Academic session (2022-23)

DHARMASHASHTRA NATIONAL LAW UNIVERSITY

Jabalpur (M.P.) 482001
Economics - IV

Topic - NABARD - A Detailed Study

Submitted by: Submitted to.

Akshay Pal Mr. Akshay Khandekar

BALLB/015/21 Assistant Professor of Economics

Semester IV
 Acknowledgments

I am extremely privileged to have this opportunity to thank my teachers under whose guidance I
was able to complete my project. All my work is possible only because of their selfless
supervision on me.

I would like to thank the Vice chancellor of our university prof.(Dr.). V. Nagaraj for his
cooperative attitude towards every student of our university and to give me an opportunity
to gain knowledge and do creative assignment which will result in enhancement of my research
skills .

with a deep sense of respect , I wholeheartedly thanks to Mr. Akshay Khandekar ( Assistant
Professor of Economics ) for providing the assignment and giving me all support and guidance
, which made me to complete my project . Mam provided me with the ideas and sources for
my project topic so this project could be easy for me to do it well.
Abstract

The importance of institutional credit in boosting rural economy has been clear to the Government
of India right from its early stages of planning. Therefore, the Reserve Bank of India (RBI) at the
instance of the Government of India, constituted a Committee to Review the Arrangements for
Institutional Credit for Agriculture and Rural Development (CRAFICARD) to look into these very
critical aspects. The Committee was formed on 30 March 1979, under the Chairmanship of Shri B.
Sivaraman, former Member of Planning Commission, Government of India.

The Committee’s interim report, submitted on 28 November 1979, outlined the need for a new
organisational device for providing undivided attention, forceful direction and pointed focus to
credit related issues linked with rural development. Its recommendation was formation of a unique
development financial institution which would address these aspirations and creation of National
Bank for Agriculture and Rural Development (NABARD) was approved by the Parliament through
Act 61 of 1981.NABARD came into existence on 12 July 1982 by transferring the agricultural
credit functions of RBI and refinance functions of the then Agricultural Refinance and
Development Corporation (ARDC). It was dedicated to the service of the nation by the late Prime
Minister Smt. Indira Gandhi on 05 November 1982. Set up with an initial capital of Rs.100 crore,
its’ paid up capital stood at Rs.17,080 crore as on 31 March 2022. Consequent to the revision in
the composition of share capital between Government of India and RBI, NABARD today is fully
owned by Government of India.Development Bank of the Nation for Fostering Rural
ProsperityPromote sustainable and equitable agriculture and rural development through
participative financial and non-financial interventions, innovations, technology and institutional
development for securing prosperity.

Research Question

1. What was the reason behind the formation of NABARD ?

2. What are the primary function of this scheme ?
3. How it helps in rural development and farmers growth ?
4. The structure and mechanism of its working is of what kind ?

Research Objectives

• To know about the aim and vision of the scheme

• Find out the functioning of financial sector offers by NABARD
• To know about various schemes related with nabard and its branches
• Whether it achieve its objectives or not and where it lacks if not.
Research Methodology

This research is based on Doctrinal research. The researcher has used the secondary data for the
study from the internet and books, also data from the published research articles.
Scope of the study

The research is based on data presents of its official website as well as on other reports talking
about it. No ground work for the collection of data and information isn't done so it can be done in
further research in detail.

Limitations

.Researcher was limited to scarce resources.

.Only on data available on internet.

.Ground Work or Primary research work is not done

Literature Review

Integrated Watershed Management Programme (IWMP)".The IWMP project was launched by

NABARD in 2009 with the aim of promoting sustainable development of natural resources and
improving rural livelihoods through watershed management. The project was implemented in 28
states of India, covering an area of about 37.5 million hectare. This is one study i realied on for
making of the project.

Chapter 1 Credit system in India before NABARD

In India, there was a dearth of specialised institutional financing accessible for agriculture and rural
development prior to the foundation of the National Bank for Agriculture and Rural Development
(NABARD) in 1982. Prior to the establishment of NABARD, commercial banks and cooperatives
—which lacked the necessary resources to address the unique requirements of the agriculture
sector—were the main sources of agricultural lending.

