NABARD

National Bank for Agriculture & Rural Development
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Table of contents
CHAPTER TITLE PAGE NO.
NO.
1 INTRODUCTION TO NABARD
1.1 ESTABILSHMENT OF THE
BANK
1.2 GENISIS &HISTORICAL
BACKGROUND
1.3 OBJECTIVES
1.4 MISSION STATEMENT
1.5 CUTTENT POSITION OF
NABARD
2 WHAT IS NABARD?
2.1 MAJOR ACTIVITIES

2.2 REGIONAL OFFICE OF
NABARD ALL OVER INDIA
2.3 ORGANISATIONAL
STRUCTURE
2.4 MILE STONES IN NABARD
2.5 NABARD’S ROLE IN TRAINING
3 FUNCTIONS OF NABARD CREDIT ROLE
3 FUNCTIONS OF NABARD
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3.1 CREDIT OPERATIONS

PERFORMED BY THE BANK
3.2 CREDIT PLANNING BY NABRD
3.3 RESOURCES FOR THE
OPERATION
3.4 CREDIT STRUCTURE OF
NABARD
3.5 TYPES OF REFINANCE
FACILITIES
3.6 INTREST RATE
3.7 DIRECT CREDIT
4 PROMOTIONAL ROLE OF NABARD
4 INTRODUCTION
4.1DEVELOPMENT &
PROMOTIONAL FUNCTION
4.2 SWAROJGAR CREDIT CARD
4.3 FARMERS CLUB PROGRAMME
4.4 SELF HELP GROUPS
4.5 KISSAN CREDIT CARDS
5 DEVELOPMENTAL ROLE OF
NABARD
5 INTRODUCTION
5.1 WATERSHED DEVELOPMENT
FUND(WDF)
5.2 CO-OPERATIVE DEVELOPMENT
FUND (CDF)
5
5.3 RURAL INFRASTRUCTURAL

DEVELOPMENT FUND (RIDF)
5.4 DISTRICT RRAL INDUSTRIES PROJECT
(DRIP)
5.5 MAHARASHTRA RURAL CREDIT
PROJECT (MRCD)
5.6 RURAL ENTERPRUNERSHIP
DEVELOPMENT PROGRAMME (REDP)
5.7 RURAL MARKETING
5.8 REVIVAL OF SHORT TREM RURAL CO-
OPERATINE STRUCTURE
5.9 RURAL INNOVATION FUND
5.10 NABARD CONSULTANCY SERVICES
5.11 CO-FINANCING
6 LATEST SCHEMES OF NABARD
6.1 MILLION SHALLOW TUBEWELLS
PROGRAMME
6.2 OFWAMS
6.3 RIF
6.4 FUNDS FOR SWAROJGAR AWWARNESS
SCHEME
6.5 NABARD’S REFINANCE SCHEME FOR
KERELA CO-OP BANK
6.6 LPG CONNECTION FINANCE SCHEME
FROM UNITED BANK
6.7 NEW SCHEME TO INCREASE
PRODUCTION OF CROPS
7 GENDER DEVELOPMENT
7.1 WOMEN DEVELOPMENT
7.2 GENDER SENSITIZATION
PROGRAMMES
7.3 WDC
7.4 ARWIND
7.5 MAHIMA
6
7.6 DEWTA
7.7 ADIVASI DEVELOPMENT
PROGRAMME IN GUJRAT
7.8ADIVASI DEVELOPMENT
PROGRAMME IN MAHARASHTRA
8 SUPERVISORY ROLE OF NABARD
8 INTRODUCTION
NABARD AN OVERVIEW
7
Twenty four years ago, to be precise on July12,1982, by an Act of the parliament ,NABARD
came into being with the avowed objective of providing focused and undivided attention to
the development of rural India which was, and even now is, crucial to the country’s
economic progress. Naiad’s mandate touches practically every aspect of rural life. As its
mission statement underscores, NABARD is to promote sustainable and equitable
agriculture and rural prosperity through effective credit support, related services, institution
development and other innovative initiatives.
As its core business is the credit support that suits every activity in rural India. Today
it has a tremendous reach through 28 regional offices at the state capitals, a sub-office. It
refinances commercial, co-operative and regional rural banks for lending to on farm and
non-farm activities like minor irrigation, animal husbandry, farm mechanization ,forestry,
fisheries, land development, horticulture, plantation and medicinal corps and non-farm like
rural industries, artisans, handicrafts, handlooms, rural housing, rural tourism and so on.
Refinance is provided by NABARD for both long term investment credit as well as short
term production credit for crop rearing and working capital for non-farm activities.
Clearly NABARD has been silently working for supporting diversified activities and
its stakes are quite awesome. The figures speak for themselves. It has channelised whopping
8
Rs 8622crore disbursed during 2005-2006. under production credit the bank sanctioned
limits of Rs 11,889 crore during 2005-2006.
NABARD has effectively brought in a number of innovations in the rural credit
domain. To quote a few:
• SELF HELP GROUPS,
• FARMER CLUBS,
• RURAL INFRASTRUCTURE DEVELOPMENT FUND,
• WATERSHED DEVELOPMENT,
• KISSAN CREDIT CARD,
• DISTRICT RURAL INDUSTRIES PROJECT CLUSTER
• DEVELOPMENT PROGRAMME AND
• RURAL INNOVATION FUND.
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Table of contents:
10
CHAPTER 1
CONCEPT OF NABARD
1. INTRODUCTION
"Rural India which comprises 5.5 lakh villages and encompasses three fourths of the
Country's population is Characterized by low income levels, inadequate to ensure a quality
of life compatible with physical well being. The Ministry of Rural Development,
spearheading the frontal attack on rural poverty, through its various programmes endeavored
to reach out to the last and most disadvantaged sections of society, provide them with
avenues of employment, be it self-employment or wage-employment, and to improve
infrastructure relating to their life support systems."
India has been a welfare state ever since her Independence and the primary objective
of all governmental endeavors has been the welfare of its millions. Planning has been one of
the pillars of the Indian policy since independence and the country's strength is derived from
the achievement of planning. The policies and programmes have been designed with the aim
of alleviation of rural poverty which has been one of the primary objectives of planned
development in India. It was realized that a sustainable strategy of poverty alleviation has to
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be based on increasing the productive employment opportunities in the process of growth

itself. Elimination of poverty, ignorance, diseases and inequality of opportunities and
providing a better and higher quality of life were the basic premises upon which all the plans
and blue-prints of development were built.
NABARD implies both the economic betterment of people as well as greater social
transformation. In order to provide the rural people with better prospects for economic
development, increased participation of people in the rural development programmes,
decentralization of planning, better enforcement of land reforms and greater access to credit
are envisaged.
1.1 Establishment of the Bank:
The Bill for setting up the Bank was passed by the Parliament in December, 1981 and
National Bank came into existence on 12th July, 1982.The review committee envisaged that
the new apex bank would be an organizational device for providing undivided attention,
forceful direction and pointed focus to the credit problems arising out of the integrated
approach to rural development.
The Committee recommended that the new bank take over from the Reserve Bank the
overseeing the entire rural credit system, including credit for rural artisans and village
industries, and the statutory inspection of co-operative banks and Regional Rural Banks on
an agency basis, the Bank continuing to retain its essential control. The new bank was to
have organic links with the Reserve Bank by virtue of the latter contributing half of its share
capital ( the other half being contributed by the Central Government), and three members of
the Central Board of Directors of the Reserve Bank being appointed on its board, besides
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Deputy Governor of Reserve Bank being appointed as its Chairman. On the establishment,
the National Bank has taken over the entire undertaking of the Agriculture Refinance and
Development Corporation, and has taken over from the Reserve Bank its refinancing
functions in relation to the State Co-operative Banks and the Regional Rural Banks.
The bank is now coordinating agency in relation to the Central Government, Planning
Commission, State Governments and institutions at all-India level and State-level engaged in
the development of small-scale industries, rural crafts, etc. for giving effect to the various
policies and programmes related to rural credit.
Chapter 1 1.2. Genesis and Historical Background

The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural
Development (CRAFICARD) set up by the RBI under the Chairmanship of
Shri B Sivaraman in its report submitted to Governor, Reserve Bank of India on November
28, 1979 recommended the establishment of NABARD. The Parliament through the Act 61
of 81, approved its setting up.
The Committee after reviewing the arrangements came to the conclusion that a new
arrangement would be necessary at the national level for achieving the desired focus and
thrust towards integration of credit activities in the context of the strategy for Integrated
Rural Development. Against the backdrop of the massive credit needs of rural development
and the need to uplift the weaker sections in the rural areas within a given time horizon the
arrangement called for a separate institutional set-up. Similarly. The Reserve Bank had
onerous responsibilities to discharge in respect of its many basic functions of central banking
in monetary and credit regulations and was not therefore in a position to devote undivided
13
attention to the operational details of the emerging complex credit problems. This paved the
way for the establishment of NABARD.
CRAFICARD also found it prudent to integrate short term, medium term and long-term
credit structure for the agriculture sector by establishing a new bank. NABARD is the result
of this recommendation. It was set up with an initial capital of Rs 100 crore, which was
enhanced to Rs 2,000 crore, fully subscribed by the Government of India and the RBI.
Chapter 2 1.3 Objectives

NABARD was established in terms of the , "for providing credit for the promotion 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 IRDP and
securing prosperity of rural areas and for matters connected therewith in incidental thereto".
The main objectives of the NABARD as stated in the statement of objectives while placing
the bill before the Lok Sabha were categorized as under:
The National Bank will be an apex organisation in respect of all matters relating to policy,
planning operational aspects in the field of credit for promotion of Agriculture, Small Scale
Industries, Cottage and Village Industries, Handicrafts and other rural crafts and other allied
economic activities in rural areas.
The Bank will also provide direct lending to any institution as may approved by the Central
Government.
The Bank will have organic links with the Reserve Bank and maintain a close link with in.
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Chapter 3 1.4 Mission

Promoting sustainable and equitable agriculture and rural development through effective
credit support, related services, institution building and other innovative initiatives.
In pursuing this mission, NABARD focuses its activities on
Credit functions, involving preparation of potential-linked credit plans annually for all
districts of the country for identification of credit potential, monitoring the flow of ground
level rural credit, issuing policy and operational guidelines to rural financing institutions and
providing credit facilities to eligible institutions under various programmes
Development functions, concerning reinforcement of the credit functions and making credit
more productive
Supervisory functions, ensuring the proper functioning of cooperative banks and regional
rural banks
1.5 CURRENT POSITION OF NABARD
 In a journey spanning 25 years, NABARD has paved the way for all-round rural
progress and development with 28 regional offices, sub-office at Port Blair and 376
district offices.
 The Micro Finance programme is the largest of its kind in the world. The programme
has helped over 329.90 lakh households through 22.38 lakh SHGs comprising mostly
of women members.Women empowerment in rural areas. Rs 872 lakh have been
sanctioned by way of assistance to women entrepreneurs.
15
 Through the infrastructure development fund Rs 51,283 crore have been sanctioned
for 2,44,651 projects covering irrigation, rural roads and bridges, health and
education, soil conversation, drinking water schemes etc.
 Watershed development fund, with cumulative sanctions of Rs578.95 crore for 427
projects in 124 districts of 14 states, has created a ‘Peoples Movement’ in rural India.
 Farmers now enjoy financial access and security through 582.50 lakh Kisan Credit
Cards that have been issued through a vast rural banking network.
 District Rural Industries Projects (DRIP) has generated employment for 23.34 lakh
units in 105 districts.
CHAPTER 2
What is NABARD?
National Bank for Agriculture & Rural

Development
2 INTRODUCTION
16
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.
NABARD is established as a development Bank, in terms of the Preamble of the 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
The National Bank for Agriculture & Rural Development (NABARD) : was setup by
an act of 1981. The objective of the Bank was to provide credit for promotion of Agriculture,
small-scale Industry, cottage and village industries, handicrafts and other rural crafts and
other allied economic activities in rural area with a view to promote integrated rural
development and to secure prosperity of rural area and for matters connected therewith or
incidental thereto.
NABARD is set up as an apex Development Bank with a mandate for facilitating

credit flow for promotion and development of agriculture, small-scale industries, cottage and
village industries, handicrafts and other rural crafts. It also has the mandate to support all
other allied economic activities in rural areas, promote integrated and sustainable rural
development and secure prosperity of rural areas. In discharging its role as a facilitator for
rural prosperity NABARD is entrusted with
Providing refinance to lending institutions in rural areas
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Bringing about or promoting institutional development and
Evaluating, monitoring and inspecting the client banks
Besides this pivotal role, NABARD also:
Acts as a coordinator in the operations of rural credit institutions
Extends assistance to the government, the Reserve Bank of India and other organizations in
matters relating to rural development
Offers training and research facilities for banks, cooperatives and organizations working in
the field of rural development
Helps the state governments in reaching their targets of providing assistance to eligible
institutions in agriculture and rural development
Acts as regulator for cooperative banks and RRBs.
Chapter 4 2.1 Major Activities

Preparing of Potential Linked Credit Plans for identification of exploitable potentials under
agriculture and other activities available for development through bank credit.
Refinancing banks for extending loans for investment and production purpose in rural areas.
Providing loans to State Government/Non Government Organizations (NGOs)/Panchayati

Raj Institutions (PRIs) for developing rural infrastructure.
Supporting credit innovations of Non Government Organizations (NGOs) and other non-
formal agencies.
18
Extending formal banking services to the unreached rural poor by evolving a supplementary
credit delivery strategy in a cost effective manner by promoting Self Help Groups (SHGs)
Promoting participatory watershed development for enhancing productivity and profitability

of rainfed agriculture in a sustainable manner.
On-site inspection of cooperative banks and Regional Rural Banks (RRBs) and iff-site
surveillance over health of cooperatives andRRBs
2.2 REGIONAL OFFICES OF NABARD ALL OVER

