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INTRODUCTION Around 70 per cent of India's population of one billion lives in rural areas


Around 70 per cent of India's population of one billion lives in rural areas and depends on agriculture and other allied activities for a livelihood. The task of sustainable rural development, therefore, is an enormous one. It is important for the agricultural sector to lay greater emphasis on increasing productivity and profitability through conservation of natural resources. The role of universities in research and development, extension services and right application of technology assumes importance in this context. Thrust is also required on strategies to generate income potential through non-farm activities by building the entrepreneurial capacity of villagers and providing them with ideas and resources to set up their own micro- enterprises. They must also be imparted knowledge of the market for their products, because it is crucial for micro-enterprises in the non- farm sector to be sustainable. Sustainability is at the core of NABARD's mission for rural development. NABARD (National Bank for Agricultural and Rural Development) itself has been formed to promote sustainable and equitable agriculture and rural development through effective credit support, related services, institutional development and other initiatives.


NABARD is an apex institution, accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India.

NABARD is established as a development Bank, in terms of the Preamble of the NABARD Act, "for providing and regulating Credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto."

NABARD’s refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations or co- operative societies, production credit is generally given to individuals.


Reserve Bank of India (RBI) established in 1935 interalia, with a mandate to set up a special Agricultural Credit Department (ACD) with expert staff.

ACD (RBI) interalia initiated different measures to develop a healthy rural credit structure and provided guidance to State Governments and Cooperative Credit Structure.

Agricultural Refinance Corporation (ARC) was established in 1963 to support investment credit needs for agricultural development.

Consequent to undertaking of development and promotional functions, ARC was renamed as Agricultural Refinance and Development Corporation (ARDC) in 1972.

RBI, at the request of Government of India (GOI) appointed a Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) in 1979.

The CRAFICARD reviewed the need of integrating short-term, medium-term and long-term agriculture credit structure.

The CRAFICARD recommended the establishment of National Bank for Agriculture and Rural Development (NABARD).

National Bank for Agriculture and Rural Development Act, 1981 was passed by the Indian Parliament and NABARD was established on 12 July 1982 with an initial capital of Rs. 100 crore. The capital enhanced to Rs.2000 crore subscribed by Govt. of India and Reserve Bank of India.
















The following committees have been constituted in the Bank:

1. Executive Committee

2. Sanctioning Committee for loans under RIDF

3. Audit Committee

4. Risk Management Committee


The Central Government has constituted the Board of NABARD. Currently the Board consists of the following directors:

1) Dr. Y S P Thorat Chairman NABARD Plot No 24, G-Block Bandra-Kurla Complex Bandra (E), Mumbai - 400051

2) Smt Usha Thorat Deputy Governor Reserve Bank of India Central Office, 16th Floor Shahid Bhagat Singh Road Mumbai

3) Amitabh Verma, IAS Joint Secretary Ministry of Finance MEA(Banking Division) Govt. of India New Delhi

4) Smt Radha Singh, IAS Secretary Ministry of Agriculture Department of Agriculture and Cooperation Government of India New Delhi

5) Dr. (Mrs.)Renuka Viswanathan, IAS Secretary (Rural Development) Ministry of Rural Development Government of India New Delhi

6) Shri Om Prakash, IAS Secretary Agriculture Department Government of Uttaranchal Secretariat, 4 Subhash Marg Dehradun - 248 001

7) Dr R N Bohidar, IAS Agriculture Production Commissioner and Additional Chief Secretary Government of Orissa Rajiv Bhavan Bhubaneshwar - 751 001

8) Shri Surampudi Sivakumar Chief Executive Agri Business, ITC Limited IBD 31 Sarojini Devi Road, Secunderabad - 500003

9) Dr. Anup Kumar Sinha Professor of Economics Indian Institute of Management Kolkatta

10) Dr. Ram S Tarneja Former Chairman UNI & Former M.D. Bennett & Coleman Co.Ltd

11) Dr K G Karmakar Managing Director, NABARD 7th Floor, "A" Wing, C-24, G-Block, Bandra Kurla Complex Bandra(East), Mumbai 400 051


