A

PROJECT REPORT
ON
National Bank for Agriculture and Rural
Development
National Bank for
Agriculture and Rural
Development

Logo of The NABARD

NABARD headquarters in Mumbai

Mumbai,
Headquarters
Maharashtra, India

Established 12 July 1982 [1]

Dr K G Karmakar
Managing Director [2]

Inside
1. Genesis
2. Functions in Brief
3. More about operations
4. Credit Products & Clients
Short Term Credit
Medium Term Credit
Investment Credit
Direct Credit
Loans to State Government
Supporting Cooperatives
Rural Infrastructure Development
Co-financing
Bulk Lending to NGOs
5. Thrust Areas
Doubling of Credit
Kisan Credit Card
Non-Farm Sector
microFinance
Watershed Development
Women & Development
Support to Weaker Sections
6. Development Initiatives
7. Institutional Development
8. Supervision
9. NABARD Consultancy Services Ltd. (NABCONS)
10. NABARD at a glance
Source and Uses of Funds
State-wise Financial Support (2005 -06)
11. Regional Offices

12. District Offices

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

Genesis
National Bank for Agriculture and Rural Development (NABARD) was established on 12 July
1982 by an Act of Parliament. The agriculture credit functions of the Reserve Bank of India
(RBI) and refinance functions of the then Agricultural Refinance and Development Corporation
(ARDC) were transferred to NABARD on its formation.

Mission

Promote sustainable and equitable agriculture and rural prosperity through effective
credit support, related services, institution development and other innovative initiatives Mandate
NABARD was set up by the Government of India (GoI) as a development bank with the
mandate for facilitating credit flow for promotion and development of agriculture, small-
scale industries, cottage and village industries, handicrafts and other rural crafts.

It also has the mandate to support all other allied economic activities in rural areas, promote
integrated and sustainable rural development and secure prosperity of rural areas, as also for
matters connected therewith and incidental thereto.

Role

A. Facilitating credit flow for agriculture, rural infrastructure and rural development
B. Promoting and supporting policies, practices and innovations conducive to rural
development.
C. Strengthening rural credit delivery system through institutional development.
D. Supervising rural financial institutions (Co-operative Banks and Regional Rural
Banks)

PACE FOR PHOTO GRAPH

Share Capital
The share capital of NABARD is Rs.2000 crore, subscribed by the GoI (Rs.550 Crore) and the
RBI (Rs.1450 Crore).

Management
The Management of NABARD vests in the Board of Directors. The Board of Directors of
NABARD comprises the Chairman, Managing Director, representatives of RBI, GoI, State
Governments, and Directors nominated by the GoI.
Structure
NABARD operates through its Head Office at Mumbai, 28 Regional Offices located in the
State Capitals, a Sub Office at Port Blair, and Training Establishments at Lucknow, Bolpur,
Mangalore and Hyderabad and has 391 District Development Managers functioning at district
level. NABARD has on its roll around 2976 professionals who are supported by other staff.

About the Functions

Credit Planning

District Level Planning

NABARD prepares Potential Linked Credit Plan (PLP) annually for each district of the country.
It maps the potentials available for development in the agriculture and rural sectors in the district
and projects credit requirement, taking into account the long-term physical potential, availability
of infrastructure, extension services, marketing support, and the strengths and weaknesses of the
Rural Financial Institutions (RFIs). The PLPs form the basis for preparation of Credit Plan at the
district level by banks. PLPs assessing potentials for the year 2006-07 have been prepared and
circulated

State Level Planning

NABARD prepares the State Focus Paper for every state, which presents a comprehensive
picture of the potentials available in the State for development of agriculture and allied sectors. It
is used by the bankers and other agencies for preparing their plans for making investment in
these sectors. It provides a road map for exploiting the opportunities available for further
investments. State Credit Seminar is convened by NABARD annually where all agencies
concerned viz., the State Government officials, banks, NGOs, etc. participate and discuss
policies and operational measures required to be taken for tackling constraints in development of
the potentials available in agriculture and allied sectors in the State.
National Level Planning
NABARD facilitates GoI, State Govts and RBI in policy decisions regarding credit flow to
agriculture and rural development.