INDIA
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NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in
the capitals of all the states/union territories. 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.
Chapter 5 2.3 Organization Structure
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2.4 Some of the milestones in NABARD's activities

are:
Refinance disbursement under ST-Agri & Others and MT-Conversion/ Liquidity support
aggregated Rs.16952.83 crore during 2007-08.
Refinance disbursement under Investment Credit to commercial banks, state cooperative

banks, state cooperative agriculture and rural development banks, RRBs and other eligible
financial institutions during 2007-08 aggregated Rs.9046.27 crore.
Through the Rural Infrastructure Development Fund (RIDF) Rs.8034.93 crores were
disbursed during 2007-08. With this, a cumulative amount of Rs.74073.41 crore has been
sanctioned for 280227 projects as on 31 March 2008 covering irrigation, rural roads and
bridges, health and education, soil conservation, drinking water schemes, flood protection,
forest management etc.
Under Watershed Development Fund with a corpus of Rs.613.71 crore as on 31 March 2008,
416 projects in 94 districts of 14 states have benefited.
Farmers now enjoy hassle free access to credit and security through 714.68 lakh Kisan
Credit Cards that have been issued through a vast rural banking network.
Under the Farmers' Club Programme, a total of 28226 clubs covering 61789 villages in 555
districts have been formed, helping farmers get access to credit, technology and extension
services.
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Chapter 6 2.5 NABARD and its Role in Training

National Bank Staff College, Lucknow
National Bank Training Centre, Lucknow
Zonal Training Centre, Hyderabad
Regional Training Centre, Bolpur
Bankers Institute of Rural Development (BIRD), Lucknow
The provisions of the Act as stated below very clearly indicate the nature and scope of the
developmental mandate of the Bank and its role in training and capacity building with the
underlying belief that the process of development cannot be accomplished by
credit/refinance alone.
Section 38 of the NABARD Act provides that the Bank shall:
maintain expert staff to study all problems relating to agriculture and rural development and
be available for consultation to the Central Government, the Reserve Bank, the State
Governments and the other institutions engaged in the field of rural development.
provide technical, legal, financial, marketing and administrative assistance to any person
engaged in agriculture and rural development activities;
may provide consultancy services in the field of agriculture and rural development and other
related matters in or outside India, on such terms and against such remuneration, as may be
agreed upon;
in this context, the role of training in NABARD and the role played by it for capacity
building in client institutions, partner agencies and other developmental agencies is
important.
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For maintaining 'Expert Staff', the bank needs to provide continuous exposure to its officers
and staff for upscaling their knowledge and skills in core areas. However, in the initial years
the Bank had recruited expert staff from various technical disciplines and created a separate
cadre of officers. These officers were involved in formulating, appraising, monitoring and
evaluating different agricultural projects implemented by different credit agencies.These
officers, irrespective of their academic background, were imparted similar type of training as
all other officers. Their placements and the regular job rotations helped in grooming them to
take up assorted assignments, get involved in a variety of roles and functions including
credit, developmental, promotional, supervisory and necessary support and information for
decision making. The Bank also had access to their specialised skills which were utilised
whenever needed.
In pursuance of the Bank's mandate as stated in the Act, the Bank provides training facilities
for the RFIs and agencies involved in rural development through BIRD and the two RTCs.
With a view to broadbase the training and capacity building efforts, the Bank encourages the
RFIs to set up their own training systems and provides these training institutes the necessary
support to conduct meaningful and quality training. Options and avenues for strengthening
the training interventions at the client level are continuously examined so that the human
resources in these institutions are developed to take on the challenges, reckon with the
competition, improve customer service, expand outreach, develop suitable products and
thereby contribute to rural development.
As NABARD primarily functions through other agencies, the needs of the client
institutions largely determine the knowledge and skill requirements of NABARD
officers.
NABARD endeavours to blend the experiences of client bank training with the training for
NABARD officers so as to make training meaningful and relevant to their roles. Efforts are
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also made to blend the study findings with the outcome from training to periodically
measure the overall impact of the investments made in the training efforts.
CHAPTER 3
FUNCTIONS OF NABARD
CREDIT ROLE
 3 Introduction
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
25
evaluation of projects refinanced by it.It promotes research in the fields of rural banking,
agriculture and rural development.
 3.1 CREDIT OPERATIONS PERFORMED BY THE

BANK:
The National Bank is empowered to provide short-term refinance assistance for

periods not exceeding 18 months to state Co-operative Banks, Regional Rural Banks and any
financial institution approved by Reserve Bank in this behalf; for a wide range of purposes,
including marketing and trading, relating to rural economy. These short term loans granted
to State co-operative Banks and Regional Rural Banks , in so far as they relate to the
financing of agricultural operations or marketing of crops, can be converted by the National
Bank into medium-term loans for periods not exceeding seven years under conditions of
drought, famine or other natural calamities, military operations or enemy action.
The National Bank can grant medium-term loans to the State co-operative Banks and
Regional Rural Banks for period extending from 18 months to seven years for agriculture
and rural development and such other purposes as may be determined by it from time to time
subject to their being fully guaranteed by the State Governments as to the repayment of
principal and payment of interest. Such guarantee can however be waived by the National
Bank in such circumstances.
The National Bank is empowered to provide by way of refinance assistance long-term

loans extending upto a maximum period of 25 years including the period of re-scheduling
such loans to the State Land Development Banks, Regional Rural Banks, Commercial
Banks, State Co-operative Banks or any other financial institutions approved by the Reserve
26
Bank for the purpose of making investment loans. It may also give short-term loans
alongwith long-terms loans where such composite loans are considered necessary. Loans for
periods not exceeding 20 years can be made to the State Governments to enable them to
subscribe directly or indirectly to the Share capital of Co-operative Societies.
Moreover, the new bank can contribute to the share capital or invest in the securities
of any institutions concerned with agriculture or rural development.
 3.2 Credit Planning by NABARD :
3.2.1 District Level Planning -
NABARD prepares Potential Linked Credit Plans (PLPs) for all the districts of the country.
It maps the potentials available for development in agriculture and rural sectors in the district
and projects credit requirements, taking into account long-term physical potential,
availability of infrastructure, extension services and marketing support and the strengths and
weaknesses of the RFIs in the district.
3.2.2 State Level Planning -
NABARD prepares a State Focus Paper for every State. This presents a comprehensive
picture of potentials available in the State for development of agriculture and allied sectors.
It also provides a road map of the opportunities available for further investments in these
27
sectors. It can be used by bankers and other agencies for preparing their action plans for
making these investments.
State Credit Seminars are convened by NABARD annually where all agencies concerned
viz., the State Government, banks, NGOs, etc. participate and discuss policies and
operational measures required to be taken for tackling constraints in development of
potentials available in agriculture and allied sectors in the State.
3.2.3National Level Planning -
NABARD facilitates policy decisions by GoI and RBI in the areas of credit flow to
agriculture and rural development.
 3.3 RESOURCE FOR THE OPERATIONS :
For its short-term operations, the National Bank will borrow funds from the Reserve Bank in
the form of Line of Credit under Section 17 (4E) of the Reserve Bank of India Act which
permitted the Reserve Bank to grant short-term loans to the Agricultural Refinance and
Development Corporation earlier and which has now been amended suitably by the National
Bank for Agriculture and Rural Development Act .
For its term-loan operations, the National Bank will draw funds, as the Corporation was
doing earlier, from the Central Government, World Bank/IDA, and other multilateral and
bilateral aid agencies, the market and National Rural Credits (long-term operations). Fund
that it has established. To this Fund has been transferred the balance in the National
28
Agricultural Credit (Long term operations). Funds maintained by the Reserve Bank. Further
contributions would be made annually to the new Fund by the Reserve Bank in addition to
the contributions by the National Bank itself. Provision has been made also for the Central
Government and the State Governments to contribute to this Fund from time to time.
3.4 CREDIT STRUCTURE OF NABARD
29
Fig 3.4. 1
30
3.5 TYPES OF REFINANCE FACILITIES

Agency Credit Facilities
Commercial Banks Long-term credit for investment purposes
Financing the working capital requirements of

Weavers' Co-operative Societies (WCS) & State
Handloom Development Corporations
Short-term Co-operative Structure (State Short-term (crop and other loans)
Co-operative Banks, District Central Co-
Medium-term (conversion) loans
operative Banks, Primary Agricultural
Credit Societies) Term loans for investment purposes
Financing WCS for production and marketing

purposes
Financing State Handloom Development

Corporations for working capital by State Co-
operative Banks
Long-term Co-operative Structure (State Term loans for investment purposes
Co-operative Agriculture and Rural
Development Banks, Primary Co-
operative Agriculture and Rural
Development Banks)
Regional Rural Banks (RRBs) Short-term (crop and other loans)
Term loans for investment purposes
31
State Governments Long-term loans for equity participation in co-

operatives
Rural Infrastructure Development Fund (RIDF)

loans for infrastructure projects
Non-Governmental Organisations (NGOs) Revolving Fund Assistance for various micro-
- Informal Credit Delivery System credit delivery innovations and promotional
projects under 'Credit and Financial Services Fund'
(CFSF) and 'Rural Promotion Corpus Fund'
(RPCF) respectively
Chapter 7
Chapter 8 3.6 Interest Rates

3.6.1 Margin money
The beneficiary's contribution to the project cost is necessary in order to ensure his stake in
the investment. Such margin money varies from 5% to 25% depending on the type of
investments and the category of the beneficiaries. The margin money can be by way of
contribution in cash or own or family labour. Large farmers, firms, corporate borrowers
including state-owned corporations, forest development corporations provide margin money
up to 25% pf the investment cost.
3.6.2 Special focus
Removal of regional and sectoral imbalances is one of the thrust areas and hence preference
is given to the needs of the underdeveloped areas. For example, the development of the
north-eastern region has been a key programme and special efforts have been made through
32
refinance offered on liberal terms and other supportive measures so that the rural credit
delivery system in the region is strengthened.
3.6.3 Monitoring
Special attention is paid to monitoring the projects that are offered assistance so that the
targets are met and the implementation is properly done. An evaluation of the project is
taken up and in the light of the findings the quality of the projects and their implementation
methods can be improved. District-oriented monitoring studies are conducted to evaluate the
performance of the ongoing agricultural development schemes sanctioned. Specific sector
studies are also undertaken like floriculture, mushroom, aqua culture, agro-processing, etc.
to get an insight into the problems and prospects of these sectors.
Guidelines are often issued for formulation of high-tech and export-oriented projects in farm
and non-farm sectors. Besides, even consultancy is also offered for projects, including
appraisal of projects even in cases where refinance is not secured from the bank.
Chapter 9 3.7 Direct Credit
3.7.1 Direct credit from NABARD constitutes loans

to State Governments.
Supporting Cooperatives
In order to strengthen the owned funds position of cooperative credit institutions and thereby
increasing their capacity to leverage larger resources, NABARD provides loans to State
Governments to contribute to the share capital of these institutions.
33
3.7.2 Rural Infrastructure Development
With the objective of assisting State Governments in the completion of ongoing rural
infrastructure projects and to take up new infrastructure projects, the Rural Infrastructure
Development Fund (RIDF) was set up with NABARD in 1995-96 with contributions from
Commercial banks by way of deposits. The shortfall in agri/priority sector lending was
deposited by the commercial banks with NABARD as part of their contribution to the RIDF.
The total corpus covering RIDF I (1995-96) to X (2004-05) is Rs. 42,000 crore. Sanctions
under all trenches of RIDF as on 31 March 2005 were Rs.42948.51 crore against which the
disbursements were Rs. 25384.02 cr.
Chapter 10 Rural Infrastructure

With the objective of assisting State Governments in the completion of ongoing rural
infrastructure projects and to take up new infrastructure projects, the Rural Infrastructure
Development Fund (RIDF) was set up with NABARD in 1995-96 with contributions from
Commercial banks by way of deposits. The shortfall in agri/priority sector lending was
deposited by the commercial banks with NABARD as part of their contribution to the RIDF.
The total corpus covering RIDF I (1995-96) to X (2004-05) is Rs. 42,000 crore. Sanctions
under all trenches of RIDF as on 31 March 2005 were Rs.42948.51 crore against which the
disbursements were Rs. 25384.02 cr.
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Chapter 11 3.7.3 Farm Sector Schemes

Village Adoption/Village development Plan
Backward Blocks
Bamboo Farming
MACs
Bio Fuels
Crop Insurance
Agriculture Commodities
SGSY
Farm Mechanisation
Land Purchase
Scheme for AgriClinic/ Agri-Business Centres (ACABCs)
SEMFEX
Capacity Building for Adoption of Technology (CAT)
Agri Export Zone (AEZ)
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CHAPTER 4
PROMOTIONAL ROLE of NABARD
 4 INTRODUCTION
Promotion of RNFS has been recognized as an important and necessary adjunct to the
refinancing function. The objective of promotional programmes is to establish replicable
models for generating/enhancing opportunities for employment and income generation in
rural areas in a sustainable, demonstrative and cost effective manner by providing
grant/revolving fund assistance etc., to NGOs,Voluntary Associations(VAs), Trusts and
other Promotional Organizations. And trained around 1,51,000 rural youth with grant
assistance of Rs. 11.91 crore
Here are some of the promotional schemes of NABARD like :
• Swarojgar credit card schemes

• Farmer’s club programme
• Self help groups
• Kissan credit card schemes
36
• Many more
Chapter 12 4.1 Development and Promotional