National Bank for Agriculture and Rural Development Plot No C-24, "G" Block, Bandra-Kurla Complex P.B.No 8121 Bandra(E) Mumbai - 400051

and Rural Development Plot No C-24, "G" Block, Bandra-Kurla Complex P.B.No 8121 Bandra(E) Mumbai - 400051
and Rural Development Plot No C-24, "G" Block, Bandra-Kurla Complex P.B.No 8121 Bandra(E) Mumbai - 400051


NABARD has suitably qualified and experienced staff in the areas of:

General Banking

Agriculture and related Sciences such as Irrigation, Plantation and Horticulture, Land Development, Animal Husbandry and Dairy Technology, Agricultural Engineering, Bio-technology, Fisheries, Forestry, etc.

Agricultural Economics

Accounts and Finance

Information Technology

Appropriate training and skills are imparted to the staff on an ongoing basis within and outside the country. NABARD's own training establishment as also outside agencies are utilised for the purpose.

Staff Structure

























Others: 2257









NABARD being an Apex Development Bank promotes agriculture and rural development through refinance support to all banks for investment credit and to Co-operatives and RRBs for production credit. The objective of providing refinance to eligible institutions is to supplement their resources for delivering credit for agriculture, cottage & village industries, SSIs, rural artisans, etc., thus influencing the quantum of lending in consonance with the policy of Govt. of India. It directs the policy, planning and operational aspects in the field of credit for agriculture and integrated rural development.

NABARD is an apex institution accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas.

It is an apex refinancing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas

It takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc.

It co-ordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation.

It prepares, on annual basis, rural credit plans for all districts in the country; these plans form the base for annual credit plans of all rural financial institutions

It undertakes monitoring and evaluation of projects refinanced by it.

It promotes research in the fields of rural banking, agriculture and rural development


NABARD provides short-term refinance for various types of production/marketing/ procurement activities. Refinance is expected to provide liquidity to co-operative banks and enable them to effectively leverage their high cost funds to boost credit flow to the agricultural sector.

1. Refinance in the form of a consolidated limit to SCBs on behalf of all eligible DCCBs for financing Seasonal Agricultural Operations (SAO) which covers such activities as are undertaken in the process of raising various crops and are seasonal in nature. The activities include among others, ploughing and preparing land for sowing, weeding, and transplantation where necessary, acquiring and applying inputs such as seeds, fertilizers, etc., and labour for all operations in the fields for raising and harvesting the crops.

Rate of interest has been linked to NPA norms and a consolidated limit would be sanctioned giving greater flexibility to SCBs in the availment of refinance.

Rate of Interest on NABARD refinance will be linked to NPA levels as under:

Level of NPAs

ROI (%) p.a

Upto 20%


> 20%


SCBs in North Eastern Region, Jammu and Kashmir and Sikkim will be charged at the rate of 5.25% p.a. irrespective of the level of their NPAs.

2. Refinance support in the form of consolidated limit to SCBs for financing approved short-term agricultural/allied and marketing activities which are not covered under normal credit covering secured advances.

R.O.I. 6.50% p.a

3. Refinance to SCBs on behalf of DCCBs and RRBs for financing

Marketing of crops for affording reasonable opportunities for remunerative price to growers for their produce by enabling them to hold on to the produce for time being.

Ceiling of Rs. 5 lakh per borrower.

Maximum period of credit upto 12 months.

R.O.I. 6.00% p.a

4. Refinance support in the form of consolidated

limit to SCBs on behalf of eligible DCCBs for financing the working capital requirements of

the Primary Weavers’ Cooperative Societies (PWCS) for production and marketing of cloth.

R.O.I. 6.00% p.a

for production and marketing of cloth . R.O.I. 6.00% p.a 5. Refinance support to State Cooperative

5. Refinance support to State Cooperative Banks for financing procurement and marketing of cloth and Trading in yarn by Apex/Regional Weavers' Cooperative Societies.