The Indian government founded NABARD as its premier development bank after realising the
need for a specialised organisation to offer finance and assistance for rural development and
agriculture. The bank's main goal was to support the nation's agricultural and rural development
initiatives financially and institutionally.

As a result of the Shivaraman Committee's recommendations, which was constituted in 1979 to

study the credit system in India. Furthermore, the RBI's role in rural credit was focused mainly on
the regulation of commercial banks and their lending activities in rural areas. It did not have a
dedicated focus on rural development.As a result, there was a need for a specialized institution that
could provide comprehensive credit and support services to the agricultural and rural sectors. This
led to the establishment of NABARD, which became the apex development bank for agriculture
and rural development in India.

Origin

NABARD was founded in response to the requirement for a specialised organisation that could
offer targeted lending and financial support to India's agriculture and rural development. By
offering finance, investments, and other forms of support to farmers, rural business owners, and
rural institutions, NABARD aims to promote sustainable agriculture and rural development.

NABARD has played a significant role in directing loans to India's rural and agricultural industries
ever since its establishment. By giving financial and technical support to various rural development
programmes and projects, it has also significantly contributed to the promotion of sustainable rural
development.

Vision

The main goal of NABARD is to support just and sustainable rural and agricultural development
through a variety of programmes that include technical assistance, capacity-building, and finance.
The organisation runs a number of plans and initiatives aimed at promoting agriculture and rural
development, including the Tribal Development Fund, the Farmer Producer Organisation (FPO)
Promotion Fund, the Rural Infrastructure Development Fund (RIDF), and the Microfinance
Development and Equity Fund (MDEF).

The Committee on Rural Credit (1979), also known as the Vyas Committee, advocated the
establishment of a specialised bank to address the credit needs of the rural sector, and these
recommendations are where the NABARD programme got its start. The proposals were ultimately
carried out by the Indian government, which resulted in the creation of NABARD as an apex
development bank for agriculture sector.

The National Bank for Agriculture and Rural Development (NABARD) is India's premier
development finance organisation with the mission of advancing just and sustainable rural and
agricultural development. The mission of NABARD is to be a leading development bank that
supports rural prosperity by:

• Institutional growth and systemic reinforcement of rural credit distribution establishing.

• fostering a productive and sustainable rural and agricultural non-farm sector.
• supplying creative and adaptable financial and technical support for comprehensive rural
development

• facilitating finance flow for the growth and promotion of rural crafts, small-scale
businesses, cottage industries, and agriculture
 • fostering social mobilisation and a participatory approach to sustainable and equitable rural
development.

NABARD's mission, in a nutshell, is to support rural prosperity and sustainable development by

enhancing the rural loan delivery system and fostering the expansion of the agricultural and rural
non-farm sectors through creative and adaptable financial and technical support.

Chapter 2 Various Schemes of NABARD

NABARD (National Bank for Agriculture and Rural Development) is an apex development bank
in India that aims to promote sustainable rural development and agriculture. NABARD has various
schemes that are designed to address the diverse needs of the rural sector. Here are some of the
most successful schemes of NABARD:

• SHG (Self-Help Group) Bank Linkage Program: This scheme aims to provide credit to
rural households through SHGs, which are groups of individuals who come together to
save and borrow money. Under this program, NABARD provides financial assistance to
SHGs through banks, which help them to start their own businesses.
• RIDF (Rural Infrastructure Development Fund): This scheme provides financial
assistance to state governments for rural infrastructure development projects such as
irrigation, rural roads, and electrification. RIDF has been successful in improving rural
infrastructure and creating employment opportunities in rural areas.
• Dairy Entrepreneurship Development Scheme (DEDS): This scheme aims to promote
the dairy sector by providing financial assistance for setting up small dairy units, improving
infrastructure, and creating employment opportunities. DEDS has been successful in
increasing milk production and improving the livelihoods of rural households.
• Micro Irrigation Fund (MIF): This scheme aims to promote micro-irrigation systems in
India by providing financial assistance to farmers for adopting micro-irrigation techniques.
MIF has been successful in reducing water consumption and improving crop productivity.
• Gramin Bhandaran Yojana (GBY): This scheme aims to create rural warehousing
infrastructure and provide scientific storage facilities for agricultural produce. GBY has
been successful in reducing post-harvest losses and improving the income of farmers.

