design variables, thus, include size, scope, technology, ownership, and management. These variables needs to be simultaneously optimised based on the community context such as social, cultural, geography, infrastructure, micro-climatic etc., of the conditions, community. basic Hence,

(ISI),

Kolkata

focused

on

Adivasis,

who

live

precariously far below the poverty line and seldom get academic attention. The study conducted in 2009 covered five districts from three eastern States of Odisha, Jharkhand and West Bengal covering 1000 tribal households across 100 villages. The study revealed that the tribal per capita income increased three times over last 20 years against 6 fold increase in the country as a whole. The growth got neutralised by doubling of the Consumer Price Index (CPI) during the same period. On an average, three fifth of the sample households are living below poverty level in the region. Degree of poverty is not uniform among the tribes. Eleven tribal communities have been found to have more than 80 per cent BPL households in each. Forty to fifty per cent households have been found in Jalpaiguri and Purulia to be the victims of starvation some time during the year. Tribes like Birhor, Oraon, Paharia, Mal and Sutar are the worst victims of starvation. Firewood is the only source of fuel in more than 90 per cent households of the entire region often requiring family members, mostly women, to travel more than 10 kms to collect it. MGNREGA programme could hardly make any dent in the area. PDS at subsidized prices has better record for the poor in general than the tribal poor in particular. Hence, Successful functioning of PDS holds the key in improving the plight of the tribal poverty. The study harps on the need for massive reforestation programmes, control of over hacking and graszing and provision of cheap fuel through alternatives such as solar power or biogas. 3.90 A study titled, A Commons Story In The Rain

sustainability of the producer-family is the prime concern and not the enterprise per se. Sustaining and improving the quality of life of family of the small and marginal farmer/producer is the main purpose of the proposed system. The key functions of the CES included (a) marketing of surplus produce for better net price realisation for the producers/farmers, (b) provide emergency and production credit to the producer/farmer members and subsequently facilitate consumption demand by partially supporting the retail outlets in the villages of the Nava Jyothi CES, (c) encourage adoption of integrated natural farming methods with minimum external inputs and with better management of land, water and other natural resources, (d) plan, budget, schedule and strategize the activites of the producers/farmers at the village level to be able to enhance the net income over 365 days of the year, and (e) continuously engage with the producer/farmers to build the faith and trust of the people CES to cooperate under with the each other the in the community. Based on the experience with Nava Jyoti developed to project, of the manual delineates 15 steps starting from identification of the community that withdrawal institutional champions / external agencies. The project concludes development of local human competences is a step towards actions in catalysing the and sustaining enterprise community critical system. 3.89 A study on Impact of Economic Reforms on

Shadow Of Green Revolution done by Foundation for Ecological Security (FES), Anand, Gujarat, probed into whether commons survive under the changing production environment and also whether livestock and agricultural production systems would remain viable if support provided by them to commons would cease. The study argues that the subsidy derived from the Commons forms a critical contribution to both livestock and agricultural production systems. In an

cooperative

Tribal Poverty, conducted by Indian Statistical Institute

70

essentially unpredictable environment, the Commonslivestock agricultural complex provides stability and control to households over their lives as 20-40% of household incomes are derived from the Commons. Community institutions help the poor in ensuring their rights on commons. Commons as well as the institutional mechanisms that enable them to function sustainably declined due to encroachments as a result of usurpation by the elite, state policy and privatisation by local landlords, real estate developers and mining interests. The study stresses on need to strengthen symbiotic relationships between Commons, livestock and agriculture in the rainfed areas of India and delineated essential steps to revive Commons, viz .,: 1. Formulating policy on Commons and securing rights of communities on Commons, 2. Increasing public investments for revitalising common land and water resources, for 3. Strengthening governance institutional of natural arrangements better

iii. NABARD Chair Professor Scheme

3.92 during Following the approval from the Board of the year 2010-11 and three professors

Directors, NABARD revived its Chair Unit Scheme commenced their tenure of three years with effect from 01 January 2011. During the current year, one more professor, Dr.Anil Sharma, was inducted with affiliation to NCAER, New Delhi, for a period of three years with effect from 1 Aug 2011.

iv. Training Activities

3.93 Apart from extending grant assistance for

various R&D activities, an amount of `0.02 crore was utilised from the Fund during the year for capacity building of the staff of RFIs.

v.
3.94

Summer Placement Scheme

The Summer Placement Scheme is being since 2005-06 to enable students

resources, and, 4. Influencing the common mindset on the Commons :

implemented

selected from reputed agriculture and management institutes, to be associated with various projects/studies taken up by NABARD in agriculture and rural sectors. The students are assigned tasks/projects of relevance to NABARD for generating new ideas, products and services. During 2011-12, 94 students were assigned such projects by 19 ROs, TEs and HOs and all the 94 students have submitted project reports. An expenditure of ` 0.25 crore was incurred under this Scheme, during the year. C. Training of Personnel of RFI 3.95 RTC, Mangalore and RTC, Bolpur were

ii.
3.91

Seminars, Conferences and Workshops

During the year, grant assistance of `1.14

crore was sanctioned to various universities, research institutes and other agencies for organising 139 seminars, conferences, including Micro symposia Green and workshops Agricovering subjects/areas related to agriculture and rural development Marketing, Revolution-II, Financial Finance, Inclusion,

Sustainable Livestock and Poultry Development, Plant Bio Technology, Conservation of Animal Genetic Resources Water Security and Climate Change, Food Security, Organic Farming, Economic Reforms and Agriculture, Advances in Aqua Culture, Regional Imbalance Inclusive Growth, SHG and Women Entrepreneurship and Coffee Research, etc. The grant support extended to the organisers enabled them to document the proceedings and publish background papers, thus facilitating wider dissemination of the recommendations/action points and initiate suitable policy interventions by agencies concerned.

renamed as BIRD, Mangalore and BIRD, Bolpur respectively. BIRD - Lucknow , BIRD - Mangalore and BIRD- Bolpur conducted 574 training programmes and trained 13, 581 participants (Table 3.7).

D. Other Developments
a. BIRD, Lucknow:
3.96 An innovative programme for Developing a cadre of professionals to work in rural areas was

71

Table 3.7: Training of RFI Personnel Institute Programmes Conducted Personnel Trained (Nos.)

Shri Y C Nanda, Ex- Chairman, NABARD inaugurated the seminar and delivered the key note address and 158 delegates who included delegates from wide spectrum of policy makers, academicians and experts from MFI sector participated in the seminar. In order to build a competent cadre of professionals in the field of rural banking, BIRD started a Post Graduate Diploma in Rural Banking (PGDRB). The second batch of the Course has commenced in July 2011, with the programme being affiliated to IGNOU.

2009-10 2010-11 2011-12 2009-10 2010-11 2011-12 BIRD, Lucknow BIRD, Mangalore BIRD, Bolpur Total 261 93 113 467 377 106 93 576 344 113 117 574 6139 2474 2894 11507 9645 2649 2373 14667 8140 2842 2599 13581

designed by BIRD, Lucknow during the year to develop capacity of rural youth to implement various development projects of NABARD, Government and other agencies in rural areas. With a view to sensitize the senior bankers and government officials about the developmental initiatives of NABARD and the need for further interventions for enhancing credit support in the project areas, two exposure visits to NABARD assisted watershed and tribal development (wadi) projects and a producer company were organised. A programme was organised by BIRD in collaboration with HASAL Institute consisting of of Micro CEOs finance and Studies of Academy Limited, Nigeria for 15 Micro finance practitioners, Heads Departments, officials from Central Bank of Nigeria, Group Heads etc. of different micro finance banks of Nigeria. Ten participants from the Bank of Bhutan Ltd. attended a training programme on Appraisal of Agriculture Projects. Trainers Training Programme on Promotion and Financing of SHGs & JLGs was conducted for participants with from 4 for countries, in collaboration Centre International

b. BIRD, Mangalore
3.97 The institute conducted 113 programmes covering 2842 participants with 10434 trainee days during the year 2011-12. Of these 36 Orientation Programmes covering 844 participants were conducted under Vaidyanathan Committee Package for senior officers and branch managers of SCBs and DCCBs in select five states. Two exposure visits of one week each on micro finance sector to SANASA Development Bank, Sri Lanka were conducted. The Institute conducted an Exposure Visit on Agroprocessing and dairy farming for 11 Officers of SANASA Development Bank (SDB) and Sanasa Insurance Ltd. Colombo, Sri Lanka. Programmes on different topics, viz ., KYC, AML, RTI Act, micro Finance, Business Development & Profit Planning, Credit Appraisal of Farm & Non-Farm Sector, Financing MSMEs, REDP and Skill Development, Negotiation Skills for NPA Management Investment Portfolio Management for CCBs, ALM and Investment Management, Government Sponsored Programmes, Management Development Programme, Legal Aspects of Banking and Health Management were conducted as per the needs and requirements of the client institutions.

Cooperation and Training in Agriculture Banking (CICTAB) Pune. Eleven studies were conducted during the year which included, inter-alia, Case study on Nalgonda DCCB and Thrissur DCCB, Agriculture Growth story of Gujarat and Chhatisgarh, NIDA, Producers Groups, Direct Lending to RFIs, NRLM, Back Ended Subsidy System Advantages and Disadvantages Alternate Model etc..A National Seminar on Micro finance in India- Issues and Challenges was organised by BIRD, Lucknow.

c. BIRD, Bolpur
3.98 The Institute conducted 117 programmes covering 2,599 participants during the year 2011-12. Of these, 26 Orientation Training Programmes (OTPs) for Branch Managers and senior officers of SCBs/ DCCBs were conducted. As a part of collaborative 72

effort, training programmes were conducted jointly with BIRD, Lucknow and ACMART, Kolkata. Further, training infrastructure of Agriculture Cooperative Staff Training Institute (ACSTI) of Odisha State Cooperative Bank and Kalna Chamber of Commerce, Kalna (West Bengal) were utilised of for Viswa conducting Bharati with training University, participants/ of different programmes. In a collaborative arrangement with Agriculture University relating to Institute regularly Santiniketan, Agriculture Scientists/Professors from the interacted trainees of different training programmes on topics agriculture/allied activities training programmes and latest technology adopted in these sectors. BIRD, Bolpur also collaborated with Womens Study Centre of Visva Bharati University, Santiniketan . Training Programmes for Federations of FCs/SHGs for promotion of JLGs/TFGs and Producers Organisation, sponsored by West Bengal RO were conducted. Organisational The Institute also conducted in Assam Development Initiatives

interest. Director BIRD participated in APRACA Finpower programme held in Bangkok and presented a paper on Rural Innovations. 3.100 GTZ) in NABARD in collaboration with GIZ (earlier established During the the Centre year, for Professional revised the

Excellence in Cooperatives (C-PEC) at BIRD, Lucknow 2008. C-PEC accreditation parameters for cooperative banks and enrolled 57 co-operatives, institutions and 151 PACS as members and accredited 35 Cooperative Training Institutions. Further, Course designs, content and syllabus for following four distance learning flagship courses each of six month duration were finalised: CTFC - Certified Trainer for Financial Cooperatives CPS - Certified PACS Secretary Professional in Cooperative

CPCB - Certified

Banking (Level I) CPCB - Certified Professional in Cooperative

Cooperative Apex Bank Ltd. and Langpi Dehangi Rural Bank, Assam. 3.99 The Centre for Micro finance Research (CMR)

Banking (Level II) 3.101 During the year, NABARD sanctioned grant assistance of ` 7.92 lakh to the National Institute of Rural Banking (NIRB), Bangalore for conducting 21 programmes. An amount of `4.76 lakh has been released to NIRB, Bangalore for conducting 11 training programmes covered. under which IIBM, 169 participants was were Further, Guwahati granted

set up in BIRD in 2008 has been continuing its research activities on various themes relating to the micro finance sector to facilitate policy initiatives and improve the design and delivery of various micro finance products. The Centre has completed 20 studies which are available on BIRDs website www.birdindia.org.in. The Centre has brought out two issues of its half yearly journal The Micro finance Review during the year and has conducted a seminar on Micro-finance Issues and Challenges. The cumulative grant assistance to the Centre by NABARD aggregated conducted (SBLP). `560.95 lakh as on the end of 2011-12. an Mr exposure Won-Sik visit Noh, for a team from

assistance of `9.63 lakh towards15 per cent share of revenue expenditure for the year 2011-12 and `15.90 lakh contributed towards Infrastructure Development Fund of IIBM, Guwahati. 3.102 NABARD has been extending funding support

APRACA Centre of Excellence (ACE) set up in CMR Cambodia on SHG Bank Linkage Programme Secretary General, APRACA visited BIRD and held discussions with the Director and Joint Director on various issues of mutual

under SOFTCOB to Junior Level Training Centres (JLTCs) of SCARDBs, Agricultural Co-operative Staff Training Institutes (ACSTIs) of SCBs and Integrated Training Institutes (ITIs) out of the Co-operative Development Fund (CDF). The scheme has been revised and extended for a period of three years from

73

1 April 2010 to 31 March 2013. The ACSTIs, JLTCs and ITIs will be eligible for additional assistance under the revised scheme as support from NABARD for linking their activities with C-PEC. During the year, the bank provided technical and financial support to seven JLTCs, twelve ACSTIs and three ITIs set up by SCARDBs and SCBs, respectively, to enable them to improve their training system. A total amount of `564.13 lakh was disbursed to the JLTCs, ACSTIs and ITIs out of the CDF for conducting 941 programmes covering 21,468 participants during 2011-12 as against `490.58 lakh disbursed for conducting 855

programmes 2010-11. 3.103 carved policy.

covering

18,306

participants

during

NABARDs development initiatives have been out under the overarching objective of

sustainable inclusive growth of Indias development To make a perceptible difference on ground, addressing the concerns of the small operators and excluded areas, deploying technology, finding space for location/product specific viable delivery models which can be upscaled, have been the principles which have guided the development initiatives.

74

IV
Capacity Building of Client Institutions
The Co-operative Banks and Regional Rural Banks play a very crucial role in financial intermediation in agriculture endeavours and to rural strengthen development. the capacity NABARD of these institutions through various developmental and supervisory initiatives so as to enable them to compete effectively with other financial institutions and to purvey ground level credit flow efficiently.

Institutional Development
A. Rural Co-operative Credit Institutions:
a. Performance
4.2 (Table An analysis of the financial position of SCBs 4.1) indicated that their deposits as on Banks (SCARDBs) marginally increased by 1.04 per cent and that of Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) marginally decreased by 1.13 per cent over the previous year. The loans issued by SCARDBs and PCARDBs have marginally decreased by 0.65 and 1.22 per cent respectively. Loans outstanding of SCARDBs marginally increased by 0.82 per cent and PCARDBS decreased by 2.60 per cent over the previous year (Table 4.2). b. i. 4.4 Working Results Profitability During 2010-11, 29 out of 31 SCBs earned

31 March 2011 decreased by 4.53 per cent; however in the case of DCCBs, deposits by 8.4 per cent; the borrowings of SCBs increased by 37.07 per cent and that of DCCBs increased by 50.31 per cent. Loans issued by SCBs increased by 32.07 per cent and that of DCCBs by 35.02 per cent during the year 2010-11. Loans outstanding of SCBs increased by 30.41 per cent and that of DCCBs have marginally increased by 3.89 per cent during 2010-11 as compared to previous year. 4.3 In the case of Long Term co-operative credit during 2010-11, borrowings Rural by State Agriculture and Development

profit aggregating `521 crore while the remaining 2 SCBs were in the loss (`317 crore), resulting in aggregate profit of `204 crore. While 317 out of 370 DCCBs earned profit of `1457 crore, 53 DCCBs

structure,

Co-operative

Table 4.1: Growth of Short-Term Co-operative Credit Structure (As on 31 March) (` crore) Particulars 2010 Number Share Capital Reserves Deposits Borrowings Loans Issued Loans Outstanding 31 1636 10555 82937 23530 53621 49239 SCB 2011* 31 2024 12048 79179 32252 70818 64213 % Growth 0 23.72 14.14 -4.53 37.07 32.07 30.41 2010 370 7235 22807 153585 28188 118393 126356 DCCB 2011* 370 7950 25040 166489 42370 159859 131280 % Growth over 2010 0 9.88 9.79 8.40 50.31 35.02 3.89

* Data Provisional - The data for the year 2010-11 in respect of Assam and Bihar states is repeated from the previous year.

75

Table 4.2: Growth of Long-Term Co-operative Credit Structure (As on 31 March) (` crore) Particulars 2010 Number Share Capital Reserves Deposits Borrowings Loans Issued Loans Outstanding
*

SCARDBs 2011* 20 833 3578 822 15809 3189 17141 %Growth over 2010 0 1.46 7.74 8.30 1.04 (-)0.65 0.82 2010 697 1528 3304 449 12698 2465 11666

PCARDBs 2011* 697 1520 3312 431 12555 2434 11363 %Growth over 2010 0 0.52 0.24 (-)4.00 (-)1.13 (-)1.22 (-)2.60

20 821 3321 759 15646 3210 17002

Data Provisional - The data for the year 2010-11 in respect of Assam, Bihar, Gujarat, Haryana, Kerala, Odisha, Puducherry, Punjab, Tamil Nadu, Tripura and West Bengal is repeated from the previous year. Manipur SCARDB is defunct.

incurred loss to the extent of ` 443 crore resulting in overall profit of ` 1,014 crore. 4.5 Five SCARDBs earned an aggregate profit of

367 incurred an aggregate loss of `358 crore during the year, resulting in a loss of `212 crore. (Table 4.3) 4.6 The amount of accumulated losses of SCBs

`76 crore, while 14 SCARDBs incurred an aggregate loss of ` 237 crore in 2010-11. Out of 696 PCARDBs, 329 earned an aggregate profit of `146 crore, while

and DCCBs have decreased and that of SCARDBs and PCARDBs have shown increasing trend during the year 2010-11 over the previous year (Table 4.4).

Table 4.3: Working Results of Co-operative Banks (` crore) Agency Year Total (No.) In Profit (No.) Profit Amount In Loss (No.) Loss Amount SCB 2009-10 31 29 491 2 208 2010-11 * 31 29 521 2 317 DCCB 2009-10 370 324 1691 46 495 2010-11 * 370 317 1457 53 443 SCARDB 2009-10 $ 20 10 136 9 332 PCARDB 2010-11 * 696 329 146 367 358

2010-11 $* 2009-10 20 5 76 14 237 696 295 131 401 344

*: Data Provisional The STCCS data for the year 2010-11 in respect of Uttarakhand, Bihar, West Bengal, Arunachal Pradesh, Assam, Manipur, Mizoram, Tripura and Delhi is repeated. *: The LTCCS data for the year 2010-11 in respect of Haryana, Kerala, Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated from the previous year. $: Manipur SCARDB is defunct.

Table 4.4: Accumulated Losses (As on 31 March) (` crore) Year 2009 2010 2011
* *

SCBs 404 574 480

DCCBs 5204 5302 4188

SCARDBs * 1054 1188 1401

PCARDBs* 3631 4087 4299

Data Provisional The STCCS data for the year 2010-11 in respect of Uttarakhand, Bihar and West Bengal states is repeated. The LTCCS data for the year 2010-11 in respect of Haryana, Kerala, Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated from the previous year.

76

Table 4.5: Region-wise Working Results of SCB (As on 31 March) (` crore) Region Profit/Loss (+)/ (-) 2009-10 Central Northern Eastern Western Southern North-Eastern All-India
*

Total NPAs 2009-10 469.30 364.20 387.20 1928.82 749.43 453.29 4352.24 2010-11* 507.07 434.59 418.08 2828.76 965.76 565.03 5719.29

NPA as % to loans outstanding 2009-10 7.29 3.15 7.11 18.42 5.33 36.05 8.84 2010-11* 6.13 3.01 6.83 20.57 4.94 41.10 9.01

Recovery (%) (As on 30 June) 2009-10 2010-11* 92.42 97.99 91.64 81.59 93.91 45.47 91.83 94.46 97.41 92.39 96.24 74.31 44.23 91.75

2010-11* 70.26 124.79 72.66 14.72 110.30 62.31 203.13

45.56 71.30 71.94 64.06 (-)28.99 59.48 283.35

Data Provisional- The data for the year 2010-11 in respect of Uttarakhand, Bihar, West Bengal, Arunachal Pradesh, Assam, Manipur, Mizoram, Tripura and Delhi is repeated.

4.7

At the aggregate level, the non performing

loss in NE region, Southern and Western region remained unchanged (Table 4.7). 4.10 During 2010-11, information was available

assets (NPA) in absolute terms as well as the percentage of NPAs to loans outstanding in respect of SCBs have increased marginally due to a marginal fall in the recovery performance (Table 4.5). 4.8 NPA At the aggregate level, the percentage of gross to loan outstanding in respect of DCCBs

from 696 PCARDBs and number of profit making PCARDBs in all regions increased to 329 as on 31 March 2011 from 295 in the previous year. Their total profits increased from `130.87 lakh in 2009-10 to `159.92 lakh in 2010-11 (Table 4.8).

decreased from 12.96 on 31 March 2010 to 11.61 per cent as on 31 March 2011 (Table 4.6). 4.9 During 2010-11, profits of SCARDBs

ii.
4.11

Costs and Margins

During 2010-11, SCBs as a group earned

increased in Northern region and that of SCARDBs in Eastern region, remained unchanged while SCARDBs

overall return of 6.9 per cent, while cost of funds

Table 4.6: Region-wise Working Results of DCCB (As on 31 March)

(` crore) Region DCCB No. No. 2009-10 Profit Amt. Loss No. DCCB No. Amt. 2010-11* Profit No. Amt. Loss No. Amt. Total NPAs 2010 Central Northern Eastern Western Southern All-India
*

NPA % to Loans Outstanding

Recovery % (As on 30 June)

2011 2010 2891.56 24.72 1448.63 1438.00 3.85 5.69

2011 2010 2011 19.7 67.98 70.06 6.19 79.57 83.26 18.75 68.41 69.27 13.20 71.80 73.31 9.46 82.43 86.54

104 73 64 49 80 370

95 65 48 42 74

314.28 113.01 55.96 593.38 614.59

9 8 16 7 6

37.65 35.81 86.83 321.87 12.65

104 73 64 49 80 370

89 55 47 48 78

310.17 125.28 49.27 547.01 425.05

15 166.02 18 1 2 25.48 13.66 32.65 17 204.78

3134.98 1812.21 1278.87 5597.24 4553.10

4868.21 17.68 4600.54 11.63

324 1691.22

46 494.81

317 1456.78

53 442.59

16396.40 15246.94 12.96 11.61 75.74 78.80

Data Provisional- The data for the year 2010-11 in respect of Uttarakhand, Bihar, West Bengal, Arunachal Pradesh, Assam, Manipur, Mizoram, Tripura and Delhi is repeated.

77

Table 4.7: Region-wise Working Results of SCARDB (As on 31 March) (` crore) Regions No. of Branches 2010 Central Eastern North-Eastern Northern Southern Western All-India
*

Profit/Loss(-) 2010 (-)52.91 7.07 (-)3.94 49.00 (-)63.15 (-)132.08 (-)196.01 2011* (-)48.15 7.07 (-)3.94 50.00 (-)63.15 (-)130.49 (-)188.46

Total NPAs 2010 2265.76 368.93 17.31 831.29 722.95 1441.66 5647.90 2011* 2340.42 313.99 17.31 1306.71 725.79 1411.48 6115.70

NPA % 2010 47.47 69.77 39.77 18.42 20.23 74.70 45.06 2011* 50.60 67.64 39.77 17.16 20.39 73.75 44.88

Recovery % to demand 2010 37.48 36.47 54.45 58.00 57.94 11.85 40.54 2011* 37.48 36.47 54.45 58 56.85 19.54 40.03

349 138 33 85 56 181 842

Data Provisional - The data for the year 2010-11 in respect of Haryana, Kerala, Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated from the previous year.

worked out to 5.01 per cent, resulting in financial margin of 1.92 per cent (excluding miscellaneous income of 0.49 per cent). The average transaction cost and risk cost of SCBs during the year worked out to 1.37 per cent and 0.39 per cent respectively. SCB as a group earned a positive net margin 0.71 per cent in 2010-11 compared to net margin of 1.06 per cent in 2009-10. 4.12 In the case of DCCB, the overall return on

per cent). The average transaction cost and risk cost as a percentage of working funds were 2.09 per cent and 1.37 per cent respectively, during 2010-11. The DCCBs as a group, earned net margin of 1.41 per cent during 2010-11.

iii. Non-Performing Assets and Recovery Performance

4.13 At the aggregate level, the percentage of gross

NPA to total loans and advances outstanding in respect of SCBs slightly increased from 8.84 per cent to 9.01 percent as on 31 March 2011, while that of DCCBs improved from 12.96 per cent to 11.61

working funds was 7.62 per cent, while the cost of funds was 5.11 per cent, yielding a financial margin of 2.51 per cent (excluding miscellaneous income of 2.30

Table 4.8: Region-wise Working Results of PCARDB (As on 31 March) (` crore) 2009-10 Region No. Profit No. Central Eastern Northern Southern Western 50 66 145 406 29 16 38 104 137 0 Amt. No. 2.21 33.61 50.52 34 28 41 Loss Amt. 35.74 16.37 205.03 86.68 0 343.82 50 66 145 406 29 696 No. No. 10 38 105 176 0 2010-11 Profit Amt. 15.00 33.61 52.15 59.16 0 Loss No. 40 28 40 230 29 Amt. 80.47 16.37 205.15 55.83 0 2010 623.47 249.33 2,260.42 1,273.80 480.60 2011 638.76 174.29 2256.91 1283.80 480.60 Total NPAs NPA % to Loans Outstanding 2010 52.30 63.90 30.85 37.30 75.00 51.87 2011 57.89 58.75 30.89 37.29 75.00 51.96 Recovery % As on 30 June 2010 2011 44.06 37.55 46.70 46.70 46.40 47.36 40.96 44.47 7.97 20.83 37.22 39.38

44.53 269 0 29

All-India 696

295 130.87 401

329 159.92

367 357.82 4887.62 4834.36

78

per cent (table 4.5 and 4.6). In absolute terms, gross NPA was estimated at `5,719.29 crore for SCB and `15,246.94 crore for DCCB as on 31 March 2011, registering an increase of 31.41 per cent for SCB and decline of 7.0 per cent for DCCB over the previous year. The percentage of gross NPA to total loans and advances outstanding in the SCARDBs as on 31 March 2011 decreased to 44.88 per cent from 45.06 per cent in the previous year. Similarly, gross NPA for PCARDBs marginally increased to 51.96 per cent as on 31 March 2011 from 51.87 per cent in the previous year. The gross NPA of SCARDBs and PCARDBs were estimated at `6115.70 crore and `4834.36 crore as on 31 March 2011 showing an increase of 8.28 per cent and a decline of 1.09 per cent respectively. The asset classification of NPA of SCBs, DCCBs, SCARDBs and PCARDBs are given in Table 4.9. 4.14 The NPA of SCBs was lowest in Northern

Meghalaya, Mizoram, Nagaland, and Tripura continued to have high level of NPA. In the case of DCCBs, as compared to the all India average of 11.61 per cent, NPA in Northern region (6.19%) and southern (9.46%) regions were lower during 2010-11. 4.15 The average loan recovery of SCBs showed

no change and remained at 92 per cent as on 30 June 2011, while that of DCCBs increased from 76 per cent as on 30 June 2010 to 79 per cent as on 30 June 2011 (Table 4.10). The loan recovery of Andaman & Nicobar SCB increased considerably to 92.11 per cent as on 30 June 2011 from 59.18 per cent as on 30 June 2010. SCBs in Chhattisgarh, Chandigarh, Goa, Kerala and Meghalaya had improved their loan recovery performance. However, SCB in Jammu & Kashmir, Maharashtra, showed decline in recovery of loans during 2010-11.

region (3.01%) followed by Southern region (4.94%), Central region (6.13%), Eastern region (6.83%) and these regions had a lower percentage of NPA as compared to the all-India average of 9.01 per cent during 2010-11. In the Western (20.57%) and NorthEastern (41.10%) regions, the gross NPA was higher than the all-India average. SCBs in Chandigarh, Jammu & Kashmir, Arunachal Bihar, Maharashtra, Assam, Kerala, Manipur, Puducherry, Pradesh,

4.16

The average loan recovery of SCARDBs

marginally declined to 40 per cent as on 30 June 2011 from 41 per cent as on 30 June 2010. While, in the case of PCARDB, recovery of loans improved to 39 per cent as on 30 June 2011 compared to 37 per cent during the previous year. The loan recovery of SCARDBs in Jammu & Kashmir, Rajasthan, Gujarat and Uttar Pradesh increased fairly. However, declining trend in recovery performance was recorded by SCARDBs in Chhattisgarh, Madhya Pradesh, Himachal Pradesh, Karnataka and Maharashtra. The loan

Table 4.9: Composition of NPA of Co-operative Banks (As on 31 March 2011)

(` crore) Asset Classification Sub-Standard Doubtful Loss Assets Total NPAs Provisions required Provisions made * SCB* DCCBs* SCARDBs PCARDB#

Table 4.10: Percentage of Recovery of loans to Demand (As on 30 June) Agency 2009 92 72 41 39 2010 92 76 41 37 2011* 92 79 40 39

1714.82 2505.19 1499.27 5719.28 3523.99 3997.93

6031.73 6496.99 2718.22 15246.94 10983.67 12392.75

2832.64 1771.70 127.27 4731.61 1188.28 1445.56

2521.17 1802.65 53.58 4377.40 1040.60 1113.13

SCBs DCCBs SCARDBs PCARDBs

Data Provisional -The STCCS data for the year 2010-11 in respect of Uttarakhand, Bihar and West Bengal states repeated.