R.O.I. 6.25% p.a

6. Refinance support to Scheduled Commercial Banks for financing

working Capital requirements of Primary Handloom Weavers' Cooperative Societies (PHWCS).

R.O.I. 6.25% p.a

7. Refinance support to State Cooperative Banks/Scheduled Commercial Banks for financing working capital requirements of State Handloom Development Corporations (SHDCs) for production / procurement and marketing of Handloom goods and State Handicrafts Development Corporations (SHnDCs) for production / procurement and marketing of Handicrafts goods.

R.O.I. 6.25% p.a

8. Refinance support to SCBs on behalf of DCCBs/DICBs for financing working capital requirements of cottage, village, small scale primary and Apex Industrial Cooperative Societies (Other than Weavers) for production and marketing activities.


6.00% p.a










9. Refinance support to SCBs on behalf of DCCBs/DICBs for financing working capital requirements of Labour Contract and Forest Labour Cooperative Societies for activities such as marketing, manufacturing or processing of goods and/or collection and marketing of minor forest produce and engaged in any one or more of the 22 approved broad groups of cottage and small scale industries.

ROI - Apex Societies: 6.25% ROI - Primary Societies: 6.00%

10. Refinance support to SCBs/DCCBs for financing working capital

requirements of Rural Artisans (including Weaver members of PACS/LAMPS/FSS) for production and marketing or servicing activities of such rural artisans including weaver members of PACS/FSS/LAMPS engaged in any of the 22 broad groups of approved cottage and small scale industries or handloom weaving industry

R.O.I: 6.00% p.a

11. Refinance support to SCBs/DCCBs for financing collection and

marketing of minor forest produce by Adivasis and persons belonging to the Scheduled Tribes covering all types of minor forest

produce which are fast moving and where operations are conducted on a commercial basis.

Apex Societies: 6.25% p.a Primary Societies: 6.00% p.a

12. Refinance support to SCBs on behalf of DCCBs and RRBs for



capital requirements of Fisheries


R.O.I. 5.75% p.a

13. Refinance support to SCBs on behalf of DCCBs for financing procurement, stocking and distribution of chemical fertilizers and other agricultural inputs.

a) Wholesale procurement, stocking and distribution of

fertilizers/agricultural inputs by SCBs: R.O.I. - 6.50% p.a

b) Retail distribution on cash and carry basis: R.O.I. - 6.25% p.a

14. Short Term refinance support to Regional Rural Banks (RRBs) for financing Seasonal Agricultural Operations (SAO) for meeting the production credit needs of farmers and Other than SAO such as production and marketing activities of artisans (including handloom weavers) and village/cottage/tiny sector industries as also for financing persons belonging to weaker sections and engaged in trade/business/service.

R.O.I.: P.A




Upto 20%



Above 20%




Refinance Mission

Accelerated Private Capital Formation to Promote Sustainable and Equitable Agriculture and Rural Prosperity with Refinance as Lever

Agriculture and Rural Prosperity with Refinance as Lever I) Institutions Eligible for Refinance: • State

I) Institutions Eligible for Refinance:

State Co-operative Agriculture & Rural Development Banks (SCARDBs)

Regional Rural Banks (RRBs)

State Co-operative Banks (SCBs)

Commercial Banks (CBs)

State Agricultural Development Finance Companies (ADFCs)

Primary Urban Co-operative Banks

II) Purposes:

Farm Sector :

Investment in agriculture and allied activities such as minor irrigation, farm mechanisation, land development, soil conservation, dairy, sheep rearing, poultry, piggery, plantation/horticulture, forestry, fishery, storage and market yards, bio-gas and other alternate sources of energy, sericulture, apiculture, animals and animal driven carts, agro-processing, agro-service centres, etc.

Non-Farm Sector :

Investment activities of artisans, small- scale industries, tiny sector, village and cottage industries, handicrafts, handlooms, powerlooms, etc.

artisans, small- scale industries, tiny sector, village and cottage industries, handicrafts, handlooms, powerlooms, etc.

