What is NABARD - Full form, Functions, Features and Subsidiaries

The National Bank for Agriculture and Rural Development, popularly known as NABARD, is the key institution for rural development in India. Commissioned on 12th July 1982, NABARD's main objective is to support and develop agricultural and rural development by ensuring an adequate credit flow for development purposes.

In this article, we will read about NABARD full form, functions, features, organization structure, subsidiaries, and how the NABARD enables rural prosperity.

What is the Full Form of NABARD?

NABARD stands for National Bank for Agriculture and Rural Development. As the name suggests, the institution is specialised in providing financial assistance and promoting activities for agriculture and rural development in India.

What is NABARD?

NABARD (National Bank for Agriculture and Rural Development) is an apex development bank in India headquartered in Mumbai with branches across the country.

Based on the recommendations of the Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD), under B. Sivaraman. It was established to know the credit needs of rural areas and to contribute to broader development initiatives in the rural economy.

Functions of NABARD

NABARD has a multitude of functions, all aimed at promoting sustainable and equitable agriculture and rural development. These roles can be grouped broadly into financial, developmental and supervisory functions.

Financial Functions

Refinancing: NABARD extends refinance facilities to State Cooperative Banks (StCBs), District Cooperative Central Banks (DCCBs), Regional Rural Banks (RRBs) and commercial banks for their lending to agriculture and rural development.
Title: Direct Lending It provides direct finance to projects for rural infrastructure, agriculture and allied sectors.
Credit Planning: NABARD formulates and develops district-wise credit plans to guide and inspire the banking industry to attain the target and potential in the area of rural lending.

Developmental Functions

Infrastructural Development: NABARD seeks to build and enhance rural financial institutions to make them more efficient and capable.

It extends support to strengthen cooperative banks, regional rural banks and microfinance institutions through capacity building, training and technology adoption.

Rural Infrastructure Development: It acts as a financial support for projects related to irrigation, rural roads, rural markets, and other agricultural infrastructure.
Promoting Sustainable Agriculture: NABARD promotes sustainable agriculture by enhancing productivity, conserving natural resources, and promoting climate-resilient practices and technologies.
Rural financial inclusion: The bank also focuses on advancing financial inclusion in rural areas by supporting initiatives that extend banking services, credit, and insurance products to underserved segments of the rural community.

Supervisory Functions

As a banker, NABARD is also responsible for the regulation and supervision of State Cooperative Banks (StCBs), District Cooperative Central Banks (DCCBs), and Regional Rural Banks (RRBs). It is engaged in inspections and provides advice on financial health and operational efficiency.
Project Monitoring and Evaluation: The bank monitors and evaluates the projects refinanced by it to ensure that funds are used properly and desired results are achieved.

Features of NABARD

Some unique features of NABARD, highlighting its role in India's rural development, are as follows:

Apex Institution: NABARD is the apex development banking institution that provides credit and develops financial institutions in the rural areas of our country.
Integrated: The bank is fully integrated: financial, developmental and supervisory functions.
Regional Development: While the bank operates all over India, it focuses on regional development to ensure growth that is equitable and sustainable.
Emphasis on Innovation: It drives innovation and entrepreneurship in rural regions by assisting rural startups, agri-businesses, and rural artisans.

Structure of NABARD

To implement its multifaceted functions, the organizational structure of NABARD is designed as:

Head office: Mumbai, Maharashtra.
Regional Offices: Run 31 Regional Offices in India to meet state-specific requirements and promote decentralized decision-making.
Loan subsidiaries: NABARD has started some subsidiaries to focus on particular agriculture-based sectors.

Also, read about the Fertiliser Subsidy Scheme

NABARD Subsidiaries

To augment its reach and impact, NABARD has set up a number of subsidiaries that focus on various aspects of rural development:

NABKISAN Finance Limited (NABKISAN)

It offers credit for the development, diversification and commercialization of enterprises in agriculture, allied and rural non-farm activities. It has extended financial support for and to numerous Farmer Producer Organisations (FPOs) across several states.

NABSAMRUDDHI Finance Limited (NSFL)

It provides credit facilitation to legal entities for promotion, extension, commercialization, and modernization of activities undertaken in non-farm activities in microfinance, MSME, housing, education, and transport sectors.

NABFINS Limited (NABFINS)

NABFINS is a subsidiary of NABARD engaged in providing Microfinance services to self-help groups (SHGs) and small borrowers. The institution's goal is to provide affordable credit to underserved communities, fostering financial inclusion.

NABARD Consultancy Services (NABCONS)

NABCONS is a wholly owned subsidiary providing high-quality consultancy services in agriculture, rural development and infrastructure. It advises a range of governments, banks, and international institutions in areas such as rural finance, project management, and policy development.

Conclusion

Some of the vital recent priorities of NABARD are building sub-divisional farmer-producer organisations, strengthening cooperatives, credit linkages to microfinance institutions, and self-help groups. The appointment of NABARD is crucial as it contributes about rural credit, infrastructural development, or institutional framework, which is important in the journey to transform rural India.

Frequently Asked Questions (FAQs)

1. What is the full form of NABARD?

The full form of NABARD is National Bank for Agriculture and Rural Development.

2. What are the main functions of NABARD?

The main functions of NABARD are to provide refinance to financial institutions, supervise rural banking systems, develop rural infrastructure, promote sustainable agriculture, and supports financial inclusion.

3. How is NABARD different from RBI?

The Reserve Bank of India (RBI) is the apex monetary authority in the country, whereas NABARD is a development bank for financing rural development while sampling agricultural projects.

4. Who owns NABARD?

NABARD is fully owned by the Government of India.

5. How does NABARD help farmers?

NABARD provides various financial services to the farmers through other banks, and it also provides loans to spend on FPOs, irrigation and storage projects, sustainable farming practices, etc.