Functions
Credit is a critical factor in development of agriculture and rural sector as it enables
investment in capital formation and technological upgradation. Hence strengthening of rural
financial institutions, which deliver credit to the sector, has been identified by NABARD as
a thrust area. Various initiatives have been taken to strengthen the cooperative credit
structure and the regional rural banks, so that adequate and timely credit is made available to
the needy.
In order to reinforce the credit functions and to make credit more productive, NABARD has
been undertaking a number of developmental and promotional activities such as:-
Help cooperative banks and Regional Rural Banks to prepare development actionsplans for
themselves
Enter into MoU with state governments and cooperative banks specifying their respective
obligations to improve the affairs of the banks in a stipulated timeframe
Help Regional Rural Banks and the sponsor banks to enter into MoUs specifying their
respective obligations to improve the affairs of the Regional Rural Banks in a stipulated
timeframe
Monitor implementation of development action plans of banks and fulfillment of obligations

under MoUs
37
Provide financial assistance to cooperatives and Regional Rural Banks for establishment of
technical, monitoring and evaluations cells
Provide financial support for the training institutes of cooperative banks
Provide training for senior and middle level executives of commercial banks, Regional Rural
Banks and cooperative banks
Create awareness among the borrowers on ethics of repayment through Vikas Volunteer
Vahini and Farmer’s clubs
Provide financial assistance to cooperative banks for building improved management

information system, computerisation of operations and development of human resources
4.2 Swarozgar Credit Card (SCC) Scheme -
38
The SCC Scheme formulated by NABARD in consultation with RBI and GoI
envisages adequate and timely credit, both working capital and block capital, to small
artisans, handloom weavers, service providers, fishermen, self-employed persons, rickshaw
owners and other micro entrepreneurs, in rural and urban areas in a flexible, hassle free and
cost effective manner from the banking system. The facility also includes a reasonable
component for consumption needs. As on 31 March 2004, 28,925 cards were issued by CBs,
Coop Banks and RRBs involving credit limit of Rs. 64.26 crore
4.3 Farmers' Club Programme
What are Farmers' Clubs?
Farmers’ Clubs are grassroot level informal forums. Such Clubs are organised by rural
branches of banks with the support and financial assistance of NABARD for the mutual
benefit of the banks concerned and rural people.
What is Farmers' Club Programme ?
National Bank for Agriculture and Rural Development (NABARD) encourages banks
to promote Farmers' Clubs in rural areas under the Farmers’ Club Programme, earlier known
as “Vikas Volunteer Vahini (VVV) Programme”. The Programme was launched by
39
NABARD in November 1982 to propagate the five principles of “Development through

Credit”.
Mission
Development in rural areas through credit, technology transfer, awareness and capacity
building.
Membership
All villagers except willful defaulters can become members of the club. The club must make
endeavour to raise their own resources by way of contribution from members, undertaking
certain business services such as bulk procurement of inputs and collective marketing of
agricultural produce, etc.
Financial Support from NABARD
Sl. No. Name of the Programme Maximum EligibleNorth East Region

Grant other than
(including Sikkim and
NER
Andaman & Nicobar
Islands)
1 Maintenance of aRs. 3,000 per ClubRs. 3,000 per Club year for
Farmers' Club per year for 35 years
years.
40
2 Grant if applicable in theRs. 2,000/- perRs. 2,000/- per Club per

case of KVKs, NGOs,Club per year for 3year for 3 years.
Agriculture Universitiesyears.
etc.
3 Inauguration Rs. 5000/- Rs. 5000/-
4 Basic Level Orientation
Training Program
(BLOTP)
5 "Meet with Experts"Rs. 1,250 per meetRs. 1,250 per meet for 4
Program for 4 meets for 3meets for 3 years.
years.
NABARD would provide financial support for the first three years and for the next two
years the bank sponsoring the club may provide the support, if necessary. The club is
expected to attain self sustainability in a period of 3-5 years.
4.4 Self help groups
Self help groups comprise homogenous groups of poor people who have voluntarily come
together mainly with the idea of overcoming their financial difficulties. SHGs can rightly be
41
called a potent tool for human development. SHGs enable the poor, especially the women
form the poor households, to collectively identify, prioritise and tackle the problems they
face in their socio-economic environment. By pooling their meager resources and using
them for lending among themselves, they develop the habit of thrift and the skill of credit
appraisal, before getting linked to the banks. Staring with small loans for consumption they
soon graduate to bigger loans for a wide range of micro-enterprise like vermin-composting,
livestock rearing, handicrafts, vending of various commodities in rural areas, running
distribution materials, etc. with a modest beginning of just 500SHGs in 1992, today the
programme boats over 22 lakh SHGs and 3.3 crore households influencing the lives of over
16 crore poor population. During the year 2005-06 alone, as many as 6,20.109 groups were
credit linked.
4.5 KISAN CREDIT CARD SCHEME
42
As a pioneering credit delivery innovation, Kisan Credit Card Scheme aims at

provision of adequate and timely support from the banking system to the farmers for their
cultivation needs including purchase of inputs in a flexible and cost effective manner.
Since launching in August 1998, around 2.38 crore Kisan Credit Cards issued upto 31
March 2002 by Cooperative Banks, Regional Rural Banks and Commercial Banks put
together. Scheme implemented in all States and Union Territories (except Chandigarh,
Daman & Diu and Dadra & Nagar Haveli) with all Cooperative Banks, RRBs and
Commercial Banks participating. Agency-wise/State-wise progress in issue of cards by all
banks during 2001-02 and since inception of Scheme.
Agency-wise KC Cards issued upto 31 March 2003 ( since inception) (No. of cards)
Year Cooperative RRBs Commercial Total

Banks Banks
1998-1999 155353 6421 445451 607225
CHAPTER 5
43
DEVELOPMENT ROLES OF NABARD
5 INTRODUCTION
Credit is a critical factor in development of agriculture and rural sector as it enables

investment in capital formation and technological upgradation. Hence strengthening of rural
financial institutions, which deliver credit to the sector, has been identified by NABARD as
a thrust area. Various initiatives have been taken to strengthen the cooperative credit
structure and the regional rural banks, so that adequate and timely credit is made available to
the needy. I
in order to reinforce the credit functions and to make credit more productive, NABARD has
been undertaking a number of developmental and promotional activities such as:-
Help cooperative banks and Regional Rural Banks to prepare development actionsplans for
themselves
Enter into MoU with state governments and cooperative banks specifying their respective
obligations to improve the affairs of the banks in a stipulated timeframe
Help Regional Rural Banks and the sponsor banks to enter into MoUs specifying their
respective obligations to improve the affairs of the Regional Rural Banks in a stipulated
timeframe
Monitor implementation of development action plans of banks and fulfillment of obligations

under MoUs
44
provide financial assistance to cooperatives and Regional Rural Banks for establishment of
technical, monitoring and evaluations cells
create awareness among the borrowers on ethics of repayment through Vikas Volunteer
Vahini and Farmer’s clubrovide financial assistance to cooperative banks for building
improved management information system, computerisation of operations and development
of human resources
5.1 Watershed Development Fund (WDF)
Pursuant to the announcement by the Hon'ble Union Finance Minister in the Union
Budget for the year 1999-2000, a Watershed Development Fund (WDF) has been set up in
NABARD with a corpus of Rs.200 crores equally contributed by the Government of India
and NABARD, with an objective to promote participatory watershed development
throughout the country.
The Fund envisaged coverage of 100 priority districts in 14 states over a period of 3 years.
The participating states can avail loans out of WDF for implementing watershed projects
through the village level communities, non-governmental organizations (NGOs) or project
45
facilitating agencies ( PFAs) in the selected districts. The loans are repayable over a period
of 9 years (including a grace period of 3 years) and carry a rate of interest of 4.5% per
annum at present.
One-third portion of the Fund is earmarked for promotional efforts, capacity building,
replication of Indo German Watershed Development Programme (Maharashtra) or any other
successful model and Self Help Group (SHG) related activities particularly targeted at
women in the project areas.As on 31 March 2004, the Rs. 154.61 crore has been added to the
corpus by way of interest on unutilized portion and excess margin on RIDF loans.
5.2 COOPERATIVE DEVELOPMENT FUND (CDF)
In pursuance with the recommendations of the Parliamentary Committee on

Agriculture, NABARD had created Co-operative Development Fund for providing
assistance to Co-operative Credit Institutions for improving their infrastructural facilities for
growth. The Fund, which started with an initial corpus of Rs.10.00 crore from the surplus
contributed by NABARD, has a balance of Rs.115.68 crore as on 31 March, 2003. The
assistance sanctioned to various cooperative institutions from the Fund till 31 March, 2004
aggregated to Rs.62.18 crore against which an amount of Rs.50.87 crore has been disbursed.
The Objectives and Purposes of the fund are given below:
Objective of the Fund:
• Supporting the efforts of grass root level institutions (PACS) to mobilize resources
etc.
46
• Human Resource Development aimed at achieving better working results and

improvements in viability and also for improvement in systems in cooperative
credit institutions.
Building of better MIS and Conduct of special studies for improving functional
efficiency and on subjects referred to above.
5.3 Rural infrastructural development fund :
If there is one development programme that has dramatically helped rural India, it is
projects undertaken through RIDF. Economist have explicitly emphasized on the direct
correlation between the index of infrastructure development and rural development. Indeed it
is far too crucial to have infrastructure for agriculture, industrial and overall economic
development. Infrastructure also provides basic amenities that improve the quality of life.
Therefore, for supporting State Governments and other development institutions, NABARD
opened the window of RIDF in 1995-1996 NABARD so far have sanctioned Rs 51,283
crore for 2,44651 projects under the Fund.
A cumulative position of sector-wise sanctions as on 31st March 2006 : Irrigation : Rs

15105,50 crore(107.92 lakh hectares) Rural Connectivity :Rs 20,290,40 crore of rural road
network (2.20 lakh km) and bridges (3.69 lakh mtrs) power Rs 1,327.7 crore social sector :
47
Rs 4,128.1 crore Other :Rs 3,539 crore. A separate window has been created for rural
connectivity with villages of population less than 500, with a corpus of Rs 4000 crore to
support the Bharat Nariman project.
5.4 DISTRICT RURAL INDUSTRIES PROJECT
(DRIP)
NABARD,launched DRIP, an integrated area based credit intensification programme,

in collaboration with government, banks and other development agencies with focus on
district. It was introduced in 1993-94 with the objective of creating sustainable employment
opportunities in rural areas. Today it is being implemented in 106 districts all over the
country.
5.5 Maharashtra Rural Credit Project
48
The project was under implementation since January 1994 and covers 1483 villages in
twelve districts of Maharashtra. The primary objective is poverty alleviation through
increased access to bank credit for the rural poor. It envisages formation and promotion of
Self Help Groups through NGOs. The project has been completed. As against a target of
promoting 2600 SHGs, 9000 groups have been promoted, of which 7027 groups have been
credit linked with banks. MRCP has provided a window of opportunities, particularly to the
poor rural women to enhance their skill and secure credit for income generating activities.
The project has helped in empowerment of rural women in addition to providing access to
bank credit.
5.6 Rural Entrepreneurship Development

Programme (REDP):
In order to generate employment in rural areas, it was felt necessary to

develop the entrepreneurial skills of the rural youth. REDP is a promotional
programme supported by NABARD to motivate and train educated unemployed rural
youth, to set up their own enterprises. So far, 2.32 lakh persons have been trained
under the programme under 7792 REDPs
5.7. Rural Marketing:

49
A number of marketing interventions have been made for marketing of rural

non-farm products since marketing is a key factor in the sustainability of any such
endeavour. With the financial support of NABARD under its promotional
programmes like Rural Haats, Rural Marts, participation in fairs, exhibitions and
marketing melas, rural artisans and entrepreneurs can get a larger market for their
produce and showcase their talent to urban and upcountry markets.
5.8. Revival of Short-Term Rural Co-operative

Structure(STCCS)
NABARD is the implementing agency for the Revival package for the STCCS
which mean the State Coop. Banks, District Coop. Banks and the Primary Agricultural
Coop. Societies. (PACS). The revival package has been approved by the Govt. of
India based on the recommendations of the Vaidyanathan Committee. NABARD has
had dialogues with State Govts. and so far 10 states have executed MOU with GoI and
NABARD. Apart from being on the national, state and district level implementing
committees, NABARD has designed guidelines and training manuals for the special
audit of PACS under the Package.
5.9. Rural Innovation Fund:
In association with Swiss Agency for Development and Cooperation (SDC),

NABARD has constituted the “NABARD SDC Rural Innovation Fund (RIF)” to
support innovative projects in Farm, Non-Farm and Micro-Finance Sectors leading to
creation of livelihood opportunities for the poor. Government and Non-Government
Institutions, corporate bodies, financial institutions and individuals can avail funding
50
support for activities involved in development of new products, processes, prototypes,

technology etc. which have the poor in their focus.
5.10.NABARD Consultancy Services (NABCONS)
NABCONS is a wholly owned subsidiary of NABARD, which has established

itself as a dependable and professional consultancy services provider in agriculture
and allied activities. As on 31 March 2007 , it has cumulatively contracted 487
national and international assignments involving consultancy fee of Rs.25.49 crores.
5.11.Co-Financing
It has been the experience that Banks are wary of taking credit risk of financing high
tech/large scale/ export oriented agricultural projects or those involving sunrise technologies.
To instill confidence in banks and ensure credit flow to such projects, NABARD has entered
into agreements for co-financing with 14 commercial banks. During 2006-07, seven projects
were sanctioned with bank loan of Rs. 145.03 crore and NABARD's share of Rs. 72.42
crore. Floriculture, organic farming, milk processing, ethanol production and agro
processing are among the projects sanctioned so far.
CHAPTER 6
LATEST SCHEMES OF NABARD
6.1. MILLION SHALLOW TUBEWELLS PROGRAMME
51
The Million Shallow Tubewells Programme (MSTP) submitted by GoB which was
approved by the Planning Commission, Govt. of India in March 2001 for the State of Bihar.
The objective of the programme is to install one million shallow tubewells with pumpsets to
bring an additional two million hactres of land under irrigation during the next five years and
increase the agricultural production and productivity of the State. The Scheme is being
implemented by NABARD / GoB through Commercial Banks and Regional Rural Banks
that have branches in rural areas in the State.
The funding pattern of the scheme is as follows :
• Margin money contributed - 20% by the farmers

• Subsidy - 30%
• Bank Loan - 50%
All non-defaulting individual farmers of all categories will be eligible for assistance
under the scheme.
The total subsidy for the programme is Rs. 45.50 crores which has been released by
GoI to GoB. For the year 2001-02, the targets were 33798 and for the year 2002-03, 23313.
Thus the overall targets for combined two years is 57111. The Scheme envisages a lock-in
period of five years with the subsidy being back ended i.e the borrowers will not be eligible
for subsidy if loan is liquidated completely within five years from the date of initial
disbursement.
52
6.2 ON FARM WATER MANAGEMENT FOR