III) Loan Period:

Upto a maximum of 15 years

IV) Refinance Windows

1. Automatic Refinance Facility (ARF - FS & NFS): Release of refinance without prior sanction for refinance limit upto Rs.20 lakh. 2. Project based lending.

V) Criteria for Refinance

Technical Feasibility of the project

Financial viability and bankability

Organisational arrangements for credit supervision

VI) Ultimate Beneficiaries

Although refinance is provided to SCARDBs/ SCBs/CBs /RRBs/ ADFCs/ PUCBs, the ultimate beneficiaries of investment finance may be individuals, proprietary/partnership concerns, companies, state-owned corporations or co-operative societies.

VII) Special Focus

Removal of regional/sectoral imbalance

NABARD considers removal of regional and sectoral imbalance as one of the thrust areas and gives preference to the needs of less developed areas in terms of allocation of resources, quantity of refinance etc.

Special focus for North Eastern states

For the development of the North-Eastern region, the Bank has been making special efforts through refinance on liberal terms and other supportive measures for strengthening the rural credit delivery system.

Hi-tech and Export-oriented Projects :

NABARD issues guidelines for formulation of hi-tech and export-oriented projects in farm and non-farm sectors. Besides, it undertakes consultancy work for projects including appraisal of projects even in cases where refinance is not availed from NABARD.


Agricultural Development Finance Companies (ADFCs) for financing hi-tech/commercial ventures, with NABARD as chief promoter, holding 26% equity, have been set up in Andhra Pradesh, Tamil Nadu and Karnataka states.

XI) Refinance for rural housing activity

With a view to supplementing the efforts of Government of India, State Governments, National Housing Bank and Banking Sector in augmenting the resources for the Rural Housing segment, NABARD has included Rural Housing as an eligible activity for extension of refinance (investment credit) to the eligible banks w.e.f. 01 April 2001.


credit) to the eligible banks w.e.f. 01 April 2001. OTHERS Loans to State Governments for funding

Loans to State Governments for funding equity of Co-operative Credit Institutions

NABARD provides long-term loans to state governments for contribution to the share capital of co-operative credit institutions subject to certain conditions

This is to facilitate strengthening of equity base of these credit institutions and improve their viability

The maturity period of such loans is 12 years with a moratorium period of initial 2 years and repayment in 10 annual instalments


The rural financial system in the country calls for a strong and efficient credit delivery system, capable of taking care of the expanding and diverse credit needs of agriculture and rural development. More than 50% of the rural credit is disbursed by the Co-operative Banks and Regional Rural Banks. NABARD is responsible for regulating and supervising the functions of Co- operative banks and RRBs. In this direction NABARD has been taking various initiatives in association with Government of India and RBI to improve the health of Co-operative banks and Regional Rural Banks.

The mechanism of DAP/MoU has helped in building appreciation and awareness for strategic planning facilitating, in turn, sustainable viability at all levels. The feedback received indicates that there was positive impact on the performance of banks as a result of introduction of DAP/MoU through reduction and cost of resources. The DAP planning process, as an internal strategy for corporate planning, had facilitated in creating an awareness in the cooperative banking structure and RRBs about the need for strategic planning for corporate success.

The process of preparation of Bank-specific Development Action Plans (DAPs) introduced for RRBs during the year 1994-95 has been continued during the year 2004-05 for improving the performance of RRBs in a specified time frame. For ensuring performance according to these plans, RRBs have signed Memorandum of Understanding (MoU) with their sponsor banks. The process had made discernible impact on the performance of RRBs. Out of 196 RRBs 164 were loss making ones at the beginning of the execution. However as on 31 March 2004 only 31 RRBs were in the red.


NABARD has been entrusted with the statutory responsibility of conducting inspections of State Cooperative Banks (SCBs), District Central Cooperative Banks (DCCBs) and Regional Rural Banks (RRBs) under the provision of the Banking Regulation Act, 1949. In addition, NABARD has also been conducting periodic inspections of state level cooperative institutions such as State Cooperative Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies, Marketing Federations, etc. on a voluntary basis.