CREDIT PRODUCTS AND CLIENTS

Short Term (ST) Credit

Seasonal Agricultural Operations (SAO)

In order to ensure availability of timely credit to farmers, banks follow production-oriented
system of lending. The system has features like assessment of credit needs based on area under
different crops and crop wise scales of finance. Refinance is provided by way of credit limits for
seasonal agricultural operations at concessional rates of interest to State Cooperative Banks
(SCBs) and Regional Rural Banks (RRBs). Each drawl against the sanctioned credit limit is
repayable within 12 months.
Marketing of Crops
With a view to improving the flow of marketing credit to cultivators for augmenting their
holding capacity and checking incidence of distress sale, NABARD encourages Cooperative
banks and RRBs to finance marketing of crops, through its refinance facility for the purpose.
Each drawl against the sanctioned credit limit is repayable within a maximum period of 12
months.

Distribution of agricultural inputs

With a view to ensuring timely supply of agri-inputs like fertilizers, pesticides, etc., a line of
credit is made available to Co-operative Banks for financing Apex/Primary Societies for stocking
and distribution of agricultural inputs by way of sanction of yearly limits. Each drawal is
repayable within a period of 120 days.

Financing industrial societies

Refinance is provided to Cooperative Banks for financing production and marketing activities of
industrial cooperative societies engaged in one or more of the 22 approved broad groups of
cottage and Small Scale Industries (SSIs).

Weavers’ Finance
Given the importance of handloom sector in rural employment generation, refinance is extended
to meet the working capital requirements of primary weavers’ societies, procurement, stocking,
distribution and marketing activities of Apex Weavers’ societies and State Handloom
Development Corporations (SHDCs).

Financing handicrafts sector

Rural craftsmen are provided support by financing State Handicraft Development Corporation
(SHDCs) through SCBs and Commercial Banks (CBs) for production, procurement and
marketing of handicraft goods.

Investment Credit
Investment credit leads to capital formation through asset creation. It induces technological
upgradation resulting in increased production, productivity and incremental income to farmers
and entrepreneurs.

Eligible Institutions
NABARD provides refinance support to SCARDBs/ SCBs/ RRBs/ CBs/ Scheduled Primary
Urban Cooperative Banks/Non-Banking Financial Companies (NBFCs)/North East Development
Finance Corporation Ltd. (NEDFI) etc. against their Investment Credit in the Rural Sector.
Achievements during 2005-06 was Rs. 8622.37 crore The target for refinance support for
Investment Credit for the year 2006-07 set at Rs.8700 crore.
Eligible Purposes
Major purposes covered are Farm Mechanization, Minor Irrigation, Plantation/ Horticulture,
Animal Husbandry, Storage/Market Yards, Fisheries, Post Harvest Management, Food/Agro
Processing, Non Farm Sector including rural industries, microFinance, Purchase of land (for
Small/Marginal Farmers, share croppers etc.) Rural Housing and disbursements under Poverty
Alleviation programmers like SGSY and SC/ST Action Plan etc. Hi-tech projects and Agri
Export Zones are identified as thrust areas and NABARD helps in techno-financial appraisal of
such projects besides providing refinance. In the recent years, refinance support has been
extended to new activities like financing of diesel generator sets in Madhya Pradesh and LPG
kits to rural areas all over the country.

Criteria
The technical feasibility of the project, financial viability and incremental income generation to
the ultimate borrowers thereby enabling them to have a reasonable surplus after repayment of the loan
installments are the necessary conditions to be satisfied for sanctioning investment credit. The period of
loan ranges between 3 and 15 years depending on the purpose for which it is provided.

