INTRODUCTION

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.
 ABOUT NABARD

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.
 GENESIS OF NABARD
• 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.
 ORGANISATIONAL SET-UP

BOARD OF DIRECTORS

CHAIRMAN

MANAGING DIRECTOR

EXECUTIVE DIRECTORS (5)

HEAD OFFICE REGIONAL TRAINING

DEPARTMENTS (22) OFFICES (28) ESTABLISHMENTS (5)

SUB-OFFICE (1) & SPECIAL CELL(Srinagar)

DISTRICT DEVELOPMENT
OFFICES (360)

Committees

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
 BOARD OF DIRECTORS
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
 HEAD OFFICE

National Bank for Agriculture

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

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

CHAIRMAN
MANAGING DIRECTOR
EXECUTIVE DIRECTORS
CHIEF GENERAL MANAGERS
GENERAL MANAGERS
DEPUTY GENERAL MANAGERS
ASSISTANT GENERAL MANAGERS / MANAGERS /
ASSISTANT MANAGERS
CLERKS / STENOGRAPHERS / TYPISTS

Total Staff: Officers: 2973 (including 50 officers on deputation)

Others: 2257
 ROLE AND FUNCTIONS
Introduction
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
 PRODUCTION CREDIT
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% 5.25
> 20% 5.75

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

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.

R.O.I. - Apex Societies: 6.25% p.a R.O.I. - Primary Societies:

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

financing working capital requirements of Fisheries
Societies/fishermen

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

NPA % ST-SAO ST-OSAO

Upto 20% 5.75 6.00
Above 20% 6.00 6.25
 INVESTMENT CREDIT
(MEDIUM AND LONG TERM)
Refinance Mission
Accelerated Private Capital Formation to Promote Sustainable
and Equitable Agriculture and Rural Prosperity
with Refinance as Lever

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.
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.

• ADFCs

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.

OTHERS

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
 INSTITUTION BUILDING
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.
 SUPERVISORY ROLE OF NABARD
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 SCBs, RRBs - seasonal agricultural operations -
Rs.10185.06 crore
o For RRBs - other than seasonal agricultural operations
- Rs.216.83 crore.
o 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;

Agency During 2004-05 Cumulative as on 31.3.2005

Number Number

Amount (Rs million) Amount (Rs million)

For promotion & linkage of For promotion & linkage of

SHGs SHGs

NGOs 263 42.66 24234 1048 193.87 139513

RRBs 12 2.97 3890 93 30.55 38935

DCCBs 26 10.63 12560 55 23.03 28110

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)

As on March 1999-2000 2000-01 2001-02 2002-03 2003-04

31
Capital 2000 2000 2000 2000 2000
Reserves & 15184 16922 18266 19469 20660
Surplus
Borrowings & 15212 18966 23495 27634 31588
Deposits
Others 971 928 1338 968 1641
Total 33367 38816 45099 50071 55889
Refinance and 30175 35772 41063 45361 48790
Loans &
Advances
Investments 1833 1388 1298 1355 2412
Others 1359 1656 2738 3355 4687
Total 33367 38816 45099 50071 55889
 ROLE OF NABARD IN THE DEVELOPMENT OF
CO-OPERATIVE MOVEMENT IN THE STATE
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: Bank KSCARDB and PCARDBs 50% of

the paid up share capital

2. District Co-operative Banks 10 to 12 times of owned funds

3. Farmers Service Co-operative Banks In the ratio of 1:20 paid

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

4. Primary Agricultural Credit Societies In the ratio of 1:20 of

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.
 HIGHLIGHTS/ACHIEVEMENTS:
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.
 INITIATIVES / POLICY DECISIONS

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.