INCREASING CROP PRODUCTION IN EASTERN
INDIA (OFWAMS)
The Centrally sponsored programme has been appeared by the Ministry of Agriculture
(MOA) GoI for the duration of the 9th Plan Period (2001-02) and 10th Plan Period. The
scheme will cover all the districts of 8 Eastern India States viz. Arunachal Pradesh, Assam,
Bihar, Chattisgarh, Jharkhand, Manipur, Mizoram and Orissa and 35 districts of Eastern UP
and 9 districts of West Bengal.
The funding pattern of the schme is as under :
• Borrowers contribution - 20%

• Subsidy - 30%
• Bank Loan - 50%
All non-defaulting individuals farmers or groups of farmers will be eligible for assistance
under the scheme. Proforma will be given to small and marginal farmers and SC/ST
borrowers. The assistance will be available for Shallow Tubewell with pumpsets, Dugwells,
Low Lift Irrigation Points and Pumpsets in isolation. The combined targets for 2001-02 and
2002-03 are 48699 Shallow Tubewells with pumpsets, 4571 LLIP, 924 Dugwells and 6252
Pumpsets.
The subsidy will be back-ended with a lock in period of 2 years i.e the borrowers will not be
eligible for subsidy if the loan is completely liquidated within two years from the date of
initial disbursement.
53
6.3 NABARD SDC Rural Innovation Fund (R I F)
. A new fund named as "NABARD SDC Rural Innovation Fund" has been created by
merging the erstwhile Rural Promotion Corpus Fund (RPCF), Credit and Financial Services
Fund (CFSF) and Interest on RPCF and the new fund came into being on 01 October 2005.
It is envisaged that the entire fund will be utilised in a period of 5 years.
National Bank for Agriculture and Rural Development (NABARD) in association with
Swiss Agency for Development and Cooperation (SDC) has constituted the "NABARD-
SDC Rural Innovation Fund (RIF)" to, inter alia, support innovative projects in Farm, Non-
Farm and Micro-Finance Sectors leading to creation of livelihood opportunities for the poor.
NABARD invites proposals for funding support to innovative projects having the above
objective.
An illustrative list of areas is given below :
• Biological and Engineering measures/techniques which improve productivity of

water.
• Design of economic and efficient water harvesting structures.
• Efficient water use systems : low cost micro-irrigation technology/ micro tube
irrigation technology, etc.
• Diversification of farm activities - agro-forestry, silvipasture, agro-horticulture and
animal husbandry etc.
• Organic farming - bio-fertilisers and pesticides.
• Development of location specific crops and agronomic practices.
54
• Extension of technology - Agri-clinics, Agro Service Centres & e-Service Centres.

The e-Service Centres may include the feasibility of commodity trading/ Village
Knowledge Centres.
• Community farming.
• Contract farming.
• Insurance products for rainfed agriculture.
• Banking through SHGs, VWCs and user teams, Joint Liability Groups, etc.
• Innovative rain water harvesting for rural dwellings.
• Rural energy from biomas, agri waste.
• Techniques for increasing value of crop residues and non-crop bio mass.
• Community regulation of distribution and use of waste and energy.
• Storage devices for agricultural and rural products.
• Innovative methods of managing Common Property Resources.
• Materials and designs for rural roads.
• Rural sanitation and waste disposal.
The list is illustrative and new ideas/innovations in tune with the objective of the Rural
Innovation Fund would be supported.
6.4 Nabard to provide funds for Swarojgar

awareness scheme
On NABARD has launched a pilot scheme to provide funds to select banks to create
awareness about the Swarojgar credit card scheme. Under the promotional scheme, financial
55
grants will be provided to select regional rural banks and cooperative banks to support
publicity programmes on the Swarojgar credit card scheme.
The idea is to create greater awareness about the swarojgar credit card scheme, which
has been developed by Nabard to provide adequate and timely bank credit to small artisans,
handloom weavers, rickshaw owners and other micro-entrepreneurs. The promotional
campaign on the Swarojgar credit card scheme is also intended to educate card holders on
how to use the cash credit facility optimally and to help the scheme reach out to the
maximum number of people, the release adds.
In Kerala, one time grant assistance will be provided to three banking entities to create
awareness about the Swarojgar credit card scheme. The assistance will be given to North
Malabar Gramin Bank, South Malabar Gramin Bank and Kerala State Cooperative
Agriculture and Rural Development Bank, according to the press release. The three banks
will receive one-time grant assistance up to 60 per cent of their expenditure on publicity,
subject to a maximum of Rs 1 lakh per bank, the release adds. Funds from the grant
assistance can be used to prepare publicity material on the Swarojgar credit card scheme and
also to arrange banker-borrower meets and other promotional activities.
6.5 Nabard's refinance scheme for Kerala co-op

bank
The Regional Office of Nabard has released schematic refinance to the tune of Rs 15.29
crore to the Kerala State Cooperative Agricultural and Rural Credit Bank (KSCARDB). An
official spokesman said here that, of this, Rs 9.47 crore was directed to the rural housing
sector while the rest would go into various non-farm sector activities, including road
56
transport operators. The applicable rates of interest ranged from 5.5 per cent to 6.5 per cent
per annum.
So far during this financial year, Nabard has released schematic refinance aggregating to
Rs 102.78 crore to various agencies in the State. This includes Rs 57.33 crore advanced to
the apex Kerala State Cooperative Bank (KSCB), Rs 29.51 crore to the two Regional Rural
Banks (RRBs) in the State and Rs 0.64 crore to commercial banks
6.6 LPG connection finance scheme from United

Bank
ON 1ST June, 2006 UNITED Bank of India has introduced a special scheme under
Nabard's refinance facility for financing LPG connections in rural areas.
The scheme covers the cost of supplying a regulator, a cylinder and accessories and a
burner stove.
The maximum amount of loan to be available under the scheme is Rs 3,500 at 7.5 per
cent rate of interest with quarterly rest, payable between three and five years, according to a
bank release
6.7 NEW SCHEME TO INCREASE PRODUCTION OF

CROPS
The centre has launched a new scheme "On-Farm Water Management for increasing crop
production in Eastern India" in 10 states of Eastern India. The scheme will be implemented
in all districts of Arunachal Pradesh, Assam, Bihar, Chattisgarh, Jharkhand, Manipur,
57
Mizoram and Orissa besides 35 districts of Eastern Uttar Pradesh and nine districts of West
Bengal. An amount of Rs.15 crore has been released during 2001-02 to NABARD as the
share of the Government of India’s assistance under the scheme. An allocation of Rs.115
crore has been proposed during 2002-03.
The scheme aims at developing irrigation facility at the command of the farmers by
tapping ground water resources of the region in a plananed manner with proper spacing.
Thus, there will be a substantial increase in agricultural production and productivity and per
capita income.
CHAPTER 7.
GENDER DEVELOPMENT
 7.1 Women Development:
Women constitute almost half the population and make up one third of the labour
force in India. Various schemes for financing farm and non-farm sector activities through
banking system are available both to men and women. In order to give focus to women in
58
various developmental activities and to increase their access to institutional credit,

NABARD has formulated various programmes -
7.2 Gender Sensitization Programmes -
With the objective of facilitating internalization of gender concerns in credit as also to

improve the outreach of the banks in respect of women clients, NABARD has been
conducting gender sensitization meets/ workshops for various levels of bankers at the district
and state level. 330 such programmes covering over 6000 bank personnel have been
conducted till 31 March 2004.
7.3 Women Development Cells (WDC) -
With a view to strengthening institutional capabilities for addressing gender issues in

credit and support services and accelerating credit flow to women through ‘relationship
banking’, NABARD has extended grant support for setting up of Women Development
Cells in RRBs and Coop Banks. NABARD has so far supported 100 such cells in Coop
Banks and RRBs. The credit flow to women through these banks is Rs.3595.79 crore
covering 27.94 lakh women since inception of WDCs. Based on a review of their
performance a modified incentive based scheme was formulated under which 8 banks have
been sanctioned assistance.
7.4 Assistance to Rural Women in Rural Non Farm

Development (ARWIND) -
59
ARWIND, a single window scheme comprising credit as well as promotional

components, has been formulated with the objective of entrepreneurial development among
rural women. Under the scheme, assistance is available for activities like Escort Services
(help in actual setting up of units), Common Facility Centres/Service Centres, setting up of
Mother Units, Product Design, Quality Control, Organising Women etc. NABARD provides
100% refinance to banks under the Scheme. As on 31 March 2004, Rs. 3 crore has been
sanctioned for 128 projects covering 9813 rural women in 22 states.
7.5 Assistance for Marketing of Non Farm Products

of Rural Women (MAHIMA) -
Recognizing the importance of marketing as a crucial link for women entrepreneurs

the scheme ‘MAHIMA’ was introduced. It aims at supporting various initiatives for
promoting marketing of items produced by rural women such as market survey, capacity
building, technology upgradation, branding, labeling, packaging, publicity, setting up of
showrooms/sale outlets, etc. NABARD provides 100% refinance to banks under the scheme.
As on 31 March 2004, 26 projects in 11 states were supported with assistance of Rs.59 lakh.
7.6 Development of Women through Area

Programme (DEWTA)
Responding to the need for an integrated and holistic approach to development of

women entrepreneurs, this scheme is being implemented in three RRBs on a pilot basis.
Under the programme the WDCs of select banks will identify the skill upgradation, capacity
60
building, and credit needs of women and fulfill the same over a period of three years. A
grant of Rs.32 lakh has been sanctioned to the WDCs.
• Support to Weaker Sections:
NABARD, has designed special programmes for upliftment of weaker sections of

society, viz. the Small and Marginal farmers, Scheduled Castes and Scheduled Tribes
(SCs/STs) and people living below the poverty line (BPL).
• Support to Small and Marginal Farmers

(SF & MF) -
As per NABARD’s refinance policy for production credit, the banks are required to
earmark a certain percentage of their lending to small and marginal farmers.
• Special Lines of Credit for Tribals -
In consonance with the policy to step up credit to tribal population, a separate line of
credit on liberal terms known as Development of Tribal Population is being extended in
predominantly tribal areas. Short Term credit limits are also sanctioned to cooperatives for
financing collection and marketing of various types of minor forest produce. SUCH AS
7.7 Adivasi Development programme in Gujarat
The programme has been under implementation with grant support from KfW,
Germany, since 1994-95 in Dharampur Taluka of Valsad district through BAIF
61
Development Research Foundation, Pune. The focus is on development of wadi (small

orchard) while other supportive interventions viz, water resource development, agriculture
development, women development, health and sanitation are also addressed. Small and
marginal farmers, including women, are selected under the programme.
The landless are supported by providing them micro-enterprises in farm and non-farm
sectors and employment opportunities in processing units. The establishment of village level
people's organisations (POs) called Village Ayojan Samitis (VAS) have been the strongest
tool and nuclei for planning and implementation of the programme. The programme has
been a great success in converting 5,140 ha wastelands into orchards of cashew, mango and
forestry plants by 13,663 adivasi families from 162 villages.
7.8 .Adivasi Development Programme in Tribal

Areas of Maharashtra
The successful implementation of Wadi model in Gujarat is being replicated in

Maharashtra (Nasik and Thane districts) with grant support from KfW, Germany through
Maharashtra Institute of Technology Transfer for Rural Areas (MITTRA), Nasik, an NGO
promoted by BAIF, Pune.
The programme with a project period of ten years (2000-2010), aims to support
15,000 tribal families by developing wadis on their marginally productive lands. The project
which was launched in September, 2000 has covered an area of 2076 ha under wadis
belonging to 5676 families from the 160 villages and has been instrumental in bringing
about an overall improvement in the quality of li8fe of the families in the project area.
62
CHAPTER 8
SUPERVISORY ROLE OF NABARD
• 8 INTRODUCTION
Apart from the role of a development bank, NABARD undertakes certain supervisory
functions in respect of Coop Banks and RRBs under the Banking Regulation Act. The
objective of NABARD’s supervision is to assess financial and operational soundness and
managerial efficiency of these banks and their compliance with banking regulations.
NABARD has constituted a Board of Supervision as an Advisory Committee to the Board of
Directors of NABARD, which gives directions and guidance in respect of policies and on
matters relating to supervision and inspection.
NABARD undertakes on-site inspection of RRBs, SCBs and DCCBs on a two-year cycle
basis. Inspection of SCARDBs and apex non-credit cooperatives are undertaken on a
voluntary basis. Off-site surveillance of Coop Banks and RRBs are also undertaken on an
on-going basis.
63
8.1 Core Functions
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.
Objectives of Inspection.
To protect the interest of the present and future depositors
To ensure that the business conducted by these banks is in conformity with the provisions of
the relevant Acts/Rules, regulations/Bye-Laws, etc
To ensure observance of rules, guidelines, etc. formulated and issued by

NABARD/RBI/Government
To examine the financial soundness of the banks
To suggest ways and means for strengthening the institutions so as to enable them to play
more efficient role in rural credit.
Instruments of Supervision
64
Periodic on-site inspection of 31 SCBs , 371 DCCBs, 20 SCARDBs and 82 RRBs and other
Apex level Cooperative institutions
Supplementary Appraisal
Off-site Surveillance System ( OSS )
Portfolio inspection/System study
CMA returns
8.2 Supervisory Strategy
In the wake of the banking sector reforms, new set of international norms/practices were
made applicable to Commercial Banks (CBs) to make them more competitive and
sustainable in the changing scenario. The co-operative banks and RRBs were also to
function in the general banking environment, emerging out of the financial sector reforms,
introduced by the GOI/RBI. Accordingly, the prudential norms were extended to them in
phases. 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 RBI to the commercial banking sector had been extended to
cover RRBs in 1995-96, SCBs and DCCBs in 1996-97 and to SCARDBs in 1997-98.
NABARD, through a concrete and time-bound supervision strategy, facilities these banks to
adjust to the new financial discipline so as to internalize prudential norms stipulated.
8.3 Current Focus
65
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
realization 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.
8.4 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.
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8.5 Board of Supervision (for SCBs, DCCBs and

RRBs)
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
dentifying the emerging supervisory issues in the functioning of cooperative banks/RRBs

such as NPAs recovery, investment portfolio, credit monitoring system, management
practices, frauds, etc.
Suggesting necessary follow-up measures
Recommending appropriate training for Inspecting Officers of NABARD for imparting

necessary skills and knowledge
Recommend issue of directions by RBI
Oversee the quality of inspections carried out and the reports issued
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Review the information generated through off-site surveillance and other supplementary
vehicles, action taken thereon
Undertake any other functions entrusted from time to time by the Board of Directors of
NABARD
The Board of Supervision, since its formation on 20 November 1999 , has held 45 meetings
till 21 September 2010 and reviewed the financial position of Cooperative Banks and RRBs.
Based on the observations of BoS, authorities concerned have been apprised of the
weaknesses.
8.6 Other Initiatives
The day-to-day functioning of the supervised banks is being monitored through various
statutory returns prescribed by the RBI/NABARD including OSS returns
Periodic coordination Meets are conducted with RPCD, RBI to discuss the policy and
operational matters relating to supervision
State level groups comprising RCS, Apex bank, Cooperation and Finance Department, State
Government, Director of Audit and non-compliant banks have been constituted/convened for
preparing/discussing suitable strategy for Section 11 non-compliant banks and monitoring
the progress of Action Plan prepared by them to facilitate them recompliance with the
provision.
Periodic discussions are held with the MD, Apex Banks, RCS, State Government etc. to
discuss the supervisory concerns.
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8.7 NABARD Consultancy Services Pvt. Ltd.