Although the prime objective of the statutory inspections is to ensure general safety of public deposits, NABARD, through these statutory inspections, has been simultaneously endeavouring for further developing and strengthening the above institutions to enable them to play a far more effective and efficient role in meeting the rural credit requirements.

The general banking environment emerging out of the financial sector reforms introduced by GOI/ RBI has also since been extended to cover cooperative banks and RRBs. While the capital adequacy norm has not yet been made applicable to these banks, the other prudential norms viz., income recognition, asset classification and provisioning, which were made applicable by Reserve Bank of India to the commercial banking sector have been extended to cover SCBs and DCCBs since 1996-97 and to SCARDBs in 1997-98. These norms had already been extended to RRBs since 1995-96. The exposure of these institutions to the prudential norms also called for a suitable strategy to be adopted by the NABARD to help these banks to adjust to the new financial discipline.

The changes mentioned above necessitated a review and revision of the strategy adopted by the NABARD for the inspection and supervision of the cooperative banks and RRBs. Under the revised strategy, a sharper focus of the NABARD's inspection was given on the core areas of the functioning of banks pertaining to Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Systems Compliance (CAMELSC). Thus NABARD's focus in its statutory `on-site' inspections is on core assessments leaving the collateral appraisals to supplementary inspections.

The micro level aspects are to be taken care of by the banks themselves by way of internal inspections or by other agencies such as auditors. In this direction, through a series of workshops and meetings held with the Chief Executives and the Chief Auditors of cooperative banks, NABARD attempted to ensure that the other areas, particularly relating to the internal checks and controls, revenue and income realisation by way of interest on loans and deposits and other routine features of carrying out general banking transactions were suitably taken care of by the respective banks and their concurrent/ statutory audit systems.

Off-site Surveillance

As a part of the new strategy of supervision, a system of `Off-site Surveillance' has been introduced as a supplementary tool to the on- site inspection. Its objectives are to obtain and analyse critical data on a continuous basis, to identify areas of supervisory concern and to identify early warning signals and risky areas requiring further probe. The system basically envisages desk scrutiny of operations of cooperative banks and RRBs through a set of statutory and non- statutory returns. While the periodical statutory on-site inspections attempt an overall evaluation of the performance of the banks with a stipulated period, off-site surveillance envisages continuous supervision supplementing the on-site inspections with additional instruments of supervision.

Board of Supervision (for SCBs, DCCBs and RRBs) has been constituted by NABARD under Section 13(3) of NABARD Act, 1981 as an Internal Committee to the Board of Directors of NABARD. The broad powers and functions of the Board of Supervision are : giving directions and guidance in respect of policies and on matters relating to supervision and inspection, reviewing the inspection findings, suggesting appropriate measures, reviewing the follow-up action taken by Department of Supervision (DoS) on matters of frauds and internal checks and control, identifying the emerging supervisory issues in the functioning of cooperative banks/RRBs such as NPAs recovery, investment portfolio, credit monitoring system, management practices, frauds, etc., and suggesting necessary follow- up measures.

It can also recommend appropriate training for Inspecting Officers of NABARD for imparting necessary skills and knowledge, suggest measures for strengthening of DoS, recommend issue of directions by RBI, oversee the quality of inspections carried out and the reports issued, review the information generated through off-site surveillance and other supplementary vehicles, action taken thereon, and undertake any other functions entrusted from time to time by the Board of Directors of NABARD.

Potential Linked Credit Plans (PLPs)

NABARD started preparing PLPs with district as a unit of planning, from the year 1988-89. These plans give an indication of potential available for credit supported investment in agriculture and other rural development activities. The PLPs also indicate existing infrastructure gaps, anticipated infrastructure development by way of public investment during the year that would facilitate credit absorption, developmental programmes of government agencies that require credit support, a review of performance of different credit agencies in the last 3-5 years etc. Many of these information are furnished block-wise to take care of micro region variations.