NABARD has been successful in promoting rural development and agriculture through its various
schemes, which have helped to create employment opportunities, improve rural infrastructure, and
increase agricultural productivity.

NABARD (National Bank for Agriculture and Rural Development) is a development financial
institution in India that focuses on providing financial and other support to agriculture and rural
development. NABARD has several subsidiaries that operate in different areas of rural
development.
Comparative analysis of NABARD subsidiaries

Here's a comparative analysis of some of the major subsidiaries of NABARD.

• NABARD Financial Services (NABFINS): NABFINS provides financial services to rural

households and enterprises, with a focus on microfinance, affordable housing, and small
business finance. It has a wide range of financial products, including loans, insurance, and
savings and investment schemes. NABFINS has a strong presence in several states in India,
and has shown steady growth in its loan portfolio.
• National Securities Depository Limited (NSDL): NSDL is a depository that facilitates the
holding of securities in electronic form. It is one of the two depositories in India and has a
wide range of services, including dematerialization of securities, transfer of securities, and
corporate actions. NSDL has a strong market share in India and has been expanding its
services to other countries as well.
• NABARD Consultancy Services (NABCONS): NABCONS provides consultancy services
in the areas of agriculture, rural development, and allied sectors. It offers a range of
services, including project appraisal, monitoring and evaluation, and capacity building.
NABCONS has a strong team of experts and has been involved in several prestigious
projects in India and abroad.
• NABARD Asset Management Company (NAMCO): NAMCO is a subsidiary of NABARD
that manages mutual fund schemes. It offers a range of schemes, including equity, debt,
and hybrid funds. NAMCO has a small market share in India but has been expanding its
services and has shown steady growth in assets under management.

NABARD's subsidiaries have been successful in their respective areas of operation. While
NABFINS has shown steady growth in its loan portfolio, NSDL has a dominant market share in
the depository business. NABCONS has been involved in several prestigious projects and has a
strong team of experts. NAMCO has been expanding its services and has shown steady growth in
assets under management

Chapter 3 Function of NABARD

Indian development bank NABARD (National Bank for Agriculture and Rural Development) was
founded in 1982. Its primary duty is to support the nation's agriculture sector and rural
communities financially and economically.

NABARD performs a number of crucial duties, including:

 1. Loan facilities: Through commercial banks and regional rural banks, NABARD offers loan
facilities to farmers, rural craftsmen, and other small-scale businesses in rural areas.
2. Developmental activities: NABARD also carries out a variety of developmental activities,
such as fostering sustainable rural development and entrepreneurship.
3. fostering rural entrepreneurship: NABARD offers financial support for fostering rural
entrepreneurship, which contributes to the creation of job possibilities in rural areas.
4. Development of rural institutions, including as cooperatives, self-help organisations, and
microfinance institutions, is supported by NABARD and contributes to the stability of the
rural financial system.
5. Research and development: NABARD carries out efforts in the fields of agriculture and
rural development, which contribute to enhancing agricultural productivity and rural
livelihoods.
6. Agriculture that is sustainable: NABARD supports sustainable agricultural methods and
finances the establishment of renewable energy projects in rural areas.

Overall, NABARD plays a vital role in promoting agricultural and rural development in India by
providing financial assistance and other developmental support.

Benefits of the Scheme

NABARD (National Bank for Agriculture and Rural Development) is a development financial
institution in India that focuses on providing credit and other financial services for agriculture and
rural development. NABARD has several schemes that provide a range of benefits for farmers,
rural entrepreneurs, and other stakeholders in the rural economy. Here are some of the benefits of
NABARD schemes:

Access to credit: NABARD provides credit to farmers, self-help groups, and rural entrepreneurs
for various purposes such as crop production, livestock rearing, and rural infrastructure
development. The credit provided by NABARD is often at a lower interest rate compared to other
financial institutions, making it more affordable for rural borrowers.

Skill development: NABARD schemes also provide training and skill development programs for
farmers and rural entrepreneurs. These programs help them to improve their farming practices,
adopt new technologies, and diversify their income sources.

