After nationalisation of 14 banks in 1969 and 6 banks in 1980, formation of National Bank for Agriculture and Rural Development on July 12, 1982 was a milestone or master stroke by Mrs. Indira Gandhi. Based on the recommendations of the Dr. Sivaraman Committee NABARD was formed through an act of parliament. It replaced Agriculture Credit Dept. of RBI, Rural Planning and Credit Cell of RBI and Agriculture Refinance and Development Corporation. Though it was owned by RBI & GoI, later on the entire shareholding was transferred to GoI. One Dy. Governor RBI continues to be in the Board.
The Vision of NABARD is, “development bank of the nation for fostering rural prosperity”.
The mission is, “promote Sustainable and equitable agriculture and rural development through participative financial and non-financial interventions, innovations, technology and institutional Development for securing Prosperity”
NABARD’s major activities are,
- Refinancing banks and financial institutions
- Monitoring and guiding co-operative banks, regional rural banks and guiding financial inclusion.
- Direct finance to projects like Food Parks and monitoring and evaluation of them.
- Manage Rural Infra Structure Development Fund, and provide credit to state government projects.
- Prepare, District Level Potential Linked Credit Plan, State Level Potential Linked Credit Plan.
With the mission of sustainable development, NABARD has focus on climate change and maintains National Adaptation Fund for Climate Change, Green Climate Fund, Climate Change Fund, Watershed Development Programme, National Resource Management etc.
NABARD also runs Bankers Institute of Rural Development, Lucknow and Collaborates with many international Agencies. Provides training to Bankers. [I was one of the trainees who attended an exposure programme at Israel to study their diary, horticulture and agriculture technologies]
NABARD also has few subsidiaries like NABCONS, NABVENTURE Ltd, NABKISAN Ltd and NABSAMRUDDHI Finance Ltd.
It is NABARD which promoted Self Help Groups (SHGs) which are different from the Bangladesh Grameen Bank Model. As on March 2019, NABARD has supported cumulatively 100.14 lakh SHGs catering to 12.5 crore poor families through the SHG-Bank Linkage Programme.
NABARD has a capital of Rs.12580 crores, reserves and surplus of Rs.31094 crores, bonds & debentures of Rs.105803 crores, RIDF deposits of Rs.119763 crores. Government Securities of Rs.16165 crores. Through RIDF NABARD has helped to irrigate 330 Ha of land, built 4.68 lakh Km roads and supports 4000 farmer producer organisations. The advances outstanding as on 31st March 2019 is Rs.430712 crores.
What is Lacking?
NABARD has deviated from its original goals of late by investing in Private Corporations and funding Non Banking Finance Companies which has created a dent.
NABARD has given loan of Rs.1100 Cr to the Anil Ambani Company Reliance Commercial Finance Ltd which has become NPA(Business line 20.02.2020). The investment in ILFS & DHFL have also become bad.
NABARD which had almost no NPA till 2018 had to provide Rs.213.7 crores for NPA and Rs.248.32 crores for Non-Performing Investments on 31st March 2019.
If NABARD’s mandate of sustainable and equitable agriculture is to be sustained it has to refocus on small and marginal farmers, cooperatives, RRBs and rural development.
This budget the FM asked NABARD to support NBFCs more. There are 10190 NBFCs as per NABARD report. Every quarter RBI is publishing new lists of NBFCs blacklisted. Hence the government should stop NABARD from refinancing NBFCs. It is not their mission.
It is sad that after 38 years NABARD has a District Development Manager only in 336 Districts out of 718 Districts. This DDMs are one-man army without any support staff.
In the last 15 years the staff strength of NABARD has come down to 3793 from 5298 whereas the balance sheet size has gone up from Rs.55888 in 2004 to Rs.487938 crores in 2019 and advances increased from Rs.48790 crores to Rs.430712 crores for the same period.
This will kill the institution. When RBI has announced Rs.25000 Crores for refinance to NABARD due to COVID-19, NABARD has to be given many more support. Once NABARD was tax free but now it pays tax [The net profit is transferred to Reserves].
NABARD can play a major role in reviving the economy by
- Preparing revised potential linked credit plan for all 718 districts with the help of the banks, Lead Bank and district administration.
- NABARD can come up with innovative schemes similar to the Integrated Rural Development Programme.
- Strengthen RRBs, Co-operative Banks and Primary Agriculture Credit Societies. (PACS)
- NABARD can extend the e sakhi programme which helps banks to access the individual SHG A/cs for evaluation which helps to decide on credit. Now it covers only 100 districts out of 718.
- NABARD can use the RIDF to help states to improve irrigation & road infrastructure and create employment.
But this needs tripling the staff strength and bring back NABARDS original focus. The umbilical cord with RBI should not be forgotten and NABARD should work closely with RBI in Policy making.
Unfortunately, the post of Managing Director and Executive Director are vacant and the Chairman who was appointed on 18 Dec 2013 has been given extension for 6 months from 19 Dec 2019. Newspapers have reported that the Bank Boards Bureau has recommended Mr. Chintala Govinda Rajulu for the post on 19th Feb 2020 but the Appointment Committee of the Cabinet is yet to decide. You can’t have adhoc Chairman for such a crucial Development Agency and keep crucial posts of MD and ED vacant. Hope the government acts fast.
Similarly, SIDBI can play a major role in reviving Micro, Small and Medium Enterprises (MSMEs), Industrial Finance Corporation can finance large project for infrastructure development.
National Housing Bank can help the construction industry which employs huge number of workers.
What is allotted to them is insignificant.
If there is a will there is a way. Does the government have the will?
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.