The Gandhian ideology of “villa includes” is not a brand new concept and its proliferation is observed intercontinentally. Possessing the same stance NABARD was established by the government of India. Its sole mandate includes the facilitation of credit flows s for the growth and development of the agrarian economy (India), cottage and village industry includes of a small scale.
The very reason for the origination of NABARD rests in the perpetual fact of India being an agrarian economy. Current statistics suggest the agri-sector incorporate 41.49% of the working force the which on its own specifies the need for a comprehensive Bank, working methodically for up lithe fitment of agriculture. Rural development is an area of high accommodative space where several social scientists, activists, policymakers and philanthropists are dedicating themselves towards the goal of its fulfilment. India is currently home to 895,386,226 or 65% of the Indian population is rural, among which 39% are in absolute poverty while others are scuffling for better means of livelihood. After the dawn of independence improvement of the rural section, credit was inevitable to exhilarate their lives by providing easy access to credit. Subsequently, it became incapable for India to look towards a bank specifically calibrated for mentioned tasks.
Central or Federal Bank (in the case of the USA) has an increasing role in the management of the economic system of the state. Regulatory and supervisory work of Central Bank of India—RBI( Reserve Bank of India) is on variable expansion with overarching tasks inclusive of monetary policy management, acting as custodian of Forex, lending and controller of credit are on their way. With such increasing role of RBI, it became difficult for it to focus on agri-finance.
To study in-situ scenario of credit and reach of institutional credit in rural areas, the government of India in collaboration with RBI established a committee called All India Rural Credit Survey (AIRCS) headed by Astad Dinshaw Gorwala (former civil servant). The committee opined that the credit situation in rural India needs great impetus both infrastructurally and on monetary terms. Backing the same attribute, RBI at the insistence of the government of India constituted a Committee to Review the Arrangements For Institutional Credit for Agriculture and Rural Development (CRAFICARD) in 1979 under the chairmanship of Shri. Balaram Siva ram( former member of erstwhile Planning Commission). Committee submitted its report (1979) which was centred on the vitality and imperativeness of the new organisational structure to address issues critical to agriculture and rural development. Eventually, NABARD was established in 1982.
NABARD was constituted under National Bank for Agriculture and Rural Development Act, 1981 by displacing two erstwhile organisations viz. The Agriculture Credit Department and Rural Planning and Credit Cell. It was established as an extra-constitutional or statutory body on 12 July 1982. It functions as a high level rural financial development institution headquartered in Mumbai and possesses 31 regional offices covering various States and Union Territories, a special cell at Srinagar, 3 training centers and establishment in north-eastern & South India and 418 District Development Managers in-charged of district-level management. The head of NABARD is one, currently served by Dr G. R Chintala. Other executive members are—Chief General Manager (head of regional office), executive directors and members or chairpersons. It is wholly owned by the government of India.
The initial working capital of NABARD was ₹100 crore shared in the ratio of 50:50 among centre and RBI. After the victorious functioning of NABARD and successfully forwarding the role of RBI at the rural level paved the way for the substantial step taken by the government to increase authorised capital to NABARD. Sequentially, The NABARD (Amendment) Bill, 2017 was passed by parliament in 2018 which increased working capital at the range of ₹5000-₹30000 crores. On 31st March 2020, its paid-up capital stood at ₹14080 crores.
The unambiguous role of NABARD is manifold. It acts as a supreme institution to make policy, planning and operationalization of credit distribution in rural areas. Refinancing is its prominent role whereby it gives credit to numerous institution for disposal of institutional credit at the grassroots level or it indirectly deals with people through various banking, agri-finance, micro-finance platforms viz. Regional Rural Banks (RRBs), Commercial Banks, Co-operative Societies, State Co-operative Agriculture and Rural Development Banks (SCARDBs), agriculture and cottage industries. NABARD facilitates research and development and training program in rural banking. It circulates, collaborates and prepares credit plans annually with RBI, State governments, central government and all national-level organisations. It provides financial support to the state government for the successful development and operation of rural development programs and incentivisation drives. The advisory role is also played by NABARD while formulating agricultural credit policy with RBI. Irrigation is a major factor that drives great contribution in agricultural income through ways of drip irrigation, sprinklers, fertigation, tube-wells, canals, reservoirs and so on. NABARD encourage and promote irrigation projects. Inspection and regulatory work of cooperative and RRBs is too performed by it. Its supervisory function also includes examination conduction for RRBs, cooperative banks, SCARDs etc. Portfolio investigations other than off-site reconnaissance is also carried by NABARD. Its miscellaneous functions include infrastructure building in rural areas, guiding the rural banking sector to finish their credit target to escape the condition of Non-Performing Asset (NPA) and giving support to handicrafts, craftsman, weavers etc.
The refinancing mechanism of NABARD is categorised on two loan items— short term loans and long term loans. Duration is the main criteria in the ambience of lending by banks. NABARD grants short term loans for short period through intermediaries ( like RRBs, Cooperative Banks) to farmers and other beneficiaries. Long term loans are provided by it for 18 months – 5 years for several farming as well as non-farming activities.
NABARD has rolled out numerous schemes and programs. Rural Infrastructure Development Fund (RIDF) in partnership with the government of India was launched by it in 1995-1996. RIDF has RBI as its sponsor to address the shortfall in lending to the priority sector ( infrastructure) to foster infrastructural development. Scientific warehousing is aided by NABARD through Warehouse Infrastructure Fund (WIF) for agro-products and commodities. Long Term Irrigation Fund (LTIF) was conceptualized in NABARD in 2016-17 fore exacerbating and increasing the rate of completion of 99 irrigation project with sanctioned Corpus of ₹20000 crores. Its supplementary initiatives include NABARD Infrastructure Development Assistance (NIDA), Food Processing Fund, Credit Facility to Marketing Federations, Credit Facility to Farmers Produce Organization (FPOs) and Primary Agriculture Credit Society (PACS).
The specific government-sponsored scheme is also instrumentalised by NABARD viz. Dairy Entrepreneurship Development Scheme (DEDS) aimed at bringing structural and positive reforms in the dairy sector, Credit Linked Capital Subsidy Scheme (CLCSS) for technical support an increment of its uses to SME—small micro-enterprises, Interest Subvention Scheme to generate sentiment of timely repayment of the loan by farmers and National Livestock Mission for sustainable development of livestock sector. One of the remarkable efforts of NABARD is the KCC—Kisan Credit Card, introduced in August 1998 to ensure adequate and timely credit dispersal under a single-window simultaneously benefiting farmers and increasing ease of doing business and reducing red-tapism.
NABARD achieved the worth remembering milestone where a remarkable increase in rural finance and development of cottage and small scale industry is witnessed. NABARD played an eclectic role ranging from rural financing to rural development through various schemes both directly and indirectly. Crop diversification remains in silence when it comes to the front, NABARD needs to work deliberately to enhance the concept of crop diversification to have a concomitant effect on both soil fertility and income of the farmer. NABARD can accomplish the Gandhian vision in which he envisaged an empowered rural unit but it needs more resources and technical up-gradation from the centre to succeed as a great developer.
By Simran Bhati