* Data Provisional - The STCCS data for the year 2010-11 in respect of Uttarakhand, Bihar, West Bengal, Assam, Manipur, Mizoram and Tripura states repeated. * The LTCCS data for the year 2010-11 in respect of Haryana, Kerala,Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated.

# The LTCCS data for the year 2010-11 in respect of Haryana, Kerala, Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated from previous year.

79

Table 4.11: Frequency Distribution of Co-operative Banks According to Range of Loan Recovery Percentage (As on 30 June) (Number) Recovery (%) (Recovery to demand) <40 >40 to < 60 >60 to < 80 >80 Total SCBs* (No.) 2010 1 1 12 17 31 2011 3 1 9 18 31 2010 47 77 121 124 369 DCCBs* (No.) 2011 47 77 121 124 369 SCARDBs**@ (No.) 2010 10 4 4 1 19 2011 10 4 4 1 19 PCARDBs*@ (No.) 2010 337 205 113 42 697 2011 337 205 113 42 697

*: Data Provisional - The data for the year 2010-11 is repeated from previous year in respect of SCBs & DCCBs in Uttarakhand, Bihar, Assam, Manipur, Mizoram and Tripura. Data for one DCCB in MP not available. @: The LTCCS data for the year 2010-11 in respect of Haryana, Kerala, Odisha, Punjab, Tamil Nadu, Assam, Bihar, Puducherry and Tripura is repeated from the previous year. **: Manipur SCARDB is defunct.

recovery of PCARDBs had improved in Maharashtra, Karnataka, Rajasthan, while it showed decline in PCARDBs in Chhattisgarh, Madhya Pradesh states.

4.17

The frequency distribution of loan recovery of

banks in the co-operative structure is presented in Table 4.11 to Table 4.13.

Table 4.12: Frequency Distribution of States/UTs according to Level of Loan Recovery of SCBs and DCCBs (As on 30 June 2011) Recovery (%) <40 SCBs* Arunachal Pradesh, and Meghalaya (3) J & K (1) Manipur DCCBs* Jammu & Kashmir (1), Bihar (5), Jharkhand (7) West Bengal Madhya Pradesh (9), Uttar Pradesh (15), Uttarakhand (2), Maharashtra (3) (3),

>40 and <60%

Haryana (3), Rajasthan (4), Bihar (10), Jharkhand (1), Odisha (3), West Bengal (5), Madhya Pradesh (7), Uttar Pradesh (15), Gujarat (1), Maharashtra (9), Karnataka (1), Kerala (1), Tamil Nadu (3) Haryana (15), Himachal Pradesh (1), Jammu & Kashmir (2) Punjab (1), Rajasthan (15), Bihar (6), Odisha (11), West Bengal (7), Madhya Pradesh (14), Chhattisgarh (6), Uttar Pradesh (12), Uttarakhand (2), Gujarat (7), Maharashtra (9), Andhra Pradesh (6), Karnataka (3), Kerala (2), Tamil Nadu (5) Haryana (1), Himachal Pradesh (1), Punjab (19), Rajasthan (10), Bihar (1), Odisha (3), West Bengal (2), Madhya Pradesh (8), Uttar Pradesh (8), Uttarakhand (6), Gujarat (10), Maharashtra (10), Andhra Pradesh (16), Karnataka (17), Kerala (11), Tamil Nadu (15)

>60 and <80%

Chandigarh, Himachal Pradesh, Bihar, Maharashtra, Assam, Nagaland, Sikkim, Mizoram and Tripura (9) Chhattisgarh, MP , UP , Uttarakhand, Delhi, Haryana, Punjab, Rajasthan, Andaman & Nicobar, Odisha, West Bengal, Goa, Gujarat, Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu (18) 31

>80%

Total
*

370

Data Provisional - The data for the year 2010-11 is repeated from previous year in respect of SCBs & DCCBs in Uttarakhand, Bihar, Assam, Manipur, Mizoram and Tripura.

80

Table 4.13: Frequency Distribution of States/UTs according to Levels of Loan Recovery of SCARDBs and PCARDBs (As on 30 June 2011) Recovery < 40 % SCARDBs Chattisgarh, Madhya Pradesh, Bihar, Assam, J & K, Tamil Nadu and Maharashtra > 40 % and < 60% PCARDBs * Chhattisgarh (2), Haryana (15), Karnataka (59), Kerala (3), Madhya Pradesh (29), Maharashtra (29), Odisha (26), Punjab (8), Rajasthan (16), Tamil Nadu (170) West Bengal (11) (368) Chhattisgarh (7), Haryana (4), Karnataka (77), Kerala (15), Madhya Pradesh (7), Odisha (11), Punjab (24), Rajasthan (15), Tamil Nadu (8), West Bengal (9) (177)

Uttar Pradesh, Odisha, West Bengal, Pradesh, Gujarat Haryana, Himachal and Rajasthan

> 60% and < 80%

Tripura and Punjab

Chattishgarh

(3),

Himachal

Pradesh

(1),

Karnataka

(37),

Kerala

(20),

Madhya Pradesh (2), Odisha (5) Punjab (29), Rajasthan (4), Tamil Nadu (2), West Bengal (2) (105)

> 80%

Kerala and Puducherry

Karnataka (4) Kerala (8), Odisha (4), Punjab (28), Rajasthan (1), West Bengal (2) (47)

Total
*

19*

697

Data in respect of Manipur SCARDB and Maharastra SCARDB not available ; Data in respect of SCARDB and PCARDB for the states in Bihar, West Bengal, Punjab, Kerala, Gujarat, and Maharashtra repeated from previous year

c. Supersession of Elected Boards

4.18 NABARD, as a matter of policy, continues to emphasize the need for co-operative banks to be managed by duly elected Boards of Management (one of the covenants of the memorandum of understanding (MoU), executed by State Governments under the GoI revival package for STCCS). Despite this, the practice of superseding elected Boards continued in some States. As on 31 March 2011, duly elected Boards were superseded in 9 SCBs and 86

DCCBs in ST structure. Supersession was done in 7 SCARDBs also and in 284 PCARDBs in the LT structure (Table 4.14). 4.19 Co-operative credit institutions suffer from low

resource base, high dependence on higher financing agencies, imbalances, poor business diversification and recoveries, huge accumulated losses, lack of professionalism and skilled staff, weak MIS, poor internal checks and control systems, etc. leading to heavy accumulated losses.

Table 4.14: Elected Boards under Supersession (As on 31 March 2011) Particulars Total Institutions (No.) Boards under Supersession (No.) Boards under Supersession (%)
*: The data for the year 2010-11 is provisional

SCBs* 31 9 29

DCCBs* 370 86 23

SCARDBs* 20 7 35

PCARDBs* 697 284 41

81

d. Development Action Plan (DAP)/ Memorandum of Understanding (MoU)4.20 Keeping in view the viability of the bank on sustainable basis, the process of preparing institution specific DAP and executing MoU began in 1994-95. It was implemented in four phases, 1994-95 to 1999-2000 (Phase I), 2000-01 to 2003-04 (Phase II), 2004-05 to 2006-07 (Phase III). The PACS were advised to prepare Viability Action Plans under the guidance of DCCBs and to enter into MoUs with the respective DCCBs in the third phase. The fourth phase of DAP/ MoU was for the period April 2007 to March 2012. As many as 21 SCBs and 10 SCARDBs and State Governments concerned had executed DAP/MoU with NABARD for fourth phase. The progress in implementation of DAPs is monitored and review is held during quarterly meetings of State Level Task Force (SLTF) at State level and District Level Monitoring and Review Committee (DLMRC) at district level. The banks have been advised by ROs to prepare DAP for 2012-13 based on the existing guidelines. The banks which seriously follow the targets under DAP have grown financially stronger. Further, implementing DAP in phases gives an opportunity to learn from past experience and refine their policies.

functional crore

efficiency.

During

2011-12,

financial against

assistance of `7.09 crore was sanctioned and `5.34 disbursed (including disbursements sanctions of previous years). As on 31 March 2012, cumulative sanctions and disbursements were ` 105.26 crore and `92.91 crore, respectively. The balance in the Fund as on 31 March 2012 stood at `125 crore.

f.

Organisation Development Initiatives (ODI)

Organisation Development Initiatives (ODI),

4.22

being conducted by NABARD since 1994-95 is a re-engineering process which facilitates and aims at achieving change in the organisational structures. Keeping in view the changing environment for RRBs (Amalgamation) and co-operative banks (adoption of revival package for STCCS), the design, methodology and objective of ODIs would now be more focused towards enabling financial inclusion and sustainable viability. As RRBs and co-operative banks face different kind of problems and opportunities, separate approaches were worked out for these institutions. During the year, emphasis was laid on conducting ODIs in RRBs which are not compliant with section 42(6) of RBI Act, 1934 and the SCB and DCCBs not complying with section 11 of BR Act 1949 (AACS). With a view to assess the impact of ODI, the ROs were advised to evaluate the process for fine-tuning the ODI process. During 2011-12, 03 ODI viz. ODI (phase I) in Vizianagaram DCCB (Andhra Pradesh), Hazaribagh DCCB (Jharkhand) and Phase I - follow up visit of Cuttack DCCB (Odisha) have been conducted . ODI has been able to inculcate a sense of responsibility among the employees in achieving the targets set by the management. Further, ODI is a motivation to employees and helps in increasing their productivity and profits of the organisation, given that the functioning of other internal and external factors remain the same.

e. Co-operative Development Fund

4.21 The Co-operative Development Fund (CDF) was constituted in 1993 under Section 45 of NABARD Act 1981, with an initial contribution of `10 crore. The fund is replenished every year through contributions from NABARDs surplus. Assistance from the Fund is available to co-operatives in the form of soft loans/ grants for resource mobilisation, human resource development, DCCBs etc., capacity which in building turn and operational to their streamlining, setting up of PACS Development Cells in contribute

82

g. Standard Audit Manual for PACS

4.23 NABARD-GIZ Rural Financial Institutions Programme (RFIP) undertook the task of preparation of Standard Audit Manual for PACS through study visits to Gujarat and Odisha. The objectives were: (i) Revising audit framework for PACS in consultation with the stakeholders; (ii) Developing a Model/ Standard Audit Manual for PACS based on the revised audit frameworks; (iii) Developing audit rating tool for PACS; and (iv) Developing a training programme for PACS auditors on the revised audit system. The contents of the draft Audit Manual for PACS were discussed with the select Government Auditors and Banks and the inputs have been incorporated in updating the manual. The manual will be printed and circulated among all concerned in 2012-13.

i.
4.25

Revival Package for Short-Term Rural Co-operative Credit Structure

Twenty-five States (covering 96 per cent of the

STCCS in the country), have executed the MoU with GoI and NABARD, for implementing the revival package announced by the GoI in 2006. The integrated package for the STCCS units envisages introduction of legal/institutional reforms, initiating measures to improve the quality of management and provision of financial assistance for cleansing the balance sheets and meeting CRAR of 7 per cent as assessed through Special Audits and for capacity building & computerisation.

i.

Special Audit and Release of Recapitalisation assistance

h. Centre for Professional Excellence in Co-operatives (C-PEC)

4.24 Under the purview of institutional development efforts, NABARD established a Centre for Professional Excellence in Co-operatives (C-PEC) in BIRD, Lucknow. The Centre will get support for a period of 5 years from January 2009 from NABARD, GTZ and Govt. of India under Rural Financial Institutions Programme, India (RFIP) formulated as a result of Indo-German bilateral technical cooperation negotiations. Broad objectives of C-PEC are:

4.26

The special audits of STCCS, as on 31 March

2004, to arrive at the precise amount of losses after factoring in prudential provisioning norms and the sharing pattern, was completed in 80,837 PACS across 25 States. Special audit of DCCBs has been completed in all fifteen States (except Punjab & Uttarakhand) which have DCCBs. Special Audit of SCBs have been completed in 17 States/UTs and is in progress in 3 States. An amount of ` 9002.98 crore has been released by NABARD as GoI share for recapitalisation of 53,205 eligible PACS in seventeen States, 1510 ineligible PACS affiliated to 30 DCCBs in three States and 13 DCCBs in Orissa, while the State Governments concerned have released ` 855.53 crore as their respective share. Of this, ` 412.84 crore was released to DCCBs as GoI share in respect of 1,510 ineligible PACS in 3 States viz. , Gujarat, Maharashtra and Odisha. An amount of ` 67.87 crore has been released by NABARD as GoI share for recapitalisation of 13 DCCBs in Orissa . Statutory audit as on 31 March 2011 in SCB and all DCCBs from NABARD approved panel has been completed in all 24 States.

To coordinate the training efforts of various Co-operative Training Institutes (CTIs)

To develop a process of accreditation of national and state level CTIs

To evolve uniform standards for training To build and certify the professional

competence in CCS

83

ii.
4.27 the

Legal and institutional Reforms

The participating States are required to amend democratic character and autonomy of

dry run of the software is required to be done in each of the States before roll out. Accordingly, 13 States have initiated dry run in three PACS each. Dry run of the software has been completed in eight States viz., Assam, Chhattisgarh, Gujarat, Maharashtra, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal and is in progress in 5 States. The remaining 7 States have been advised to initiate the process at the earliest.

their Co-operative Societies Acts (CSA) for securing co-operatives and for their regulatory control by RBI. So far, twenty one States have amended their CSA. The draft amendments proposed by the remaining four States have been vetted by NABARD, even as previous amendments in two of these States are awaiting Presidential assent. Consequent upon the amendment to the State Co-operative Societies Act, the rules and bye laws are amended/being amended by the States.

iv. HRD Initiatives

4.31 The package lays emphasis on training and

capacity building of Board Members and functionaries of STCCS. Till date, training has been imparted to 410 master trainers from 25 States, who in turn have trained 2637 district level trainers. As on 31 March 2012, training has been imparted to 86,276 Secretaries of PACS from twenty one States, 1,29,599

iii. Common Accounting System and Management Information System and Computerisation in PACS
4.28 The process System of adoption and of Common

elected Board Members of PACS from 18 States, 374 CEOs of DCCBs from 17 states, CEOs of SCBs in 8 NER States and 3,519 Directors of DCCBs/SCBs from 16 states. In addition, training on CAS/MIS has been imparted to 76,237 PACS functionaries and 4,490 bank supervisors/ departmental auditors. 38,940 PACS staff in 12 States have been trained on Business Development and Profitability so far. Further, 8169 Branch Managers/Senior Officers of DCCBs/SCBs in 25 States have been trained on business development/ diversification. During the year, a three-day Orientation programme for Supervisors/ Inspectors of PACS has been developed. Forty-five Master trainers have been trained in the module by BIRD Lucknow.The programme is in the process of being rolled out.

Accounting

(CAS)

Management

Information System (MIS) formulated for PACS is underway in 20 States, while in the remaining States where the MoU has been signed, the RCS concerned have been advised to adopt CAS on the lines suggested by NABARD. Training on CAS/MIS has been imparted to the PACS functionaries in all the implementing States. 4.29 the Computerisation has been envisaged under package to facilitate of speedier and smooth Pradesh, CAS/MIS. Andhra

implementation

Haryana and Tamil Nadu have developed State specific software to implement CAS/MIS in the PACS in their respective States. The softwares are in different stages of roll out in these three States. 4.30 As decided in the VIII meeting of the National

v. Incentive Scheme for Audit clearance in PACS

4.32 Statutory audit as on 31 March 2004 was

Implementing and Monitoring Committee (NIMC) held in September 2009, common software (referred to as Core Software) was finalised by NABARD and sent to all 20 States that had opted for it. As per guidelines,

completed in 80,837 PACS to facilitate implementation of Revival Package. A need was felt to provide a one-time assistance to PACS to facilitate/update the

84

audit so that it is regularly completed on continuous basis. Hence, a one- time Scheme for Audit clearance in PACS has been formulated and circulated among the ROs. The objective of the scheme is to provide an incentive to PACS for clearing arrears of audit by 31 December 2011. One time incentive of `8000/- will be given to each PACS for clearing the arrears of audit upto the financial year ending 31 March 2011, latest by 31 December 2011. The incentive is applicable to PACS having arrears in audit and those that complete the audit upto 2010-11 latest by 31 December 2011. The Scheme was operative till 31 March 2012. Expenditure under the Scheme will be met out of CDF of NABARD.

recapitalisation assistance, have increased substantially as could be observed from the credit disbursement patterns during the period from 2007-08 to 2009-10. Business specially Development in most on of Plan the and (BDP) in have states to been like prepared by PACS across the states in general and entities Chhattisgarh, Programme Karnataka, BDP etc. Specialised Training PACS

governance

Secretaries/ staff has shown positive impact. Second Phase of Impact Studies on Implementation of the Revival Package in 13 States has been awarded to three agencies. The impact studies have brought out a number of positive features (Box 4.1).

vii. Revival of Long-Term Rural Co-operative vi. Impact of the Revival Package
4.33 In most of the SCBs/DCCBs of implementing 4.34

Credit Structure
The Task Force constituted by GoI under the

States, fit and proper criteria for CEO/Professional Directors has been adopted which had a positive impact on the governance of the STCCS and helped in improving their financial position. The credit absorption capacity of those PACS which had received

Chairmanship of Shri G. C. Chaturvedi, to review the need for a separate package for Revival of LTCCS submitted its report to the Government of India on 25 February 2010. Announcement of the Package by the GoI is awaited.

Box 4.1: GoI Revival Package for STCCS : Impact Assessment Study Overall outcome of the Revival Package has been positive and visible in several ways such as the institutional and legal reforms that have been undertaken so far. Co-operative Societies Act, Rules and Bye-laws have been amended thus creating the basis for autonomy to the banks/PACS. Release of recapitalisation assistance has development, and responsibility & accountability of Boards to run the affairs. Financial indicators have shown varying degrees of improvement in all three tiers of CCS during the implementation period of the Package. Loans disbursed by PACS during the period 2006-07 to 2009-10 have registered growth rates ranging from 73 per cent in Uttar Pradesh to 53 per cent in Madhya Pradesh and 23 per cent in Odisha. The Annual Average Growth Rate (AAGR) during the period 2003-04 to 2009-10 ranged from 62 per cent to 38 per cent (in States like Odisha and Haryana). SF/MF coverage was a priority with the CCS and continued to be around 70 per cent during the period 2006-07 to 2009-10 in Madhya Pradesh & Uttar Pradesh.

improved liquidity of PACS and has enabled them to re commence lending and restore cash flow and income streams. The overall efficiency and functioning of PACS has improved after implementation of the Revival Package. There is increased awareness among members regarding the reforms process like autonomy of CCS, reduction of government interference, need for diversified business

85

Regional Rural Banks

a. Financial Performance
4.35 Post amalgamation, the number of RRBs in 75 with `2420.75 crore in 2010-11. The remaining 3 RRBs incurred losses of ` 25.77 crore as compared to loss of `71.32 crore posted by 7 RRB in 2010-11. The number of sustainably viable RRBs (i.e. RRBs making net current profit and having no accumulated losses) had increased to 60 as on 31 March 2012 as compared to 58 as on 31 March 2011. The aggregate reserves of RRBs increased to ` 11,135.19 crore and net worth increased to `14786.77 crore as on 31 March 2012. (Table 4.15) The accumulated losses of RRBs have decreased by 27.90 per cent over the previous year. The performance of RRBs varied across the regions in 2011-12. While all RRBs in the 4.36 indicate Financial results of RRBs for the year 2011-12 that there was improvement in their Northern, Southern, and Western region made profit, 22 (of 23), 13 (of 14) and 7 (out of 8) RRBs posted profit in the Central, Eastern and North Eastern regions, respectively, (Table 4.16).

the country as on 31 March 2012 stood at 82, with a network of 16,914 branches covering 635 notified districts in 26 States and the UT of Puducherry. Over a period of three years (200910 to 2011-12), the deposits and investments increased by 29.18 per cent and 12.30 per cent, respectively, the borrowings increased by 61.28 per cent and loans and advances (outstanding) (Table 4.15). increased by 45.56 per cent

performance with 79 out of 82 RRBs showing pre-tax profit to the extent of `2469.18 crore as compared to

Table 4.15: Indicators of Performance (As on 31 March) (` crore) Particulars No .of RRB (No.) Branch Network (No.) Share Capital Share Capital Deposit Reserves Deposits Borrowings Investments Loans & Advances (Outstanding) Loans Issued RRB earning Profit (No.) Amount of Profit (A)$ RRB incurring Losses (No.) Amount of Losses (B) Gross Profit (A B)$ Accumulated Losses RRB with no accumulated losses (No.) Recovery (%) NPA to loans outstanding (%) Net worth
*: Number reduced due to amalgamation.

2009 86 * 15181 197.00 3959.30 6753.99 120188.90 12734.65 65909.92 67802.10 43367.13 80 1823.55 6 35.91 1787.64 2299.98 31 77.85 4.14 8610.31
$ Before Tax

2010 82* 15480 197.00 3984.91 8065.26 145034.95 18770.06 79379.16 82819.10 56079.24 79 2514.83 3 5.65 2509.18 1775.06 27 80.09 3.72 10472.10
# Data is Provisional

2011 82 16001 197.00 4076.34 9565.58 166232.34 26490.80 86510.44 98917.43 71724.19 75 2420.75 7 71.32 2349.43 1532.39 23 81.18 3.75 12306.53

2012# 82 16914 197.00 4559.43 11135.19 187351.37 30271.71 89145.79 120550.66 78546.55 79 2469.18 3 25.77 2443.41 1104.85 22 82.63 4.14 14786.77

86

Table 4.16: Region-wise Working Results of RRB (As on 31 March 2012*) (` crore) Region RRB No. Profit Earning No. Central Eastern Northern Southern Western All India
*

Loss Incurring No. 1 1 0 1 0 0 3 Amt. 3.70 18.10 0.00 3.97 0.00 0.00 25.77

Net Profit

Amt. 752.53 400.45 404.86 201.53 614.53 95.28 2469.18

Accumu lated Losses 77.80 702.00 181.66 95.16 0.00 48.23 1104.85

Loans & Advances O/S 31477.15 20109.98 17546.74 5429.02 40462.11 5525.66 120550.66

Gross NPA Amount 2040.71 990.53 370.80 259.25 1164.15 168.71 4994.15 % 6.48 4.93 2.11 4.78 2.88 3.05 4.14

Recovery (%) (As on 30 June) 2010 76.10 73.46 88.71 74.49 83.97 75.96 81.18 2011 81.29 72.03 88.76 74.69 84.92 75.77 82.63

23 14 15 16 6 82

22 13 15 7 16 6 79

579.89 326.99 264.15 154.18 473.67 55.35 1854.23

North - Eastern 8

Data Provisional

b. Recovery Performance
4.37 The recovery performance of RRBs was 82.63 per cent, as on 30 June 2011 as compared to 81.18 per cent as on 30 June 2010 (Table 4.16). Further, 05 out of 23 RRB in Central Region, 1 out of 14 in Eastern, 13 out of 15 in the Northern, 2 out of 6 in Western and 08 out of 16 RRBs in Southern region had registered a recovery performance above 80% per cent in the year 2010-11 (Table 4.17). Twelve RRBs in the country had achieved a recovery percentage of above 90 while four RRBs had a poor recovery percentage of less than 60.

c. Non-Performing Assets
4.38 The aggregate gross NPA of all RRBs

increased from 3.75 per cent, as on 31 March 2011 to 4.14 per cent as on 31 March 2012.

d. Branch Expansion Programme/Core Banking Solution

4.39 RRBs were given a target of opening 2000

new branches by March 2012. In the current year, as on 31 March 2012, RRBs had opened 913 new branches, taking the cumulative number of branches

Table 4.17: Frequency Distribution of States According to Levels of Recovery of RRB (As on 30 June 2011) Recovery (%) < 40 > 40 and < 60 > 60 and < 80 Nil Bihar (1), Jharkhand (1), Manipur (1), West Bengal (1) (4) Andhra Pradesh (2), Arunachal Pradesh (1), Assam (1), Bihar (2), Chhatisgarh (2), Haryana (1), J & K (1), Jharkhand (1),Karnataka(3), Maharashtra (3), Madhya Pradesh (5),Meghalaya (1),Nagaland (1), Odisha (5), Uttar Pradesh (7), Uttarakhand (1), West Bengal (2) (39) >80 Andhra Pradesh (3), Assam (1), (Bihar (1), Chhatisgarh (1), Gujarat (3), Haryana (1), Himachal Pradesh (2), J & K (1), Karnataka (3), Kerala (2), M.P (3), Mizoram (1), Puducherry (1), Punjab (3), Rajasthan (6), Tamil Nadu (2), Tripura (1), U.P . (3), Uttaranchal (1) (39) States

87

of all RRBs to 16,914 spread over 635 districts in 26 states and one UT. It is now compulsory for all new branches to be equipped with Core Banking Solution (CBS). The sponsor banks are required to extend all necessary help in this regard, including financial assistance, training, back office support, etc. RRBs were directed by GoI to implement CBS in all their branches by September 2011. As on date, CBS has been fully implemented in 80 RRBs. J & K GB has implemented been able CBS to in make 90 branches out of on 184 CBS branches. Kisan Kshetriya Gramin Bank (UP) has not any progress

RRBs for strengthening their CRAR to the level of 9 per cent by 31 March 2012. According to the Committee, the remaining RRBs are in a position to achieve the desired level of CRAR on their own. Accepting the recommendations of the committee, the GoI along with other shareholders decided to recapitalise the RRBs by infusing funds to the extent of ` 2,200 crore. The shareholder wise proportion (GoI/ Sponsor Banks/State Governments) is 50:35:15 respectively. 4.42 States. As on 31 March 2012, an amount of

implementation in the bank, as it is linked to its merger with Aryavrat GB.