These PLPs are made available to all the banking institutions in the districts before their planning process starts as also to government agencies . The ground level bank branches prepare their annual credit plans keeping in view the potential. The government agencies are also benefited from the PLPs in planning public investments in infrastructure development. Thus the PLPs facilitate improving the productivity of credit supported private investment.

Service Area Monitoring and Information System ( SAMIS)

For appropriate credit planning and policy formulation on rural credit, availability of accurate data is very crucial. Towards this goal, RBI in consultation with NABARD devised the Lead Bank Returns (LBRs) in the year 1991 which replaced the erstwhile Lead Bank Statements (LBS) prescribed for Banks under the Lead Bank Scheme. The LBRs contain valuable information such as sector-wise, purpose-wise agency-wise credit flow besides information about the banks' recovery, targets vis-a-vis their credit disbursements under Government programmes/other programmes, etc. The responsibility of compilation of data from LBRs was assigned to the Lead Banks while NABARD took the responsibility of monitoring the submission of returns to the Lead Banks by banks. To facilitate compilation of data, NABARD developed a separate software called SAMRUDDHI and provided the same to the Lead Banks/ SLBC convenors through its ROs. The data so compiled serve as a useful base for discussions at DCC/DLRC and SLBC to evaluate banks' performance under the Lead Bank's Scheme. As on date, SAMIS has stabilised in 20 States and 3 Union Territories. NABARD is making continuous efforts to stabilise the system in the remaining states and U.Ts.

Credit planning

Credit planning at the block and district level is an important annual exercise undertaken by NABARD to assess the potential for investment in a variety of economic activities in the private sector. The Potential Linked Credit Plan (PLP) for each district is prepared on an annual basis.

These plans are based on the sector-wise potential, the existing infrastructure and the infrastructure likely to come up within the year. These try to estimate the extent of development in agriculture and related areas that would be possible with institutional credit in the year. These district plans are consolidated at the state level and help state governments and other agencies to plan their development programmes and strategic priorities.

Water resources

As an important strategy of augmenting and stabilising agricultural production in the country, NABARD is giving special thrust for creation of additional irrigation structures through special loans to state governments under Rural Infrastructure Development Fund (RIDF).

In order to boost investments in minor irrigation structures, NABARD has not only stepped up the allocation of refinance in its annual budget but has also reduced interest rates to a uniform level of 8.5 per cent per annum.

NABARD has given importance to the development of groundwater resources in a scientific and sustainable manner. Groundwater potential in each block, mandal and taluka is classified into 'safe' (up to 70 per cent development of groundwater resources), 'semi critical' (70 to 90 per cent development), 'critical' (90 to 100 per cent) and over exploited (more than 100 per cent) categories. The bank ensures that there is no exploitation of groundwater resources in the blocks and mandals classified as 'dark' by regulating refinance to banks for investment in minor irrigation projects in such areas.

The bank is also making efforts to encourage and support artificial recharge, rainwater harvesting and minimising surface run-off, especially in semi-critical, critical, over-exploited and drought-prone areas. It has taken initiatives in creating awareness and propagating the use of advanced water conserving irrigation systems and for promoting conjunctive use of surface and groundwater sources, especially in canal command areas.

People's participation

An important programme of NABARD for securing the people's participation in the development of the rural community is the Vikas Volunteer Vahini (VVV), which provides a forum for banks, technical experts and people to engage in a positive dialogue and make sincere efforts to achieve sustainable development. VVV works on the principles of 'development through credit' to promote people's participation and inculcate repayment ethics among borrowers. A total of 5882 farmers' clubs have been established under this programme across 27 states and two union territories. Agencies participating in the programme include banks, NGOs, agricultural universities and Krishi Vigyan Kendras.

NABARD has supported the establishment of a resource centre for precision farming for poverty alleviation in the M S Swaminathan Research Foundation, Chennai. It is a pilot project for creating awareness about precision farming to optimise the use of agricultural inputs and help build the capacity of small and marginal farmers by upgrading their skills. The emphasis on soil conservation, and efficient use of water and energy is expected to promote sustainable agricultural productivity. The centre will train farmers in the use of balanced soil nutrients, including the advantages of using bio-fertilisers and organic farming as well as Integrated Pest Management (IPM) for the control of diseases and pests.