(NABCONS):
NABCONS was set up on 17 November 2003 with an authorized capital of Rs. 25

crore of which Rs. 5 crore has been fully subscribed by NABARD. It provides consultancy
services in agriculture, agro processing and infrastructure projects, institutional
development, microfinance, watershed development, non-farm enterprises, training,
potential identification and related areas. In 2003-04, NABCONS had contracted business to
the tune of Rs.10.26 crore. The clients of NABCONS include GoI, State Governments,
Banks, International Bodies, Corporate entities and individuals.
CHAPTER 9
NABARD AND MICRO FINANCE IN INDIA-
AN OVERVIEW
9 Background
69
The post nationalization period in the banking sector witnessed substantial amount of
resources being earmarked towards meeting the credit needs of the poor. The banking
network underwent an expansion phase without comparables in the world. The branch
expansion1 was synergised with massive manpower recruitment drive for manning such
branches. Credit came to be recognized as a remedy for many of the ills of the poverty.
Credit packages and programmes were designed based on the perceived needs of the poor.
Programmes also underwent qualitative changes based on the experiences gained. Besides
the programmes initiated by the Central Government, a large number of credit-based
programmes were introduced by the state governments with large resource allocations.
While the underlying objectives were laudable and substantial progress was achieved, credit
flow to the poor, and especially to poor women, remained low. This led to initiatives that
were institution led, that attempted to converge of the existing strengths of rural banking
infrastructure and leverage this to better serve the unbanked poor. The pioneering efforts at
this were made by National Bank for Agriculture and Rural Development (NABARD),
which was vested with an enviable task of framing appropriate policy for rural credit,
provision of technical assistance backed liquidity support to banks, supervision of rural
credit institutions and other development initiatives.
NABARD during the early eighties conducted a series of research studies in association with
MYRADA (a leading NGO from South India) and also independently which showed that
despite having a wide network of rural bank branches that implemented specific poverty
alleviation programmes and self-employment opportunities through bank credit for almost
two decades, a very large number of the poorest of the poor continued to remain outside the
fold of the formal banking system. These studies also showed that the existing banking
70
policies, systems and procedures, and deposit and loan products were perhaps not well suited
to meet the most immediate needs of the poor. It also appeared that what the poor really
needed was a better access to these services and products, rather than cheap subsidised
credit. Against this background, a need was felt for alternative policies, systems and
procedures, savings and loan products, other complementary services, and new delivery
mechanisms, which would fulfill the requirements of the poorest, especially of the women
members of such households. The emphasis therefore was on improving the access of the
poor to microFinance (mF) rather than just micro-credit.
The launching of its Pilot phase of the SHG (Self Help Group) Bank Linkage programme in
February 1992 could be considered as a landmark development in banking with the poor.
The SHG-informal thrift and credit groups of poor came to be recognised as bank clients
under the Pilot phase.
The strategy involved forming small, cohesive and participative groups of the poor,
encouraging them to pool their thrift regularly and using the pooled thrift to make small
interest bearing loans to members, and in the process learning the nuances of financial
discipline. Subsequently, bank credit also becomes available to the Group, to augment its
resources for lending to its members. It needs to be emphasised that NABARD sees the
promotion and bank linking of SHGs not as a credit programme but as part of an overall
arrangement for providing financial services to the poor in a sustainable manner and also an
empowerment process for the members of these SHGs. NABARD, however, also took a
conscious decision to experiment with other successful strategies such as replicating
Grameen, wholesaling funds through NGO-mFIs.
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The NABARD led Pilot Project commenced with the support of the Central Bank of the
country, i.e., Reserve Bank of India, from 1992 onwards aimed at promoting and financing
500 SHGs across the entire country, the SHG- bank linkage strategy has come a long way.
The strategy includes financing of SHGs promoted by external facilitators like NGOs,
bankers, socially spirited individuals and government agencies, as also promotion of SHGs
by banks themselves and financing SHGs directly by banks or indirectly where NGOs and
similar organisations act as financial intermediaries as well.
9.1 Overall Strategy
• Forming and nurturing small, homogeneous and participatory self-help groups (SHGs)
of the poor has today emerged as a potent tool for human development. This process
enables the poor, especially the women from the poor households, to collectively
identify and analyse the problems they face in the perspective of their social and
economic environment. It helps them to pool their meagre resources, human and
financial, and prioritise their use for solving their own problems.
• The emphasis on regular thrift collection and its use to solve immediate problems of
consumption and production not only helps to meet their most urgent needs, but also
trains them to handle larger financial resources more skillfully, prudently and with a
more lasting impact
Encourage SHGs to become a forum for many social sector interventions.
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SHG-Bank Linkage Programme
• Facilitating SHGs to access credit from formal banking channels. SHG-Bank Linkage
Programme has proved to be the major supplementary credit delivery system with
wide acceptance by banks, NGOs and various government departments
Region-specific Initiatives
• NABARD has intensified its efforts for roping in new partners for promotion and
linkage of groups in regions where the growth of groups has not been commensurate
with potential
• Priority has been assigned to awareness- building and for identification of NGOs and
other partners in 13 priority states, which account for 70% of rural poor in the country.
Capacity Building
• NABARD sponsors capacity building programmes for various partners in the field of
microFinance to sensitise and equip them with concept & nuances of SHG bank
linkage programme.
• NABARD provides training inputs on SHG financing to training establishments of
participating banks, to help them to internalise the training requirements at their level.
• NABARD gives technical support to banks to evolve suitable intermediate structures
like Farmers' Clubs to increase the outreach of their branches in promotion and linking
SHGs
• NABARD supports and helps banking institutions (especially RRBs & cooperative
banks) to take on the role of Self Help Promoting Institutions (SHPIs)
73
9.2 Support to Governments
• Necessary assistance is provided to the governments by NABARD for dovetailing mF

practices with the poverty alleviation programmes
• NABARD also encourages the association of Panchayati Raj Institutions (PRIs ) in
adopting group processes for maximization of empowerment.
• NABARD, in association with Lal Bahadur Shastry National Academy of
Administration, Mussoorie conducts tailor made exposure programme on self help
group and microFinance for senior and middle level officers of Indian Administrative
Services (IAS) who are posted as district collectors/ Chief Executive Offices of local
administrative set ups (Zilla Parishad)
9.3 Support to NGO Partners
• Several steps have been taken by NABARD for capacity building of NGOs which
partner in promotion and nurturing of SHGs. The emphasis is on involving a large
number of NGOs. Special focus is on those NGOs participating in watershed
development, health, literacy and women development, to encourage them to take up
promotion, nurturing and linkage of SHGs as an 'add-on' activity.
• NABARD has a scheme of part-financing the cost of promotion of groups by NGOs.
• NABARD has developed specialized programmes for use by CEOs of NGOs for
appropriately envisioning this as an add-on concept. Separate programmes have also
been designed for NGO field staff to appreciate the nuances of SHG functioning.
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9.4 Alternate mF practices
• The NGOs and other local bodies at village, block and district levels in the North
Eastern States are encouraged to take up alternative micro-credit delivery mechanisms
through direct funding.
• Formation and operation of SHG Federations is supported and encouraged by
NABARD. Similarly, networking of NGOs is also encouraged.
Coordinating mF Efforts in India
NABARD coordinates the mF activities in India at international/ national/ state / district

levels. These include organizing international/national Workshops, Seminars, etc for
experience sharing, Organizing National and State level Meets of Bankers and NGOs
etc.Dissemination of best practices in SHG / microFinance.
Monitoring and Review
Block/district/state level review meetings are organised and/or organised by NABARD. The
relative documentation and database is also carried out by NABARD. In addition, periodical
Monitoring studies are conducted through NABARD/Bank Officers. Internal Impact Studies
and are conducted by NABARD periodically.
Other Initiatives:
MicroEnterprise Development Programme (MEDP) for Matured SHGs
The progression of SHG members to take up micro enterprise involves intensive training and
hand holding on various aspects including understanding market, potential mapping and
75
ultimately fine tuning skills and entrepreneurship to manage the enterprise. Hence, a
separate, specific and focussed skill-building programme ‘Micro Enterprise Development
Programme (MEDP)’ has been formulated. This involves organizing short duration, location
specific programmes on skill upgradation / development for setting up sustainable micro-
enterprises by matured SHG members. The duration of training programme can vary
between 3 to 13 days, depending upon the objective and nature of training. The training may
be conducted by agencies that have background and professional competency in the field of
microEnterprise Development with an expertise in skill development.
Scheme for Capital/ Equity Support to Micro-Finance Institutions (MFIs) from MFDEF
The scheme attempts to provide capital/equity support to Micro Finance Institutions (MFIs)
so as to enable them to leverage capital/equity for accessing commercial and other funds
from banks, for providing financial services at an affordable cost to the poor, and to enable
MFIs to achieve sustainability in their credit operations over a period of 3-5 years.
Scheme for financial assistance to banks/ MFIs for rating of Micro Finance Institutions
(MFIs)
In order to identify MFIs, classify and rate such institutions and empower them to
intermediate between the lending banks and the clients, NABARD has decided to extend
financial assistance to Commercial Banks and Regional Rural Banks by way of grant. The
banks can avail the services of credit rating agencies, M-CRIL, ICRA, CARE and Planet
Finance in addition to CRISIL for rating of MFIs. The financial assistance by way of grant
for meeting the cost of rating of MFIs would be met by NABARD to the extent of 100% of
the total professional fees subject to a maximum of Rs.3,00,000/-/-. The remaining cost
76
would be borne by the concerned MFI. The cost of local hospitality (including boarding and
lodging) towards field visit of the team from the credit rating Agency, as a part of the rating
exercise, would also be borne by the MFI. Those MFIs which have a minimum loan
outstanding of more than Rs. 50.00 lakh (Rupees fifty lakh only) and maximum of Rs 10
crore (Rupees Ten crore only) would be considered for rating and support under the scheme.
Financial assistance by way of grant would be available only for the first rating of the MFI.
MFIs availing Capital Support and/or Revolving Fund Assistance from NABARD are also
eligible for re-imbursement of 50% of the cost of professional fee charged by Credit Rating
Agency for second rating subject to a maximum of Rs.1.50 lakh (i.e 50% of Rs.3 lakh). This
will be in addition to the re-imbursement of professional fee for first rating of the MFI.
9.5 Refinance support to banks for financing mFIs
The scheme is to provide 100% refinance to banks for financing mFIs. Interest rate on
refinance to Commercial Banks and Regional Rural Banks on their loans to mFIs for on
lending to clients will be at 3% less than that charged by banks subject to minimum interest
rate of 7.5% for all regions and all eligible purposes. The revised rate of interest is
applicable to refinance disbursed on or after 01 March 2010.
Scheme for financing matured SHGs for Farm Production and Investment activities
The objective of the scheme is to facilitate the members of matured SHGs to meet their
credit requirement for farm production and investment activities and to enable them to
diversify their income generating activities. Term Loan and Cash Credit limit given by the
banks for a period of five years to SHGs exclusively for farm production and investment
activities covering agriculture sector and allied activities. Banks can also sanction composite
77
loans by combining consumption credit to the extent of 30% of the total limit. Matured
SHGs which have successfully utilised bank loans and whose members have moved from
consumption requirements to production requirements, may be considered for financing for
farm production and investment activities. Due freedom may be given to SHGs to monitor
and ensure end-use of credit as is usually practiced by banks under SHG Bank Linkage
Programme. Refinance - 100% of the bank loan under Automatic Refinance facility (ARF).
The refinance provided to the banks under the scheme will be payable in 5 years at half
yearly intervals.
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Chapter 13 9.7 MICRO FINANCE INSTITUTIONS