` 1,046.11 crore has been released to 27 RRBs in 16 The released amount includes GoIs contribution of `468.92 crore, State Governments

e. Financial Inclusion
4.40 The RRBs have emerged as a strong intermediary for Financial Inclusion in rural areas by opening a large number of No Frills accounts and financing under General Credit Card (GCC). Total number of business accounts (deposit plus loan accounts) with RRBs stood at 1,363.09 lakh, as on 31 March 2012 (Table 4.18).

contribution of `173.16 crore and Sponsor banks contribution of `404.03 crore. The recapitalisation is completed in respect of 16 RRBs (5 in Odisha, 3 in MP, 2 in Uttarakhand and one each in Assam, Arunachal Pradesh, Nagaland, Tripura, J&K and Karnataka). Further, amount pending for release by GoI in respect of nine RRBs is `108.25 crore. After release by GoI recapitalisation will be completed in respect of these nine RRBs also. Maharashtra State Government. has released the amounts partially in respect of two RRBs. The six State Govts. viz., Manipur (2), UP (3), West Bengal (4), Rajasthan (5), Mizoram (6), and J&K have not released any amount in respect of 13 RRBs operating in their states. in 2010 and

f.
4.41

Recapitalisation of RRBs
The Chakrabarty Committee reviewed the position of all RRBs

financial

recommended for recapitalisation of 40 out of 82

Table 4.18: Status of Financial Inclusion - RRB (As on 31 March 2012)* (No. in lakh) Of total Loan Accounts, major areas of Financial Inclusion Year No. of Deposit Accounts 1157.47 Of which, No-Frills Accounts 260.94 No. of Loan Accounts 205.62 GCC SHG KCC Tenants Farmers SSI, Artisans, SCC & retail trade 28.15

2011-12

5.2

8.62

9.74

1.91

*: Data provisional

88

g. Recruitment in RRBs
4.43 Government of India, Ministry of Finance, Selection (IBPS) for recruitment of officers and staff in RRBs. selection NABARD process has been entrusted finalization with of the the responsibility of coordination and Supervision of the besides methodology for the conduct of the Common Written Examination. Department of Financial Services vide their letter no. F No.3/8/2010-RRB dated 23 February 2012 has instructed that from the year 2012-13 and onwards, there will be a Common Written Examination which will be conducted by Institute of Banking Personnel

Supervision of Banks
4.44 NABARD inspects SCBs and CCBs in terms of which were communicated to the banks concerned, Registrar of Co-operative Societies (RCS), State Governments (in respect of co-operative banks) and Sponsor Banks (in respect of RRBs) for corrective action. NABARD also held discussions with the Board of Directors of SCBs/DCCBs/RRBs apprising them of the deficiencies found in the inspection and urging them to initiate immediate remedial action. Besides, meetings were also held with the CEOs of the banks concerned to secure satisfactory compliance wherever necessary. Supervisory ratings were also conveyed in confidence to the Top Management of the banks. the powers vested under Section 35(6) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) and RRBs under Section 35(6) of the B.R. Act, 1949. NABARD also conducts voluntary inspection of SCARDBs, Apex level Co-operative Societies and Federations. Considering the unique nature of all these institutions, the supervisory role of NABARD, apart from and ensuring conformity with banking regulations and prudential norms, is a very comprehensive holistic one, encompassing inspections (on-site and off-site), portfolio studies, monitoring, guiding and facilitating functions. The periodicity of statutory inspections of all SCBs and those CCBs and RRBs not complying with minimum capital requirements as stipulated under the B. R Act, 1949 (AACS)/RBI Act 1934 and voluntary inspections of all SCARDBs, continues to be annual. The statutory inspections of those CCBs and RRBs with positive net worth and voluntary inspections of Apex Co-operative Societies/Federations are conducted once in 2 years.

b. Board of Supervision
4.46 The Board of Supervision (BoS) constituted by the Board of Directors of NABARD in 1999, met four times during the year 2011-12. The BoS reviewed (i) the functioning of SCBs, CCBs and SCARDBs as brought out in the inspections, (ii) the working of RRBs sponsored by Bank of Baroda, Central Bank of India, Associate Banks of SBI and Andhra Bank, (iii) reports of frauds in the supervised banks, (iv) functioning of weak CCBs in Uttar Pradesh, Maharashtra and Gujarat (v) review of a few good working banks, (vi) major observations from the investment portfolio in SCBs, CCBs and RRBs and (vii) banks adherence to exposure norms. The BoS also approved (i) the revised Supervisory Rating Scales of RRBs, (ii) the revised Guidelines for the onsite inspection of RRBs, (iii) the revised exposure 89

A. Operational Matters
a. Inspection of Banks
4.45 During 2011-12, statutory inspections of 319

banks (31 SCBs, 240 CCBs and 48 RRBs) and voluntary inspections of 15 SCARDBs have been conducted as programmed. The inspections brought out supervisory concerns relating to these institutions,

norms under Credit Monitoring Arrangements (CMA) for co-operative banks, etc.

become Scheduled Banks only with the approval of the RBI, on the basis of recommendations given by the NABARD, after conducting statutory inspection. Forty-four amalgamated RRBs were included by the RBI in the Second Schedule to the RBI Act, 1934, after found with 42(6)(a)(ii) the they were Section of the of RRBs
With the implementation of the Govt. of Indias Package for Revival of Short-Term Rural Cooperative Credit Structure, NABARD, in collaboration with the ICAI, has initiated the process of preparation of Audit Manual for the guidance of Chartered Accountants undertaking the Statutory Audit of SCBs/CCBs.

c. Health of Supervised Banks

i. Compliance with Minimum Share Capital Requirement
4.47 During the year 2011-12, one SCB and 18

complying

CCBs improved their financial position and recomplied with the provisions of Section 11(1) of the B.R. Act, 1949 (AACS) i.e., minimum capital requirements. As
For strengthening the Risk Management Systems in the supervised entities, NABARD has partnered with GIZ for implementation of RFIP Programme under which pilot implementation of Risk Management Tools is in progress.

Act, ibid. With this, number scheduled

on 31 March 2012, 49 banks (4 SCBs and 45 CCBs) complying provisions were with of not the Section

stood at 80 out of 82 as on 31 March 2012.

11(1) of the B.R. Act, 1949 (AACS).

iii. Compliance with various Statutory Provisions

4.50 As on 31 March 2012, 4 SCBs and 45 CCBs

ii. Grant of Licence/Scheduling of Banks

4.48 Pursuant to the recommendations of the

were found to be non-compliant with Section 22(3) (a) of the B.R.Act, 1949 (AACS), as regards their capacity to pay their depositors in full and 9 SCBs and 93 CCBs did not comply with Section 22(3)(b) of the Act, ibid/Section 42(6)(a)(ii) of RBI Act, 1934, as the affairs of these banks were construed to have not been conducted in a manner not detrimental to the interests of their depositors. Similarly, out of the 31 SCBs, four were not compliant with Section 11 (1) of the BR Act, 1949 (AACS) in regard to minimum capital requirement. As on 31 March 2012, out of 82 RRBs, 75 complied with Section 42(6) (a) (i) of the RBI Act, 1934 and 59 complied with Section 42(6)(a)(ii) of the Act, ibid.

Committee on Financial Sector Assessment (CFSA) (Chairman: Dr. Rakesh Mohan, the then Deputy Governor of RBI), the RBI had revised the licensing norms for co-operative banks during October 2009. The number of licensed SCBs and CCBs stood at 24 and 222, respectively, as on 31 March 2011. During the year 2011-12, RBI issued licenses to 4 SCBs and 82 CCBs, thus increasing the number of licensed banks to 332 (28 SCBs and 304 CCBs) as on 31 March 2012. The number of scheduled SCBs remained unchanged at 16. The problems in attaining licensing eligibility by co-operative banks in some States were reviewed periodically by the Honble Minister for Agriculture, Government of India and Secretary, Ministry of Agriculture, GoI. 4.49 From its very inception, all the RRBs were

B. Policy Decisions
4.51 During the year a number of instructions involving policy matters were issued to the SCBs, CCBs and RRBs. A few important among them are indicated below:

included in the Second Schedule to the RBI Act 1934. However, amalgamated RRBs being new entities could

90

a. SCBs/CCBs
4.52 SCBs and CCBs were advised (i) about the modus operandi of an attempted fraud in a bank to enable them to take necessary precautions, (ii) to follow the best practices to further strengthen the internal checks and control systems in the banks as brought out in the seminars, (iii) to review the IT system afresh and incorporate proper control measures for preventing frauds in the computerized environment, (iv) to submit revised returns under Offsite Surveillance System, (v) to review the financial statements of borrowers diligently for strengthening the credit assessment/monitoring framework of the banks, (vi) about the reduction in the time limit for submission of compliance on inspection reports from 90 days to 60 days (vii) initiate necessary action to ensure that whenever payments are made or received, the same are done electronically, (viii) Revised Guidelines on Monitoring of Frauds and Reporting System and (ix) Operational Guidelines on Off-site Surveillance System (OSS) & submission of Revised Returns under OSS.

necessary action to ensure that whenever payments are made or received, the same are done electronically, (vii) Revised Guidelines on Monitoring of Frauds and Reporting System, (viii) Operational Guidelines on Off-site Surveillance System (OSS) & submission of Revised Returns under OSS and (ix) Operational Guidelines for conduct of Concurrent Audit in RRBs.

C. Supervisory Interventions and other initiatives:

4.54 (i) Revised Software developed by NABARD, in collaboration with the Tata Consultancy Services, for submission and processing of Off-Site Surveillance System Returns has been introduced from December 2011, (ii) in order to improve the quality and effectiveness of the statutory audit in Co-operative Banks, besides a Seminar at National Level, 13 Workshops for Statutory Auditors were conducted at the State Level, (iii) Regional Offices of NABARD & Training Establishments had conducted sensitisation workshops on KYC (Know Your Customer) /AML (AntiMoney Laundering), Credit Monitoring Arrangement (CMA), Controls, Frauds, Investments, Internal Checks & Corporate Governance, Investment

b. RRBs
4.53 During the year under review, instructions were issued to RRBs on the following: (i) Modus operandi of an attempted fraud was brought to the notice of all RRBs, (ii) to follow the best practices to further strengthen internal checks and control systems as brought out in seminars, (iii) to review the IT system afresh and incorporate proper control measures for preventing frauds in the computerised environment, (iv) submission of revised returns under Off-site Surveillance System, (v) review
Computerisation of OSS
New Software developed by NABARD under the OSS has been forwarded to all the supervised entities for submission of revised returns.

Management, Asset Liability Management (ALM) etc. for supervised entities, (iv) training programmes were also arranged for Inspecting Officers of NABARD at IDRBT, Hyderabad & the Punjab National Bank Institute Lucknow, Officers of to to Information better conduct equip Technology NABARDs in (PNBIIT), Inspecting

inspection

Computerised

Environment and under the Core Banking Solutions, (v) a training programme on Risk Based Supervision was also arranged for the Inspecting Officers NABARD Reserve Staff of in Bank College, Towards entities, improving NABARD the has Risk taken Management Skills of supervised up the task of preparation of Risk Management Manual for Co-operative Banks and RRBs.

the financial statements of borrowers diligently for credit strengthening the assessment/

monitoring framework of the banks, (vi) initiate 91

Chennai, in July

2011, (vi) during the year, NABARD conducted 3 Regional Supervision Seminars for its inspecting officers to discuss various issues involved in the inspection of banks, (vii) NABARD HO in association with the Financial Intelligence Unit-India (FIU-IND), Government of India had also conducted two workshops-cum-review meets of supervised banks to review and sensitise the Principal Officers regarding implementation of KYC/AML and (viii) with a view to improving the Risk Management skills in supervised

banks, NABARD had taken up the task of preparation of Risk Management Manual separately for Cooperative banks and RRBs. 4.55 For a holistic and more effective approach

towards supervision, NABARD continued to forge partnerships with other related agencies, especially in strengthening the Risk Management Systems in the supervised banks under the GIZ - RFIP programme and Institute of Chartered Accountants of India (ICAI) for preparation of Audit Manual.

92

V
Organisation, Corporate Governance and Management
NABARD has been entrusted with the responsibility of handling diverse functions ranging from refinance, credit planning, institutional development and supervision of client banks. Human tasks resource development NABARD and has organisation management is crucial to deliver on these multi-dimensional efficiently. undertaken several initiatives in recent years to improve transparency, governance and efficiency. Introduction of Human Resources Management System (HRMS), e-payments, recruitment, training of staff, schemes for higher studies and incentive schemes for attaining professional qualifications by the staff are some of these initiatives. Some departments of NABARD were reorganised with a view to harnessing greater synergies.

Management
A. Board of Directors
5.2 The Board of Directors met seven times during the year, while the Executive Committee and the Sanctioning Committee for loans under RIDF, met once and nine times respectively. 5.3 The following changes took place in the (e) (d) Shri Jainti Kumar Batish, Prof. Trilochan Sastry and Prof. M L Sharma were appointed as Directors on the Board with effect from 16 May, 12 October and 19 December 2011 respectively. Shri D B Gupta, Principal Secretary, Ministry of Agriculture, Government of Rajasthan was appointed as Director with effect from 01 August 2011 vice Shri R K Meena. (f) Shri Shaleen Kabra, Commissioner/ Secretary, Agriculture Production Department (APD), Government of Jammu & Kashmir was appointed as Director with effect from 24 February 2012 vice Shri Navin Kumar Choudhary. Shri Choudhary was appointed as Director with effect from 16 December 2011, vice Shri Mohd. Iqbal Khandey and was on the Board of NABARD only for a brief period. (g) Shri S Vijay Kumar, Secretary, Ministry of Rural Development, Government of India was appointed Director on the Board with effect from 01 February 2012 vice Shri B K Sinha.

composition of the Board during the year: (a) Dr. Prakash Bakshi assumed charge as Chairman, NABARD with effect from 02 June 2011 vice Shri Rakesh Singh, Additional Secretary (FS), Department of Financial Services, Ministry of Finance, Government of India who demitted office on 01 June 2011. (b) Shri H R Khan, Deputy Governor, RBI and Shri Dipankar Gupta were appointed as Directors on the Board with effect from 19 August and 30 November 2011 vice Dr. K C Chakrabarty, Deputy Governor, RBI and Shri Lakshmi Chand respectively. Smt. Shashi Rekha Rajagopalan, Director passed away during the year. (c) Shri Umesh Kumar, Joint Secretary (BA),

B. Senior Management
5.4 Management Committee, an important governance structure continued to meet regularly during the year. Chaired by the Chairman, the Committee deliberated on important issues having inter departmental or larger policy ramifications. Executive

Department of Financial Services, Ministry of Finance, Government of India was appointed Director on the Board with effect from 15 November 2011 vice Shri Alok Nigam.

93

Director (ED) and concerned Chief General Managers participated in the deliberations. Meetings of the Top Management Team comprising of Chairman, EDs and all CGMs was another forum which met regularly to discuss key issues and strategic interventions. C. Right to Information Act (RTI), 2005 5.5 As part of its goal of achieving transparency

Information Officers (CPIOs), with Shri V Ramakrishna Rao, Executive Director as the Appellate Authority and Shri S K Mitra, Executive Director as the Transparency Officer for the Bank. During the period ended 31 March 2012, 744 applications and 101 appeals were received and information provided. Twenty hearings on appeals made to Central Information Commission were attended to. Workshops were conducted on Right to Information Act, 2005 through Video Conferencing for selected Regional Offices at HO and one for core HO departments. The third workshop for Rajasthan RO was held at Jaipur.

and complying with statutory obligations, NABARD has been providing necessary information under the RTI Act. The Chief General Managers of Regional Offices have been designated as Central Public

Human Resources Management

A. Human resource development initiatives
a. Training/deputation/higher studies/ distance learning
5.6 During the year, 103 programmes were conducted by NBSC Lucknow covering 2,232 officers (2,049 from NABARD and 103 officials from RFIs) covering training on Watershed Development, TDF, Microcredit, HRMS, Financial Inclusion, Appraisal and monitoring of Infrastructural projects etc. Out of 2,232 officers, 1,704 and 528 officers were trained in In-house and On-location programmes, respectively. Major training programmes conducted were: International programme on Financial Inclusion, SHG-Bank linkage advanced training programme, etc. Customised Programmes on Faculty Development for 25 faculty Members from various training establishments of NABARD was conducted at IIM, Lucknow. In addition, 25 officers were deputed for a customised training programme on Advances in Citriculture at National Research Centre on Citriculture, Nagpur. Besides, 212 officers were deputed for 101 Off-the-Shelf Programmes, workshops, seminars and conferences organised by various institutions of repute in India. The major areas covered in these programmes were strategic HRM, information treasury systems audit, risk management, management, women empowerment, negotiation skills, ground water recharge etc. During 2011-12, National Bank Training Centre (NBTC), Lucknow and Zonal Training Centre (ZTC), Hyderabad conducted 74 training programmes for 976 Group B and C staff. The Colleges also conducted pre-promotion training programmes for Group B staff for promotion to higher grade in the officers cadre. One programme each conducted by NBTC, ZTC and HO, Mumbai covering 31 ST/SC Group B staff. One pre-recruitment training programme was conducted at IES, Bandra covering 84 SC/ST participants. Further, a consultancy assignment on Training Needs Assessment study of Haryana State Co-operative Bank was completed by NBSC Lucknow. 5.7 During the year, 20 staff members availed of

the facility of the Incentive Scheme for staff members to pursue professional studies. Various courses being pursued by employees were CFA, CS and MBA from reputed institutions viz. C F Institute of USA and Institute of Company Secretaries of India, Sikkim Manipal University, etc. During the year, 177 officers completed the e-learning programme, Harvard Mentor 10 in collaboration with Harvard Business School, USA. This programme aimed at building capabilities in wide ranging areas such as change management and leadership time management

94

b. Overseas Training / Visits by Top Management

5.8 various During the year, 54 officers from NABARD and 10 officers from client banks were deputed for overseas training programmes, exposure visits, seminars, meetings, etc. BIRD, Mangalore conducted a customised exposure visit on micro-Finance to SANASA Development Bank, Colombo, Sri Lanka, wherein 5 officials each from NABARD, RRBs and DCCBs from priority states were included. A team of 05 officers was deputed to participate in 3rd International Co operative Dialogue conducted by Academy of German Co operative at Montabaur, Germany. Further, two teams of six officers each were deputed for a training programme on Enterprise Risk Management conducted by AIM, Manila. Other officers were deputed for exposure visits to different countries, viz. Philippines, China, USA, Germany, Spain, Netherlands, Sri Lanka, Thailand, Malaysia, Iran, etc. Dr. Prakash Bakshi, Chairman led a team to 2011 Global Microcredit Summit at Valladolid, Spain. Further, he attended Mini Consultation Meet conducted by APRACA in Bangkok on finalisation of project report on Fin Power Programme for seeking grant assistance from IFAD. Shri Amaresh Kumar, ex-Executive Director participated in Financial Inclusion Policy Makers Forum held at Kuala Lumpur, Malaysia. the Shri 60th S.K.Mitra, Executive Director attended

Table 5.1: Promotions effected during the year Particulars Officers from Grade E to F Officers from Grade D to E Officers from Grade C to D Officers from Grade B to C Officers from Grade A to B Group B to officers cadre Total Total 33 51 103 83 7 115 392 Of which SC 2 4 5 10 1 20 42 ST 0 0 2 6 0 16 24

Tribes (8.72%) (Table 5.2).

The staff strength of

ex-servicemen and physically handicapped employees stood at 80 and 88, constituting respectively, 1.7 per cent and 1.9 per cent of the total staff strength. 5.11 With a view to ensuring optimum utilisation of

the qualified, experienced and relatively younger staff in Group B cadre, an opportunity to take up promotion to officer cadre, was offered under the Special Non-Transferability Scheme (SNTS). Under the scheme, Group B staff opting for promotion can seek posting to their centre of choice on a long term basis and 273 eligible officers opted for the scheme.

c. Special drive for promoting SC/ST staff

5.12 In order to fill the vacancies reserved in Group A cadre, an exclusive Special drive for SC and ST staff was conducted and 17 Group B staff were promoted as officers in Grade A.

EXCOM Meeting of APRACA held at Tehran, Iran.

B. Promotion and Staff Strength

a. Promotion
5.9 A total of 392 promotions were effected during the year. This included 17 employees in Group B promoted to Group A under the Special drive of promotion for SC/ST employees conducted to fill the backlog. Details of promotions effected grade/

d. PAR System
5.13 With a view to making the assessment of performance of officers more objective, an In-house Committee was set up under the Chairmanship of
Table 5.2: Total Staff Strength Cadre Total Of which SC ST 226 69 102 397

group-wise are given in the Table 5.1.

b. Staff Strength
5.10 The total staff strength of the Bank as on 31 March 2012 stood at 4552, of which, 836 belong to Scheduled Castes (18.36%) and 397 to Scheduled 95

Group A Group B Group C Total

2842 868 842 4552

431 104 301 836

Shri S K Mitra, ED, HRMD to examine the existing Performance Appraisal parameters, Ratings, Formats, etc. and to suggest modifications thereof. Based on the

recommendations of the Committee, new PAR formats have been introduced for the year ending 31 March 2012.

Administrative and Other Matters

A. Industrial Relations
5.14 Industrial relations in the Bank continued to Periodic discussions be harmonious during the year.

E. Seminar on Administrative Issues

5.19 Two seminars on Administrative Matters, including one for Senior Officers at Head Office were organised during the year. 100 Officers from Head Office and for various ROs/TEs have been covered in officers issues, for as effective also handling of and the seminars. The main objective of the seminars was sensitising administrative RTI cases. disciplinary

were held between the Management and the All India National Bank Officers Association and the All India NABARD Employees Association.

B. Transparency/Consultative Approach
i. Grievances Redressal System
5.15 Five meetings of the Grievances Redressal Twenty one

F. Committee for revision in various facilities/amenities to DDMs

5.20 A Committee comprising GM (HRMD) and for made policy DDMs by and its the to assess report. the The were GM (CPD) set up to review and recommend the facilities/amenities workload considered of for recommendations DDMs submitted decisions

Committee and three meetings of the Appellate Committee were held during the year. grievances and 6 appeals were processed. grievances and six appeals were received, of which 19

ii. Joint Consultation Scheme for Officers

5.16 The Joint Consultative Committee (JCC)

Committee and

necessary

comprising representatives from Bank Management and National Bank Officers Association, met during the year to discuss HR issues.

instructions were issued.

G. Welfare Measures for SC/ST employee

5.21 The Bank continued to adhere to the instructions issued by GoI regarding reservations for SC/ST employees in recruitment and promotions. Quarterly meetings of the Senior Executives and Chief Liaison Officer with the representatives of the Welfare Association of SC/ST employees were held at HO and ROs. for at 31 Two pre-promotion staff centres. Other training were benefits programmes SC/ST members

C. Other Welfare Measures for the Staff

5.17 The fifteenth Annual Sports and Cultural Festival of the Bank, NABOTSAV was held at Jaipur between 18-22 December 2011.

D. Other Developments
5.18 The of Central sexual Complaints harassment The Committee of women for at prevention function

conducted

training

extended to SC/ST employee included grant of scholarship to 13 wards of SC/ST employees and providing compassionate appointment to the dependants of 05 deceased employees.

workplace in HO and Committees in RO continued to effectively. Central Complaints Committee met 4 times during the year.

96

H. IT roadmap implementation in NABARD

5.22 The following Information Technology related have taken place during the developments year 2011-12:

2011-12,

implementation

of

Human

Resources

Management System (HRMS) and Centralised Loan Accounting & Management System (CLMAS) was initiated after due system studies done in previous financial year.

a. Video Conferencing facility:

5.23 For the whole year, the Video Conferencing (VC) facility was utilised very effectively by all the functional departments as per needs. The VC facility, definitely helped in increasing the staff productivity by enabling sharing of all information/data dynamically. It helped in decision making process, by obtaining responses from ROs/TEs quickly. Obviously, it has proved a big money and time saver for the Bank apart from saving the travel time and other hassles related with tour and travel. So far 980 conferences/seminars / workshops/training sessions and 1696 interviews have used VC facility. During the year 690 Conferences/ Seminars/Workshops/Training sessions and 246 Interviews made use of the VC facilities. Some of the important communications facilitated by VC facility are the following:

c. Strengthening of IT infrastructure:
5.25 The need for a strong Data Centre and

Disaster Recovery System (DRS) emerged with the migration to centralised HRMS and CLMAS. After examining various alternatives, Bank decided to upgrade its existing Data Centre to state-of-the-art technology driven Data Centre at HO. After successful commissioning of Data Centre, DRS, will be set up in Mumbai.

d. Improvements in computer network environment:

5.26 During the year, the computer network in the

Banks Head Office has been revamped through the procurement of latest network switches. For the purpose, Bank had successfully carried out the process of e-reverse bidding for the very first time. The e-reverse bidding process resulted in ensuring a more competitive, speedy and transparent bidding process.