OPERATIONS HIGHLIGHTS 2004-2005 Credit Operations • Short-term credit limits sanctioned during 2004 - 05 o For

HIGHLIGHTS 2004-2005

Credit Operations

Short-term credit limits sanctioned during 2004 - 05


For SCBs, RRBs - seasonal agricultural operations - Rs.10185.06 crore


For RRBs - other than seasonal agricultural operations - Rs.216.83 crore.


For SCBs - financing Weavers' Cooperative Societies- Rs.349.89 crore.

Long term loans sanctioned to 7 State Governments for contribution to the share capital of co-operative credit institutions aggregated Rs.32.98 crore.

Liquidity support to SCBs - Rs.1914.24 crore

Liquidity support to RRBs - 158.78 crore

Investment Credit to CBs, SCARDBs, SCBs, RRBs and other eligible institutions - Rs. 7605.29 crore.

Kisan Credit Card Scheme

During the year (upto Feb’ 2005), 70.43 lakh cards issued by co-operative banks, RRBs and commercial banks.

Since inception in 1998-99, 4.84 crore cards issued.

Rural Infrastructure Development Fund

GoI announced Rs. 8000 Crore for RIDF XI ( 2005-06 )

As at the end of March 2005, RIDF sanctions under all the tranches of RIDF amounted to Rs. 42948.51 crore against which the disbursements were Rs. 25384.02 crore.

SHG bank linkage programme - Highlights- 2004-05

During the period April 2004 to March 2005 - 5, 39,385 new SHGs were financed by banks to a tune of Rs 29.94 billion by way of loans.

Cumulatively, banks have lent Rs 68.98 billion to 1,618,476 SHGs. 35,294 branches of 560 banks (Commercial banks- 48; Regional Rural banks-196; & Cooperative banks - 316) situated in 563 districts in the 30 states of the country are participating in the programme.( Data- provisional)

About 24.25 million poor households have gained access to formal banking system through SHG bank linkage programme.

Nearly 90% of the groups are women only groups.

Capacity building initiatives

Around 42,812 bank officials, 4,246 NGO staff, 7,063 government officials and 2, 07,916 self help group members trained with grant support from NABARD. In addition, about 161 faculty members of various banks' training establishments were also trained. Cumulatively 1,016,600 persons trained through various SHG related capacity building programmes.

Promotional grant assistance

Grant assistance extended by NABARD to various agencies/ institutions for promotion & linkage of self-help groups during the year as well as cumulatively is given below;


During 2004-05


Cumulative as on 31.3.2005






Amount (Rs million)

Amount (Rs million)

For promotion & linkage of SHGs

For promotion & linkage of SHGs






















RRB- Regional Rural Bank; DCCB- District Central Cooperative Bank;

Financial Highlights

NABARD was set up under an Act of Parliament, NABARD Act, 1981 and has a capital base of Rs.2000 crore contributed by RBI and Government of India. As on 31 March 2004, the highlights are as under:

Total Assets of Rs.55889 crore of which owned funds are Rs.22660 crore.

Net profit before tax stood at Rs.1460 crore.

A high Capital Adequacy Ratio of 39.41% as against a minimum of 9% stipulated by RBI.

NPA as low as 0.0014% of advances as on 31 March 2004.

Summary of Balance Sheet

(Rs. Crore)















































































The refinance to State Co-operative Banks and District Co-operative Banks for short term (short term agricultural operations) purposes at present is made available by the NABARD subject to minimum involvement policy. The credit limit for the purpose will be fixed with reference to the credit limit statement under the crop loan system.

Financial assistance by way of loans with NABARD's refinance is also provided to District Co-operative Banks for various purposes such as Minor Irrigation, Land development, Plantation, horticulture, diary development, animal husbandry, farm mechanization, etc. and non-farm sector outside I.R.D.P.