Chapter 14 A range of institutions in public sector as well as private sector
offers the micro finance services in India. They can be broadly categorized
in to two categories namely, formal institutions and informal institutions.
The former category comprises of Apex Development Financial Institutions,
Commercial Banks, Regional Rural Banks, and Cooperative Banks that
provide micro finance services in addition to their general banking activities
and are referred to as micro finance service providers. On the other hand,
the informal institutions that undertake micro finance services as their main
activity are generally referred to as micro Finance Institutions (mFIs).
While both private and public ownership are found in the case of formal
financial institutions offering micro finance services, the mFIs are mainly in
the private sector.
micro Finance Service Providers
The micro finance service providers include apex institutions like National
Bank for Agriculture and Rural Development (NABARD), Small Industries
Development Bank of India (SIDBI), and, Rashtriya Mahila Kosh (RMK). At the
retail level, Commercial Banks, Regional Rural Banks, and, Cooperative banks
provide micro finance services. Today, there are about 60,000 retail credit outlets
of the formal banking sector in the rural areas comprising 12,000 branches of
district level cooperative banks, over 14,000 branches of the Regional Rural
79
Banks (RRBs) and over 30,000 rural and semi-urban branches of commercial
banks besides almost 90,000 cooperatives credit societies at the village level. On
an average, there is at least one retail credit outlet for about 5,000 rural people.
This physical reaching out to the far-flung areas of the country to provide
savings, credit and other banking services to the rural society is an unparalleled
achievement of the Indian banking system. In the this paper an attempt is made
to deal with various aspects relating to emergence of private micro finance
industry in the context of prevailing legal and regulatory environment for private
sector rural and micro finance operators.
9.7 MF in India - An Overview
Innovative Pilot Projects
The phenomenal growth rate of microFinance sector, especially the SHG bank linkage
programme has posed number of issues and challenges which need immediate attention. In
response to this NABARD has initiated a number of innovations basically as an investment
for posterity. At the core of these innovations is a desire to improve the outreach and
sustainability of the programme. Some of the pilot projects designed and initiated recently
are summarized here.
Introduction of Processor/Memory Cards- Application of IT in SHG Bank Linkage

Programme
There are now many branches of Commercial Banks and Regional Rural Banks that service
more than 200 SHG accounts which were hitherto considered impossible. Howsoever
welcome the trend may be, the burgeoning numbers have also brought to the fore a host of
issues relating to tracking, monitoring and adequately servicing SHG accounts. It was felt
that the best way to deal with the huge numbers would be to take recourse to new
technologies available.
80
Also in general, the branch manager in the rural areas is hard pressed for time and as a result
does little for developing the business of the branch or for scouting for new business
opportunities for the branch. It was felt that use of Information Technology in the form of
processor/memory cards for SHGs and other clients coupled with automation in a branch
would serve to solve these vexed issues and leave adequate time for business development
work.
NABARD has therefore decided to launch an experiment through five branches each of two
RRBs in Andhra Pradesh & Karnataka. Introduction processor/memory Cards for active
clients and SHGs & automation of book keeping in SHGs is expected to reduce paper work,
save time and thus improve the efficiency of the field worker. This is also expected to reduce
the scope of manipulation, reduce unintended leakages and also maintain up to date books at
SHG level.
The first pilot project on smart cards has been launched with Sri Visakha Grameena Bank in
Andhra Pradesh (Reorganised as Andhra Pradesh Grameen Vikas Bank).The users of
processor/memory cards would include SHGs and other good customers of the bank who are
its regular customers. About 500 such customers, who would perform all banking
transactions on a fast track, would be selected in each bank branch; time taken for banking
by these regular good clients is likely to be reduced considerably. Use of processor/memory
cards by SHG customers also adds another set of advantages like effective book keeping,
tracking and monitoring of SHGs, reducing the hassles of illiterate SHG members seeking
the assistance of the NGO / promoter/ local book writer to perform these functions. In
addition to prompt upkeep of books by SHGs, auditing of books of accounts, computing
interest, could also be ensured with this system. The transaction data of each SHG collected
from the field could be consolidated at branch office to generate MIS reports, which the
branch staff could effectively use to track the functioning of SHGs, ensure prompt credit
linkages and recovery. This coupled with automation of back office operations of the branch
would ease the branch manager of a lot of time spent on routine matters and they could use
the spare time to build new customers and enhance business relations.
Scheme to finance Joint Liability Groups of tenant farmers
A Joint Liability Group (JLG) is an informal group comprising preferably of 4 to10

individuals coming together for the purposes of availing bank loan either singly or through
the group mechanism against mutual guarantee. The JLG members would offer a joint
81
undertaking to the bank that enables them to avail loans. The JLG members are expected to
engage in similar type of economic activities like crop production. The management of the
JLG is to be kept simple with little or no financial administration within the group. JLGs can
be formed primarily consisting of tenant farmers and small farmers cultivating land without
possessing proper title.
CHAPTER 10
Chapter 15 10 Natural Resource Management Center

While the human life is depends on natural resources, they are also depend on humans
for their sustainability. In nature there are ways and means, which ensure a balance between
the various natural resources. However, advancement of human activities and excessive use
of natural resources. Natural resources are basically land, water, air, minerals etc. Their
use / exploitation has far exceeded their natural replenishment rates. Industrialization and
various other developmental processes have added to the problem by enhancing pollution
and global temperature and today the very future of mother earth is at stake. The most
important resources affected are water, land and air. While planned development of
resources brings in prosperity, the indiscriminate exploitation of nature leads to destruction
of environment and degradation of resources.
In India, an estimated area of 146.82 million hectare suffers from various kinds of
land degradation due to water and wind erosion and other complex problems like
alkalinity/salinity, water logging, soil acidity. In addition to erosion, salinity and alkalinity,
our soils are losing soil carbon and micronutrients due to irrational and unbalanced fertilizer
82
use. This must be addressed urgently since nearly two-thirds of our farmlands are in some
way either degraded or sick. Droughts and floods are also a common feature in many parts
of the country. A large part of the country depends on rains for agriculture. Due to heavy
deforestation and denudation of soils, the rainwater received does not percolate much in
many areas for replenishing the aquifers and is lost in runoff. There is also over exploitation
of available ground water for agricultural and other uses. Management of natural resources is
one of the most critical aspects in the economic development of any country. In Indian
conditions, it assumes more importance, because the limited natural resources have to be
judiciously used to feed the ever-increasing population.
Chapter 16 10.1 NABARD and Natural Resource

Management
NABARD being apex institution directly and indirectly has been facilitating processes to address the
above challenges. NABARD‘s policy on NRM envisages “enhancing livelihoods and quality of life of the
rural community through improved resource conditions”. The policy indicates that NABARD would direct
its NRM interventions towards achieving structural impact on the NRM sector for livelihood enhancement,
poverty reduction and ecological sustainability.
NABARD has done pioneering and innovative work in NRM sector through its various programs
like Watershed development, WADI program under Tribal Development Fund, Rural Habitat Programs,
Environment Promotional Assistance, Rural Innovation Fund and Farm Innovation and Promotion Fund
(FIPF) etc. NABARD has also experimented with Farmers Club (FCs), Joint Liability Groups(JLGs), Self
help Groups (SHGs) as means of peoples’ participation in development. Through these interventions,
NABARD has been able to prove the success of the experiment and successful models have emerged. The
larger replication on a wider scale requires more partners and public and private investments. While
NABARD would take up the policy advocacy and capacity building needs, it looks towards the financial
83
institutions to come forth for financing the NRM based livelihood interventions and towards the technical
institutions for appropriate technology.
To give focused attention and facilitate NRM activities on a larger scale, NABARD has set up a
Natural Resource Management Center (NRMC) at Kolkata. NRMC is visioned as a brand institution of
NABARD and an institution of excellence, which will facilitate the thematic leadership role of NABARD in
NRM sector.
10.2 Objectives and Functions
The overall objective of NRMC is to facilitate improvement in livelihoods of rural

poor through sustainable management of natural resources. For achieving this, the center
would undertake following initiatives,
• identify appropriate technologies available and ready for transfer

• Awareness creation among and capacity building of communities and other stake
holders about the need and utility of appropriate technologies
• Identification and documentation of successful models.
Chapter 17 10.3 Focus Areas of NRMC
The centre’s core functional areas would relate to land, water and biotic resources
including forestry. The agricultural production subsystems and renewable energy will
also be the focus along with national priorities / global concerns / eastern & north
eastern regional concerns like,
o Food Security concerns

o S ustainable agricultural growth @ 4% p.a.
o Climate change (proofing, adaptation, mitigation)
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o Disaster Management (Special focus on flood control in Eastern Region).

o Energy Security – Need for renewable energy (Bio-fuel, solar, wind)
o Evolution / dissemination of NRM based livelihood approaches
o Financial Products development suited to NRM Sector
o Other related areas (e.g. delivery models, gender issues).
•
• Facilitate replication of successful models in NRM and transfer of technologies

• Facilitate NRM based livelihoods integrating technology and credit
• Promote CDM technologies and facilitate C- credit earning
• Take up/ facilitate special studies, meets, workshops, Action research/ research in
NRM
• Networking with academic institutions, research organizations, policy making
institutions, technical institutions, financial institutions, livelihood promoting
institutions.
• Adopt a multi sectoral and multi disciplinary approach.
• Policy feed back and advocacy.
• Publish relevant literature for various stakeholders
• Maintain comprehensive database on resources, technologies and approaches in NRM
• Establish and maintain information and knowledge systems(IKM) for various stake
holders
• Serve as NRM development technology clearing house
Chapter 18 10.4 Activities of NRMC
) Workshops and Meets
85
• Celebration of Earth day

• Workshop on Opportunities in Green Finance on the occasion of World
Environment Day
• Seminar on Community based NRM to mark NABARD’s foundation day
• Meet on post Aila livelihood NRM based promotion
• Meet with KVKs, research organizations
• Consultative Meet on Impact of Climate Change On Agriculture and Farmers’
Adaptation.
• Training programmes on new Jute retting technology
Chapter 19 (2) Networking with National Afforestation and Eco-development
Board, NIRJAFT, WWF, NAIP etc.,
(3) Action research on the way- Alternate Livelihoods for the Fringe villages of
Ayodhya Hills, River embankment strengthening in Sundarban areas with Vetiver
plantation
(4) Publications- NABARD’s Initiatives in NRM, Wadi in Bengali, Innovative Jute

Retting in English, Bangle and Hindi, Opportunities in Green Finance, Community
Based NRM
(5) Exposure Visits- Chemical free villages, rain water harvesting, watershed , wadi
etc.,
86
Chapter 20
CHAPTER 11
Chapter 21
Chapter 22 Model Bankable Projects
Chapter 23 11 Animal Husbandry
. Why do Dairy Farming ?
87
Dairying is an important source of subsidiary income to small/marginal farmers and

agricultural labourers. The manure from animals provides a good source of organic matter
for improving soil fertility and crop yields. The gober gas from the dung is used as fuel for
domestic purposes as also for running engines for drawing water from well. The surplus
fodder and agricultural by-products are gainfully utilised for feeding the animals. Almost all
draught power for farm operations and transportation is supplied by bullocks. Since
agriculture is mostly seasonal, there is a possibility of finding employment throughout the
year for many persons through dairy farming. Thus, dairy also provides employment
throughout the year. The main beneficiaries of dairy programmes are small/marginal farmers
and landless labourers. A farmer can earn a gross surplus of about Rs. 12,000 per year from
a unit consisting of 2 milking buffaloes. The capital investment required for purchase of 2
buffaloes is Rs. 18,223/-. Even after paying a sum of Rs. 4294/- per annum towards
repayment of the loan and interest the farmer can earn a net surplus of Rs. 6000 - 9000/-
approximately per year. (For details see model scheme enclosed). Even more profits can be
earned depending upon the breed of animal, managerial skills and marketing potential.
According to World Bank estimates about 75 per cent of India's 940 million people are in
5.87 million villages, cultivating over 145 million hectares of cropland. Average farm size is
about 1.66 hectares. Among 70 million rural households, 42 per cent operate upto 2 hectares
and 37 per cent are landless households. These landless and small farmers have in their
possession 53 per cent of the animals and produce 51 per cent of the milk. Thus,
small/marginal farmers and land less agricultural labourers play a very important role in
milk production of the country. Dairy farming can also be taken up as a main occupation
around big urban centres where the demand for milk is high.
Scope for Dairy Farming and its National

Importance.
2.1 The total milk production in the country for the year 2001-02 was estimated at 84.6
million metric tonnes. At this production, the per capita availability was to be 226 grams per
day against the minimum requirement of 250 grams per day as recommended by ICMR.
Thus, there is a tremendous scope/potential for increasing the milk production. The
population of breeding cows and buffaloes in milk over 3 years of age was 62.6 million and
42.4 million, respectively (1992 census)
88
2.2 Central and State Governments are giving considerable financial assistance for creating
infrastructure facilities for milk production. The nineth plan outlay on Animal Husbandry
and Dairying was Rs. 2345 crores.
11.1 Farmers
Modern and well established scientific principles, practices and skills should be used to
obtain maximum economic benefits from dairy farming. Some of the major norms and
recommended practices are as follows :
I. Housing:
1. Construct shed on dry, properly raised ground.
2. Avoid water-logging, marshy and heavy rainfall areas.
3. The walls of the sheds should be 1.5 to 2 meters high.
4. The walls should be plastered to make them damp proof.
5. The roof should be 3-4 metres high.
6. The cattle shed should be well ventilated.
7. The floor should be pucca/hard, even non-slippery impervious, well sloped (3 cm per
metre) and properly drained to
remain dry and clean.
8. Provide 0.25 metre broad, pucca drain at the rear of the standing space.
9. A standing space of 2 x 1.05 metre for each animal is needed.
10. The manger space should be 1.05 metre with front height of 0.5 metre and depth of 0.25
metre.
11. The corners in mangers, troughs, drains and walls should be rounded for easy cleaning.
12. Provide 5-10 sq. metre loaf space for each animal.
89
13.Provide proper shade and cool drinking water in summer.
14.In winter keep animals indoor during night and rain.
15. Provide individual bedding daily.
16. Maintain sanitary condition around shed.
17.Control external parasites (ticks, flies etc.) by spraying the pens, sheds with Malathion or
Copper sulphate solution.
18. Drain urine into collection pits and then to the field through irrigation channels.
19.Dispose of dung and urine properly. A gobar gas plant will be an ideal way. Where gobar
gas plant is not constructed, convert the dung alongwith bedding material and other farm
wastes into compost.
20.Give adequate space for the animals. (The housing space requirement of crossbred cattle
in various
Organic farming is emerging as a sustainable alternative in reviving Indian