Dissemination of important policy decisions to ROs/TEs by top management Chairmans Secretary, interaction Department of with the Finance Services, Financial

Government of India, in New Delhi

e. Wide Area Network:

5.27 In order to provide uniform access to

Performance Review of ROs by Chairman. In-house trainings like Trainers training on VC, training on Disaster Management, Application Tracker System (ATS).

computer applications, across the Bank, like e-mail, Intranet, HRMS, CLMAS etc., better management of these applications, improved IT security and centralised control over IT systems, the Bank has decided to implement the Wide Area Network (WAN) using its existing secured MPLS backbone. The MPLS network has been moulded in such a way so as to integrate existing LANs at ROs with HO LAN, hence making it WAN of the Bank. It is also proposed to provide the Internet services to all ROs/Training Establishments centrally from HO. The operationalisation of WAN will also reduce significant expenditure incurred by the Bank in decentralised IT application environment. 97

Internal Promotional Interviews All promotional interviews from Group B to Grade A, Grade A to B, Grade B to C, Grade C to D, Grade D to E, and Grade E to F were conducted through VC.

b. Centralised IT application systems:

5.24 Bank has taken steps in implementing IT systems as per IT roadmap. In continuation with the Banks efforts in this direction, in the financial year

f. Capacity building:
5.28 etc. The IT personnel of the Bank were trained This capacity building would help them to

occasion by the Bank. CVC, HO actively participated in the meetings of Vigilance Study Circle, Mumbai Chapter.

with the latest system application, software, databases understand the scope of centralised IT systems and address the issues effectively as and when the need arises.

K. Inspections and Concurrent Audits

5.31 In keeping with the principles of corporate governance, the Inspection Department (ID) continued to perform its role to ensure transparency in the decision making process of the bank and accountability of staff on adherence to set rules and

I. Offices Premises / Residential Quarters

5.29 The project for the construction of RO building and residential quarters at Port Blair has been completed and the same occupied in May 2011. The work relating to construction of office premises at Bengaluru, Jammu, Itanagar and RTC Complex at Mangalore is in progress. The acquisition of residential quarters at Raipur and Ranchi is at an advanced stage. The process of purchase of plots for construction of office building / residential quarters at Chhattisgarh, Uttarakhand Purchase of and Sikkim has been completed. plot for construction of office building/

guidelines. During the year, the Audit Committee of the Board (ACB) met four times, while the Risk Management Committee of the Board (RMCB) met thrice. The ACB reviewed the internal inspection/audit function in the institution - the system, its quality and effectiveness with focus on the follow-up of major areas of concern in housekeeping. The Committee followed up on all the issues raised in the Statutory Auditors report, inspection reports of RBI, etc., and interacted report. with the external auditors the before Credit the Risk finalisation of the annual financial accounts and The RMCB Asset reviewed and Management, Liability Management,

residential quarters at Agartala, Shillong and Patna is underway. The premises for both office and staff quarters at Chandigarh is expected to reach construction phase during 2012-13. Structural Audit of NABARD properties at Mumbai has been taken up so that necessary repairs and maintenance of these buildings can be initiated during 2012-13.

Operational Risk Management and other risks areas of the bank and guided in formulating the policy and strategy for integrated risk management. ID continued to monitor defaults by client institutions and apprise the Top Management of the status and follow-up action initiated for recovery of default, on a fortnightly basis. During the year, ID conducted Inspection of 09 ROs and 18 HODs. The concurrent audit at HO continued to be outsourced to external auditors, while the Concurrent Audit of all ROs/TEs were undertaken by the internal Concurrent Audit Cells (CAC) set up in the respective RO/TEs. The Department also inspected NABARD Subsidiaries, viz. , Agri Business Finance Ltd, Hyderabad, Agri Development Finance Ltd, Chennai, NABARD Financial Services, Bengaluru and NABCONS, Mumbai. The working of the subsidiaries revealed their sound financial health. The synopses of Inspection Reports containing major areas of concern were placed before the ACB for deliberation and guidance.

J. Vigilance
5.30 Central Vigilance Cell, Head Office conducts Preventive Vigilance Inspections (PVI) of Regional Offices/Training Establishments once in two years, to check that these systems are in place. Three PVIs have been conducted during the year. The Bank observed Vigilance Awareness Week from 31 October to 5 November 2011 at Head Office and all Regional Offices/ Training Establishments to create awareness about vigilance among the staff. The theme for the year was Participative Vigilance. Vigilance oath was administered to all the employees and eminent personalities invited to deliberate on the

98

L. Visits of Parliamentary Committees

5.32 During the year, the following Parliamentary Committees have visited NABARD: i. Study visit by the Parliamentary Committee on Subordinate Legislation to Mumbai, Chandigarh and Shimla from 13 to 18 June 2011 The Parliamentary Committee on Subordinate Legislation representatives had of discussions the with the Union/ Employees

iv.

Visit of the Committee on Government Assurances, Chandigarh Rajya and Sabha Shimla to from Amritsar, 16 to

22 September 2011 The Committee on Government Assurances,

Rajya Sabha had discussions with regard to fulfillment of the assurances given in Rajya Sabha to (i) USQ No. 1452 dated 23.11.2010 regarding Agriculture Debt Waiver (ii) USQ No.2054 dated 15.03.2011 regarding provision of direct loans to the needy and (iii) SQ No.277 dated 15.03.2011 regarding fraudulent practices adopted by MFIs. v. Study visit by the Parliamentary Committee on Subordinate Legislation, Rajya Sabha to Mumbai and Goa from 25 September to 01 October 2011 The Rajya Committee Sabha on had of Subordinate discussions the Legislation, with the Union/

Association of NABARD, followed by discussion with the officials of NABARD, Mumbai on the Rules/Regulations framed under the relevant Act. ii. Visit of the Committee on Subordinate Legislation, 2011 The Rajya of Committee Sabha on had Subordinate discussions Banks, Ministry Legislation, with along of the with Rajya Sabha to Bengaluru, Cochin & Munnar from 19th to 25th June,

representatives

Employees

Association of RRBs in Gujarat & Maharashtra followed by discussions with the officials of RRBs, Sponsor Bank and Private Sector Banks along with representatives of Ministry of Finance (Department of Financial Services) and NABARD on (i) Regional Rural Banks (Appointment and Promotion of Officers) Rules, 2010 and (ii) current status of Priority Sector Lending advances with special reference to micro-credit to farmers. vi. Meeting of the Draft & Evidence

representatives of Employees Association/Unions RRBs, Sponsor of representatives Finance

(Department of Financial Services) and NABARD on (i) Regional Rural Banks (Appointment and Promotion of Officers) Rules, 2010 along with current status of Priority Sector lending (ii) Reverse Mortgage Scheme and (iii) Social Sector Schemes. iii. Visit of the Committee on Government Assurances, Rajya Sabha to Leh and Srinagar from 22 to 27 June 2011 The Committee on Government Assurances,

Sub-Committee of Committee of Parliament on Official Language with member offices of Jaipur Jaipur The Committee had discussions on Progressive use of Official Language. vii. Inspection/Tour Programme of the Third Sub-Committee of Committee of Parliament on 99 Official Language for the Central Nagar on Rajbhasha 29 Implementation 2011 at Committee September

Rajya Sabha had discussions in connection with fulfillment of the assurances given in Rajya Sabha to (i) USQ No. 2053 dated 08.12.2009 regarding appointment on compassionate ground in RRBs and (ii) USQ No. 2054 dated 15.03.2011 regarding direct loans to needy.

Government

offices

located

in

Delhi,

suicides by farmers, rehabilitation works, access to bank credit, availability of agricultural inputs, crop insurance and implementation of various programmes at State and Central Governments.

Guwahati, Kohima, Dimapur & Imphal from 28 October to 05 November 2011 The Committee had discussions on Progressive use of Official Language. viii. Visit of the Committee on Subordinate Legislation, Rajya Sabha to Kolkata, Port Blair & Chennai from 23 to 29 February 2012 : The Committee discussed the following issues with representatives of various Commercial Banks, RRBs, Insurance Companies, RBI, IRDA and NABARD: RRBs (Appointment and promotion of officers and employees) Rules, 2010 Insurance (Licensing, Surveyors and Loss Assessors and

M. Promotion of Hindi
5.33 GoI Implementation of Official Language Policy of was monitored HO through by their Official quarterly Language meetings.

Implementation Committees constituted in all offices, including Further, monitoring was also done at HO level through quarterly progress reports received from ROs/TEs. Financial Services Department, Ministry of Finance, GoI carried out Rajbhasha inspection of our HO on 08 November 2011. As a part of its efforts towards capacity building of staff in order to enable them to use Hindi in their day-to-day official work, 92 workshops were conducted across the offices in which 843 staff members were trained. Further, training was imparted on use of APS Saral, Unicode-compliant version of our Official Language Software in the aforesaid workshops. 5.34 Six articles of officers of NABARD were

professional

requirements

code of conduct) Regulations, 2000 Implementation committee on Scheme, 2006 Current status of priority sector lending and Complaint redressal mechanism for customers and employees of banks. ix. Study visit of the Parliamentary Committee on Agriculture to Ranchi, Patna, Bhopal, Yavatmal & Nagpur from 27 February 2012 to 2 March 2012 : The Committee visited Moregaon village in Yavatmal district of Maharashtra state and interacted with the villagers on the reasons for of the 183rd report of the

Banking

Ombudsman

published in the book titled Vittiya Samaveshan aur Vittiya Saksherta (Financial Inclusion and Financial Literacy) published by CAB, RBI, Pune and which were selected for the national level seminar organised by NABARD under the aegis of Coordination Committee on Training in Hindi. In addition, in-house publication Rashtriya Bank Srijana bagged two silver trophies from Association of Business Communicators of India (ABCI). To encourage the officers to prepare PLP and Inspection Reports in Hindi, a Special Cash Award Scheme was also introduced.

100

VI
Financial Performance & Management of Resources
NABARD has put in place a sound resource the previous period. The funds deployed for management system. The management of funds by investment operations (including rural infrastructure development & warehousing) and for production and marketing activities (including conversion) increased by `9,723 crore and ` 14,390 crore, respectively as 6.2 The financial resources of NABARD (Table 31 on 31 March 2012. The total market borrowing which stood at ` 43,203 crore, as on 31 March 2012, constituted 23.73 percentage of the total resources of the bank. 6.1) increased from ` 1,58,872 crore as on

the Bank and its financial performance during the year are detailed in this chapter.

March 2011 to `1,82,075 crore as on 31 March 2012, registering an increase of 14.60 per cent over

Table 6.1: Sources of Funds (As on 31 March 2012) (` crore) Particulars 31.03.2011 Amount Capital, Reserves & Surplus NRC (LTO) and NRC (Stabilisaton) Funds STCRC Fund Deposits RIDF Deposits Bonds & Debentures Certificate of deposits Term Money Borrowings Commercial Paper Borrowings from GoI Foreign Currency Loan Borrowings against STDs Borrowings under JNN Solar Mission Programme Other Liabilities/Funds Total 13,863 16,045 14,622 277 67,878 26,788 137 110 6,448 124 503 360 0 11,717 158,872 Share (%) 8.7 10.1 9.2 0.2 42.7 16.9 0.1 0.1 4.0 0.1 0.3 0.2 0 7.4 100.0 31.03.2012 Amount 16,408 16,058 20,000 291 75,107 38,584 1,281 182 2,245 85 503 0 33 11,298 182,075 Share (%) 9.0 8.8 11.0 0.2 41.3 21.2 0.7 0.1 1.2 0 0.3 0.0 0 6.2 100.0

Sources of Funds
A. Capital, Reserves & Surplus
6.3 The paid up capital, as on 31 March 2012 was ` 3,000 crore against the authorised capital of `5,000 crore, with the share of GoI being at 99.33 per cent and that of RBI at 0.67 per cent. Government of India contributed `1,000 crore to NABARDs paid up capital during the year. The 101 amount of reserves and surplus increased by `2,545 crore, as on 31 March 2012.

B. NRC (LTO) & NRC (Stabilisation) Funds

6.4 The National and the Rural Credit (Long Rural Term Credit Operations) National

(Stabilisation) short-term

Funds

are

utilised

for

investment Funds are

` 75,107 crore, as against `67,878 crore at the end of March 2011, resulting in a net inflow deposits held as on 31 March, 2011. of `7,229 crore, an increase of 10.65 per cent over the

operations and for conversion/ reschedulement of credit, respectively. These augmented by internal accruals and contributions made by RBI. During the year, an amount of `13 crore was contributed to these Funds.

E. Borrowings
i. Capital Gains Bonds
Capital Gains Bonds aggregating `0.76 crore and the stood at ` 7 crore as on 31 March

C. STCRC Fund
6.5 With a the view Short to augmenting NABARDs Rural resources for ST credit facilities to Co-operative Institutions, Term Co-operative Credit (Refinance) Fund (STCRC Fund) was set up in 2008-09, with contributions by scheduled commercial banks not achieving their priority sector obligations. From an initial corpus of `4,622 crore, it was augmented with an additional allocation of `5,000 crore each for 2009-10 and 2010-11 and `10,000 crore for the year 2011-12. An amount of `4,622 crore was repaid during the year. The outstanding balance under the STCRC Fund as on 31 March 2012 stood at ` 20,000 crore.

6.8

were redeemed during the year 2011-12 outstanding 2012.

ii.
6.9

Corporate Bonds
Corporate Bonds amounting to ` 17,914

crore were issued during the year while `6,019 crore were redeemed. The amount outstanding at the end of the March 2012 stood at `33,578 crore as against ` 21,682 crore as on 31 March 2011.

iii. Statutory Liquidity Ratio (SLR) Bonds

6.10 The entire outstanding of `99 crore under

D. Deposits
i.
6.6 deposits

SLR Bonds was redeemed during the year and there was no outstanding as on 31 March 2012. iv. Bhavishya Nirman Bonds (BNB) of term tea, deposits coffee and the from and rubber 6.11 No fresh bonds were issued during the year. `4,975 crore

Term Deposits
The amount

received

companies aggregated `291 crore as on 31 March 2012, as against ` 277 crore at the end of the 31 March 2011, reflecting an during the current year. increase of ` 14 crore,

The outstanding under BNB stood at as on 31 March 2012.

v.
6.12

NABARD Rural Bonds

No fresh bonds were issued during the year.

ii
6.7 XVII

RIDF Deposits
During the year, and RIDF Deposits Nirman(BN) crore, from XIII with

The outstanding at the end of 31 March 2012 stood at `24 crore.

commercial banks under RIDF XII to XVII, RIDF Warehousing Bharat to mobilised aggregated `15,241

vi. Certificates of Deposits (CD)

6.13 Fresh borrowings through issue of Certificates

of deposits of `1,281 crores were mobilised and ` 137 crore were redeemed during the year. The balance outstanding against CDs issued was `1,281 crore as on 31 March 2012. 102

repayments being `8,012 crore under RIDF VI to XIV and BN XII & XIII. As on 31 March 2012, aggregate outstanding of RIDF deposits stood at

vii. Commercial Paper (CP)

6.14 Commercial papers amounting to `7,308

aided projects. The outstanding balance in respect of borrowing made from GoI stood at `85 crore as on 31 March 2012, as against `124 crore, as on 31 March 2011.

crore were issued and `11,511 crore were repaid during the current year. The CPs outstanding as on 31 March 2012 stood at `2,245 crore as against `6,448 crore as on 31 March 2011.

x. Borrowings in Foreign Currency

6.17 An amount of ` 41 crore was repaid under ` 41

viii. Term Money Borrowings (TMB)

6.15 Term Money Borrowings (TMB) of three to

this segment during the year and a sum of

crore was drawn under KfW (UPNRM) which resulted in maintaining the balance under the borrowings in foreign currency from KfW, Germany, at ` 503 crore, as on 31 March 2012. The foreign exchange risk on forex borrowings as well as interest payments, have been hedged at an average cost of 1.79 per cent p.a. for 10 years.

six months tenor were resorted in order to meet the short-term requirements. TMB worth `438 crore were raised and repayments to the tune of `366 crore made, leaving an outstanding of `182 crore as on 31 March 2012, compared to the outstanding at `110 crore as on 31 March 2011.

xi. Borrowings against Short term Deposits ix. GoI Borrowings

6.16 There of were India no fresh borrowings the year from 6.18

(STD)
The entire amount of borrowing made during 2011-12,

Government

against STD at ` 360 crore was repaid during the current year. As such no amount was outstanding under this head as on 31 March 2012.

whereas repayment of ` 39 crore was made on maturity of loans drawn under various externally

Uses of Funds
F. ST Loans, MT (Conversion) Loans
6.19 The ST (SAO) loans outstanding against and Commercial banks for financing advances to the SCBs at `33,682 crore, RRBs at `13,764 crore PACS at `79 crore together with ST (OSAO) loans to SCBs at `311 crore and RRBs at `502 crore had resulted on 31 in increased 2012, loans outstanding to the for loan production and marketing credit at `48,338 crore as March compared outstanding at `33,885 crore in the corresponding period last year. There has been an increase of 42.65 per cent in the outstanding of credit under this segment. Outstanding balance under MT conversion loan stood `129 crore as on 31 March 2012 (Table 6.2). 103

G. Project Loans under RIDF

6.20 Loans provided to State Governments for implementation of rural infrastructure development stood at `70,860 crore as on 31 March 2012 compared to outstanding at ` 66,078 crore as on 31 March 2011, recording a net outflow of `4,782 crore during the year.

H. Non-Project Loans
6.21 (LT) The loans outstanding in respect of long-term granted to State Governments for

contributing to the share capital of co-operative credit institutions, stood at March 2011. ` 140 crore as on 31 March 2012 compared to ` 167 crore as on 31

Table 6.2: Uses of Funds (As on 31 March 2012)

(` crore) Particulars 31.03.2011 Amount Cash and Bank Balance Government Securities and other Investments CBLO Production and Marketing Credit Conversion of Production Credit into MT Loans MT & LT Project Loans * LT Non Project Loans Loans out of RIDF Co Finance Loans(net of provision) NIDA Loan Direct Refinance to DCCBs RIDF- Warehousing infrastructure Other Loans Fixed Assets & Other Assets Total 10537 5868 228 33885 193 38896 167 66078 88 0 0 0 182 2750 158872 Share (%) 6.6 3.7 0.1 21.3 0.1 24.5 0.1 41.7 0.1 0 0 0 0.1 1.7 100.0 31.03.2012 Amount 8313 5867 231 48338 129 43107 140 70860 72 423 910 759 231 2695 182075 Share (%) 4.6 3.2 0.1 26.6 0.1 23.7 0.1 38.9 0.0 0.2 0.5 0.4 0.1 1.5 100.0

(* Including the amount subscribed to Special Development Debentures of SCARDBs which are in the nature of Deemed Advances.)

I. Investment Credit
6.22 Refinance assistance of ` 43,107 crore was medium and extended to banks in respect of the

` 72 crore (net of provision), as against ` 88 crore (net of provision ) at the end of previous year.

K. NIDA
6.24 NIDA, a new the line of credit year was for made rural available during current

long term investment loans provided by them as as on 31 March 2012 as against the assistance at ` 38,896 crore provided at the end of 2011. During the year, refinance 31 March by provided,

infrastructure investment to state-owned institutions, with sustained income streams which can repay the loan directly to NABARD, without depending upon budgetary resources of the State Governments. Assistance is provided based on viability of the

NABARD for investment credit activities increased by 10.82 per cent.

J. Co-finance
6.23 The Bank has entered into agreements with commercial banks to co-finance various projects. The outstanding balance as on 31 March 2012 stood at

borrowing entity and its financial condition, including track record of execution of works and delivery of services related to the specific investment being financed. The outstanding loans under the segment stood at `423 crore as on 31 March 2012.

104

L. Direct lending to CCBs

6.25 A Short-term multipurpose credit product designed for direct lending to DCCBs for meeting the working capital and farm asset maintenance needs of the individual borrowers and affiliated PACS has been launched, on a pilot basis. The quantum of outstanding under this line of credit stood at `910 crore as on 31 March 2012.

The loans outstanding under the Warehousing stood at ` 759 crore as on 31 March 2012.

N. Other Loans
6.27 Other loans extended out of different Funds (CDF, MFDEF, WDF and TDF, KfW UPNRM, FIPF, JNN Solar Mission and PODF ) stood at ` 231 crore as on 31 March 2012.

M. RIDF Warehousing Infrastructure

6.26 Government of India has accorded top priority for creation of quality warehouse facilities in the country for reducing the inefficiencies in post harvest agencies management. owned/ Financial by assistance Central/ is available under this scheme to State Government, supported State Government, Cooperatives etc. All RRBs / DCCBs and Scheduled commercial banks are also eligible for refinance from NABARD under this Scheme.

O. Investment of Surplus Funds

6.28 The quantum of surplus deployed by NABARD in various financial instruments stood at `12,862 crore during the year. Out of this `6,097 crore was deployed in Government securities and other financial instruments and an aggregate sum of `6,765 crore was kept in the form of Short Term Bank Deposits in order to meet liquidity and contingency requirements, as on 31 March 2012.

Income and Expenditure

6.29 The total income of NABARD during the The profit before tax u/s 36(1) (viii) of IT Act 1961, NRC (LTO) Fund, NRC (Stabilisation) to Fund and Reserve viz., FIPF, Fund, respectively. Further, an aggregate of ` 145 crore was transferred Investment FITF. various Funds Reserve, Cooperative FTTF and Development Fund, Research and Development Fund, Fluctuation year amounted to `10,979 crore as against ` 9,202 crore for the year 2010-2011. (PBT) and profit after tax (PAT) were at ` 2,252 crore and ` 1,635 crore respectively as on 31 March 2012, as against the previous years PBT and PAT `1,824 crore and `1,279 crore, respectively. The average cost of borrowings (interest expenditure as percent of average borrowings) increased from 6.64 percent per annum during 2010-11 to 6.96 percent per annum during 2011-12 due to rising interest rates. An amount of `310 crore, `10 crore, `1 crore and `1,238 crore was transferred to Special Reserve

Capital Adequacy
6.30 The capital to risk-weighted assets ratio per cent as on 31 March (CRAR) was at 20.55

2012 as compared to 21.76 percent as on 31 March 2011, as against a minimum 9 per cent norm stipulated by RBI.

105

Asset-Liability Management (ALM)

6.31 The and Asset-Liability of the Bank of management Management oversees market the risk, Committee monitoring (ALCO)

and

interest-rate limits evaluating

sensitivity prescribed the market

positions by the risk of

vis-a-vis RBI/Board. treasury

prudential Besides

operations, the ALCO reviews at periodic intervals, the interest rates fixed for various products and effect modification in the interest rates wherever considered essential, taking into account the market scenario.

liquidity risk and interest rate risks, as per the comprehensive ALM / liquidity management policies approved by the Board. The role of ALCO includes, inter-alia, reviewing the Banks structural liquidity

106

Annual Accounts 2011-2012

107

P. Parikh & Associates

Chartered Accountants

AUDITORS REPORT
We have audited the attached Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (the Bank) as at March 31, 2012 and the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto in which are incorporated the returns of 11 Regional Offices and 1 Training Centre audited by us. These Offices and Training Centre have been selected in consultation with the Bank in terms of notification no.F .No.1/14/2004-BOA dated January 23, 2012 issued by Government of India, Ministry of Finance, Department of Financial Services. Also incorporated in the Balance Sheet, Profit and Loss Account and Cash Flow Statement are the returns from 18 Regional Offices and 2 Training Centres which have not been subjected to audit. These unaudited offices account for 26.18% of advances (includes deemed advances as per Note B-14(c) of Schedule 18), 0.38% of deposits and term money borrowings, 24.85% of interest income (includes interest on deemed advances as per Note B-14(b) of Schedule 18) and 0.34% of interest expenses. These financial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. Subject to the limitations of the audit mentioned in paragraph 1 above, we report that: a. b. c. d. e. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and have found them to be satisfactory; In our opinion, the transactions of the Bank which have come to our notice have been within the powers of the Bank; The returns received from the Regional Offices and Training Centres of the Banks have been found adequate for the purpose of our audit; The Balance Sheet and Profit and Loss Account have been drawn up in accordance with Schedule A and Schedule B of Chapter IV of the National Bank for Agriculture and Rural Development (Additional) General Regulations, 1984; In our opinion and to the best of our information and according to the explanations given and as shown by the books of the Bank: i. the Balance Sheet, read with Significant Accounting Policies and notes on accounts contain all necessary particulars and is properly drawn up in conformity with the accounting principles generally accepted in India so as to exhibit a true and fair view of the state of affairs of the Bank as at March 31, 2012; and the Profit and Loss Account, read with Significant Accounting Policies and notes on accounts, shows a true balance of the profit for the year ended on that date and is in conformity with accounting principles generally accepted in India; and

ii.

iii. the Cash Flow Statement gives a true and fair view of the cash flows of the Bank for the year ended on that date. Place: Mumbai Date: May 26, 2012 For and on behalf of P . Parikh & Associates Chartered Accountants Firm Registration No. 107564W Ashok Rajagiri Partner, Membership No.: 046070
HO : 501, Sujata, off Narsi Natha Street, Mumbai - 400 009, Tel : 23443549, 23437853, Fax : 23415455, Website : www.pparikh.com

108

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT BALANCE SHEET AS ON 31 MARCH 2012
Sr. No. 1 2 3 4 5 6 7 8 9 10 FUNDS AND LIABILITIES Capital Reserve Fund and other Reserves National Rural Credit Funds Funds out of grants received from International Agencies Gifts, Grants, Donations and Benefactions Other Funds Deposits Bonds and Debentures Borrowings Current Liabilities and Provisions Total Forward Foreign Exchange Contracts (Hedging) as per contra 1 2 3 4 5 6 7 8 9 SCHEDULE As on 31.03.2012 3000,00,00 13407,68,56 16058,00,00 139,20,78 657,92,20 4157,12,25 95397,75,23 38583,86,29 4328,48,40 6345,16,85 182075,20,56 632,33,09

(` in thousands) As on 31.03.2011 2000,00,00 11862,72,33 16045,00,00 138,89,56 2601,89,23 3431,47,40 82776,67,53 26788,21,49 7681,29,10 5546,09,80 158872,26,44 592,09,63 (` in thousands)

Sr. No. 1 2 3 4 5

PROPERTY AND ASSETS

SCHEDULE

As on 31.03.2012 8544,37,38 18209,82,72 152625,95,23 225,05,62 2469,99,61 182075,20,56 632,33,09

As on 31.03.2011 10765,26,79 19329,50,93 126027,99,95 229,48,63 2520,00,14 158872,26,44 592,09,63

Cash and Bank Balances Investments Advances Fixed Assets Other Assets Total Forward Foreign Exchange Contracts (Hedging) as per contra Commitment and Contingent Liabilities Significant Accounting Policies and Notes on Accounts