DON’T- ask sir

Physical Units Financed and Completed as on 31 March 2006
S.No Investment Units Units financed upto 31 March Units completed upto 31 March
2005 2006 2005 2006
1 Minor Irrigation
i Tubewells with Pumpsets @ ‘000 1501 1531 1499 1528
ii Dugwells with pumpsets ‘000 2057 2059 2056 2058
iii Dugwells with conventional lift ‘000 1703 1707 1702 1706
iv Pumsets on existing wells ‘000 2346 2380 2244 2377
V Others** ‘000 1621 1691 1619 1688
2 Land Development*** ‘000 ha 3114 3127 3112 3125
3 Farm Mechanization
i Tractors‘0001233 1278 1232 1276
Ii Power tillers‘000153 156 152 155
Iii Other farm equipments‘000559 648 557 645
4 Plantation & Horticulture ‘000 ha 2038 2112 2036 2109
5 Forestry Lakh ETPs 2321 2332 2320 2331
6 Storage ‘000 tonnes 16385 17015 16383 17011
7 Market Yards No. 2015 2087 2014 2086
8 Dairy Development ‘000 animals 14904 15440 14902 15437
9 Sheep/Goat Rearing‘000 animals36393 37044 36390 37040
10 Piggery‘000 animals1648 1674 1644 1669
11 Poultry Lakh birds 1734 1782 1732 17809
12 FisheryMechanized Boats No. 21643 21930 21639 21925
Other Boats No. 72643 72738 72640 72730
Brackish Water Aquaculture Ha. 5217 5217 5215 5215
Fresh Water Aquaculture ‘000 ha. 358 358 356 356
13 Non-Farm Sector ‘000 5699 6347 5691 6337
14 Miscellaneous$ ‘000 12969 13641 12954 13624
@ Includes borewells with pumpsets * Includes dug-cum borewells with pumpsets
ETPs : Entire Trans-Planting** Includes dug wells/ dugwells-cum-bore wells, deep tube wells with pump sets, deepening / renovation of
wells, sprinkler, pipeline, storage / waterharvesting tank, rectification of pumpset, lift irrgation, drip, shallow tube wells / million shallow
tubewell programme, etc.*** Includes soil conservation, saline /alkaline soil, channels / lining/ under ground pipeline, farm development
(other than CADA).$Includes bullock pairs, bullock carts, camels, camel carts, SHGs, other activities under AH, Kisan bikes,
Sericulture, Agri Clinics, Agri Business Centers (ACABC), soil/water testing, compost/manure / plants, gobar gas plants, sericulture,
SRTO, contract farming, SC/ST Action Plan, beekeeping,etc.
Note: While estimating the completed units, appropriate adjustments have been made for units financed upto March 2006, but not likely
to have
been completed. It is possible that some of the units have turned out to be infructuous or remained incomplete beyond their normal
gestation
period.
Direct Credit
Loans to State Governments

Supporting Cooperatives
In order to strengthen the owned funds position of cooperative credit institutions and thereby
increasing their capacity to leverage larger resources, NABARD provides loans to the State
Governments to contribute to the share capital of these institutions.
Co-financing
To ensure substantial credit flow to agriculture and rural sector and to instill confidence
in banks for financing hi-tech/export oriented agriculture projects involving large
Financial outlays/sunrise technologies, etc., NABARD has entered into agreements for
Co-financing with 14 Commercial Banks thereby sharing the credit risks with partner
Banks. Under this arrangement, projects have been sanctioned in the areas like floriculture,
Organic farming, milk processing, ethanol production, infrastructure development, forestry,
Animal husbandry, agro/ food processing etc.

A. Rural Infrastructure Development

With the objective of assisting State Governments in the completion of ongoing rural
infrastructure projects and to take up new infrastructure projects, the Rural Infrastructure
Development Fund (RIDF) was set up with NABARD in 1995-96 with contributions from
Commercial banks by way of deposits. The shortfall in agriculture sector lending target of
18% of net was deposited by the commercial banks with NABARD as part of their contribution
to the RIDF. The total corpus covering RIDF I (1995-96) to XI (2005-06) is
Rs.50,000 crore. Sanctions under all trenches of RIDF as on 31 March 2006 were
Rs.51283.01 crore against which the disbursements were Rs.31337.34 cr. The allocation to RIDF
XII has been enhanced and fixed at Rs. 10000 crore and specified projects under Public Private
Partnership (PPP) model will be allowed access to RIDF funds.

Anticipated Benefits
It is anticipated that the projects sanctioned upto 31 March 2006 under RIDF would result in:
A. Creation of additional irrigation potential in 107.91 lakh ha.
B. Addition of 202194 km of rural road network & 368641 meter bridge length.
C. Contribution to the GDP to the tune of Rs. 12235 crore.
D. Generation of recurring employment of 50.62 lakh jobs and non-recurring employment of 15417 lakh
person days due to increased irrigation.
E. Generation of non-recurring employment expected from non-irrigation projects: 28348 lakh person
days

Bharat Nirman
The Hon’ble Finance Minister in his budget speech had stated that a separate window for Bharat
Nirman will be opened under RIDF-XII for funding rural road component of Bharat Nirman of
GoI with corpus of Rs.4000 crore during 2006-07.