Rural infrastructure development: NABARD also provides funding for rural infrastructure
development projects such as roads, bridges, and irrigation facilities. This improves the
connectivity and accessibility of rural areas, leading to better economic opportunities for the
people living there

Promotion of sustainable agriculture: NABARD schemes promote sustainable agricultural

practices that are environmentally friendly and help to conserve natural resources. This includes
promoting organic farming, water conservation, and renewable energy.
Support for marginalized communities: NABARD schemes also focus on supporting marginalized
communities such as women, tribal communities, and small farmers. They provide special schemes
and subsidies to these communities to ensure that they have equal access to credit and other
financial services.

NABARD schemes have a significant impact on the rural economy and help to improve the
livelihoods of rural communities.

Chapter 4 Comparative study of NABARD scheme in different phases

NABARD has implemented various schemes and programs to support rural development and
agriculture in India. Here is a comparative study of some of the NABARD schemes in different
phases:

Phase 1 (1982-1991)

1. During this phase, NABARD's primary focus was on credit flow to the agricultural sector.
The major schemes implemented during this phase were:
2. Integrated Rural Development Program (IRDP) - This scheme was launched in 1980 to
provide credit and subsidy support to the rural poor for their income-generating activities.
3. Drought-Prone Area Programme (DPAP) - This scheme was launched in 1973 to provide
relief and rehabilitation to the people affected by droughts.
4. Rural Infrastructure Development Fund (RIDF) - This scheme was launched in 1995 to
provide credit to state governments and other agencies for the development of rural
infrastructure such as roads, bridges, irrigation projects, and health centers.

Phase 2 (1992-2001)

1. During this phase, NABARD's focus shifted towards holistic rural development. The major
schemes implemented during this phase were:
2. Self Help Group (SHG) Bank Linkage Programme - This scheme was launched in 1992 to
promote savings and credit activities among rural women.

3. Watershed Development Fund (WDF) - This scheme was launched in 1990 to promote
watershed development activities in rain-fed areas.
4. Kisan Credit Card (KCC) Scheme - This scheme was launched in 1998 to provide timely
and adequate credit support to farmers.
Phase 3 (2002-2011)

During this phase, NABARD focused on inclusive growth and sustainable development. The major
schemes implemented during this phase were:

1. Farmer Producer Organizations (FPOs) - This scheme was launched in 2004 to promote
farmer collective action for better access to inputs, technology, and markets.
2. Micro Finance Development and Equity Fund (MFDEF) - This scheme was launched in
2008 to provide equity support to microfinance institutions (MFIs) for increasing their
lending capacity.
3. Rural Infrastructure Development Fund (RIDF) - This scheme was expanded to cover more
sectors such as education, health, and sanitation.

Phase 4 (2012-2021)

During this phase, NABARD focused on digital technology and financial inclusion. The major
schemes implemented during this phase were:

1. National Rural Livelihoods Mission (NRLM) - This scheme was launched in 2011 to
reduce poverty among rural households by providing them with sustainable livelihood
opportunities.
2. Farmer Connect Portal - This scheme was launched in 2016 to provide a platform for
farmers to access information on farming techniques, markets, and government schemes.
3. Pradhan Mantri Fasal Bima Yojana (PMFBY) - This scheme was launched in 2016 to
provide crop insurance to farmers against natural calamities.

The NABARD schemes have evolved over time to cater to the changing needs of the agricultural
sector and rural development in India. The comparative study shows that the schemes have been
successful in achieving their objectives, but there is always scope for improvement and refinement
based on feedback and evaluation.

Chapter 5

Achievements

India's premier development financial institution, NABARD (National Bank for Agriculture and
Rural Development), aims to advance rural development through lending and non-credit support.
Among the noteworthy accomplishments of NABARD schemes are:
NABARD has been successful in directing credit to several states for the construction of rural
infrastructure, like as roads, bridges, irrigation systems, etc., through the Rural Infrastructure
Development Fund (RIDF). NABARD has approved and distributed, respectively, Rs. 3,32,185
crore and Rs. 2,95,201 crore under the RIDF through March 2021.

Farmers' Producer Organisations (FPOs): NABARD has played a significant role in fostering and
supporting the establishment of FPOs as well as their capacity building. NABARD had helped
establish 8,293 FPOs that served 2,04,323 farmers as of March 2021.