10 11 12 13 14

17 18

Schedules referred to above form an integral part of accounts As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012

M L Sharma Director

109

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2012
Sr.No. INCOME 1 2 3 Interest received on Loans and Advances Income from Investment Operations / Deposits (Refer Note B-4 of Schedule 18) Other Receipts(Refer Note B-6 of Schedule 18) Total A Sr.No. EXPENDITURE 1 2 3 4 5 6 Interest and Financial Charges(Refer Note B-5 of Schedule 18) Establishment and Other Expenses Provisions Depreciation Total B Profit before Tax (A - B) Provision for a) Income Tax b) Deferred Tax Asset (Refer Note B-13 of Schedule 18) Profit after Tax Significant Accounting Policies and Notes on Accounts 18 SCHEDULE 15 16 A 16 B SCHEDULE 2011-12 9511,97,11 1346,02,32 120,50,51 10978,49,94 2011-12 7534,01,97 1027,10,81 144,18,23 21,22,00 8726,53,01 2251,96,93 455,00,00 162,00,00 1634,96,93

(` in thousands)
2010-11 8169,13,99 943,23,85 89,63,23 9202,01,07 (` in thousands) 2010-11 6193,86,85 1126,09,88 35,60,34 22,57,98 7378,15,05 1823,86,02 460,00,00 84,65,00 1279,21,02

Schedules referred to above form an integral part of accounts

PROFIT AND LOSS APPROPRIATION ACCOUNT

Sr.No. APPROPRIATIONS / WITHDRAWALS 1. 2. Profit for the year brought down Add: Withdrawals from funds against expenditure debited to Profit & Loss A/c a) Co-operative Development Fund (Refer Schedule 1) b) Research and Development Fund (Refer Schedule 1) c) Watershed Development Fund (Refer Schedule 5) d) Micro Finance Development and Equity Fund (Refer Schedule 5) e) Investment Fluctuation Reserve (Refer Schedule 1) f) Farm Innovation & Promotion Fund Withdrawals of Funds which have been closed i) Foreign Currency Risk Fund ii) Soft Loan Assistance Fund for Margin Money iii) Agriculture & Rural Enterprise Incubation Fund Profit available for Appropriation Less: Transferred to: a) Special Reserves u/s 36(1) (viii) of IT Act, 1961 b) National Rural Credit (Long Term Operations) Fund c) National Rural Credit (Stabilisation) Fund d) Co-operative Development Fund e) Research and Development Fund f) Investment Fluctuation Reserve (Refer Schedule 1) g) Farmers Technology Transfer Fund h) Farm Innovation & Promotion Fund (Refer Schedule 1) i) Producers Organizations Development Fund j) Rural Infrastructure Promotion Fund k) Financial Inclusion Technology Fund l) Reserve Fund Total 2011-12 1634,96,93

(` in thousands) 2010-11 1279,21,02

5,35,40 20,65,30 0 10,61,32 29,94,42 2,73,85 0 0 0 1704,27,22 310,00,00 10,00,00 1,00,00 5,35,40 20,65,30 27,15,42 44,56,36 2,73,85 0 0 45,00,00 1237,80,89 1704,27,22

6,05,32 17,67,49 1,01,14 11,40,75 2,07,65 2,39,20 147,06,04 10,00,00 5,00,00 1481,88,61 360,00,00 50,00,00 10,00,00 6,05,32 17,67,49 116,07,65 33,55,54 2,34,20 50,00,00 25,00,00 10,00,00 801,18,41 1481,88,61

2.1

Refer Schedule 18 for Significant Accounting Policies and Notes on Accounts. As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W

Ashok Rajagiri Partner M No.046070 Mumbai, Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director

K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012 M L Sharma Director

110

SCHEDULES TO BALANCE SHEET Schedule 1 - Reserve Fund and Other Reserves

(` in thousands) Sr. Particulars No. 1 2 3 4 5 6 Reserve Fund Research and Development Fund Capital Reserve Investment Fluctuation Reserve Co-operative Development Fund Special Reserves Created & Maintained u/s 36(1)(viii) of Income Tax Act, 1961 Producers Organizations Development Fund Rural Infrastructure Promotion Fund MFDEF - Reserve Fund Farm Innovation & Promotion Fund Total Previous year Opening Balance as on 01.04.2011 6703,91,80 50,00,00 74,80,53 259,00,00 125,00,00 Exp./Add./ Adjust. during the year 0 0 0 0 0 Transferred From P&L Appropriation 1237,80,89 20,65,30 0 27,15,42 5,35,40 Transferred to P&L Appropriation 0 20,65,30 0 29,94,42 5,35,40 Balance as on 31.03.2012 7941,72,69 50,00,00 74,80,53 256,21,00 125,00,00

4445,00,00 50,00,00 25,00,00 80,00,00 50,00,00 11862,72,33 10674,59,96

0 -1,64 -4,01 0 0 -5,65 5,00

310,00,00 0 0 0 2,73,85 1603,70,86 1378,33,07

0 0 0 0 2,73,85 190,25,70

4755,00,00 49,98,36 24,95,99 80,00,00 50,00,00 11862,72,33

7 8 9 10

58,68,97 13407,68,57

Schedule 2 - National Rural Credit Funds (` in thousands) Sr Particulars No. 1 National Rural Credit (Long Term Operations) Fund National Rural Credit (Stabilisation) Fund Total Previous year Opening Balance as on 01.04.2011 Contribution by RBI Transferred from P&L Appropriation Balance as on 31.03.2012

14468,00,00 1577,00,00 16045,00,00 15983,00,00

1,00,00 1,00,00 2,00,00 2,00,00

10,00,00 1,00,00 11,00,00 60,00,00

14479,00,00 1579,00,00 16058,00,00 16045,00,00

Schedule 3 - Funds Out of Grants received from International Agencies (` in thousands) Sr. No. 1 2 3 4 Particulars Opening Balance as on 01.04.2011 55,61,77 73,16,38 9,19,49 91,92 Grants received/ adjusted during the year 0 0 63,10 5,23,64 5,86,74 16,39,37 Interest credited to the fund 0 4,66,84 5,45 0 4,72,29 4,15,31 Exp./Disb./ Adjust. during the year 0 10,24,81 0 3,00 10,27,81 31,52,76 Balance as on 31.03.2012 55,61,77 67,58,41 9,88,05 6,12,55 139,20,78 138,89,56

National Bank - Swiss Development Coop. Project Rural Innovation Fund (RIF) (Refer Note B-2 & B-10 of Schedule 18) Rural Promotion Fund (Refer Note B-2 & B-10 of Schedule 18) KfW - NABARD V Fund for Adivasi Programme Total Previous year

138,89,56 149,87,64

111

Schedule 4 - Gifts, Grants, Donations and Benefactions

(` in thousands) Sr. No. A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 B. 1 2 3 4 5 6 7 8 9 10 11 12 Particulars Opening Balance as on 01.04.2011 Grant received during the year Interest Credited to the fund Adjusted against the expenditure Balance as on 31.03.2012

Grants from International Agencies KfW - NB - IX Adivasi Development Programme Maharashtra (Refer Note B-10 of Schedule 18) KfW UPNRM - Accompanying Measures KfW NB UPNRM - Financial Contribution KfW UPNRM - Risk Mitigation Fund International Fund for Agriculture Development (IFAD) Priyadarshini(Refer Note B-11 of Schedule 18) GIZ - Uttarakhand Regional Economic Development KfW-NB-Indo German Watershed Development Programme Phase III - Maharashtra (Refer Note B-10 & B-11 of Schedule 18) Indo German Watershed Development Programme Andhra Pradesh (Refer Note B-10 & B-11 of Schedule 18) Indo German Watershed Development Programme Gujarat (Refer Note B-10 & B-11 of Schedule 18) Indo German Watershed Development Programme Rajasthan (Refer Note B-10 & B-11 of Schedule 18) KfW Umbrella Programme on Natural Resource Management Fund (Refer Note B-3 of Schedule 18) NABARD Grant for Fixed Assets under NB-SDC HID Project GIZ-NABARD RFP - Financial Component NE Council Fund for Miscellaneous Training Programme (Refer Note B-11 of Schedule 18) KfW NB SEWA Bank Capitalisation of Rural Financial Institutions (RFIs) GIZ Rural Financial Institutions Program (RFIP) GIZ UPNRM Technical Collaboration United Nation Development Programme(UNDP) NABARD-Financial Inclusion Fund Government Subsidy Schemes Capital Investment Subsidy for Cold Storage Projects - NHB Capital Subsidy for Cold Storage NHM Capital Subsidy for Cold Storage TM North East Credit Linked Capital Subsidy for Technology Upgradation of SSIs Capital Investment Subsidy for Rural Godowns Million Shallow Tubewell Programme Bihar Bihar Ground Water Irrigation Scheme (BIGWIS) Cattle Development Prog. - Uttar Pradesh (Refer Note B-10 of Schedule 18) Cattle Development Programme - Bihar (Refer Note B-10 of Schedule 18) National Project on Organic Farming Integrated Watershed Development Programme Rashtriya Sam Vikas Yojana Centrally Sponsored Scheme on Integrated Development of Small Ruminants and Rabbits 19,18,67 9,66 4,37,96 6,23 39,38,94 2,63,15 182,89,03 26,61 99,46 6,22 14,22,55 3,44,55 11,35,46 0 1,65,03 4,89,64 121,00,00 0 2,39,65 0 1,71,40 1,50,00 10,58,00 4,00,00 0 0 0 0 0 0 0 1,68 6,19 0 0 0 26,63,82 0 6,02,99 4,95,87 148,68,54 2,63,15 34,78,22 26,60 99,46 1,08,52 17,74,18 7,14,53 3,90,32 9,66 0 0 11,70,39 0 150,50,47 1,69 1,77,59 47,71 7,06,37 30,02 78,42 16,88 81,00 11,74 4,66,44 86,39 2,32 73 15 0 9,20,51 6,60 1,00 1,79 2,66 58,00 39,21 -1,09,74 4,41,18 3,28,48 28,29 1,24,17 0 0 18,79,53 7,86,68 5,53,18 3,23,66 2,73,36 0 0 0 2,94,83 76,86 51,40 1,56,48 8,72 1,00 0 0 0 0 4,81 25 2,94 67 0 0 0 0 0 0 0 0 3,52,00 3,16,21 16,09 0 4,66,44 86,39 18,86,67 7,87,67 5,56,25 3,24,33 2,16,46 6,60 1,00 1,79 2,97,49 36,56 63,50 46,74 1,76,33 30,15 93,19 1,35,91 0 0 0 0 0 0 9,77,42 0 0 0 0 98,31 27,11 0

112

Schedule 4 - Gifts, Grants, Donations and Benefactions

(` in thousands) Sr. No. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 C. 1 2 D 1 2 3 4 5 E F 1 2 Particulars Opening Balance as on 01.04.2011 89,93 39,35 12,27,65 5,61,71 0 20,65,63 5,97,03 2,16 54,47 51,14 1,37,01 1,58 10,45,52 1,92,00 31,39,19 0 9,92 1,59,61 1256,04,04 419,85,25 0 19,64 134,82,85 10,49,15 340,64,24 13,90,73 9,10,27 18,82,00 20,00,00 0 0 2601,89,22 4706,76,57 Grant received during the year -89,93 0 0 0 5,00,00 149,25,88 2,28,12 48,73 0 0 0 6,37,00 110,00,00 0 29,60,00 46,80,00 0 6,00,00 0 35,69,00 100,00,00 30,00,00 0 0 88,78 0 1,59,00 15,21,22 0 5,00,00 5,00,00 760,55,08 2988,77,26 Interest Credited to the fund 0 0 0 0 0 0 0 0 0 3,36 2,86 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 32,48 69,91 0 5,69,82 1232,17,58 263,64,41 0 30,08,33 134,37,52 10,49,15 341,53,03 13,30,17 10,68,71 34,15,83 0 66,58 5,10 2704,84,58 5094,34,52 Adjusted against the expenditure 0 17,38 -5,00,36 3,79,11 4,14,73 166,79,31 0 50,90 54,47 0 1,25,93 5,81,75 100,75,18 1,92,00 41,69,88 Balance as on 31.03.2012 0 21,96 17,28,00 1,82,60 85,27 3,12,19 8,25,15 0 0 54,49 13,95 56,83 19,70,34 0 19,29,30 46,80,00 9,92 1,89,79 23,86,46 191,89,84 100,00,00 11,31 45,33 0 0 60,57 56 -12,62 20,00,00 4,33,42 4,94,90 657,92,20 2601,89,22

Rain Water Harvesting Scheme Kutch Drought Proofing Project Dairy and Poultry Venture Capital Fund Poultry Venture Capital Fund Poultry Venture Capital Fund (Subsidy) Capital Subsidy for Agriculture Marketing Infrastructure, Grading and Standardisation Centrally Sponsored Scheme for establishing Poultry Estate Livelihood Advancement Business School Sultanpur, Uttar Pradesh Livelihood Advancement Business School Rae - Bareli , Uttar Pradesh Multi Activity Approach for Poverty Alleviation Sultanpur, Uttar Pradesh (Refer Note B-10 of Schedule 18) Multi Activity Approach for Poverty Alleviation BAIF - Rae Bareli, Uttar Pradesh(Refer Note B-10 of Schedule 18) CCS - on Pig Development Dairy Entrepreneurship development Scheme CCS - S & R Male Buffalo calves CSS - JNN Solar Mission CSS - JNNSM - Solar Lighting CSS - on Rural Slaughter Houses Capital Subsidy Scheme - Agri Clinics Agri Business Centres Artificial Recharge of Groundwater in Hard Rock Area Agriculture Debt Waiver and Debt Relief Scheme (ADWDR) 2008 Womens Self Help Groups [SHGs] Development Fund Interest Relief / Subvention Interest Subvention (Sugar Term Loan) Scheme for providing Financial Assistance to Sugar Undertakings 2007 (SEFASU - 2007) Revival Package of Short Term Cooperative Credit Structure Cost of Special Audit Recapitalisation Assistance to Credit Cooperative Societies Technical Assistance Human Resources Development Implementation Cost Revival Package for Long Term Co-operative Credit Structure (LTCCS) Revival, Reform and Restructuring of Handloom Sector Implementation Cost [RRR] - Handloom Package Expenditure on Loss Assessment [RRR] - Handloom Package Total Previous year

113

Schedule 5 - Other Funds

(` in thousands) Sr. Particulars No. Opening Additions/ Balance as on Adjustments 01.04.2011 during the year 1897,68,75 0 Transferred from P & L Appropriation 0 Interest Credited Expenditure/ Disb.during the year 201,12,19 Transferred to P&L Appropriation 0 Balance as on 31.03.2012 1806,02,59

1 2

Watershed Development Fund Micro Finance Development and Equity Fund (Refer Note B-10 of Schedule 18) Interest Differential Fund (Forex Risk) Interest Differential Fund - (Tawa) Adivasi Development Fund Tribal Development Fund Financial Inclusion Fund (Refer Note B-10 of Schedule 18) Financial Inclusion Technology Fund (Refer Note B-10 of Schedule 18) Farmers Technology Transfer Fund Total Previous year

109,46,03

139,11,97 157,69,73 10,00 5,30,31 1054,50,93 53,10,64 22,95,08 101,00,00 3431,47,41 2735,06,35

0 12,56,28 0 32,86 1003,84,89 16,27,02 60,07,76 0 1093,08,81 930,89,69

0 0 0 0 0 0 45,00,00 44,56,36 89,56,36 43,55,54

8,34,03 0 0 0 0 3,44,96 52,36 0 121,77,38 101,05,25

18,07,11 0 0 5 157,11,49 18,89,93 128,39,26 44,56,36 568,16,39 366,67,55

10,61,32 0 0 0 0 0 0 0 10,61,32 12,41,88

118,77,57 170,26,01 10,00 5,63,12 1901,24,33 53,92,69 15,94 101,00,00 4157,12,25 3431,47,41

3 4 5 6 7 8 9

Schedule 6 - Deposits
(` in thousands) Sr. Particulars No. 1 2 3 Central Government State Governments Others a) Tea / Rubber / Coffee Deposits b) Term Deposits c) Commercial Banks (Deposits under RIDF) d) Short Term Cooperative Rural Credit Fund Total 284,04,01 7,00,00 75106,71,22 20000,00,00 95397,75,23 228,29,61 48,46,15 67877,63,52 14622,28,25 82776,67,53 (` in thousands) Sr. Particulars No. 1 2 3 4 5 SLR Bonds Non Priority Sector Bonds Capital Gains Bonds Bhavishya Nirman Bonds NABARD Rural Bond Total As on 31.03.2012 0 33577,90,00 6,77,20 4975,19,52 23,99,57 38583,86,29 As on 31.03.2011 98,99,70 21682,50,00 7,52,70 4975,19,52 23,99,57 26788,21,49 As on 31.03.2012 0 0 As on 31.03.2011 0 0

Schedule 7 - Bonds and Debentures

114

Schedule 8 - Borrowings
Sr. Particulars No. 1 2 3 Central Government Jawaharlal Nehru National Solar Mission Others : (A) In India (i) Certificate of Deposits (ii) Commercial Paper (iii) Term Money Borrowings (iv) Borrowing against STD (B) Outside India (i) International Agencies Total 502,77,65 4328,48,40 1281,00,69 2245,26,97 181,81,00 0 As on 31.03.2012 84,80,09 32,82,00

(` in thousands) As on 31.03.2011 123,97,71 0

136,86,14 6447,64,81 110,16,00 360,00,00 502,64,44 7681,29,10 (` in thousands) As on 31.03.2011 3527,97,31 401,73,28 93,89 1,45,00 17,44,81 934,44,01 5,07,12 3,90,27 41,96 5,48,20 20,06,38 50 0 594,57,00 3,36,93 25,51,00 0 3,72,14 5546,09,80 (` in thousands) As on 31.03.2011 7 38,85,26

Schedule 9 - Current Liabilities and Provisions

Sr. Particulars No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Interest / Discount Accrued Sundry Creditors Subsidy Reserve (Co-finance, Cold Storage) Subsidy Reserve - CSAMI under RIDF Provision for Gratuity(Refer Note B-21 of Schedule 18) Provision for Pension(Refer Note B-21 of Schedule 18) Provision for Encashment of Ordinary Leave (Refer Note B-21 of Schedule 18) Unclaimed Interest on Bonds Unclaimed Interest on Term Deposits Term Deposits Matured but not claimed Bonds matured but not claimed Application money received pending allotment of Bonds Provisions and Contingencies (a) Amortisation in Value of Investment a/c - G Sec. (b) For Standard Assets (c) Depreciation in value of investments - equity (d) Countercyclical Provisioning Buffer (e) Sacrifice in interest element of restructured loans (Refer Note 29.6 of Schedule 18) (f) Provision for Other Assets & Receivables Total As on 31.03.2012 4905,56,26 370,76,97 1,15,23 2,27,06 0 245,62,63 15,89,20 2,01,28 71 8,32,11 5,82,48 44 30,62,12 673,31,00 3,19,22 25,51,00 51,37,00 3,72,14 6345,16,85

Schedule 10 - Cash and Bank Balances

Sr. Particulars No. 1 Cash in hand 2 Balances with : A) Reserve Bank of India B) Others (I) Other Banks in India a) in Current Account b) Deposit with Banks (i) Remittances in Transit (ii) Collateralised Borrowing and Lending Obligations (II) Outside India Total As on 31.03.2012 9 1168,79,91

379,62,31 6765,00,00 2,54 230,92,53 0 8544,37,38

801,32,40 9002,46,14 694,44,37 228,18,56 0 10765,26,80

115

Schedule 11-Investment
(` in thousands) Sr. No. 1 Particulars Government Securities a) Securities of Central Government [Face Value `2174,08,20,000 (`2599,65,70,000)] [Market Value `2105,40,99,310 (`1971,99,03,930)] b) Treasury Bills 2 3 Other Approved Securities Equity Shares in : (a) Agricultural Finance Corporation Ltd. [1,000 (1,000) - Equity shares of `10,000 each] (b) Small Industries Development Bank of India [1,60,00,000 (1,60,00,000) - Equity shares of `10 each] (c) Agriculture Insurance Company of India Ltd. [6,00,00,000 (6,00,00,000) - Equity shares of ` 10 each] (d) Multi Commodity Exchange of India Ltd. [15,62,500 (15,62,500) - Equity shares of ` 10 each] (e) National Commodity and Derivatives Exchange Ltd. [56,25,000 (56,25,000) - Equity shares of ` 10 each] (f) Universal Commodity Exchange Ltd [UCX] [1,60,00,000 (NIL) Shares of ` 10 each] (g) Other Equity Investments (i) Coal India Ltd. (ii) Power Grid Corporation of India Ltd. (iii) Mangnese Ore India Ltd. (iv) Punjab & Sindh Bank 4 Debentures and Bonds (i) Special Development Debentures of SCARDBs (Refer Note B-16 of Schedule 18) (ii) Non Convertible Debentures 5 Shareholding in subsidiaries and Joint Venture (i) NABARD Financial Services Ltd, Karnataka [2,59,68,200(84,00,000] - Equity shares of ` 10 each] (ii) Agri - Business Finance [Andhra Pradesh] Ltd. [52,00,000(52,00,000) - Equity shares of ` 10 each] (iii) Agri Development Finance [Tamil Nadu] Ltd. [52,00,000 (52,00,000) - Equity shares of ` 10 each] (iv) NABARD Consultancy Services Pvt. Ltd. [50,00,000 (50,00,000) - Equity shares of ` 10 each] 6 Others (i) Commercial Paper [Face Value ` 1115,00,00,000 (` 1950,50,00,000)] (ii) Certificate of Deposit [Face Value ` 2125 crore (` 700 crore)] (iii) Units of Liquid Mutual Funds (iv) SEAF - Indian Agri- Business (v) APIDC - Ventureast Life Fund III (vi) BVF (Bio-Tech Venture Fund) - APIDC-V Investment [49835.46 (50,000) Class A Units of ` 1,000 each] (vii) Tata Capital Innovation Fund Total 1036,60,64 2037,93,74 0 2,07,59 5,85,45 4,98,35 13,00,88 18209,82,72 1861,99,91 680,42,26 390,11,34 37,50 4,98,00 5,00,00 0 19329,50,93 ` 5,20,00,000 ` 5,20,00,000 36,36,82 5,00,00 18,80,00 5,00,00 ` 25,96,82,000 12343,53,09 375,01,62 13461,16,56 225,00,00 ` 42,60,305 ` 25,73,280 ` 43,94,625 ` 9,54,960 1,21,83 1,21,83 1,00,00 48,00,00 60,00,00 1,25,00 16,87,50 16,00,00 1,00,00 48,00,00 60,00,00 1,25,00 16,87,50 0 2146,81,84 2548,31,03 As on 31.03.2012 As on 31.03.2011

58,28,37 0

0 0

116

Schedule 12 - Advances
Sr. Particulars No. Refinance Loans a) Production & Marketing Credit b) Conversion Loans for Production Credit c) Other Investment Credit : i) Medium Term and Long Term Project Loans (Refer Note B-16 of Schedule 18) ii) Interim Finance iii) Direct refinance to DCCBs iv) Loans out of RIDF warehousing infrastructure v) JNN Solar Mission Direct Loans a) Loans under Rural Infrastructure Development Fund b) Long Term Non-Project Loans c) Loans under NABARD Infrastructure Development Assistance (NIDA) d) Loans under Producers Organization Development Fund (PODF) e) Other Loans out of: i) Co-operative Development Fund ii) Micro Finance Development Equity Fund iii) Watershed Development Fund iv) Tribal Development Fund v) KfW UPNRM Fund vi) Farm Innovation & Promotion Fund vii) NFS Promotional Activities Fund viii) Farmers Technology Transfer Fund f) Co-Finance Loans (Net of provision) Total As on 31.03.2012 48337,74,51 128,81,10 30761,75,91 1,60,00 910,34,00 759,09,58 30,32,29 70860,30,56 140,06,20 422,90,33 7,41,32 2,61,43 72,91,49 36,25,01 7,02,99 71,22,51 32,39 2,85,94 2,17 72,35,50 152625,95,23

(` in thousands) As on 31.03.2011 33884,82,33 193,21,67 25435,26,23 0 0 0 0 66077,96,22 167,20,61 0 0 3,11,68 89,23,20 32,09,56 3,47,16 53,11,82 40,75 50,00 0 87,58,72 126027,99,95 (` in thousands) As on 31.03.2011 146,12,13 1,96,16 148,08,29 40,59,65 107,48,64 259,08,11 4,34,35 263,42,46 156,33,58 107,08,88 57,24,47 1,43,23 58,67,70 13,56 58,54,15 55,77,96 2,76,19 68,22,68 8,85,36 77,08,04 4,08,59 72,99,45 62,68,28 10,31,17 4,39,48 1,63,09 6,02,57 1,59,27 4,43,30 2,59,55 1,83,75 229,48,63

Schedule 13 - Fixed Assets

Sr. Particulars No. 1 LAND : Freehold & Leasehold (Refer Note B-15 of Schedule 18) Opening Balance Additions/adjustments during the year Closing Balance (at cost) Less: Amortisation of Lease Premia Book Value 2 PREMISES (Refer Note B-15 of Schedule 18) Opening Balance Additions/adjustments during the year Closing Balance (at cost) Less: Depreciation to date Book Value 3 FURNITURE & FIXTURES Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value 4 COMPUTER INSTALLATIONS & OFFICE EQUIPMENTS Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value 5 VEHICLES Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value Total
Note: Refer note A-12.6 & B-19 of Schedule 18 for change in capitalization policy.

