Full Form of NABARD – National Bank for Agriculture and Rural Development
The full form of NABARD goes as National Bank for Agriculture and Rural Development. NABARD was set up on 12 July 1982 on the recommendations of B.Sivaramman committee with regards to the implementation of the National Bank for Agriculture and Rural Development Act 1981, and it has been the top Development Financial Institution in India, i.e., it has been majorly involved in the planning of policies and operations in the field of agriculture and other economic services in the rural parts of India.
- NABARD was primarily formed to replace a lot of old acts like the Agriculture Credit Act, Rural Planning and Credit Cell of RBI, and Agriculture Refinance and Development Corporation. It acts as one of the most important sources of credit providers for rural India. The initial corpus with which NABARD was set up was Rs.100 crores.
- The authorized paid-up capital is more than Rs.30,000 crores at present. The government of India holds 100% of the share capitalThe Share CapitalShare capital refers to the funds raised by an organization by issuing the company's initial public offerings, common shares or preference stocks to the public. It appears as the owner's or shareholders' equity on the corporate balance sheet's liability side.. NABARD has its headquartered in Mumbai. It has been the key to providing rural services, innovative social services, and the provision of credit services in the rural parts of India.
History on NABARD
- The history of the National Bank for Agricultural and Rural Development can be related to the year 1981, the B.Sivaraman Committee’s moment. The committee was set up by the 61st Act of the Parliament of India in the year 1981 to scrutinize and serve suggestions about the methods on how to provide better services and elevate the mass of the rural population of India, which during those days was almost 80% of the overall population.
- NABARD came into action or existence on 12th July 1982. The newly formed NABARD replaced the roles of a couple of other departments or acts like Agriculture Credit Department (ACD) and the RPCC (Rural Planning and Credit Cell), and ARDC (Agricultural Refinance and Development Corporation). After the successful implementation of NABARD, ARDC, RPCC, and ACD were totally stopped and replaced.
- NABARD was formed with an initial capital of Rs.100 crores, and then it grew multiple folds with subsequent passage of time. NABARD’s total paid-up capital stood at Rs.10,580 crores as of 31 March 2018, with the Government of India holding 100% of the total capital.
- During later stages, RBI sold a majority of its stake in NABARD to the Government of India, and thus Government of India now has the overall control over NABARD. NABARD has several international partnerships, which also includes the World Bank. They offer effective advisory services and financial assistance to help the betterment of the rural population.
Roles of NABARD
- Support to the cottage industry – The cottage industry in India, which was once the prime source of revenue generation for the masses, was in bad shape lately and needed financial restructuring. Most of the cottage and SMEs in India are situated in the rural part, and NABARD has played a crucial role in reorganizing the cottage industry. Rural areas of India have again become a key contributor to India’s growth.
- The national economy was treated differently to the rural economy, and both were considered as different entities. NABARD brought a synergy between the two by reaching out to various industries and sectors like fertilizer manufacturers, pesticide developers, and farm equipment producers within the two economies and linking each other for synergetic growth. This led to a mutual benefit cycle that helped both the rural and national economy.
- NABARD serves as the apex body to provide a range of services that involve financing and provision of credit to the rural regions for carrying out a range of development activities. Moreover, NABARD also provides credits to other 3rd party companies that are involved in lending support to rural industries all over the country.
- NABARD is also a key body to support new agencies and institution come up specifically targeting Indian villages and their inhabitants. These agencies are specifically targeted to end scrutiny, rehabilitation unit creation, credit institution restructuring, training new hires, etc.
- NABARD also plays the role of an intermediary to various rural financing agencies that operate at the bottom-most level. It also acts as a bridge between RBI, the Indian Government, state-level bodies, and also other institutions that are operating at a national level.
- It also plays the role of an evaluation body of all the projects related to it and monitors them closely, taking into consideration refinancingRefinancingRefinancing is defined as taking a new debt obligation in exchange for an ongoing debt obligation. In other words, it is merely an act of replacing an ongoing debt obligation with a further debt obligation concerning specific terms and conditions like interest rates tenure. if needed.
- NABARD also takes part in developing other organizations that take part in the development of the rural economy.
- NABARD plays a crucial role in the development and support of Co-operative banks’ functioning in the process of regulation and training their staff.
Functions of NABARD
NABARD was set up to serve the below-mentioned functions:
- It acts as the supreme financing agency for the provision of credits to agencies or firms which are focussed upon promoting various development activities in rural areas.
- NABARD pays special attention to projects built under the Integrated Rural Development Programme (IRDP).
- It arranges to refinance for IRDP accounts to give the highest share of contribution towards eradicating poverty.
- NABARD provides instructions for the promotion of group activities under its programs and provides 100% refinance support for them.
- It helps to connect the Self-help Group (SHG) and the needy population of the rural areas.
- It also provides a helping hand to “Vikas Vahini” volunteer programs that offer credit and development activities to poor farmers.
- NABARD also monitors and controls the cooperative banks and RRBs to support rural financing and needy farmers.
- NABARAD also suggests RBI about licenses be provided to RRBsRRBsRRB stands for Regional Rural Bank. They are Indian government banks who operate as regional commercial banks and serve the country's rural areas, providing basic banking and other financial services. and Cooperative Banks.
Working of NABARD
- The supreme body has the authority and power to plan and deal with matters related to framing policies related to the rural credit for agriculture and other economic activities.
- NABARD acts as the refinancing house for other agencies that provide credit for rural development.
- It has an active role in preparation credit plans for rural India on a yearly basis, basically for all the districts in the nation.
- NABARD also plays a key role in promoting a research-based scenario in rural banking, rural development, and in the areas of agriculture.
Others Plans of NABARD
#1 – NABARD Infrastructure Development Assistance (NIDA)
This is a new line of creditLine Of CreditA line of credit is an agreement between a customer and a bank, allowing the customer a ceiling limit of borrowing. The borrower can access any amount within the credit limit and pays interest; this provides flexibility to run a business. support for rural funding targeted to the projects related to rural infrastructure.
#2 – Direct Refinance Assistance to CCBs
NABARD, on a short-term basis, provides direct refinance assistance to CBBs for use on a multilateral ground.
NABARD has been instrumental in shaping modern India and solving the rural problems from the very grass root level. It has been shaping the problems faced by the rural population and helped them earn a livelihood and betterment the rural economy. NABARD has connected both the rural and national economy and created a synergy in between both. NABARD currently works with close to 4000 partner companies who are the leading innovators and major players in various rural projects.
This has been a guide to the Full form of NABARD, i.e. (National Bank for Agriculture and Rural Development) and meaning. Here we learn the history of NABARD, roles, and functions, along with other plans of NABARD. You may refer to the following articles to learn more about finance –