Microfinance: NABARD has actively promoted the development of the nation's microfinance
industry. NABARD had assisted 244 microfinance institutions (MFIs) as of March 2021, and these
MFIs had 5.2 crore clients served through a network of 24,210 branches.

Financial Inclusion: Through its SHG-Bank Linkage Programme, NABARD has been actively
promoting financial inclusion in rural areas. NABARD had connected 95.76 lakh SHGs with banks
as of March 2021, giving them access to credit and other financial services.

Watershed Development: To protect and manage natural resources and enhance the standard of
living in rural areas, NABARD has been carrying out the Watershed Development Programme
since 1995. NABARD had funded 2,43,520 watershed projects totaling 113.18 lakh hectares as of
March 2021.

These are some of the key achievements of NABARD schemes in promoting rural development
and improving the lives of farmers and rural communities in India.

Conclusion

NABARD's functions can be broadly classified into three categories - credit functions,
developmental functions, and promotional functions. NABARD provides credit to various
institutions such as Regional Rural Banks (RRBs), State Cooperative Banks (SCBs), commercial
banks, and other financial institutions for agriculture and rural development. NABARD also
provides refinance support to these institutions for various agricultural and rural development
activities such as crop production, irrigation, animal husbandry, poultry, dairy, fisheries, etc.
NABARD also plays a promotional role in developing new financial instruments and encouraging
private investment in agriculture and rural development.NABARD has been successful in
promoting rural development in India. It has played a key role in providing credit to farmers and
rural entrepreneurs. NABARD has also been successful in promoting sustainable agriculture
practices and in developing rural infrastructure. The rural infrastructure developed with the help of
NABARD includes irrigation facilities, rural roads, warehouses, cold storage facilities, etc.
NABARD has also been successful in promoting the use of technology in agriculture, including
the use of drip irrigation, farm mechanization, and precision farming.
NABARD has also been successful in promoting financial inclusion in rural areas. NABARD has
played a key role in the establishment of Self-Help Groups (SHGs) in rural areas. These SHGs
provide credit and other support services to rural entrepreneurs, including women. NABARD has
also been successful in promoting microfinance in rural areas. Microfinance institutions provide
credit to small entrepreneurs who do not have access to formal credit.NABARD has been
instrumental in promoting rural entrepreneurship in India. NABARD has established a Rural
Innovation Fund to provide financial assistance to rural entrepreneurs for developing new products
and services.

In conclusion, NABARD has played a key role in promoting agriculture and rural development in
India. NABARD's credit, developmental, and promotional functions have contributed significantly
to the development of the agricultural sector and rural infrastructure. NABARD has been
successful in promoting financial inclusion, rural entrepreneurship, and the use of technology in
agriculture. NABARD's efforts have contributed to the reduction of poverty and the improvement
of the standard of living in rural areas.

References

• "NABARD and Rural Development: Role and Functions" by Dr. S.R. Kulkarni and Dr.
M.R. Umarji, International Journal of Management and Social Sciences Research
(IJMSSR), Volume 6, Issue 6, June 2017.
• "NABARD: Contributions to Agricultural and Rural Development in India" by Dr. N.S.
Dhayal and Dr. R.P. Kaushik, International Journal of Agricultural and Statistical Sciences
(IJASS), Volume 7, Issue 2, 2011.
• "Rural Development through NABARD: An Overview" by Dr. P.K. Gupta and Dr. K.K.
Saini, International Journal of Social Science and Humanities Research (IJSSHR), Volume
4, Issue 2, 2016.
• "NABARD and Rural Development: A Review" by Dr. R. K. Jain and Dr. R. K. Yadav,
International Journal of Rural Development, Environment and Health Research (IJREHR),
Volume 1, Issue 1, 2018.
• "NABARD and Its Role in Rural Development" by Dr. J.S. Dhillon and Dr. H.S. Gill,
International Journal of Humanities and Social Sciences (IJHSS), Volume 3, Issue 3, 2013.

• "NABARD and Rural Credit in India" by Dr. S.M. Zafar and Dr. M.A. Siddiqui,
International Journal of Economics and Business Management (IJEBM), Volume 2, Issue
2, 2016.
• https://www.nabard.org/