As on 31.03.2012 148,08,29 -51,23 147,57,06 42,04,17 105,52,89 263,42,46 2,41,99 265,84,45 164,28,77 101,55,68 58,54,15 9,24 58,63,39 33,15 58,30,24 56,54,82 1,75,42 72,99,45 11,72,44 84,71,89 2,10,14 82,61,75 70,07,77 12,53,98 4,43,30 4,44,55 8,87,85 2,57,52 6,30,33 2,62,68 3,67,65 225,05,62

117

Schedule 14 - Other Assets

(` in thousands) Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 Particulars Accrued Interest Deposits with Landlords Deposits with Government Departments and Other Institutions Housing loan to staff Other Advances to staff Advances to Landlords Capital Work in Progress [Purchase of Staff Quarters & Office Premises] Sundry Advances Advance Tax (Net of Provision for Income Tax) Deferred Tax Assets (Refer Note B-13 of Schedule 18) Expenditure recoverable from Government of India/International Agencies Discount Receivable Total As on 31.03.2012 1804,09,10 1,39,26 3,15,19 164,74,61 77,03,84 3,27 70,75,72 51,49,02 102,55,89 71,15,00 28,75,78 94,82,93 2469,99,61 As on 31.03.2011 1815,75,35 1,48,04 2,97,86 140,22,37 65,08,79 1,03 51,48,84 38,58,47 130,80,93 233,15,00 5,35,57 35,07,89 2520,00,14 (` in thousands) 2011-12 2010-11

Schedule 15 - Interest and Financial Charges

Sr. Particulars No. 1 Interest Paid on a) Deposits under RIDF b) Short Term Cooperative Rural Credit Fund c) Term Deposits d) Tea / Coffee / Rubber Deposits e) CBS Deposits f) Deposits / Borrowings g) Loans from Central Government h) Bonds (Refer Note B-5 of Schedule 18) i) Commercial Paper (Refer Note B-5 of Schedule 18) j) Term Money Borrowings k) Borrowing against ST Deposit l) Discount Cost Paid on Certificate of Deposits m) Corporate Borrowings from Banks and FIs in India n) Borrowings from International Agencies o) Watershed Development Fund p) Micro Finance Development and Equity Fund q) Rural Innovation Fund r) Financial Inclusion Fund s) Financial Inclusion Technology Fund t) Indo German Watershed Development Programme - Andhra Pradesh u) Indo German Watershed Development Programme - Rajasthan v) Indo German Watershed Development Programme - Gujarat w) KfW UPNRM - Accompanying measures x) KfW - NB Indo German Watershed Development Programme - Phase III - Maharashtra y) KfW - NB - IX Adivasi Development Programme z) KFW NB V - Adivasi Project aa) Commitment Charges -KfW UPNRM Borrowings ab) Livelihood Advancement Business School RF Project - Sultanpur, Uttar Pradesh ac) Livelihood Advancement Business School RF Project - Rae Bareli, Uttar Pradesh ad) Multi Activity Approach for Poverty Alleviation BAIF Project - Sultanpur, Uttar Pradesh ae) Multi Activity Approach for Poverty Alleviation BAIF Project -Rae Bareli, Uttar Pradesh af) Cattle Development Programme (UP & Bihar) Discount on Collateralised Borrowing and Lending Obligations Discount, Brokerage, Commission & issue exp. on Bonds and Securities Swap Charges Total

2 3 4

4078,35,01 376,74,20 2,68,39 16,84,86 50,39 0 7,27,66 2420,01,48 372,08,50 14,74,67 2,65,85 37,53,31 0 20,85,03 109,46,03 8,34,03 4,66,84 3,44,96 52,36 25 67 2,94 1,00 4,81 8,72 5,81,92 6,84 0 0 3,36 2,86 7,86 40,71,13 6,63,94 3,72,10 7534,01,97

3714,32,70 259,76,37 22,78,08 10,86,63 0 3 10,21,19 1680,25,58 247,82,46 21,06,65 31,11,00 6,29,72 21,35,58 22,58,86 81,25,55 11,29,46 4,14,13 4,15,86 4,34,39 71 1,78 53 1,07 5,80 18,84 0 20,74 2,08 5,62 4,14 11,08 18,26 26,59,91 5,78,80 6,93,25 6193,86,85

118

Schedule 16 A - Establishment and Other Expenses (` in thousands) Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Particulars Salaries and Allowances (Refer Note B-20 of Schedule 18) Contribution to / Provision for Staff Superannuation Funds Other Perquisites & Allowances Travelling & Other allowances in connection with Directors & Committee Members Meetings Directors & Committee Members Fees Rent, Rates, Insurance, Lighting, etc. Travelling Expenses Printing & Stationery Postage, Telegrams & Telephones Repairs Auditors Fees Legal Charges Miscellaneous Expenses Expenditure on Miscellaneous Assets Expenditure on Study & Training [Including `9,35,82,458 (`7,58,70,397) pertaining to establishment expenses of Regional Training Colleges] Expenditure on promotional activities under: (i) Cooperative Development Fund (ii) Micro Finance Development and Equity Fund (iii) Watershed Development Fund (iv) Farm Innovation and Promotion Fund (v) Exp. for NFS Promotional Measures/ Activities Wealth Tax Total Schedule 16 B - Provisions (` in thousands) Sr. No. 1 2 3 3a 4 5 6 7 8 Particulars Provisions for : Amortisation of G. Sec Standard Assets (Refer Note 29.6 of Schedule 18) Non Performing Assets Non Performing Assets - Staff Nabard General Advices Depreciation in Investments G.Sec Depreciation in Value of Investment Account - Equity Sacrifice in interest element of restructured Accounts Other Assets / Receivable Total Schedule 17 - Commitments and Contingent Liabilities (` in thousands) Sr. No. 1 2 (i) (ii) Particulars Commitments on account of capital contracts remaining to be executed Sub Total A Contingent Liabilities Claims against the Bank not acknowledged as debt (Refer Note B-24 of Schedule 18) Income Tax matters in appeal Sub Total B Total (A + B) As on 31.03.2012 229,32,01 229,32,01 23,93 0 23,93 229,55,94 As on 31.03.2011 37,81,29 37,81,29 0 0 0 37,81,29 2011-12 2010-11 2011-12 442,63,36 345,27,10 27,18,08 21,67 1,36 21,81,60 29,03,51 3,20,71 8,73,17 8,51,53 9,46 28,55 42,25,15 5,84,70 2010-11 586,57,40 327,61,90 22,96,15 13,35 1,08 20,82,98 24,49,56 2,81,21 8,48,85 6,55,87 8,06 17,86 40,77,59 44,37

39,24,95 5,35,40 10,61,32 0 2,73,85 30,24,32 3,81,02 1027,10,81

33,46,06 6,05,32 11,40,75 1,01,14 2,39,20 27,52,58 2,28,60 1126,09,88

16

17

0 78,74,00 14,80,00 7,23 0 0 -80,00 51,37,00 0 144,18,23

0 0 32,86,00 4,00 -53,24 0 -5,08 -8,00 3,36,66 35,60,34

119

SIGNIFICANT ACCOUNTING POLICIES A.

1.

Schedule 18
AND

FOR THE YEAR ENDED

NOTES FORMING PART MARCH 31, 2012

3.

OF

ACCOUNTS

SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

Fixed Assets and Depreciation

1.1 The accounts are prepared on the historical cost convention and comply with all material aspects contained in the National Bank for Agriculture and Rural Development Act, 1981 and Regulations thereof, applicable Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and regulatory norms prescribed by the Reserve Bank of India (RBI). Except otherwise mentioned, the accounting policies have been consistently applied by the National Bank for Agriculture and Rural Development (NABARD / the Bank) and are consistent with those used in the previous year. 1.2 Preparation of financial statements as per Generally Accepted Accounting Practices (GAAP) requires the management to make several assumptions and estimates that affect reported results and the reported state of affairs of the Bank; the example of such cases include the estimated life of fixed assets, liability on account of employee retirement benefits, provision for anticipated losses, etc. Actual results could differ from such estimates. Such differences are recognized in the year of outcome of such results.

3.1 Fixed assets are stated at cost of acquisition, less accumulated depreciation and impairment losses, if any. The cost of assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. Subsequent expenditure incurred on existing asset is capitalized, only when it increases the future benefit from the existing assets beyond its previously assessed level of performance. 3.2 Land includes free hold and leasehold land.

3.3 Premises include value of land, where segregated values are not readily available. 3.4 Depreciation on premises situated on free hold land is charged at 10% p.a., on written down value basis. 3.5 Depreciation on leasehold land and premises situated thereon is computed and charged at 5% on written down value basis or the amount derived by amortising the premium/cost over the remaining period of lease hold land, on straight-line basis, whichever is higher. 3.6 The Bank has revised the Capitalisation Policy with effect from 01 April 2011. As per the revised policy, Fixed Assets costing ` 1 lakh and less (except easily portable electronic assets such as laptops, mobile phones, etc. costing more than ` 10,000/-) are charged to the Profit & Loss Account in the year of acquisition. The valuable but easily portable electronic assets such as laptops, mobile phones, etc., shall be capitalised, if individual cost of the items is more than `10,000/-. All software costing above ` 1 lakh each, whether purchased independently or with hardware and operating system software, is capitalised. 3.7 Depreciation on other fixed assets is charged over the estimated useful life of the assets ascertained by the management at the following rates on Straight Line Method basis: Type of Assets Furniture and Fixtures Computer Installations Office Equipments Vehicles Depreciation Rate w e f 01 April 2011 20% 33.33% 20% 20%

2.

Income and expenditure

2.1 Income and expenditure are accounted on accrual basis, except the following, which are accounted on cash basis: a. b. Interest on non-performing assets identified as per RBI guidelines. Income by way of penal interest charged due to delayed receipt of loan dues or noncompliance with terms of loan. Service Charges on loans given out of Micro Finance Development and Equity Fund, Watershed Development Fund. Expenses not exceeding ` 10,000 at each accounting unit, under a single head of expenditure.

c.

d.

2.2 Issue expenses relating to floatation of bonds are recognised as expenditure in the year of issue of Bonds. 2.3 Dividend on investments is accounted for, when the right to receive the dividend is established. 120

Depreciation is charged for the full year, irrespective of the date of purchase of asset. No depreciation is charged on assets sold during the year.

5.9 Brokerage, commission, etc. paid at the time of acquisition, are charged to revenue. 5.10 Broken period interest on debt investment is treated as a revenue item. 5.11 Transfer of a security between the categories is accounted for, at lower of the acquisition cost/book value/ market value on the date of transfer and depreciation, if any, on such transfer, is fully provided for.

4.

Intangible Assets and Amortisation

Intangible assets are recognized /amortised, as per the criteria specified in AS 26 Intangible Assets.

5.

Investments

5.1 In accordance with the RBI guidelines, Investments are classified into Held for Trading (HFT), Available for Sale (AFS) and Held to Maturity (HTM) categories (hereinafter called categories). 5.2 Securities that are held principally for resale within 90 days from the date of purchase are classified as HFT. Investments that the Bank intends to hold till maturity are classified as HTM. Securities which are not to be classified in the above categories are classified as AFS. 5.3 Investments categorized under HTM are carried at cost and provision for depreciation/diminution/ amortisation, if any, in value of investments, is included under Current Liabilities and Provisions. 5.4 Provision for diminution, other than temporary, in the value of investments in subsidiaries under the category HTM is made, wherever necessary. 5.5 Profit on sale of investment categorized under HTM is recognized in Profit & Loss A/c and then transferred to Capital Reserve A/c. Loss on sale of investment categorized under HTM is recognized in Profit & Loss A/c. 5.6 Investments under AFS and HFT are marked to market, scrip-wise, at the rate, declared by Primary Dealers Association of India (PDAI), jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA), at prescribed intervals. While only net depreciation, if any, is provided for investments in the category classified as AFS, depreciation / appreciation is recognised in the category for investments classified as HFT. 5.7 Treasury Bills are valued at carrying cost.

6.

Advances and Provisions thereon

6.1 Advances are classified as per RBI guidelines. Provision for standard assets and nonperforming assets is made in respect of identified advances, based on a periodic review and in conformity with the provisioning norms prescribed by RBI. 6.2 In case of restructuring/rescheduling of advances, the difference between the present value of future interest as per the original agreement and the present value of future interest as per the revised agreement is provided for. 6.3 Advances are stated net of provisions towards Nonperforming Advances.

7.

Foreign Currency Transactions

7.1 Foreign currency borrowings are covered by hedging agreements and are marked to market at every reporting date, the resultant gain, if any, is ignored and loss, if any, is provided for. The liability towards foreign currency borrowings at the prevailing exchange rate on the reporting date is mentioned under the Balance sheet, as a contra entry. 7.2 Profit on cancellation of or renewal of currency SWAP agreement, if any, is accounted for, on the final settlement of agreement; however, loss on such transactions is provided at the market rates, as on the date of Balance Sheet.

8.

Retirement Benefits

8.1 The Bank has a Provident Fund Scheme managed by RBI. Contribution to the Fund is made on actual basis. 8.2 Provision for gratuity is made based on actuarial valuation, in respect of all employees including employees transferred from RBI. The amount of gratuity due from RBI, in respect of employees transferred from RBI, is accounted on cash basis.

5.8 Unquoted Shares are valued at breakup value, if the latest Audited Accounts of the investee companies is available, or at ` 1/- per share as per RBI guideline.

121

8.3 Employers contribution to Provident Fund relating to the pension optees (part of Pension Fund) is maintained with RBI. 8.4 Provision for Encashment of Ordinary Leave is made on the basis of actuarial valuation.

and liabilities include those that relate to the Bank as a whole and not allocable to any segment.

11.

Impairment of Assets

11.1 As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a) b) the provision for impairment loss, if any, required; or the reversal, if any, required for impairment loss recognized in the previous periods.

9.

Taxes on Income

9.1 Tax on income for the current period is determined on the basis of taxable income and tax credits computed, in accordance with the provisions of Income Tax Act, 1961 and based on expected outcome of assessments/appeals. 9.2 Deferred tax is recognized, on timing difference, being the difference between taxable income and accounting income for the year and quantified, using the tax rates and laws that have been enacted or substantively enacted, as on Balance Sheet date. 9.3 Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the extent that there is virtual certainty that sufficient future taxable income will be available against which, such deferred tax assets can be realized. 9.4 Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which, such deferred tax assets can be realized. 9.5 Provision for Wealth Tax is made, in accordance with the provisions of Wealth Tax Act, 1956.

11.2 Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount.

12

Provisions, Contingent Liabilities and Contingent Assets

12.1 Provisions are recognised for liabilities that can be measured only by using substantial degree of estimation if: a) b) c) the Bank has a present obligation as a result of a past event; a probable outflow of resources is expected to settle the obligation; and the amount of the obligation can be reliably estimated.

12.2 Reimbursement, expected in respect of expenditure, which require a provision, is recognised only when it is virtually certain that the reimbursement will be received. 12.3 a) Contingent liability is disclosed in the case of: a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation, a present obligation when no reliable estimate is possible, and a possible obligation arising from past events where the probability of outflow of resources is not remote.

10.

Segment Reporting
b) c)

10.1 Segment revenue includes interest and other income directly identifiable with / allocable to the segment. 10.2 Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. The expenses, which relate to the Bank as a whole and not allocable to segments, are included under Other Unallocable Expenditure. 10.3 Income, which relates to Bank as a whole and not allocable to segments is included under Other unallocable bank income. 10.4 Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets 122

12.4 Contingent assets are neither recognized, nor disclosed. 12.5 Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. 12.6 Change in accounting policy: There was a change in accounting policy during the year in case of capitalization of fixed assets. The details are indicated in para 3.6 and 3.7 of part-A of this schedule

B.

NOTES

FORMING PART OF THE

ACCOUNTS
Particulars Pledged for Business Segment (Securities) Pledged for Business Segment (Collateralised Borrowing and Lending Obligation) Face Value 35.00 (55.00) 2071.00 (2257.00)

(` in crore) Book Value 34.08 (54.81) 2044.06 (2208.63)

1. In terms of TAWA Command Area Development Project Agreement, the Interest Differential Fund is to be utilized for certain specified purposes. 2. In accordance with the Memorandum of Understanding entered into with the Swiss Agency for Development Cooperation, repayment of loan, service charges and other receipts made out of Rural Innovation Fund (RIF) are being credited to the Rural Promotion Fund (RPF). 3. In terms of the agreement with KfW, accretion/ income and certain expenditure under UPNRM have been charged to the fund. The loans granted out of the fund have been adjusted with direct loans. 4. Income under the head Income from Investment Operations / Deposits includes Discount and Commission. 5. Subvention received/receivable from GOI amounting to ` 1475.52 crore (` 989.34crore), being the difference between the cost of borrowing by NABARD and the refinance rate, has been reduced from interest and financial charges and shown as accrued interest. 6. Other receipts includes ` 78.49 crore (` 54.49 crore) received/receivable from GoI towards administration charges on providing refinance under interest subvention scheme to SCBs and RRBs, for financing Seasonal Agricultural Operations. 7. Government of India advised the bank that the short term loans extended by the Long Term Co-operative Credit Structure (LTCCS) are not covered under the interest subvention scheme. Accordingly, the bank had refunded a sum of ` 11.80 crore to the Central Government in May, 2012. As this amount has been identified for refund at the time of audit, the same has been fully provided for, while accounting the results for the financial year 2011-12. 8. An amount of ` 4.29 crore chargeable as penal interest on account of default in repayment by MPSCARDB has been waived during the year. 9. Investments in Government securities include the following securities pledged with Clearing Corporation of India Limited as collateral security for Business segments: 123

10 Interest at the rate of 6.00% (6.00%) per annum on unutilised balances of RIF, Watershed Development Fund, KfW NB IGWDP(Andhra Pradesh, Gujarat, Maharashtra and Rajasthan) and KfW NB IX Adivasi Development Programme has been credited to respective funds based on respective agreements. Further, interest at the rate of 6.57% (8.80%) per annum on unutilised balances of Micro Finance Development and Equity Fund, Cattle Development Programme (Uttar Pradesh & Bihar), and Multi Activity Approach for Poverty Alleviation (MAPA) BAIF (Sultanpur and Rae Bareli), Financial Inclusion Fund and Financial Inclusion Technology Fund has been credited to the respective funds. The said interest is calculated based on the mid-month average outstanding of the respective funds. 11. The expenditure recoverable from Government of India / international agencies as per Schedule-14 of balance sheet amounting to ` 28.76 crore includes debit balance of various funds viz. IGWDP Maharashtra (` 7.25 crore), IGWDP Gujarat (` 0.88 crore), IGWDP Rajasthan (` 2.96 crore), IGWDP Andhra Pradesh ( ` 5.85 crore), IFAD Priyadarshini (` 1.72 crore), Revival Reform Restructuring of Handloom package (` 10.00 crore), NE council fund for miscellaneous training (` 0.10 crore) which were shown as debit balances in Schedule-4 in the respective funds in the previous year. 12. The Provision for Pension is made after considering the employers contribution to PF maintained with RBI as per the records available with the Bank as on 31 March 2012. 13. The Bank, during the year, in accordance with AS 22 Accounting for taxes on Income, recognized in the Profit and Loss account the difference of ` 162.00 crore between net deferred tax assets of ` 71.15 crore and ` 233.15 crore as at 31 March 2012 and 31 March 2011 respectively, as detailed below:

(` in crore) Sr. Deferred Tax Assets No. 1 Provision for Retirement Benefits made in the books but allowable for tax purposes on payment basis Depreciation on Fixed Assets Amortisation of G Sec Total 31 March 2012 49.65 31 March 2011 181.18

b)

Interest earned on the same is shown as a part of Interest received on Loans and Advances in the Profit and Loss Account, treating them as deemed advances. Deemed Advances for the purpose of IRAC norms, capital adequacy and computation of ratios etc. The value of Allotment Letters / Debenture Scrips, yet to be received, as at the year end, aggregates to NIL (` 238.15 crore)

c) d)

2 3

21.50 0.00 71.15

21.77 30.20 233.15

14. Provision for Deferred Tax on account of Special Reserve created u/s 36(1)(viii) of the Income Tax Act, 1961, is not considered necessary, as the Bank has decided not to withdraw the said reserve. 15. Land and Premises include ` 34.77 crore (` 29.88 crore) paid towards Office Premises and Staff Quarters for which conveyance is yet to be completed. 16. Pursuant to the directives of RBI, the project loans provided to SCARDBs by way of subscription to the Special Development Debentures (SDDs) floated by these agencies, are treated as under: a) classified as Investments and shown in Schedule 11 under the head Debenture and Bonds. Amount that would have been charged to Revenue A/c as per Previous Capitalisation Policy (Depreciation on items under Computer Installations, F&F & Other CIOE which would have been capitalised, and cost of Software) Computer F&F Other CIOE Software Total 19.2 0.97 0.19 0.35 5.61 7.12 Impact due to change in Depreciation rate:

17. The bank with effect from 2 September 2011, has decided to provide financial support to SCARDBs in the form of refinance loans, instead of subscribing to the Special Development Debentures floated by them. 18. The tax liability of the bank for the Assessment Year 2002-03 amounting to ` 373.15 crore was assessed by the Income Tax department and fully paid by the bank. However, the bank has filed an appeal against the taxability of NABARD for the AY 2002-03 with Income Tax Appellate Tribunal. 19. The net impact due to change in accounting policy as per para 12.6 of part-A of the schedule was as under: 19.1 Net Effect on Revenue A/c due to change in Capitalisation Policy (` in crore) Amount taken to Revenue A/c as per New Capitalisation Policy (Cost of items under Computer Installations, F&F & Other CIOE which are charged to Revenue A/ c, and Depreciation on Software which is capitalised) 2.92 0.93 1.73 1.87 7.45 Net Effect in Revenue A/c due to change in Policy

1.95 0.74 1.38 -3.74 0.33

An amount of ` 0.22 crore was additionally charged as depreciation in the current year for assets purchased in earlier years (2009-10 and 2010-11) for items under Computer and Communication devices and electrical installations, due to change in Depreciation rate. 20. The salaries and allowances for the year amounting to ` 442.63 crore was arrived at after deduction of excess provision of ` 5.33 crore towards salary arrears. 124

21. Disclosure required under AS 15 (Revised) on Employee Benefits is as under: 21.1 Defined Benefit Plans
Employees Retirement Benefit plans of the bank include Pension, Gratuity and Leave Encashment, which are defined benefit plans. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of services as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

a.

Reconciliation of opening and closing balances of defined benefit obligations: (` in crore)

Particulars Present value of defined benefit obligation at the beginning of year Current Service Cost Interest Cost Actuarial gain/ loss Benefits paid Present value of defined benefits obligations at the year end b.

Pension

Gratuity

Leave Encashment 144.88 (117.63) 3.77 11.95 4.42 -11.99 (6.54) (9.70) (17.67) (-6.66)

1223.03 (958.76) 33.42 100.90 -83.80 (22.76) (79.10) (-45.01)

242.57 (221.20) 17.53 20.01 -8.61 (16.90) (18.25) (8.16)

283.32 (207.42)

-31.82 (-21.94) 239.68 (242.57)

1556.87 (1223.03)

153.03 (144.88)

Amount recognized in the Balance Sheet as on 31 March 2012: (` in crore) Pension (Partly Funded) 1556.87 (1223.03) 1311.25 (288.11) @ 245.63 (934.92) Gratuity (funded) 239.68 (242.57) 260.82 (227.85) -21.14* (14.72) Leave Encashment (Funded) 153.03 (144.88) 137.14 (143.66) $ 15.89 Encashment.

Particulars Present value of defined benefits obligations as at the year end Fair value of plan assets as at the year end Liability recognized in the Balance sheet as at the year end

(1.22)

@ Includes the Banks contribution of ` 363.79 crore (` 288.11 crore) towards PF for pension optees available with RBI. $ Represents the amount invested with Insurance companies towards the liability for Leave * Negative amount is shown as other assets under Schedule-14 c. Expenses recognized in the Profit and Loss Account during the year: (` in crore) Particulars Current Service Cost Interest Cost Net Actuarial gain/ loss Expected return on Plan Assets Expense recognized in the statement of Profit & Loss d. Actuarial assumptions: Pension 1994-96 (Ultimate) 8.75% (8.25%) 5.50% (4.00%) 1.00% (1.00%) Gratuity 199496 (Ultimate) 8.75% (8.25%) 5.50% (7.00%) 1.00% (1.00%) Leave Encashment 199496 (Ultimate) 8.75% (8.25%) 5.50% (7.00%) 1.00% (1.00%) Pension 33.42 (22.76) 100.90 (79.10) 220.54 (172.83) -37.10 Gratuity 17.53 (16.90) 20.01 (18.25) -8.65 Leave Encashment 3.77 11.95

(6.54) (9.70)

(8.16)

12.12 (17.67) -13.17 (-12.26) 14.67 (21.65)

(0.00)

-21.62 (-16.92) 7.27 (26.39)

317.76 (274.69)

Particulars Mortality Table (LIC) Discount rate (per annum) Salary growth (per annum) Withdrawal rate

125

21.2 The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. 21.3 The aforesaid liabilities include liabilities of employees deputed to subsidiaries. 21.4 The above information is certified by the actuary and the provision for pension is recognized in the profit and loss account after considering the outstanding balance of the Banks contribution to the Provident Fund of pension optees. 21.5 The income of ` 22.78 crore recognized during the year 2011-12 on investments earmarked towards leave encashment includes the overall impact for the financial years 2010-11 and 2011-12.

23. In the opinion of the Banks management, there is no impairment to assets to which AS 28 Impairment of Assets applies requiring any provision. 24. The movement in Contingent Liability as required in AS 29 Provisions, Contingent Liabilities and Contingent Assets is as under: (` in crore) Particulars Opening Balance Addition during the year Deletion during the year Closing Balance 2011-12 0.00 0.24 0.00 0.24 2010-11 3.37 0.00 3.37 0.00

21.6

Defined Contribution Plan:

25. Prior period items included in the Profit and Loss account are as follows: (` in crore) Sr. Particulars No. 1 2. Depreciation Revenue Expenditure Total 2011-12 0.00 5.27 5.27 2010-11 2.895 0.00 2.895

The bank contributes a defined sum of 10% on the basic salary for both pension optees and non pension optees every month towards Provident Fund. The contribution made for the pension optees forms part of the plan assets of pension scheme. The total contribution charged to Profit and Loss account during the year is ` 12.68 crore (` 11.87 crore) 22. During the year 2011-12 the bank has created NABARD Pension Fund Trust and transferred a sum of ` 934.44 crore being the provisions for pension held in the books of the bank as on 31 March 2011 to the Trust. 27. Investments in Mutual Funds are as under:

26. Capital adequacy ratio of the Bank as on 31 March 2012 was 20.55% (21.76%) as against a minimum of 9% as stipulated by RBI.

(` in crore) Sr. Name of the No Mutual Fund 1 2 3 4 5 6 7 8 9 10 11 Kotak Mahindra ICICI Prudential Canara Robeco IDFC UTIMoney Market Tata DWS SBI IDBI Peerless Taurus Total As at 31 March 2012 No. of units 0 0 0 0 0 0 0 0 0 0 0 0 Book Value 0 0 0 0 0 0 0 0 0 0 0 0 Market Value 0 0 0 0 0 0 0 0 0 0 0 0 As at 31 March 2011 No. of units 31178095.5170 2069242.3680 25172008.7263 25159975.5110 310661.2930 276239.8430 2356602.6900 19254837.7780 285224.8670 28065186.0720 284381.6460 Book Value 50.01 30.01 30.01 30.01 50.01 50.01 30.01 30.01 30.01 30.01 30.01 390.11 Market Value 50.01 30.01 30.01 30.01 50.01 50.01 30.01 30.01 30.01 30.01 30.01 390.11

126

28. As per the information available with the Bank, there are no dues payable under Micro, Small and Medium Enterprises Development Act 2006. 29. The following additional information is disclosed in terms of RBI circular No.RBI/201112/68 DBOD.No.FID.FIC.2/01.02.00/201112 dated 01 July 2011.

