Credit Facilities Offered by NABARD

NABARD also offers various credit facilities like:

Rural Infrastructure Development Fund (RIDF) RIDF is a fund to promote the investment in
infrastructure for agriculture. State Governments as well as Panchayati Raj Institutions (PRIs), NonGovernmental Organisations, Self-Help Groups, etc. are eligible to borrow out of RIDF for their
schemes like ongoing Irrigation, Flood Protection, Watershed Management projects, rural Road &
Bridge projects, Primary and Secondary Schools, Primary Health Centres, Village Haats, Joint Forest
Management, Terminal and Rural Market/Godowns, Rain Water Harvesting, Watershed development,
flood protection, drainage, Cold Storage, Riverine Fisheries, Fishing Harbour & Jetties, Mini/Small
Hydel Projects in Power Sector, Rural Drinking Water Supply Schemes, Citizen Information Centres,
Modern abottoir, Seed/Agri./Hori. Farms, etc.
Kisan Credit Cards: NABARD has formulated a Model scheme for issue of Kisan Credit Cards to
farmers, on the basis of their land holdings, for uniform adoption by banks, so that the farmers may
use them to readily purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and also
draw cash for their production needs. Farmers have to get in touch with Researcherised banks to use
this facility
Micro Credit Innovation scheme, Under the MCIS, NABARD facilitates sustained access to
financial services for the unreached poor in rural areas through various microfinance innovations in a
cost effective and sustainable manner.
Refinance for Rural Housing Facilities scheme RRHFS provides Credit to the Individuals,
Cooperative Housing Societies, Public Bodies, Housing Boards/ Improvement, Trusts, Local Bodies,
Voluntary agencies and NGOs, Housing Finance Companies registered, with NHB for finance
extended by them to housing projects in the 'rural' areas only. The finance is provides for Construction
of New Houses as well as Repairs/Renovation of existing houses in rural areas/ Rainwater Harvesting
Structures/ Sanitary Latrines, etc.
A Research and Development Fund has been established by the bank with the objective of acquiring
new insights into the problems of agricultural and rural development through in-depth studies and
applied research and trying out innovative approaches backed up by technical and economic studies. It
includes facilities for training, dissemination of information and promotion of research by undertaking
studies techno-economic and other surveys in the fields of agriculture, rural banking and rural
development. The eligible Institutes for the fund are Approved research institutions, organisations and
other agencies which are engaged in action-oriented, applied research, Individuals or groups of
individuals would also be extended assistance provided they are sponsored by suitable organisations
which would certify the proper use and accounting of funds, Private and commercial organisations are
not normally eligible for assistance under the this fund.
Swarojgar Credit Card Scheme: It aims at providing adequate and timely credit i.e. Working capital
or block capital or both to small artisans, handloom weavers, service sector, fishermen, self-employed
persons, rickshaw owners, other microentrepreneures, SHGs, etc from the banking system in a
flexible, hassle free and cost effective manner. Borrowers in urban areas can be covered under SCC
Scheme. Small business covered under priority sector is also eligible under SCC Scheme. Any
scheme/project that is income generating/ employment generating may be covered under the scheme.
The facility may also include a reasonable component for consumption needs. Farm sector activities
like fisheries, dairy, etc. can also be covered under the scheme. Generally such of the self-employment
activities which have regular turn over/income stream on short-interval basis can be covered under
SCC scheme. SCC is a credit delivery mode and not a purpose. Coverage of SCC will not make a unit
ineligible for subsidy. Banks can issue SCCs to target borrowers of SCC scheme for disbursing credit
under any schemes whether they are covered under subsidy or not.
Farmers' Club Programme is a grassroots level informal forum. 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. The broad functions being to coordinate with banks to ensure credit
flow among its members and better bank borrower relationship interface with subject matter.

Refinancing of Industries in Rural Areas

The NABARD provides refinance to all small, village and cottage industries in rural areas.

Facilities for Rearrangement

In the event of changes and rearrangement of credits, when there are natural calamities like drought
and famine army as enemy operations etc., the NABARD provides refinance to State Co-operative
Banks and Regional Rural Banks for a period not exceeding 7 years NABARD also provides these
facilities to provide loans to artisans, small industries, etc.

Developmental Functions
The following development functions are performed by NABARD
i. Co-ordination of rural credit institutions;
ii. Institutions building for the improvement of capacity of credit delivery system;
iii. Developing specialisation for solving the problems relating to agriculture and rural development
efforts;
iv. Performing agency functions on behalf of the Government and the Reserve Bank for monitoring
and evaluating the work in agricultural related activities;
v. Providing facilities for research in agricultural and rural development activities out of its Research
and Development fund. The training facilities are provided in the field of rural banking, agriculture
and rural development through Bankers of Rural Development Institute and National Bank staff
colleges at Lucknow, Bhopal, and Mangalore and college of
Agricultural Banking at Pune;
vi. Disseminating information regarding, rural banking and development;
vii. Helping the State Government in subscribing to the Share capital to State Co-operative banks;
viii. providing direct credit in cases, approved by the Government of India, connected with agriculture
and rural development; and
ix. Maintaining an Easy Credit Aid Fund out of its profits so that entrepreneurs getting refinance
facilities for village, cottage and small industries may be provided margin money. This is interest free
and is recovered in annual instalments after the loan has been fully repaid.