NABARD also assists credit co-operative banks through State Government by way of providing financial assistance from the Long Terms Operation Fund (LTO). Pattern of assistance under the scheme is as shown below.

1. Kerala State Coop:


the paid up share capital





2. District Co-operative Banks

10 to 12 times of owned funds

3. Farmers Service Co-operative Banks

up share capital subject to a maximum of Rs.2.50 Lakhs per society

In the ratio of 1:20 paid

4. Primary Agricultural Credit Societies

the paid up share capital subject to a maximum of Rs.1.50 lakhs







NABARD provides assistance to State Government by way of loan carrying interest at the rate fixed by NABARD from time to time. Present rate of interest is 9%. The loan amount realised by NABARD is passed to the Societies/Banks concerned by way of share capital contribution by State Government. An amount of 69.53 crores has been provided for the State by NABARD up to 2001-01 under the scheme.

NABARD provides refinance to the State Co-operative Agricultural and Rural Development Banks by way of subscription to the special development debentures to the extent of 85% to 95% of each issue of special debentures. The remaining portion shall be subscribed by Government of India and State Government. The rate of interest of refinance sanctioned by NABARD will be such as may be determined by NABARD from time to time. NABARD's assistance under the programme is limited to the approved unit cost minus subsidy available from the special agency. The repayment of assistance (principal and interest) in respect of special debentures floated shall be guaranteed fully and unconditionally by State Government.


1. A total number of 284 projects have been sanctioned as on date in 77

districts of 10 States under Capacity Building Phase (CBP) with a grant

support of Rs. 1365.33 lakhs covering an area of to 25806 ha. These project will ultimately cover about 2.67 lakh ha when they enter Full Implementation Phase. An amount of Rs. 948.52 lakh has been released till 31 July 2004.

2. A total number of 121 projects have been sanctioned grant for

preparation of Project Feasibility Report (FR) with a grant support of Rs. 120.82 lakh against which Rs. 77.74 lakh has been disbursed.

3. Thirty seven projects (21 projects under loan & 16 projects under

grant) have graduated into Full Implementation Phase (FIP) and the outlay sanctioned is Rs. 851.52 lakh as grant and 984.74 as loan to State Govts. An amount of Rs. 30 lakh towards loan and Rs. 92.38 lakh towards grant has been disbursed.


1. The rate of interest has been reduced from the current level of

6.5% to 4.5% with a view to increase the credit flow (subject to

ratification by Central Steering Committee).

2. The powers to sanction CBP and FR have been delegated to select

ROs and have been effective from 01 July 2004.

3. WDF nodal officers meet was conducted to discuss different

strategies to increase the pace of the programme and to share the experiences of the ROs.

4. Hyderbad and Uttar Pradesh ROs have brought out posters in local

languages for popoularising the programme. Karnataka has brought out a book let on WDF. Other ROs have been advised to follow the same.

5. During the year, the best performing Village Watershed

Committee and the NGO under WDF have been awarded with cash prize

and momento during NABARD foundation day.

6. Exposure-cum-training programme on "WADI Approach" have

been conducted for NGOs from different states facilitating WDF Programme.

7. The subcommittee of Central Steering Committee on WDF which

was constituted to look into different aspects of the programme, has met

twice and draft report has been submitted. The subcommittee has made following recommendations.

1. NGOs may be given loan for specific activities from the

fund to promote rural credit

2. Earmark atleast 25% of WDF Maintenance Fund for

providing credit to farmers/landless in the watershed.

3. Two cluster of watersheds (about 3000-5000 ha) be taken up

in each identified State on grant basis to promote sustainable

participatory watershed development models.

4. To encourage State Govt's participation, as an incentive one

out of every 5 projects may be taken on grant basis.

8. Training : Different training programmes have been conducted for

the benefit of NABARD Officers, State Govt officials, NGOs, Village Organisation and others. During the year, 34 Govt officials, 31 NABARD officers, 145 NGO officials and 481 Village Watershed Committee members/village volunteers were trained.