National Bank for Agriculture and Rural Development

National Bank for Agriculture and Rural Development
National Bank for Agriculture and Rural Development
Logo of NABARD Headquarters in Mumbai
Logo of NABARD Headquarters in Mumbai
Headquarters Mumbai, Maharashtra, India
Established 12 July 1982 [1]
Managing Director Dr. Prakash Bakshi [2]
Currency INR (Rupees)
Reserves INR81,220 crore (US$16.47 billion) (2007)
NABARD is the apex development bank in India

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in Mumbai (Maharashtra)[3] and other branches are all over the country. It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector and completed its 25 years on 12 July 2007.[4] It has been accredited with "matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India".



NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premiere agencies to provide credit in rural areas.

Associated with NABARD

International associates of NABARD ranges from World Bank-affiliated organizations to global developmental agencies working in the field of agriculture and rural development. These organizations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimizing the agricultural process[5].


NABARD is the apex institution in the country which looks after the development of the cottage industry, small industry and village industry, and other rural industries. NABARD also reaches out to allied economies and supports and promotes integrated development. And to help NABARD discharge its duty, it’s been given certain roles as follows:

  1. Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas
  2. 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.
  3. Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation
  4. Undertakes monitoring and evaluation of projects refinanced by it.
  5. NABARD refinances the financial institutions which finances the rural sector.
  6. The institutions which help the rural economy, NABARD helps develop.
  7. NABARD also keeps a check on its client institutes.
  8. It regulates the institution which provides financial help to the rural economy.
  9. It provides training facilities to the institutions working the field of rural upliftment.
  10. It regulates the cooperative banks and the RPB’s.[6]

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. NABARD has its head office at Mumbai, India.

NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in the capitals of all the states/union territories.Each Regional Office[RO] has a Chief General Manager [CGMs] as its head, and the Head office has several Top executives like the Executive Directors[ED], Managing Directors[MD], and the Chairperson.It has 336 District Offices across the country, one Sub-office at Port Blair and one special cell at Srinagar. It also has 6 training establishments.

NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to lend to self-help groups (SHGs). Because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. As of March 2006 2.2 million SHGs representing 33 million members had to been linked to credit through this programme.[7]

NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.

Rural innovation

NABARD's role in rural development in India is phenomenal.[8] National Bank For Agriculture & Rural Development (NABARD) is set up as an apex Development Bank by the Government of India with a mandate for facilitating credit flow for promotion and development of agriculture, cottage and village industries. The credit flow to agriculture activities sanctioned by NABARD reached Rs 1,574,800 million in 2005-2006. The overall GDP is estimated to grow at 8.4 per cent. The Indian economy as a whole is poised for higher growth in the coming years. Role of NABARD in overall development of India in general and rural & agricultural in specific is highly pivotal.

Through assistance of Swiss Agency for Development and Cooperation, NABARD set up the Rural Infrastructure Development Fund. Under the RIDF scheme Rs. 512830 million have been sanctioned for 2,44,651 projects covering irrigation, rural roads and bridges, health and education, soil conservation, water schemes etc. Rural Innovation Fund is a fund designed to support innovative, risk friendly, unconventional experiments in these sectors that would have the potential to promote livelihood opportunities and employment in rural areas.[9] The assistance is extended to Individuals, NGOs, Cooperatives, Self Help Group, and Panchayati Raj Institutions who have the expertise and willingness to implement innovative ideas for improving the quality of life in rural areas. Through member base of 250 million, 600000 cooperatives are working in India at grass root level in almost every sector of economy. There are linkages between SHG and other type institutes with that of cooperatives.

The purpose of RIDF is to promote innovation in rural & agricultural sector through viable means. Effectiveness of the program depends upon many factors, but the type of organization to which the assistance is extended is crucial one in generating, executing ideas in optimum commercial way. Cooperative is member driven formal organization for socio-economic purpose, while SHG is informal one. NGO have more of social color while that of PRI is political one. Does the legal status of an institute influences effectiveness of the program? How & to what an extent? Cooperative type of organization is better (Financial efficiency & effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs.[10]

Recently in 2007-08, NABARD has started a new direct lending facility under 'Umbrella Programme for Natural Resource Management' (UPNRM). Under this facility financial support for natural resource management activities can be provided as a loan at reasonable rate of interest. Already 35 projects have been sanctioned involving loan amount of about Rs 1000 million. The sanctioned projects include honey collection by tribals in Maharashtra, tussar value chain by a women producer company ('MASUTA'), eco-tourism in Karnataka[11] etc.[12]

Microfinance and NABARD


                                            “To promote sustainable and equitable
                                             agriculture and rural prosperity through
                                             effective credit support, related services,
                                             institutional development and other
                                             innovative initiatives ”

SHG’s and the link to the banking system has become a very well-known method for upgrading the financial system in the rural India and meeting one of the roles of the eleventh five year plan of financial inclusion. Microfinance over a period of time has become a very well-known method of development and integrating many development programs to tackle the problem of financial exclusion. A pilot project in microfinance by NABARD linked 225 SHG’s in 1992 and now has reached 69.5 lakh saving-linked SHGs and 48.5 lakh credit-linked SHGs, covering 9.7crore Households under this project and hence converging formal financial sector with the informal financial sector.

For a better reach of microfinance program a continuous check of the status, progress, trends, qualitative and quantitative performance comprehensively is required. Thus the Reserve Bank of INDIA and NABARD has laid out certain guidelines in 06-07 for the commercial banks, Regional Rural Banks and Cooperative Banks to provide the data to RBI and NABARD about the progress of the microfinance program. There are three aspects on which the data was collected, savings of self-help groups with banks, loan disbursed by banks to self-help groups default by self-help group’s repayment of the loans taken from banks. Banks also provides data regarding loans given by banks to the microfinance institutions[13] .


  1. ^ "25 YEARS OF DEDICATION TO RURAL PROSPERITY". Retrieved 2010-09-01. 
  2. ^ "Apex Development Bank with a mandate for facilitating credit flow". Retrieved 2010-09-01. 
  3. ^ "Nabard Rural Innovation Fund | Agriculture and Industry Survey". Retrieved 2010-09-01. 
  4. ^ "25 YEARS OF DEDICATION TO RURAL PROSPERITY". Retrieved 11 September 2011. 
  5. ^ "NABARD". Retrieved 11 September 2011. 
  6. ^ "ROLE OF NABARD". Retrieved 10/12/2011. 
  7. ^ EDA and APMAS Self-Help Groups in India: A Study of the Lights and Shades, CARE, CRS, USAID and GTZ, 2006, p. 11
  8. ^ "Nabard can help change face of rural India". The Hindu Business Line. 2010-06-28. Retrieved 2010-09-01. 
  9. ^ "NABARD – SDC rural innovation fund". Retrieved 2010-09-01. 
  10. ^ "SSRN-Evaluating Effectiveness Among Cooperatives vis-a-vis Other Social Institutes - A Case Study of Nabard's Rural Innovation Fund & Other Schemes by Vrajlal Sapovadia". Retrieved 2010-09-01. [dead link]
  11. ^ "Karnataka lags in using Nabard rural infra fund". 2010-04-12. Retrieved 2010-09-01. 
  12. ^ "National Bank for Agriculture and Rural Development". Retrieved 2010-09-01. 
  13. ^ "status of microfinance in INDIA 2009-2010". 

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