Agriculture especially in areas where the indiscriminate usage of chemical fertilizers and
pesticides had resulted in loss in soil fertility and productivity with adverse effects on water
quality, soil, plant and human health.
Recognising the importance of organic farming in Indian Agriculture, Government of India

has taken various initiatives to promote and support organic production. Setting up of
National Centre of Organic Farming with Regional Centres at various places, launching of
the National Programme on Organic Production encompassing National Standards and
Accreditation Programme for Certification Agencies etc., are important steps in this
direction. The importance of organic inputs in development of organic farming is adequately
emphasized with the launching of the Capital Investment Subsidy Scheme for Commercial
90
Production Units of Organic Inputs by Government of India.
NABARD, as an apex institution in the field of agriculture and rural development has
identified Organic Farming as a thrust area and has taken various initiatives for its
promotion. These initiatives include building capacities of bankers, NGOs, farmers through
training programmes, exposure visits etc., technology development and its dissemination
through various funds and suggesting policy measures for financing organic farming.
Package of practices for organic farming is being developed by many Universities and
Research Institutions. These practices need to be developed into a bankable model for aiding
financial institutions in extending credit for organic farming. Preparation of model bankable
schemes based on package of practices developed by research institutions and those adopted
by farmers is an attempt in this direction. I am certain that these model schemes may act as a
catalyst in promoting organic farming amongst prospective entrepreneurs especially with the
support of institutional credit.
Chapter 24 11.2 State Specific Projects

The Uttarakhand State is strategically located and forms part of the Northern boundary
of the country sharing its borders with Nepal in the East and Tibet (China) in the North,
Himachal in the West and Northwest, Gangetic plains of UP in the South. It extends between
77o 43’and 81o 02’E Longitude and 28o 43’ to 31o 27’ N Latitude. Starting from the foothills
in the South it extends to the snow clad mountains in the North. The elevation extends from
approximately 300 to 7000 m above mean sea level. The highest peak is Nanda Devi (7817
m) in the Chamoli district. The entire State of Uttarakhand forms a part of the Central
Himalayas. The State is interspersed with rivers, deep valleys, glaciers, Alpine meadows and
91
high peaks; the state presents a very pristine, pure and picturesque environment.
In view of Uttarakhand's advantage as a major horticulture crops producing state, the state
Govt. has taken various steps to tap the resources for integrated development of horticulture
sector ensuring nutritional security, utilization of wastelands and capture of foreign market.
With a holistic approach to improve the quality and productivity of horticultural crops by
integrated implementation of viable, eco-friendly, refined technologies, and the centrally
sponsored scheme on Technology Mission for Integrated Development of Horticulture in
Uttarakhand was launched on 16th December 2003 in the state. The technology mission was
focused to bring significant increase in production and productivity of horticultural crops
through area expansion under various horticultural crops incorporated with creation of water
sources to ensure availability of water for irrigation and launch modern and scientific
systems of irrigation like Drip/Micro irrigation as water scarcity in hills and Bhabar areas of
Uttarakhand is the major constraint which influence the crop yield badly.
As a policy to encourage use of such systems, the Govt. of India under centrally sponsored
scheme for small and marginal farmers to increase the irrigation efficiency, provides subsidy
to the extent of 50% of the cost of the equipment, the balance would be provided by banks as
a bank loan.
Keeping in view the declaration of Litchi Export Zone in Uttarakhand the use of micro
irrigation systems like drip has become all the more essential to improve the yield and
quality of Litchi to compete with the world market. In this context, an attempt has been
made to prepare a Model Drip Irrigation Scheme for cultivation of one hectare of Litchi in
Uttarakhand State.
92
Chapter 25 11.3 Biotechnology

The success of Horticulture development hinges on selection of desired types of plants and
their multiplications. Selection of desired types is based on evaluation of the quantitative and
qualitative performance of plants and also in some cases their aesthetic appeal. Over the
years, the horticulturists have developed various techniques for selection of desired types of
plants and their multiplication. Recently interesting developments have taken place in the
field of plant multiplication which involves culture of cells or tissues in laboratory.
Traditionally, horticultural plants are multiplied by means of seeds (sexual propagation) or

organs other than seeds (asexual or vegetative propagation). These organs are usually stems,
leaves or roots. Though multiplication by seeds is the cheapest method, it suffers form
certain disadvantages. Plants raised from seeds may not repeat good performance of mother
plants. Many horticultural plants take a long time to produce seeds/fruits and many of them
do not produce viable seeds or desired quality of seeds. Plants propagated vegetatively do
not suffer from these disadvantages. However, vegetative propagation is rather a slow, time
and space consuming process. Besides, it is usually infected with latent diseases. Some
plants are also not amenable to vegetative method of propagation, for example, coconut,
papaya, oil palm, clove etc.
Therefore, scientists started a quest for an alternative method of plant propagation which
could overcome the disadvantages of both the methods described above. After many trials
and errors in the sixties, plant propagation by tissue culture method, which could overcome
disadvantages of propagation by seeds or vegetative organs, was found commercially
successful in the case of orchids. Subsequently, the method has been perfected for many
other plants (Annexure A). The method (also known as micro-propagation) involves the
93
culture of whole organism from cells or tissues or plant parts in glass (in vitro) on a defined
medium under germ free conditions (sterile or aseptic), whereas conventional method of
vegetative propagation (macro-propagation) involves culture of parts into whole organisms
in natural conditions (in vitro).
CHAPTER 12
INTERNATIONAL ASSOCIATIONS OF NABARD
NABARD's international associates range from World Bank-affiliated organisations

to global developmental agencies working in the field of agriculture and rural development.
These agencies offer material and advisory help in implementing schemes that are aimed at
uplifting the rural poor and in making agricultural processes effective and yielding.
Chapter 26 12 The World Bank Group – The

International Development Association
The World Bank works in close partnership with India’s Central and State
Governments, aligning its strategies with the country’s own development agenda. It lays
emphasis on investing in people through better health and education, empowering
communities to participate in their own development, improving the effectiveness of
government, and promoting private sector-led growth to achieve the country’s development
goals.
94
12.1 IDA – Rubber Project
The Project was under implementation since January 1994 and closed on 30
September 2000. The achievements as at closure were commendable as more than 85,500
ha. were replanted and newly planted with high yielding clones. More than 96% of the
beneficiaries under replanting and 99% in new planting were small holders owning upto 2
ha. Owing to productivity enhancement measures adopted under the project, the yield
increased by 379 kg per ha. from the base yield. In general, economic status of the rubber
cultivators improved in the project areas. Under the project refinance assistance of Rs.
604.57 million was provided by NABARD to banks for financing rubber growers and
processors for increasing production and generating on and off-farm development through
activities such as rubber planting, replanting and processing of rubber and rubber-wood
activities in the traditional rubber growing states viz., Kerala, Tamil Nadu and selected non-
traditional states viz., Tripura, Karnataka, Assam, Meghalaya and Nagaland. The project has
since come to a close.
12.2 Revitalization of Cooperatives
World Bank is presently actively appraising a loan to the Government of India for
revitalization of short term credit cooperative structure (STCCS) as proposed under the
recommendations of Vaidyanathan Committee. World Bank is working closely with
NABARD, which is the designated project implementing agency for the revitalization of
STCCS.
95
Chapter 27 12.3 Kreditanstalt fur Wiederaufbau (KfW)

Introduction
NABARD has been implementing projects with assistance from Government of

Germany since 1990 in the sphere of Natural Resource Management, Micro Finance, Rural
Enterprise promotion and Development of Financial Sector.
Two phases of projects relating to Watershed Development have been completed in

Maharashtra during 1990-1999 and 1999-2005, propagating participatory approach to
watershed development involves the communities who also committed to maintain the assets
after the completion of the project. More than 1 lakh ha. in 160 villages in 21 districts of
Maharashtra have been treated under this programme. Based on the success of the project,
Government of India modified its Watershed guidelines (Hariyali) to incorporate some of the
elements of the Indo-German Watershed project implemented by NABARD
The major benefits of the programme are –
Primary Impact
Augmentation of drinking water availability
Improvement in Ground Water recharge
Increase in agricultural production
Decline in Migration to urban areas
Secondary impact
96
Improvement in quality of life;
Housing
Health; and
Education (attendance in schools)
The other main initiative was promotion of sustainable livelihoods for Tribals through
tree based farming approach. The programme contributed to livelihood of more than 13000
families through plantation of mango and cashew in 1 acre plantations. In the initial years
supplementary income was generated through inter-cropping with pulses, growing
vegetables in corner patches and boundary plantation of fodder varieties. When the tree
started bearing fruits, additional employment was generated for processing the fruits through
groups and cooperatives of villagers. The implementing NGO had a producer cooperative
where the products were further processed into various table varieties. The produce from the
project is even being exported.
Projects under implementation in association with KfW
KfW - NABARD - Adivasi Development Programme,

Gujarat - (Grant assistance of Euro 13.29 million equivalents to DM 26 m)
The project is under implementation since 1994 and will end by 30 December 2007. It
envisages rehabilitation of about 8000 tribal families and 2000 landless women living in the
Dunger region of Dharampur Taluka of Valsad district in Gujarat through development of 1
97
acre of marginal/ waste land per tribal family on an average by adoption of soil and water
conservation measures, development of plantation with fruit, fuel and fodder cultivation as
well as inter-cropping. The programme was subsequently extended to nearby Dangs District
of Gujarat to cover 700 additional tribal families. BAIF Research and Development
Foundation, Pune, is the implementing agency. As on 30 September 2006, the cumulative
coverage under this programme stood at 12733 acres benefiting 13663 families from 162
villages for which grant assistance of Rs. 50.85 crore has been received upto 31 December
2006 from KfW.
KfW - NABARD - Adivasi Development Programme Maharashtra -

Grant Assistance of Euro 14.32 million)
The project is similar to the one in Gujarat and aimed at improving the socio-economic
condition of 14,000 tribal families and 1000 landless women through various economic and
social welfare activities in 3 hilly blocks of Thane and Nasik districts of Maharashtra. The
project is being implemented through Maharashtra Institute for Technology Transfer for
Rural Areas (MITTRA), an associate of BAIF, Pune. It commenced in September 2000 and
is operative upto 30 December 2010. As on 31 September 2006, 13848 families from 258
villages had taken up wadi development in 12294 acres for which grant support of Rs 33.10
crore was received upto 31 December 2006 from KfW.
KfW - NABARD - Adivasi Development Programme

Gujarat Phase II - Grant Assistance of Euro 7.00 million
The second phase of the project envisages coverage of additional 4000 families from about
90 villages in Dangs district and 700 families in Dharampur taluka of Valsad district. The
98
project is proposed to be implemented over a period of 10 years through DHRUVA, an

associate of BAIF Development Research Foundation, Pune. The Financing Agreement was
signed on 28 March 2006 and the Guarantee Agreement between KfW and GoI was signed
on 16 May 2006. The implementation agreement with DHRUVA has been executed during
Jan 2007 and project implementation has begun with baseline survey of the project area.
KfW - NABARD - Indo German Watershed Development Programme

Rajasthan -Grant Assistance of Euro 11 million
The Programme is scheduled to be implemented in Banswara, Chittorgarh, Dungarpur and

Udaipur districts of Rajasthan with financial assistance of Euro 11 million over a period of
ten years commencing from January 2007. The Objective of the programme is to develop at
least 30 micro watersheds to stabilise agricultural production and improve pasture lands. The
agreements were executed with KfW during December 2006. The programme is expected to
be grounded shortly
Chapter 28 12.4 Deutsche Gesellschaft fur Techniche

Zussammenardeit - GTZ
NABARD-GTZ Technical Cooperation – Rural Finance Program
GTZ provides viable, forward-looking solutions for economic, environmental and social
development in a globalised world. GTZ supports complex reforms and change processes
across the world. All the activities of GTZ are geared to improve people’s living conditions
and prospects on a sustainable basis. The work of GTZ in the field of micro finance has
found worldwide recognition. The CGAP Peer Review on micro finance assessed GTZ and
99
gave it the highest marks for quality and efficiency in comparison to various service
providers worldwide.
The objective of the GTZ – NABARD Rural Finance Program is to improve the access for
sustainable and quality financial services to the rural population. The Rural Finance Program
consists of two components.
Component I: “Linking Self Help Groups to Banks” supports the massive efforts of the
National Linkage Banking Program. Impact assessments indicated that the Linkage Banking
Program contributes substantially to the achievement of the Millennium Development Goals.
The support of GTZ is ensuring sustainability, which includes the implementation of MIS,
Financial Health Check Systems for bank branches, Transaction Cost and Impact Analysis
and contributions to further strategy development.
Component II “Revitalization of the Rural Cooperative Banking Sector”: A reform of

this size is unique in the history of the world. GTZ is supporting the overall planning and
implementation of the Reform Program. In addition GTZ is cooperating with NABARD in
the implementing of Corporate Governance Codes for all three tiers of the CCS. This
cooperation also includes the design of a Uniform Accounting System, Internal Control
Systems, and MIS and Deposit Safety Systems for the Primary Agricultural Cooperative
Societies.
12.5 Umbrella Programme on Natural Resource

Management
GTZ is also a Technical Cooperation Partner in the field of sustainable development of Natural Resources
Management for which a TC support under UPNRM has been committed under German Development
Cooperation
100
CHAPTER 13
Set backs of NABARD
 13 FARMERS COMITTING SUICIDE