Regulatory Functions
The following regulatory functions are performed by the NABARD:i. It undertakes inspection of regional rural banks and of Cooperative banks except the primary
agricultural credit societies, apex co-operative marketing federations, state handloom weaving
societies etc.,
ii. Applications for opening of a branch by the regional rural bank as Co-operative bank other than the
primary agricultural credit societies, are to be submitted to the Reserve Bank of India through the
NABARD; and
iii. The NABARD is empowered to obtain any information or statement from the Co-operative banks
and the regional rural banks, which it may deem necessary.

Recent Additions to the Functions of NABARD

During recent years, NABARD has extended its functions and made them more broad based. These
additional functions have been undertaken by NABARD both in the agricultural sectors as well as in
the non-agricultural sector. These functions are;
Agricultural Sector
The additional programmes undertaken by NABARD in the agricultural sector include;
i. Refining and updating the potential Linked Credit plans and synthesising them with the service Area
plans;
ii. Introducing full refinance scheme in districts where such synthesis has been completed;
iii. Rationalising and liberalising the eligibility criteria for refinance of term credit;
iv. Rationalising interest rate structures;
v. Issuing guidelines to banks on new schemes for diversification of lending for the development of
agriculture;
vi. Introducing Self-Help Groups Scheme for the provision of institutional credit to weaker sections;
and
vii. Creating a Co-operative Development Fund to strengthen institutional activities.
Non-Agricultural Sector
The programmes initiated in the non-agricultural sectors include;

i. Introducing Small Road Transport Scheme under which automatic refinance is provided to banks for
financing vehicles for transporting farm produce and products of village industries for marketing;
ii. Providing finance to commercial banks for projects of financing non-agro small industrial units;
iii. Helping khadi and village Industries Centres in modifying their schemes to bring them in
conformity with banking norms and becoming eligible for automatic refinance facility;
iv. Setting up an Advisory Committee in its office to advice in the formulation of policy to promote
non-agricultural sector and to introduce new schemes;
v. Appointing technical experts in non-agricultural sector in its offices for identifying, formulating and
appraising schemes and for conducting surveys for assessing industrial potential;
vi. Formulating District Rural Industries project, and;
vii. Creating Agriculture and Rural Enterprises Incubation Fund 1.
On the establishment, The National Bank has taken over the entire undertaking of the Agricultural
Refinance and Development Corporation and has taken over from the Reserve Bank its refinancing
function in relation to the State Cooperative Banks and the Regional Rural
Banks.
This Bank is now the coordinating agency in relation to the Central Government, Planning
Commission, State Government and institutions of all-India level and State level engaged in the
development of small-scale industries, village and cottage industries, rural crafts, etc., for giving
effect to the various policies and programmes relating to rural credit.
The Bank will undertake all types of credit functions
(a) production and marketing credit,
(b) loan conversion,
(c) rescheduling of loans,
(d) investment credit (medium term),
(e) other investment credit,
(f) loans to State Government for share capital,
(g) they may make direct loans,
(h) It can also issue guarantees.
The Bank has powers
(a) To coordinate the operations of various institutions engaged in the field of rural credit,
(b) To act as agent of the Government of Reserve Bank of India,
(c) To provide facilities for dissemination of information and the promotion of research.
There is a special provision for the creation of a Research and Development Fund to which the banks,
annual surplus will be credited for the first 15 years. The Banks income, profits or gains are free from
taxation. It took over the functions of the erstwhile Agricultural Credit Department, Rural Planning
and Credit Cell of the Reserve Bank of India and Agriculture Refinance and Development
Corporation. It subscribed and paid-up capital stands at Rs. 330 crore at the end of March 1995,
contributed by the Central Government and the Reserve Bank of India in equal proportions at various
phases. NABARD was established for providing credit for promotion of agriculture, small scale
industries, cottage and village industries, handicrafts and other allied economic activities in rural areas
with a view to promoting integrated rural development and securing prosperity of rural areas.
NABARD as the apex institution, is concerned with all policy planning and operations in the field of
credit for agriculture and other economic activities in the rural areas. Its functions are to:
1. serve as an apex refinancing agency for institutions providing investment and production
credit for promoting various development activities in the rural areas;
2. take measures towards institution building for improving absorptive capacity to credit
delivery system including monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions, training of personnel, etc.;
1 Hajela, T.N., Money Banking & International Trade, Konark Publishing Pvt.Ltd., 1998, pp.360-364.

3. coordinate rural financing activities of all institutions engaged in the development work at
field level and maintain liaison with Central/State governments, Reserve Bank of India and
other national institutions concerned with policy formulation and also
4. undertake monitoring and evaluation of project refinanced by it.
NABARD provides refinance to the state land development banks, state cooperative banks, scheduled
commercial banks and regional rural banks, while the ultimate beneficiaries of investment credit can
be individuals, partnership concerned companies, state owned corporations etc. During 1995-96,
NABARD sanctioned short-term credit limits aggregating Rs. 4,750 crores to state co-operative banks
for financing seasonal agricultural operations as compared to Rs. 3,753 crore sanctioned during 199495. NABARD also disbursed Rs. 665 crore as refinance assistance to regional rural banks. The total
disbursement of NABARD during 1995-96 to the commercial banks for various purposes was Rs. 842
crore.2

2 . Datt & Sundharam, Indian Economy, Chand & Company Ltd, New Delhi, Third Edition2011, pp.610-612.