29.2 Asset Quality and Credit Concentration (a) Net NPA position 31 March 2012 0.02249 31 March 2011 0.02136

Particulars Percentage of Net NPAs to Net Loans & Advances (b) Asset classification

29.1
(a)

Capital
Capital to Riskweighted Assets Ratio (CRAR) (Percent) 31 March 2012 20.55 19.42 1.13 31 March 2011 21.76 20.43 1.33

(` in crore) 2011-12 Classification Standard Sub-standard Doubtful Loss Amount 165174.11 22.19 68.21 1.02 165265.53 (%) 2010-11 Amount (%)

Particulars CRAR Core CRAR Supplementary CRAR

99.945 139459.40 99.950 0.013 0.041 0.001 100.000 0.00 68.13 1.02 0.000 0.049 0.001

(b)

Subordinated Debt
(` in crore) 31 March 2011 Nil

Total

139528.56 100.000

Particulars 31 March 2012 Amount of subordinated debt raised and outstanding Nil as Tier II Capital

(c)Provisions made during the year (` in crore) Provisions against Standard Assets 2011-12 78.74 14.87 30.44 455.00 579.05 Movement in Net NPAs (` in crore) Particulars (A) Net NPAs as at beginning of the year (B) Add: Additions during the year (C) Sub-total (A+B) (D) Less: Reductions during the year (E) Net NPAs as at the end of the year (C-D) 2011-12 29.83 7.32 37.15 0.00 37.15 2010-11 32.72 19.44 52.16 22.33 29.83 2010-11 0.00 32.90 1.93 460.00 494.83

(c)

Risk weighted assets

(` in crore) 31 March 2012 31 March 2011 80736.44 19.44 63515.55 20.30

Non Performing Assets Investments (Net) Income Tax Total (d)

Particulars On Balance Sheet Items Off Balance Sheet Items

(d)

Pattern of Capital contribution as on the date of the Balance Sheet:

NABARD has received an amount of ` 1000 crore from Government of India vide their letter no. F.No.20/16/2010AC dated 30 March 2012 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 2012 was at 99.33% : 0.67% as per details given below. (` in crore) Contributor Reserve Bank of India 31 March 2012 20.00 0.67% 99.33% 31 March 2011 20.00 1,980.00 1.00% 99.00%

Government of India 2,980.00

Total

3000.00 100.00% 2,000.00 100.00%

Note: Net NPA includes ` 0.07 crore ( ` 0.04 crore) relating to staff advances.

127

(e)

Credit exposure as percentage to Capital Funds and as percentage to Total Assets 2011-12 Credit Exposure as % to Capital Funds Total Assets 8.35 Not Applicable 331.83 30.24 Not Applicable 91.60 2010-11 Credit Exposure as % to Capital Funds 128.67 378.64 Total Assets 11.08 32.59

Category

Largest Single Borrower

II Largest Borrower Group III Ten Largest Single Borrowers for the year IV Ten Largest Borrower Groups (f)

Not Applicable Not Applicable

Credit exposure to the five largest industrial sectors as percentage to total loan assets: Not Applicable

29.3

Liquidity
( ` in crore)

Maturity pattern of Rupee Assets and Liabilities and Maturity pattern of Foreign Currency Assets and Liabilities Sr. Item No 1 2 Rupee Assets Less than or equal to 1 year More than 1 year upto 3 years 45084.24 (40360.96) 0.00 (0.00) 45084.24 (40360.96) 57562.03 (39438.72) 79.77 (79.75) 57641.80 (39518.47) More than 3 years upto 5 years 34177.67 (31910.59) 0.00 (0.00) 34177.67 (31910.59) 32583.53 (29124.49) 79.77 (79.74) 32663.30 (29204.23) More than 5 years upto 7 years 15242.53 (13478.17) 0.00 (0.00) 15242.53 (13478.17) 25013.99 (18524.70) 34.78 (64.82) 25048.77 (18589.52) More than 7 years 4660.17 (4410.44) 0.00 (0.00) 4660.17 (4410.44) 36520.54 (33943.27) 268.58 (238.42) 36789.12 (34181.69) Total #

3 4

82177.97 (68088.65) Foreign currency assets 0.00 (0.00) Total Assets 82177.97 (68088.65) Rupee Liabilities 29159.71 (36715.00) Foreign currency liabilities 39.88 (39.92) Total Liabilities 29199.59 (36754.92)

181342.58 (158248.82) 0.00 (0.00) 181342.58 (158248.82) 180839.80 (157746.17) 502.78 (502.64) 181342.58 (158248.81)

# Net of provision made as per RBI directives on Standard Assets as well as for diminution in value of Investments aggregating to ` 732.63 (` 623.45 crore)

29.4 Operating results

Particulars (a) (b) (c) (d) (e) (a) Interest income as a percentage to average working funds Non interest income as a percentage to average working funds Operating profit as a percentage to average working funds Return on average Assets (%) Net Profit per Employee (Rs. in crore) Provision for Non Performing Assets (Loan Assets) 2011-12 39.39 14.87 0.00 54.26 (` in crore) 2010-11 32.00 23.73 16.34 39.39 2011-12 6.53 0.07 1.44 0.98 0.36 2010-11 6.22 0.10 1.25 0.88 0.27

29.5 Movement in the provisions

Particulars Opening balance as at the beginning of financial year Add: Provision made during the year Less: Write off, write back of excess provision Closing balance at the close of financial year

128

(b)

Provision for depreciation in investments (` in crore) Particulars 2011-12 2010-11 3.37 31.74 1.44 2.08

29.12 Disclosure on risk exposure in Derivatives

The Bank does not trade in derivatives. However, it has hedged its liability towards bor rowings from KfW Germany to the extent of 93.63 million Euro and interest thereon for the entire loan period. Consequent upon hedging of foreign currency borrowings the same is shown at contracted value as per the Swap agreement. The Bank does not have any open exposure in foreign currency. The value of outstanding principal amount of hedge contract at the year-end exchange rate stood at ` 632.33 crore and the value of outstanding principal liability in the books of account stood at contracted value i.e. ` 502.77 crore. The quantitative disclosure in this regard is as under: (` in crore) Sr. Particulars No. 1 Derivatives (Notional Principal amount) A) For Hedging B) For Trading 2 Marked to Market Positions [1] a) Asset (+) b) Liability (-) 3 Credit Exposure [2] 129.55 (89.45) (0.00) 109.41 NA NA NA 632.33 (592.10) NA NA NA Currency Interest Rate Derivatives Derivatives

A Opening balance as at the beginning of the financial year B Add (i) Provisions made during the year (ii) Appropriation, if any, from Investment Fluctuation Reserve Account during the year C D Less (i) Write off / Write back of excess provision Sub Total [A+B (i)+B (ii)]

0.00 35.11

0.00 3.52

1.30 0.00 1.30 33.81

0.15 0.00 0.15 3.37

(ii) Transfer, if any, to Investment Fluctuation Reserve Account Sub Total [D] E Closing balance as at the close of financial year (C-D)

29.6 Restructured accounts

During the current financial year, five loan accounts outstanding to the extent of ` 788.25 crore (including loans to MPSCARDB-outstanding ` 770.60 crore) have been rescheduled. All the said five loans are classified as Standard Asset and an additional provision at the rate of 1.6% has been made on these assets as per RBI guidelines. As per IRAC norms provisions for ` 51.37 crore has been made during 2011-12 towards sacrifice in interest element on restructuring of MPSCARDB.

29.7 Assets sold to securitisation company / reconstruction company: NIL (NIL) 29.8 Forward Rate Agreements and Interest Rate Swaps : NIL (NIL) 29.9 Interest Rate Derivatives: NIL (NIL) 29.10 Investments in Non Government Debt Securities: NIL (NIL) 29.11 Corporate Debt Restructuring (CDR) There are no loan accounts subjected to Corporate Debt Restructuring during the current year.
129

4 Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives b) on trading derivatives 5 Maximum and Minimum of 100*PV01 observed during the year a) on hedging b) on trading NA NA NA NA 8.70@ NA NA NA

@ If MIBOR rate decrease by 100 bps across tenure MTM gain would be reduced by ` 8.70 crore

29.13 Exposures where the FI had exceeded prudential exposure limits during the year: NIL (NIL)

29.14

Related Party Transactions

List of Related Parties:

Key Management Personnel: 1. 2. 3. 4. Shri U. C. Sarangi - Ex-Chairman Shri Rakesh Singh - Ex-Chairman Dr. Prakash Bakshi - Chairman Dr. K G Karmakar - Ex-Managing Director (` in crore)

As the Bank is state controlled enterprise within the meaning of AS-18 "Related Party Transactions", the details of the transactions with other state controlled enterprises are not given.

Name of the Party

Nature of Relationship Key Management Personnel- Ex-Chairman Key Management Personnel- Ex-Chairman Key Management Personnel-Chairman Key Management PersonnelEx- Managing Director

Nature of Transaction Remuneration including perquisites Remuneration including perquisites Remuneration including perquisites Remuneration including perquisites

Amount of transaction during the year 0.082 0.020 0.107 0.119

Outstanding

Shri U. C. Sarangi Shri Rakesh Singh Dr. Prakash Bakshi Dr. K G Karmakar

0.00 0.00 0.00 0.00

No amounts, in respect of the related parties have been written off/back, or provided for during the year. Related party relationships have been identified by the management and relied upon by the auditors.

29.15
Sr. No. Issuer

Issuer categories in respect of investments made

( ` in crore) Amount Investment made through private placement (4) 154.13 (79.13) 123.00 (123.00) 216.00 (150.00) 41.37 (23.80) 25.92 (10.35) 560.42 (386.28) 'Below investment grade' Securities held (5) 0.00 (0.00) 'Unrated' Securities held 'Unlisted' Securities

(1) 1 2 3 4 5 6 7

(2) PSUs FIs Banks Private Corporate Subsidiaries/Joint ventures Others (Net of Provision) including Mutual Funds Provision held towards depreciation Total

(3) 180.27 (80.34) 123.00 (123.00) 0.09 (0.00) 216.00 (150.00) 41.37 (23.80) 3100.47 (2262.47) 3.19 (3.37) 3658.01 (2636.24)

(6) 80.25 (19.13) 48.00 (0.00) 0.09 (0.00) 16.00 (0.00) 41.37 (23.80) 25.92 (10.35) 0.59 (0.00) 211.04 (53.28)

(7) 77.88 (79.13) 48.00 (48.00) 16.00 (0.00) 41.37 (23.80) 3100.47 (2262.47) 0.59 (3.37) 3283.13 (2410.03)

130

29.16 Non performing investments: NIL (NIL) 29.17 Disclosure on Repo transactions: NIL (NIL) 29.18 Concentration of Deposits, Advances, Exposure and NPAs
(a) Concentration of Deposits (` in Crore) 2011-12 Total Deposits of twenty largest depositors Percentage of Deposits of twenty largest depositors to Total Deposits of the Bank (b) Concentration of Advances (` in Crore) 2011-12 2010-11 Total Advances to twenty largest borrowers Percentage of Advances to twenty largest borrowers to Total Advances of the Bank (c) Concentration of Exposure (` in Crore) 2011-12 Total Exposure to twenty largest borrowers/ customers Percentage of Exposure to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers (d) Concentration of NPAs (` in Crore) 2011-12 Total Exposure to Top four NPA accounts 57.40 2010-11 50.71 2010-11 86213.95 75077.75 52.24% 53.81% 2010-11

29.19
Sr. Sector No

Sector-wise NPAs
Percentage of NPAs to Total Advances in that sector 2011-12 2010-11 0.00 54.46 0.00 0.02 0.00 72.35 0.00 0.06

1 2 3 4

Agriculture and allied activities Industry (Micro & Small, Medium and Large) Services Personal Loans-Staff Loans

85859.17 73761.25

29.20

Movement of Gross NPAs

(` in Crore)

90.00%

89.00%

Particulars Gross NPAs as on 1st April of par ticular year (Opening Balance)

2011-12

2010-11

69.19

50.73 25.70 76.39 5.40 1.84 0.00 7.24 69.19

Additions (Fresh NPAs) during the year 22.23 Sub-total (A) Less:(i) Upgradations (ii) Recoveries (excluding recoveries made from upgraded accounts) (iii) Write-offs Sub-total (B) Gross NPAs as on 31st March of following year (closing balance) (A-B) 0.00 0.00 0.00 0.00 91.42 91.42

87413.95 75077.75 50.88% 50.32%

29.21 Overseas Assets, NPAs and Revenue: NIL (NIL) 29.22 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms): NIL (NIL) 29.23 Information on Business Segment
(a) Brief Background

The Bank has recognized Primary segments as under: i) Direct Finance: Includes Loans given to state governments for rural infrastructure development, cofinance loans and loans given to voluntary agencies/

131

non-governmental organisations for developmental activities. ii) Refinance: Includes Loans and Advances given to State Governments, Commercial Banks, L and Development Banks, State Coop. Banks, Regional Rural Banks etc. as refinance against the loans disbursed by them to the ultimate borrowers. Information on Primary Business Segment

iii) Treasury: Includes investment of funds in treasury bills, short-term deposits, government securities, etc. iv) Unallocated: Includes income from staff loans and other miscellaneous receipts and expenditure incurred for the developmental role of the bank and common administrative expenses.

(b)

(` in crore) Direct Finance Segment Revenue Segment Results Total carrying amount of Segment Assets Total carrying amount of Segment Liabilities Other Items: Cost to acquire Segment Assets during the year Amor tization & Depreciation Non Cash Expenses 0.00 (0.00) 0.00 (0.00) 15.13 (32.90) 0.00 (0.00) 0.00 (0.00) 129.62 (-0.08) 0.00 (0.00) 0.00 (0.00) -0.80 ( -0.05) 18.16 (18.22) 21.22 (22.58) 129.34 (100.21) 18.16 (18.22) 21.22 (22.58) 273.29 (132.98) 4,401.32 (4,085.61) 246.37 (268.69) 71,728.35 (66,409.32) 76190.61 (68,908.87) Refinance 5,198.78 (4,086.49) 1,638.63 (1,567.59) 94,696.77 (74,643.27) 84520.54 (69,320.39) Treasury 1,346.02 (943.24) 1302.00 (912.21) 13,226.02 (15,316.71) 291.17 (266.47) Unallocated 32.38 (86.68) -935.03 (-924.63) 2,424.07 (2,502.96) 21,072.89 (20,376.54) Total 10978.50 (9,202.01) 2251.97 (1,823.86) 1,82,075.21 (1,58,872.26) 1,82,075.21 (1,58,872.26)

(c) 30. 31.

Since the operations of the Bank are confined to India only there is no reportable secondary segment. Figures in brackets pertain to previous year. Previous year's figures have been regrouped / rearranged wherever necessary.

As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012

M L Sharma Director

132

National Bank for Agriculture and Rural Development Cash Flow for the year ended 31 March 2012
Particulars (a) Cash flow from Operating activities Net Profit as per Profit and Loss a/c before tax Adjustment for: Depreciation Provisions and Amortisations Provision for Non performing Assets Provision for Standard Assets Provision for sacrifice in interest element of Restructured Loan Profit / Loss on sale of Fixed Assets Interest credited to various Funds (including addition/ adjustment made to Interest Differential Fund) Other Expenses Income from Investment (including Discount Income) Expenditure from various Funds Operating profit before changes in operating assets Adjustment for net change in: Current Assets Current Liabilities Increase in Loans and Advances (Including Housing Loan & Other Advances to Staff Cash generated from operating activities Payment of Income Tax Net cash flow from operating activities (b) Cash flow from Investing activities Income from Investment (including Discount Income) Increase / Decrease in Fixed Asset Increase / Decrease in Investment Net cash used / generated from investing activities (c)Cash flow from financing activities Grants / contributions received Proceeds of Bonds Increase / Decrease in Borrowings Increase / Decrease in Deposits Share capital Net cash raised from financing activities Net increase in cash and cash equivalent (A)+(B)+(C ) Cash and Cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year 1. Cash and cash equivalent at the end of the year includes : Cash in hand Balance with Reserve Bank of India Balances with other Banks in India Remittances in Transit Inter fund transfer Collateralised Borrowing and Lending Obligations Total As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director (C) 1848,88,70 11795,64,80 -3352,80,70 12621,07,70 1000,00,00 23912,80,50 16,56,73 1762,80,65 1779,37,38 2011-2012 9 1168,79,91 379,62,31 2,54 0 230,92,53 1779,37,38 (A) 2011-2012 2251,96,93 21,22,00 -80,00 14,87,23 78,74,00 51,37,00 12,58 139,38,43 0 -1346,02,32 -3283,28,78 -2072,42,94 2133,68,93 799,07,04 -25661,77,32 -24801,44,29 -426,74,97 -25228,19,26 1346,02,33 -16,91,56 2,84,72 1331,95,49

(` in thousands) 2010-2011 1823,86,02 22,57,98 2,78,34 32,90,00 0 -8,00 4,64 118,36,63 0 -938,79,85 -5492,54,83 -4430,89,07 -373,55,50 681,46,96 -19035,55,28 -23158,52,90 -539,24,46 -23697,77,35 943,23,85 -17,39,41 -2087,23,63 -1161,39,19 3925,65,16 6783,83,37 2503,49,41 12780,65,51 0 25993,63,45 1134,46,91 628,33,75 1762,80,66 2010-2011 7 38,85,26 801,32,40 694,44,37 0 228,18,56 1762,80,66

(B)

Previous years figures have been regrouped/ rearranged to confirm to the current years presentation, wherever necessary.

K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012 M L Sharma Director

133

Consolidated Balance Sheet Profit and Loss Account & Cash Flow of NABARD & its Subsidiaries
(NABCONS, ADFT, ABFL, NABFINS)

2011-2012

134

P. Parikh & Associates

Chartered Accountants

Auditors' Report on Consolidated Financial Statements

To the Board of Directors NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT 1. We have examined the attached Consolidated Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (the Bank) and its Subsidiaries as at March 31, 2012, the Consolidated Profit & Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by the management as well as evaluating overall financial statements. We believe that our audit provides a reasonable basis of our opinion. We did not carry out the audit of financial statements of subsidiaries of the Bank. The total Assets and total Revenues in respect of these subsidiaries are ` 353.65 crore and ` 46.90 crore respectively. The financial statements in respect of two subsidiaries viz., Agri Development Finance (Tamil Nadu) Ltd. and NABARD Financial Services Ltd., being unaudited, any adjustments to their balances could have consequential effects on the attached Consolidated Financial Statements, the impact of which is not ascertained. These financial statements have been certified by the managements of the respective subsidiary companies and have been furnished to us. In our opinion, in so far as it relates to the amounts included in respect of the Subsidiaries in Consolidated Financial Statements is based solely on such management certified financial statements. We report that the Consolidated Financial Statements have been prepared by the Bank in accordance with the requirements of Accounting Standard (AS) 21 Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and on the basis of the separate audited/certified financial statements of the Bank and its Subsidiaries included in the consolidated financial statements. We report that on the basis of the information and explanations given and on the consideration given of separate audited/ certified financial statements of the Bank and its Subsidiaries and subject to our comment in Para 3 above, we are of the opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India. i. in the case of the Consolidated Balance Sheet, of the state of affairs of the Bank as at March 31, 2012;

2.

3.

4.

5.

ii. in the case of the Consolidated Profit and Loss Account of the consolidated results of operations of the Bank for the year ended on that date; and iii. in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Bank for the year ended on that date. Place: Mumbai Date: May 26, 2012 For and on behalf of P . Parikh & Associates Chartered Accountants Firm Registration No. 107564W Ashok Rajagiri Partner, Membership No.: 046070
HO : 501, Sujata, off Narsi Natha Street, Mumbai - 400 009, Tel : 23443549, 23437853, Fax : 23415455, Website : www.pparikh.com

135

National Bank for Agriculture and Rural Development Consolidated Balance Sheet as on 31 March 2012
(` in thousands) Particulars FUNDS AND LIABILITIES Capital Reserve Fund and Other Reserves National Rural Credit Funds Funds Out of Grants received from International Agencies Gifts Grants, Donations and Benefactions Other Funds Minority Interest Deposits Bonds and Debentures Borrowings Current Liabilities and Provisions TOTAL FUNDS AND LIABILITIES PROPERTY AND ASSETS 3000,00,00 13442,36,69 16058,00,00 139,20,78 657,95,94 4157,17,24 32,09,12 95397,75,23 38582,89,64 4328,48,39 6349,96,46 182145,89,50 2000,00,00 11888,71,64 16045,00,00 138,89,56 2601,94,77 3431,47,40 21,69,85 82776,67,53 26787,24,84 7681,29,09 5605,55,85 158978,50,53 As on 31.03.2012 As on 31.03.2011

Cash and Bank Balances Investments Advances Fixed Assets Other Assets TOTAL PROPERTY AND ASSETS As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director

8673,66,91 18168,55,91 152593,77,37 225,83,24 2484,06,07 182145,89,50

10881,89,37 19305,80,92 126031,30,66 229,99,83 2529,49,75 158978,50,53

K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012

M L Sharma Director

136

National Bank for Agriculture and Rural Development Consolidated Profit and Loss Account for the year ended 31 March 2012
(` in thousands) 2011-12 Income: Interest Received on Loans and Advances Income from Investment operations Discount Received Other Receipts TOTAL INCOME Expenditure: Interest and Financial Charges Establishment and other expenses Depreciation Provisions TOTAL EXPENDITURE Profit before Income Tax Provision for Income Tax Deferred Tax Asset Adjustment Profit after Tax Share of Profit / Loss in Subsidiaries attributable to Minority Interest Profit available for Appropriation Appropriations: Profit as above Add: Withdrawals from various funds against expenditure debited to Profit & Loss Account Total Profit Available for Appropriation Transferred to: Special Reserve u/s 36(I)(viii) of the Income Tax Act, 1961 National Rural Credit (Long Term Operations) Fund National Rural Credit (Stabilisation) Fund Co-operative Development Fund Research & Development Fund Investment Fluctuation Reserve Producers Organization Development Fund Rural Infrastructure Promotion Fund Financial Inclusion Technology Fund Farmers Technology Transfer Fund Farm Innovation and Promotion Fund MFDEF Reserve Fund Reserve Fund Total 2010-11

9516,42,24 1354,73,85 0 139,32,23 11010,48,33 7530,76,44 1045,79,85 21,34,47 145,20,03 8743,10,79 2267,37,54 459,04,55 161,93,99 1646,39,00 2,13,27 1644,25,73 1644,25,73 69,30,30 1713,56,03 310,00,00 10,00,00 1,00,00 5,35,40 20,65,30 27,15,42 0 0 45,00,00 2,73,85 44,56,36 0 1247,09,69 1713,56,03

8170,20,18 946,91,62 0 107,08,08 9224,19,88 6194,38,06 1135,57,54 22,67,16 35,79,92 7388,42,68 1835,77,20 463,67,98 84,93,30 1287,15,92 88,93 1286,26,99 1286,26,99 202,67,59 1488,94,58 360,00,00 50,00,00 10,00,00 6,05,32 17,67,49 116,07,65 50,00,00 25,00,00 10,00,00 2,34,20 33,55,54 0 808,24,38 1488,94,58

137

Additional Notes to Consolidated Accounts

1. 2. 3. Consolidation has been done pursuant to the listing agreement with stock exchange. Financial statement in respect of Agri Development Finance (Tamilnadu) Ltd. and NABARD Financial Services Ltd. are unaudited. Details of the subsidiaries: Country of Incorporation India India India India Proportion of Ownership 52.10 47.82* 61.71 100

Name of the Subsidiary Agri Development Finance (Tamilnadu) Ltd. Agri Business Finance (AP) Ltd. NABARD Financial Services Limited NABARD Consultancy Pvt. Ltd.

*NABARD controls the Board of Directors of Agri Business Finance (AP) Ltd. and hence considered as a subsidiary.