The principal agriculture development bank has to witness unprecedented crisis in the
agricultural front with hundreds of farmers committing suicides in at least 31 districts
spanning over five states. A study conducted by the Indira Gandhi Institute of Development
Research(IGIDR)says the small and marginal farmers(holding lands up to 5 acres)were more
vulnerable to suicide. Another category of NABARD clientele, landless laborers who leased
in land constituted 19 percent of the suicide cases .In spite of NABARD and public sector
banks glorious existence for the more than two and three decades respectably, 51 percent of
cultivator household is outside the ambit of any form of credit at all and out of 49 percent of
the indebted cultivator households, only 27 percent are indebted to the formal sources.
National Sample Survey Organization (NSSO)data show that in regard to very small land
holdings of 25 percents; the formal credit delivery’s outreach is only 23 percent, while in
regard to farm holdings of between 5 and 10 acres, it is around 65 percent.
101
 13.1 CRISIS IN MOBILIZING RESOURCES
In the twenty-fifth year of its existence, NABARD is facing a crisis of sort in mobilizing
resources from the market with its cost of resource mobilization shooting up to around 8.17
percent so far in 2006-07,as against 5.76 percent in 2005-06.The government’s abolition of
long term capital gains tax has, in turn, deprived NABARD of a comparatively cheap source
of fund by way of capital gains bond, the average interest burden of which in 2005-06 being
5.45 percent .In addition, the near total discontinuation of RBI contribution to NABARD
behind national rural credit—long term operations fund, national rural credit—stabilization
fund(in spite of statutory obligations of RBI under sections 42 and 43 of NABARD
Act,1981)to support long and medium—term agri-credit needs and behind general line of
credit for short term agri-credit operations have aggravated the problem of cheap
resources .This, in turn, has accentuated the problem of cheap credit for farmers, even during
distress,(as NRC-STAB fund is utilized to res7chedule loans during calamities like flood,
drought, and farmers’ suicide).The RBI’s surplus, instead, is diverted to balance the
government of India’s fiscal deficit especially after operationalisation of Fiscal
Responsibility And Budget Management (FRBM) Act.
 13.2 NABARD UNABLE TO BE RURAL CREDIT

BANK
It is a quiet admission of poor credit flows to the needy in the rural and urban centers
despite many government-subsidised programmes. The poor and the needy in the
102
unorganized sector cannot put up any collaterals against bank loans and bankers should get
rid of the habit of demanding security from the poorest who have nothing but themselves to
offer.
Anyway bankers do okay big size corporate loans on a call from New Delhi. Reports are
the Government and the RBI could be looking afresh at flow of bank funds into agriculture
and rural development in general.
Priority sector funding has become a farce with software and information technology
being classified as priority.
The Lead Bank Approach and the Service Area Approach exist for the records, with bank
chairmen not overly worried over defaulting on the 18 per cent agriculture norm.
An excellent idea like the Rural Infrastructure Development Fund (RIDF) has gone cold,
with State Governments pleading absence of rural projects.
The Fund is presently being used by banks to earn a good return. Banks have to place any
fund shortfall in agriculture lending with RIDF. The scheme is structured in a manner which
deters banks from going into rural areas and a view being taken is to scrap interest payments.
The rate of interest on the entire deposit to be made in RIDF is prevailing Bank Rate plus 1.5
per cent when the shortfall in lending to agriculture in terms of percentage to net bank credit
(i.e., target minus achievement) is less than two percentage points; it is Bank Rate plus 0.5
per cent if the drop varies between two percentage and 4.99 percentage points; Bank Rate
minus 0.5 per cent if the default varies between 5 percentage and 8.99 percentage points; and
Bank Rate minus 1.5 per cent if the default is 9 percentage points and above.
103
Only RBI and the Finance Ministry can evolve a scheme which pays a fixed return to banks
refusing to fund the priority sector. It may be best to knock off all incentives at one go and
make it mandatory on errant banks to cough up funds free. And the rule should cover foreign
and new private banks, which have only contempt for rural India.Parallely the government
could be sending the appointment papers to Ms Ranjana Kumar as Chairman of Nabard
effective November 3, going by talk on Mint Street.
That should provide a head to the lead rural credit agency which today is doing little, as
there are no takers for its refinance facility.
Inside Nabard, officers have been discussing the agenda for the organisation over the next
five to 10 years. Most would back the idea of Nabard turning a universal bank by picking up
the branches of the Regional Rural Banks (RRBs) to mobilise retail deposits. Perhaps, banks
not keen on a rural presence could also sell their branches to Nabard. There are doubts over
the quality of staff manning RRBs and the heavy losses run up by a few. With the co-
operative credit structure sick, at this point of time, there is only a single option for Nabard:
To be India's first rural credit bank and running up an asset portfolio of rural borrowers.
104
CONCLUSION
Reserve Bank of India (RBI) entrusted NABARD (National Bank for Agriculture and
Rural Development) in 1981 to look after agriculture and rural development through all the
Cooperative and other Nationalized banks of India. NABARD will observe 25th eventful
journey on 12th July 2006 for advancement of Indian agriculture, economy and social
structure. Animal husbandry programmes with Rs.2000 crores have been approved. Indian
agriculture is dominated by a vast multitude of landless, sub marginal, marginal and small
farmers, who are at the bottom of pyramid; consisting 80% of total cultivators having only
little above one hector of land. For this NABARD has given stress on animal resource’s
productivity. From the beginning ,NABARD has grown into a unique kind of apex hybrid
organization combining best of central and development bank practices like planning,
regulation of credit and supervision of rural financial institution like agriculture cooperative
banks(both short and long term structures),Regional Rural Banks(RRB) etc. It also plays a
unique institution building role that was instrumental in safe guard of many a loss making
RRBs and Cooperative Banks in various parts of the country. During 2005-06,the balance
sheet of NABARD grew by 11.3 percent –from around Rs.60,000+ crore in 2004-05 to
Rs.67,645 crore in 2005-06.
105
From the parameter of profitability ,it is one of the best run banks, not only in India, but
in the world, as its per employee profitability is Rs.22 lakh(its net per employee profitability
is around Rs.17 lakh assuming an income tax of Rs.300 crore).It may not be out of place to
mention here that NABARD is the pioneer in the Self Help Group(SHG)—Bank linkage
programme in the country that has brought the taste of banking to doorsteps of the poor
clientele, especially the women. Beginning with a modest number of 500 groups in 1992,
today this flagship programme comprises 2 million groups touching the lives of 150 million
people.
NABARD support to RIDF behind 2.4 lakh projects has translated into developing
irrigation potential of 108 lakh hectres,2 lakh km of roads,370 lakh meters of bridge length,
schools benefiting 28 lakh students, rural health centers benefiting 2.47 lakh people,
drinking water supply benefiting 5.82 lakh people. In this connection, it may not be out of
place to mention here that the declining credit-deposit ratio in backward regions of the
country viz. northeastern, eastern and central regions, in wake of concentration of banking
business in developed urban, semi-urban centers in the post liberization phase, got improved
a bit when the RIDF investment are factored in. As the principal nodal agency, NABARD
has been really instrumental in pushing the programme of doubling of the ground level agric
edit in the country—from Rs.86,981 crore in 2003-04 to Rs.1,46,688 till February end 2006.
At the doorstep of its silver jubilees year,
NABARD IS EMPOWERRING RURAL INDIA .
106
RECOMENDATIONS
Only finance or subsidy can not be sustainable to achieve result. A loan is not an asset: it
is a liability that must be reimbursed through wise investment, and effective management.
Taking out a loan therefore increases risks, albeit against a reasonable expectation of profit.
Savings on the otherhand,are not a liability; they are an asset. They enable people to
withstand unexpected or even anticipated shocks to their livelihoods, and need not be
reimbursed.If,when they are sufficient, they are applied to productive investment, and the
investment fails, the household is more likely to absorb the shock without fear of
desolution.”The poverty is never reduced by loaning people resources that they can not
afford to repay with interest As principal agriculture development of the country,NABARD
has to come out with a clear strategy to dovetail its goal with the five-point programme of
action suggested by the National Commission on Farmers(NCF).These are—a programme of
soil health enhancement, promoting water harvesting,conservation,equitable use by
empowering gram sabhas to function as “Pani Panchayats”;initiation of immediate credit
107
reforms coupled with credit and insurance literacy with intensive coverage of crops and
livestocks for insurance coverage with village level farm land as the unit, provision of farm
credit at 4 percent with firm support from both RBI and government of India, gender
sensitiveness in credit dispensation; bridging the growing gap between scientific know-how
and field do-how for both production and post-harvest phases of farming;crop-livestock-fish
integrated production system are ideal for small farmers since this can also facilitate organic
farming;finally,the gap between what the urban consumer pays must be made as narrow as
possible,as has been done in the case of milk under Dr.V Kurien.Additionally,executing its
advisory role to the Planning Commission of the country.NABARD should strive for
balance measure on import of agricultural crops and dairy products;and enhance export of
fruits and flowers.NABARD is needed to create a conducive environment and legal frame
work for the Microfinance sector to flourish in India to achieve Millenium Development
Goal. Given that the majority of poor people live in rural areas or rely on agriculture, and
that agriculture paves the way for economic growth in the poorer nations, agricultural and
rural development will underlie progress on the broad array of economic and social
indicators emphasized by the MDGs. The most effective strategy for making steady,
sustainable progress toward the MDGs is to serve all the goals in an integrated way.
However, each goal will need a well-defined package of technologies and services for
success at the field level.Of the eight Millennium Development Goals, the first goal is the
one whose attainment most clearly involves the agricultural sector: The poor around the
globe are disproportionately farmers and herders, and, perversely, the hungry also most
commonly find their livelihoods through agriculture. By increasing food availability and
incomes and contributing to asset diversity and economic growth, higher agricultural
productivity and supportive pro-poor policies allow people to break out of the poverty-
hunger-malnutrition trap. As the country-level model simulations revealed, broadbased
108
agricultural growth is the key for decreasing poverty and increasing growth in Sub-Saharan
Africa. A global assessment of Target 2 of MDG 1 (halving child malnutrition levels) shows
that the combination of agricultural and economic growth together with larger investments in
social sectors, including health and education, can substantially narrow the gap between the
business-as-usual outcomes for 2015--24 percent of developing-country preschool children
malnourished--and the target indicator--15 percent children malnourished--to reach 17
percent. However, the outcome varies significantly by country and region. Latin America,
West Asia and North Africa, and China will, on average, likely get close to the target
indicator by 2015, even under business-as-usual; however, the likelihood that Sub-Saharan
Africa and South Asia will come close to their respective target rates is much smaller. The
total increase in investments estimated is $161 billion in agricultural and supporting sectors
during 1995–2015. In addition to these investments, significant policy and governance
reform is required.To achieve faster agriculture-based growth rates, there must be in place
favorable macroeconomic and trade policies, good infrastructure, and access to credit, land,
and markets. These conditions create level playing fields and give farmers incentives to
adopt new and sustainable technologies and diversify production into higher-value crops,
actions that raise incomes and lift households out of poverty. Government agencies in
developing countries urgently need to revisit the legal, regulatory, political, and institutional
framework in agriculture, research, extension, and industrial sectors to facilitate private-
sector involvement.Indian Trade Organisation created by leadership of Dr.Swaminathan will
be helpful to protect the interest of Indian farmer community.Moreover, both the private and
public sectors must foster private-public–sector partnerships and cultivate this relationship
with the end objective of addressing the MDGs. Moreover, to allow the agriculture sector to
develop its full potential for achieving the MDGs, the share of ODA spent on agriculture
needs to increase significantly. Policy action and increased investment in the critical arenas
109
of sustainable agriculture productivity and food and nutrition security will be essential for
responding effectively and responsibly to reach the Millennium Development Goals.
110

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National Bank for Agriculture & Rural Development

<TITLE OF PROJECT REPORT>

Under the guidance Of

Acknowledgement: Acknowledgment is the regards given to the people and

bonafide work of “…………..<NAME OF THE CANDIDATE(S)>.…………” who

carried out the project work under my supervision.

HEAD OF THE DEPARTMENT FACULTY IN CHARGE

2.1 MAJOR ACTIVITIES

3.1 CREDIT OPERATIONS

5.3 RURAL INFRASTRUCTURAL

mission statement underscores, NABARD is to promote sustainable and equitable

development and other innovative initiatives.

limits of Rs 11,889 crore during 2005-2006.

NABARD has effectively brought in a number of innovations in the rural credit

domain. To quote a few:

• SELF HELP GROUPS,

• RURAL INFRASTRUCTURE DEVELOPMENT FUND,

• KISSAN CREDIT CARD,

• DISTRICT RURAL INDUSTRIES PROJECT CLUSTER

• DEVELOPMENT PROGRAMME AND

• RURAL INNOVATION FUND.

be based on increasing the productive employment opportunities in the process of growth

1.1 Establishment of the Bank:

Chapter 1 1.2. Genesis and Historical Background

Chapter 2 1.3 Objectives

Chapter 3 1.4 Mission

1.5 CURRENT POSITION OF NABARD

National Bank for Agriculture & Rural

NABARD is an apex institution accredited with all matters concerning policy,

NABARD is established as a development Bank, in terms of the Preamble of the Act,

NABARD is set up as an apex Development Bank with a mandate for facilitating

Providing refinance to lending institutions in rural areas

Bringing about or promoting institutional development and

Evaluating, monitoring and inspecting the client banks

Besides this pivotal role, NABARD also:

Acts as a coordinator in the operations of rural credit institutions

Chapter 4 2.1 Major Activities

Providing loans to State Government/Non Government Organizations (NGOs)/Panchayati

Promoting participatory watershed development for enhancing productivity and profitability

2.2 REGIONAL OFFICES OF NABARD ALL OVER

Chapter 5 2.3 Organization Structure

2.4 Some of the milestones in NABARD's activities

Refinance disbursement under Investment Credit to commercial banks, state cooperative

Chapter 6 2.5 NABARD and its Role in Training

 3.1 CREDIT OPERATIONS PERFORMED BY THE

The National Bank is empowered to provide short-term refinance assistance for

The National Bank is empowered to provide by way of refinance assistance long-term

 3.2 Credit Planning by NABARD :

3.2.1 District Level Planning -

3.2.2 State Level Planning -

3.2.3National Level Planning -

 3.3 RESOURCE FOR THE OPERATIONS :

3.4 CREDIT STRUCTURE OF NABARD

3.5 TYPES OF REFINANCE FACILITIES

Financing the working capital requirements of

Financing WCS for production and marketing

Financing State Handloom Development

Term loans for investment purposes

State Governments Long-term loans for equity participation in co-

Rural Infrastructure Development Fund (RIDF)

Chapter 8 3.6 Interest Rates

3.6.2 Special focus

Chapter 9 3.7 Direct Credit