4. The financial statements of the company and its subsidiary companies are combined on a line to line basis by adding together expenses after fully eliminating intra-group balances and intra-group transactions in accordance with Accounting Standard (AS) 21 Consolidated Financial Statement. 5. Depreciation on fixed asset is provided on Written Down Value Method (WDV), at the rates specified in Schedule XIV to the Companies Act, 1956 by Agri Development Finance (Tamilnadu) Ltd and Agri Business Finance (AP) Ltd., whereas NABARD Financial Services provided Streight Line Method (SLM) at the rates specified in Schedule XIV to the Companies Act, 1956 on prorata basis. Thus the Accounting Policy followed by subsidiaries for depreciation are different from the Accounting Policy for depreciation followed by NABARD in the preparation of Consolidated Financial Statements. Thus out of the total depreciation of Rs. 21.34crore (22.67 crore) included in the Consolidated Financial Statement, 0.13 % (0.14%) of that amount is determined based on depreciation provided by following WDV / SLM at the rates as specified in Schedule XIV to the Companies Act, 1956. 6. 7. Income on foreign assignments by NABCONS is accounted on receipt basis. The amount of such fees receivable is not material. Disclosures as required under AS-17 Segment Reporting in consolidated financial statements are as under: (` in crore) Financial Year 2011-12 (Consolidated) Segment Revenue Segment Results Total carrying amount of Segment Assets Total carrying amount of Segment Liabilities Other Items : Cost to acquire Segment Assets during the year Amortization & Depreciation Non Cash Expenses (other than above) 0.08 (0.06) 15.98 (33.10) 0.00 (0.00) 129.62 (-0.08) 0.00 (0.00) -0.80 (-0.05) 18.42 (18.54) 21.26 (22.61) 129.34 (100.21) 18.42 (18.54) 21.34 (22.67) 274.14 (133.18) Direct Finance 4412.77 (4090.85) 252.21 (271.38) 71768.21 (66434.55) 76230.47 (68934.10) Refinance 5198.78 (4086.49) 1638.63 (1567.59) 94696.77 (74643.27) 84520.54 (69320.39) Treasury 1346.02 (943.24) 1302.00 (912.21) 13226.02 (15316.71) 291.17 (266.47) Unallocated 52.91 (103.63) -925.46 (-915.41) 2454.89 (2583.97) 21103.71 (20457.56) Total 11010.48 (9224.20) 2267.38 (1835.77) 182145.89 (158978.51) 182145.89 (158978.51)

Note: There are no reportable secondary segments for the bank and its subsidiaries

8. Previous Year figures have been regrouped / rearranged wherever necessary As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director K. S. Padmanabhan Chief General Manager Accounts Department Mumbai Mumbai : 26 May 2012

M L Sharma Director

138

National Bank for Agriculture and Rural Development Consolidated Cash Flow Statement for the year ended 31 March 2012
(` in thousands) Particulars (a) Cash flow from Operating Activities Net profit as per P & L a/c before tax Depreciation Provisions and Amortisations Provision for Non performing Assets Provision for Standard Assets Provision for Sacrifice in interest element of restructured loan Interest credited to various funds Other expenses Income from Investment Profit / Loss on sale of Fixed Asset Expenditure from various funds Operating profit before working capital changes Adjustment for net change in: Current Assets Current liabilities Increase/Decrease in Loans and Advances Cash generated from operating activities Payment towards Income tax Net cash flow from operating activities (A) (b) Cash flow from Investing Activities Income from Investment Increase / Decrease of Fixed Assets Increase / Decrease in Investments Net cash used in investing activities (B) (c) Cash flow from Financing Activities Proceeds of Bonds / Shares Increase / Decrease in Borrowings Increase / Decrease in Deposits Grants / contributions received Dividend paid Net cash raised from financing activities (C) Net increase in cash and cash equivalent (A)+(B)+(C) Cash and cash equivalent at the beginning of the period Cash and cash equivalent at the end of the period Cash and cash equivalent at the end of the period includes : Cash in hand Balance with Reserve Bank of India Balances with other Banks in India Remittances in Transit Collateralised Borrowing and Lending Obligations Total As per our attached report of even date P . Parikh & Associates Chartered Accountants FRN . 107564W Ashok Rajagiri Partner M No.046070 Mumbai Date : 26 May 2012 Prakash Bakshi Chairman H R Khan Director Dipankar Gupta Director K. S. Padmanabhan Chief General Manager Accounts Department Mumbai : 26 May 2012 M L Sharma Director During 2011-12 2266,99,31 21,34,47 -31,23 14,87,45 79,53,55 51,37,00 139,38,43 0 -1346,02,32 12,58 -3283,28,78 -2055,99,56 2126,04,74 746,43,46 -25803,53,80 -24987,05,16 -431,06,93 -25418,12,09 1346,02,32 -17,27,32 2,74,03 1331,49,03 11821,71,62 -3174,99,77 12557,92,51 1848,86,90 999,30,27 24052,81,52 -33,81,54 1815,57,69 1781,76,15 2011-12 4,04 1168,79,91 381,97,13 2,54 230,92,53 1781,76,15 During 2010-11 1835,77,20 22,67,16 2,78,34 32,90,00 0 -8,00 118,36,63 0 -938,79,85 4,64 -5492,54,83 -4418,88,71 -377,80,87 717,32,21 -19087,50,88 -23166,88,25 -541,65,19 -23708,53,44 943,23,85 -17,72,70 -2087,33,45 -1161,82,30 6793,53,37 2555,88,70 12762,20,26 3925,65,06 -58,30 26036,69,09 1166,33,35 649,24,34 1815,57,69 2010-11 10 38,85,26 854,09,40 694,44,37 228,18,56 1815,57,69

139

E-mail Addresses of NABARD Head Office Departments at Mumbai

Chairman's Secretariat Executive Director (S.K. Mitra)'s Secretariat Executive Director (V. Ramakrishna Rao)'s Secretariat Accounts Department Business Initiatives Department Central Vigilance Cell Corporate Communication Department Corporate Planning Department Department of Core Banking Solutions Department of Economic Analysis & Research Department of Information Technology Department of Premises, Security & Procurement Department of Supervision Development Policy Department-Farm Sector Development Policy Department-Non-Farm Sector Finance Department Financial Inclusion Department Human Resources Management Department Inspection Department Institutional Development Department Investment Credit Department Law Department Micro Credit Innovations Department Nabcons Production Credit Department Rajbhasha Prabhag Secretary's Department State Projects Department chairman@nabard.org ed1@nabard.org ed2@nabard.org ad@nabard.org bid@nabard.org cvc@nabard.org ccd@nabard.org cpd@nabard.org dcbs@nabard.org dear@nabard.org dit@nabard.org dpsp@nabard.org dos@nabard.org dpd.fs@nabard.org dpd.nfs@nabard.org fd@nabard.org fid@nabard.org hrmd@nabard.org id@nabard.org idd@nabard.org icd@nabard.org law@nabard.org mcid@nabard.org nabcons@nabard.org pcd@nabard.org rajbhasha@nabard.org secy@nabard.org spd@nabard.org

Telephone Nos.
Reception : 022-26539895/96/99 Protocol & Security : 022 - 26539046
140

Regional Offices / Cell / Training Establishments

REGIONAL OFFICES
ANDAMAN & NICOBAR NABARD Complex VIP Road Port Blair - 744 103 Tel No. : (03192) 233308, 242180 Fax No. : (03192) 237696 E-mail : portblair@nabard.org GOA Third floor, Nizari Bhavan Menezes Braganza Road Panaji - 403 001 Tel No. : (0832) 2220490, 2430504 Fax No. : (0832) 2223429 E mail : panaji@nabard.org KARNATAKA 113/1, Jeevan Prakash Annexe J.C. Road, P. B. No. 29 Bengaluru - 560 002 Tel No. : (080) 22225241/44 Fax No. : (080) 22222148 E mail : bangalore@nabard.org nabbng@dataone.in MIZORAM Ramhlun Road (North) Bawngkawn Aizawl - 796 014 Tel No. : (0389) 2343428, 2305290 Fax No. : (0389) 2340815 E mail : aizawl@nabard.org

ANDHRA PRADESH 1-1-61, RTC Cross Roads Musheerabad Hyderabad - 500 020 Tel No. : (040) 27685555, 27612651 Fax No. : (040) 27611829 E-mail : hyderbad@nabard.org

GUJARAT NABARD Tower Opp. Municipal Garden Usmanpura Ahmedabad - 380 013 Tel No. : (079) 27552257-59 Fax No. : (079) 27551584 E mail : ahmedabad@nabard.org

KERALA Punnen Road, Statue P. B. No. 220 Thiruvananthapuram - 695 001 Tel No. : (0471) 2323859 Fax No. : (0471) 2324358 E mail : trivandrum@nabard.org

NAGALAND NSCB Head Office Administrative Bldg, 4th Floor, West Wing Khermahal, Circular Road Dimapur - 797 112 Tel No. : (03862) 234063, 235600 235601 Fax No. : (03862) 227040 E-mail : dimapur@nabard.org NEW DELHI NABARD Tower 24 Rajendra Place New Delhi - 110 125 Tel No. : (011) 25818733 25721723 Fax No. : (011) 41539187 41539185 E mail : delhi@nabard.org

ARUNACHAL PRADESH Bank Tinali, VIP Road, TT Marg Opposite State Bank of India Itanagar - 791 111 Tel No. : (0360) 2215967, 09436040732 Fax No. : (0360) 2212675 E mail : itanagar@nabard.org

HARYANA Plot No.3, Post Box No. 7 Sector - 34 'A' Chandigarh - 160 022 Tel No. : (0172) 5046703, 5046728 Fax No. : (0172) 2604033 E mail : haryana@nabard.org

MADHYA PRADESH E-5, Arera Colony, Bittan Market Ravishankar Nagar Post Office Bhopal - 462 016 Tel No. : (0755) 2463341/69 2466695 Fax No. : (0755) 2466188 E mail : bhopal@nabard.org nabmpro@dataone.in

ASSAM Opposite Assam Secretariat G.S. Road, Post Box No.1 Dispur, Guwahati - 781 006 Tel No. : (0361) 2235661 2238004 to 025 Fax No. : (0361) 2235657 E mail : guwahati@nabard.org nabassam@dataone.in

HIMACHAL PRADESH NABARD Bhavan, Block No. 32 S.D.A. Complex, Kasumpti Shimla - 171 009 Tel No. : (0177) 2624373 2624379 Fax No. : (0177) 2622271 E-mail : shimla@nabard.org nabardsm@dataone.in

MAHARASHTRA 54, Wellesley Road Post Box No. 5, Shivaji Nagar Pune - 411 005 Tel No. : (020) 25541083 25542090 Fax No. : (020) 25542250 E-mail : pune@nabard.org

ORISSA 'Ankur', 2/1, Nayapalli Civic Centre Bhubaneswar - 751 015 Tel No. : (0674) 2553884 Fax No. : (0674) 2552019 E mail : nabbhu@sancharnet.in bhubaneswar@nabard.org

BIHAR Maurya Lok Complex Block B, 4th & 5th floor Dak Bungalow Road Patna - 800 001 Tel No. : (0612) 2223985 Fax No. : (0612) 2238424 E mail : patna@nabard.org pat_nab@dataone.in CHHATTISGARH 1st & 2nd Floor, Pithalia Complex K.K. Road, Fafadih Chowk Raipur - 492 009 Tel No. : (0771) 2888496/99 Fax No. : (0771) 2884992 E mail : raipur@nabard.org nab_rpr@dataone.in

JAMMU & KASHMIR B-II, 4th South Block Bahu Plaza Complex, P.B. No. 2 Jammu - 180 012 Tel No. : (0191) 2472355, 2472620 Fax No. : (0191) 2472337 E mail : jammu@nabard.org

MANIPUR Leiren Mansion Opposite Lamphel Supermarket Lamphelpat, Imphal - 795 004 Tel No. : (0385) 2410706, 2416192 Fax No. : (0385) 2416191 E-mail : imphal@nabard.org

PUNJAB Plot No.3, Sector 34-A Post Box No. 7 Chandigarh - 160 022 Tel No. : (0172) 5046700, 5046701 Fax No. : (0172) 5046702 E mail : chandigarh@nabard.org

JHARKHAND Opp. Adivasi College Hostel Karamptoli Road Ranchi - 834 001 Tel No. : (0651) 2361107 Fax No. : (0651) 2361108 E-mail : nabardjh@dataone.in

MEGHALAYA 'U' Pheit Kharmihpen Building Plot No.28(2), 2nd & 3rd Floor Dhankheti, Shillong - 793 003 Tel No. : (0364) 2221602, 2503499 2501518 Fax No. : (0364) 2227463 E mail : shillong@nabard.org

RAJASTHAN 3, Nehru Place Tonk Road, Post Bag No. 104 Jaipur - 302 015 Tel No. : (0141) 2740821, 2743416 Fax No. : (0141) 2742161 E mail : Jaipur@nabard.org

141

SIKKIM Om Nivas, Church Road Post Box No. 46 Gangtok - 737 101 Tel No. : (03592) 203015, 204173 Fax No. : (03592) 204062 E mail : nabard_gtk@dataone.in gangtok@nabard.org

TRIPURA Palace Compound (East) Uzirbari Road, Post Box No.9 Agartala - 799 001 Tel No. : (0381) 2302378 Fax No. : (0381) 2224125 E mail : agartala@nabard.org

UTTARAKHAND 113/2, Hotel Sunrise Building 2nd & 3rd Floor, Post Bag No.139 Rajpur Road Dehradun - 248 001 Tel No. : (0135) 2748611 Fax No. : (0135) 2748610 E mail : dehradun@nabard.org nabarddoon@dataone.in WEST BENGAL Abhilasha, 2nd floor Post Box No.9083, 6, Royd Street Kolkata - 700 016 Tel No. : (033) 22552255, 22667943 Fax No. : (033) 22494507 E-mail : nabardkol@dataone.in kolkata@nabard.org

TAMIL NADU 48, Mahatma Gandhi Road Post Box No.6074, Nungambakkam Chennai - 600 034 Tel No. : (044) 28276088, 28304444 Fax No. : (044) 28275732 E mail : chennai@nabard.org

UTTAR PRADESH 11, Vipin Khand Gomti Nagar Lucknow - 226 010 Tel No. : (0522) 2304530 Fax No. : (0522) 2304531 E mail : lucknow@nabard.org

CELL
SRINAGAR Opp. Amar Singh College Gate Gogji Bagh Srinagar - 190 008 Tel No. : (0194) 2310280 Fax No. : (0194) 2310479

TRAINING ESTABLISHMENTS
BOLPUR Bankers Institute of Rural Development NABARD, Bolpur Lodge Bolpur 731 204 Birbhum (West Bengal) Tel No. : (03463) 252812, 252783 Fax No.: (03463) 252295 E-mail : nabbol@rediffmail.com LUCKNOW Bankers Institute of Rural Development Section 'H', L.D.A. Colony Kanpur Road Lucknow - 226 012 Tel No. : (0522) 2421 954 / 137 / 187 Fax No.: (0522) 2421 006 /176 / 047 E mail : bird@bsnl.in birdindia@yahoo.co.in MANGALORE Bankers Institute of Rural Development NABARD, Post Box No. 1117 Manjusha Building Above Automatrix Showroom Near KSRTC Bus Stand Bejai Church Road Bejai, Mangalore - 575 004 Tel No. : (0824) 2225836, 2225844 Fax No.: (0824) 2225835 E mail : rtc.mangalore@nabard.org

142

LIST OF ABBREVIATIONS
AA AS AAGR AAY A & N Islands ABCI ACABC ACB ACE ACSTI ADFC ADWDRS AEPS AEZ AFC AFPRO AgDSM AGMARKNET AH AIBP AIDIS ALCO ALM AMI AML APB APCOB-CTI APMC APRACA ARWIND Administrative Approval Accounting Standards Average Annual Growth Rate Antyodaya Anna Yopjana Andaman & Nicobar Islands Associated Business Communicators of India Agri Clinic and Agri Business Centres Audit Committee of the Board APRACA Centre of Excellence Agriculture Co-operative Staff Training Institute Agriculture Development Finance Company Agricultural Debt Waiver and Debt Relief Scheme, 2008 Aadhar Enabled Payment Service Agricultural Export Zone Agricultural Finance Corporation Ltd. Action for Food Production Agriculture Demand Side Management Agricultural Marketing Information Network Animal Husbandry Accelerated Irrigation Benefit Programme All India Debt and Investment Survey Asset Liability Management Committee Asset Liability Management Agriculture Marketing Infrastructure Anti-Money Laundering Aadhar Payment Bridge Andhra Pradesh State Cooperative Bank-Cooperative Training Institute Agricultural Produce Market Committee Asia-Pacific Rural and Agricultural Credit Association Assistance to Rural Women in Non-Farm Development CBP CBS CCB C-DAC CDF CDP CER CERFI CES ASP ATM ATS BADP BAIF BC BCM BDP BF BKGB BIRD BMCU BNB BoS BPL C-PEC CAC CAGR CARE CAS CAT CB CBLO Application Service Provider Automated Teller Machine Application Tracker System Border Area Development Programme Bharatiya Agro Industries Foundation Business Correspondents Billion Cubic Meters Business Development Plan Business Facilitators Bihar Kshetriya Gramin Bank Bankers Institute of Rural Development Bulk Milk Chilling Unit Bhavishya Nirman Bonds Board of Supervision Below Poverty Line Centre for Professional Excellence in Cooperatives Concurrent Audit Cell Compound Annual Growth Rate Credit Analysis & Research Limited Common Accounting System Capacity Building for Adoption of Technology Commercial Banks Collateralised Borrowing and Lending Obligation Capacity Building Phase Core Banking Solution Central Co-operative Bank Centre for Development of Advanced Computing Co-operative Development Fund Cattle Development Project Certified Emission Reduction Centre of Excellence for Rural Financial Institutions Community Enterprise System

143

CFSA CGTMSE CIBIL CIP CISS CLA CLMAS CMA CMIE CMR CPI CPI-AL CPIO CPI-RL CPIS CRAR CRIDA CRISIL CRR CS CSA CSP CTFC CTI CUC CV CVC CWC DADI DAHDF DAP DCCB

Committee on Financial Sector Assessment Credit Guarantee Fund Trust for Micro and Small Enterprises Credit Information Bureau (India) Limited Central Issue Price Capital Investment Subsidy Scheme Central Loan Assistance Centralised Loan Accounting and Management System Credit Monitoring Arrangement Centre for Monitoring of Indian Economy Centre for Micro-finance Research Consumer Price Index Consumer Price Index for Agricultural Labour Central Public Information Offices Consumer Price Index for Rural Labour Coconut Palm Insurance Scheme Capital to Risk-Weighted Assets Ratio Central Research Institute for Dryland Agriculture Credit Rating Information Services of India Limited Cash Reserve Ratio Capital Support/Company Secretary Co-operative Societies Act Customer Service Provider Certified Trainer in Financial Cooperatives Co-operative Training Institute Carcass Utilisation Centre Coefficient of Variation Central Vigilance Cell Central Water Commission District Agricultural Development Index Department of Animal Husbandry, Dairying and Fisheries Di-Ammonium Phosphate/ Development Action Plan District Central Co-operative Bank

DDM DDSD DEDS DLMRC DLT DMI DPR DRDA DRIP DTL DTP DVCF EC FC FCI FDI FIF FIMMDA FINO FIP FIPF FITF FIU-IND FLCC FR FRC FRL FSR FSS FTRDC FTTF GAAP GCC

District Development Manager Demand Driven Skill Development Dairy Entrepreneurship Development Scheme District Level Monitoring and Review Committee District Level Trainers Directorate of Marketing and Inspection Detailed Project Reports District Rural Development Agency District Rural Industries Project Demand and Time Liabilities Development of Tribal Population Dairy Venture Capital Fund Extension Counter Farmers Clubs/Financial Co-operation Food Corporation of India Foreign Direct Investment Financial Inclusion Fund Fixed Income Money Market and Derivatives Association of India Financial Information Network & Operations Ltd. Full Implementation Phase Farm Innovation and Promotion Fund Financial Inclusion Technology Fund Financial Intelligence Unit - India Financial Literacy and Credit Counselling Centres Flash Reports Farmers Resource Centre Full Reservoir Level Feasibility Study Report Farmers Service Societies Farmers Training and Rural Development Centres Farmers Technology Transfer Fund Generally Accepted Accounting Policies General Credit Card

144

GCF GDP GDS GIZ GLC Ha HFT HPC HRMS HTM HWG IARI IAS IBPS ICAI ICM ICRA ICRISAT-WWF

Gross Capital Formation Gross Domestic Product Gross Domestic Savings Deutsche Gesellschaft fur Internationale Zusammenarbeit Ground Level Credit hectare Held for Trading High Power Committee Human Resource Management System Held to Maturity Handloom Weavers Groups Indian Agricultural Research Institute Indian Administrative Service Institute of Banking Personnel Selection Institute of Chartered Accountants of India Institutes of Cooperative Management Investment Information and Credit Rating Agency of India International Crops Research Institute for the Semi-Arid Tropics - World Wide Fund for Nature Information and Communications Technology Institute for Development & Research in Banking Technology Information, Education, Communication Indian Economic Service International Fund for Agriculture Development Indo-German Watershed Development Programme Integrate Handloom Development Scheme Indian Institute of Bank Management Indian Institute of Management Invest India Micro-Pension Services Integrated Nutrient Management Indian Institute of Technology International Monetary Fund

IPDSS IPM IR IRDA IRR IRV ISAP ISEC ISMW ISRO-VSAT ISS ITI IWDP JCC JLG JLTC JNNSM KADFC KCC KfW KVIC KVK KYC LABS LAMPS LBSNAA LPA LT LTCCS LWE MAAPA

Institutional Protection and Deposit Safety Scheme Integrated Pest Management Inspection Reports Insurance Regulatory and Development Authority Internal Rate of Return Individual Rural Volunteers Indian Society of Agri-business Professionals Institute for Social and Economic Change Indian School of Micro-Finance for Women Indian Space Research Organisation Very Small Aperture Terminal Investment Specific Studies Integrated Training Institute Integrated Watershed Development Programme Joint Consultative Committee Joint Liability Group Junior Level Training Centres Jawaharlal Nehru National Solar Mission Karnataka Agriculture Development Finance Company Ltd. Kisan Credit Card Kreditanstalt fur Wiederaufbau (German Development Bank) Khadi and Village Industries Commission Krishi Vigyan Kendras Know Your Customer Livelihood Advancement Business School Large-sized Adivasi Multipurpose Society Lal Bahadur Shastri National Academy of Administration Long Period Average Long Term Long Term Co-operative Credit Structure Left Wing Extremism Multi-activity Approach for Poverty Alleviation

ICT IDRBT IEC IES IFAD IGWDP IHDS IIBM IIM IIMPS INM IIT IMF

145

MACS MDMI MEDP MF MFDEF MFI MIS MMS MMTC MNAIS MNRE MoA MOP MoSPI MoT MoU MPLADS MPKV MRP MSP MSTP MT MU Nabcons NABFINS NAFSCOB NAIS NBFC NBS NCCT NCOF NEDFi

Mutually Aided Co-operative Societies Manpower Development & Management Institute Micro-Enterprise Development Programme Micro-Finance Micro-finance Development and Equity Fund Micro Finance Institution Management Information System/Market Intervention Scheme Mandal Mahila Samakhya Minerals and Metals Trading Corporation Modified National Agricultural Insurance Scheme Ministry of New and Renewable Energy Ministry of Agriculture/Memorandum of Agreement Muriate of Potash Ministry of Statistics and Programme Implementation Ministry of Textiles Memorandum of Understanding Member of Parliament Local Area Development Scheme Mahatma Phule Krishi Vidyapeeth Maximum Retail Price Minimum Support Price Million Shallow Tubewell Programme Medium Term / Metric Tonne Mother Units NABARD Consultancy Services Pvt. Ltd. NABARD Financial Services Ltd. National Federation of State Cooperative Banks National Agricultural Insurance Scheme Non-Banking Finance Company Nutrient Based Susidy National Council for Cooperative Training National Centre of Organic Farming North Eastern Development Finance Corporation Ltd.

NER NFS NFSM NGO NHM NIDA NIMC NIRB NLUP NMCP NMMI NPA NPCI NPDP NPOF NPRI NPS NPW NR NRC(LTO) NRMC NRC(Stab.) ODI OMSS OPP OSS OSAO PACS PARFI PAT PBT PCARDB

North-Eastern Region Non-Farm Sector National Food Security Mission Non-Governmental Organisation National Horticulture Mission NABARD Infrastructure Development Assistance National Implementing and Monitoring Committee National Institute of Rural Banking New Land Use Policy National Manufacturing Competitiveness Programme National Mission on Micro Irrigation Non Performing Asset National Payments Corporation of India National Pulses Development Programme National Project on Organic Farming National Programme on Rural Industrialisation New Pension System Net Present Worth Natural Rubber National Rural Credit (Long Term Operations) Natural Resources Management Centre National Rural Credit (Stabilisation) Organisational Development Initiative Open Market Sale Scheme Oilseeds Production Programme Off-site Surveillance System Other than Seasonal Agricultural Operations Primary Agricultural Credit Societies PanIIT Alumni Reach for India Profit After Tax Profit Before Tax Primary Co-operative Agriculture and Rural Development Bank

146

PDAI PDS PEC PFRDA PGDRB PIA PLP PMU POS PPID PODF PPP PRI PUCB PVCF PVI RBI RASS RCMB RCS RDBS REDP RDA RFA RFI RFIP RGCT RGMVP RICM RIDF RIPF RIF RLP RML

Primary Dealers Association of India Public Distribution system Project Equipment Corporation Pension Fund Regulatory & Development Authority Post Graduate Diploma in Rural Banking Project Implementing Agency Potential Linked Credit Plan Programme Management Unit Point of Sale Pilot Project for Integrated Development of Backward Blocks Producer Organisation Development Fund Public Private Partnership Panchayat Raj Institution Primary Urban Co-operative Bank Poultry Venture Capital Fund Preventive Vigilance Inspections Reserve Bank of India Rashtriya Seva Samiti Risk Management Committee of the Board Registrar of Co-operative Societies Rural Development Banking Service Rural Entrepreneurship Development Programme Rural District Association Revolving Fund Assistance Rural Financial Institutions Rural Financial Institutions Programme Rajiv Gandhi Charitable Trust Rajiv Gandhi Mahila Vikas Pariyojana Regional Institute of Cooperative Management Rural Infrastructure Development Fund Rural Infrastructure Promotion Fund Rural Innovation Fund Realistic Lending Programme Reuters Market Light

RMCB RNFS RRB RSVY RTC RTI

Risk Management Committee of the Board Rural Non-Farm Sector Regional Rural Bank Rashtriya Sam Vikas Yojana Regional Training College Right to Information

RUDSETI/R-SETI Rural Development and Self Employment Training Institute R&D SAO SAS SAU SBLP SBPC SCARDB SCB SCC SDC SDD SDP SEWA SFAC SF/MF SFP SGSY SHG SHLS SHPI SIDBI SLIC SLR SLSMC SLTF SMS Research and Development Seasonal Agricultural Operations Situation Assessment Survey State Agricultural University SHG-Bank Linkage Programme Standardised Banking Programme for Co-operatives State Co-operative Agriculture and Rural Development Bank State Co-operative Bank Swarojgar Credit Card Swiss Agency for Development and Cooperation Special Development Debentures Skill Development Programmes Self Employed Womens Association Small Farmers Agribusiness Consortium Small Farmers/Marginal Farmers State Focus Paper Swarnjayanti Gram Swarozgar Yojana Self Help Group Solar Home Lighting System Self Help Promoting Institution Small Industries Development Bank of India State Level Implementation Committee Statutory Liquidity Ratio State Level Sanctioning and Monitoring Committee State Level Task Force Short Messaging Service

147

SNTS SOFTCOB SPA SPV SRI SRTO SS SSI STCCS STCRC STD ST(SAO) ST(OSAO) SWC SWOT TANGEDCO TC TDF TE TFO

Special Non-Transferability Scheme Scheme of Financial Assistance for Training of Co-operative Banks Personnel Special Programme Assistance Special Purpose Vehicles System of Rice Intensification Small Road Transport Operators Special Studies Sustainable Sugarcane Initiative Short Term Co-operative Credit Structure Fund Short Term Co-operative Rural Credit (Refinance) Fund Short Term Deposit Short Term (Seasonal Agricultural Operations) Short Term (Other than Seasonal Agricultural Operations) State Warehousing Corporation Strength, Weakness, Opportunities, Threats Tamil Nadu Generation and Distribution Company Technical Component Tribal Development Fund Training Establishment Total Financial Outlay

TMB TMT TPDS ToR UIDAI UNDP UPNRM USAID USQ UT VA VC VDP VSAT VWC WAN WBCIS WDC WDF WPI WSHG ZoC

Term Money Borrowings Top Management Team Targeted Public Distribution System Terms of Reference Unique Identification Authority of India United Nations Development Programme Umbrella Programme on Natural Resources Management US-Agency for International Development Unstarred Question Union Territory Voluntary Agency Video Conferencing Village Development Programme Very Small Aperture Terminal Village Watershed Committee Wide Area Network Weather Based Crop Insurance Scheme Women Development Cell Watershed Development Fund Wholesale Price Index Women Self Help Group Zone of Consideration

148

National Bank for Agriculture and Rural Development

C-24, G Block, Bandra-Kurla Complex, Bandra ( East ), Mumbai - 400 051. website : http://www.nabard.org