Bulk lending/Revolving Fund Assistance

NABARD provides Bulk lending facilities to NGOs. As on 31.3.2006, 32 agencies have been
sanctioned assistance of Rs. 27.32 crore against which Rs.21.50 crore has been disbursed.
Financial Package for Sugar Factories
In pursuance of the Hon'ble Finance Minister's announcement made in the Union Budget for
2005-06, NABARD was advised by the Government of India to work out a scheme for providing
financial package for sugar factories. NABARD, in consultation with the State Governments,
RBI, IBA, Banks and Financial Institutions had worked out a scheme for restructuring of loans
of sugar factories. The scheme was approved by the GoI for the cooperative sugar mills in the
country. All the Coop.Sugar Mills in the country who had term loans outstandings as on 31
March 2005 and are commercially viable with adequate operational surplus to repay the
rescheduled term loans are categorized as Category A or Category B. Their term loans are
restructured/rescheduled with repayment within five years for Category A and 15 years for
Category B, including a moratorium of two years for payment of interest and principal. The rate
of interest on the restructured loans has been reduced to 10% per annum, with effect from 1st
April 2005, irrespective of the original contracted rate. The proposal of sugar factories were
examined by the Technical Committee at the state level headed by Senior Officers of NABARD
Regional Office with one member each from the Sugar Commissionerate of the State, State
Cooperative Bank and an Expert having sound knowledge on the working of sugar mills.105
proposals have been cleared for restructuring of term loans of cooperative sugar mills in 3 States
(93 from Maharashtra, 8 from Karnataka and 4 from Gujarat) for total amount of Rs.1963 crore .
GoI had agreed to provide interest subvention of Rs.525 crore on loans of Cooperative Sugar
Mills restructured by SCB, District Cooperative Banks. An additional amount of Rs.80 crore has
been sought for the cooperative sugar mills financed by Urban Cooperative banks.

Thrust Areas

Doubling of flow of Agriculture Credit:

In order to achieve the 4% growth in agriculture sector during the X plan period and also
to make available the adequate credit to farmers, GoI announced, on 18 June 2004, Farm Credit
Package which envisaged 30% growth in credit flow to agriculture during the year 2004-05 and
doubling it over 3 years and provision of debt relief to farmers. NABARD has been entrusted
with the responsibility of overseeing the implementation of the package and monitoring the
progress. The progress in the implementation of the credit package as on 31 March 2006
indicates that the total disbursement by all agencies is at Rs.167775.27 crore*, forming 118.99%
of the target of Rs. 141000 crore and showing a growth of 33.89% over the disbursement of Rs.
125309.37 crore during 2004-05.

Kisan Credit Card

As a pioneering credit delivery innovation, KCC Scheme aims at provision of adequate and
timely support from the banking system to the farmers for their cultivation needs including
purchase of inputs in a flexible and cost effective manner. The scope of KCC has been extended
to cover term loans, working capital needs, consumption needs etc. As on 31 March 2006,
cumulatively 5.91* crore cards involving bank loan of Rs.181992* crore were issued to the
farmers by Cooperatives, RRBs and CBs. A Personal Accident Insurance Scheme (PAIS) is
available to KCC holders to cover them against accidental death/permanent disability.
Non Farm Sector
Rural Non Farm Sector (RNFS) is a thrust area of NABARD because of its employment
generation potential in rural areas. NABARD provides refinance as well as promotional support
for development of the sector.
Credit Support
The refinance products of NABARD cover the entire manufacturing, processing and service
activities in the Small Scale Industries (SSI) sector with focus on cottage, village and tiny
industries, rural artisans and rural crafts as also financing rural housing projects. Refinance is
also extended to Government sponsored programmed like the Industry, Service and Business
component of Swarnjayanti Gram Swarojgar Yojana (SGSY) and Prime Minister’s Rozgar \
Yojana.
Promotional Support
Promotion of RNFS has been recognized as an important and necessary adjunct to the
Refinancing function. The objective of promotional programmes is to establish replicable models
for generating/enhancing opportunities for employment and income generation in rural areas in
a sustainable, demonstrative and cost effective manner by providing grant/revolving fund
Assistance, etc., to NGOs, Voluntary Associations, Trusts and other Promotional Organizations.

SDC Rural Innovation Fund

A fund namely the NABARD-SDC Rural Innovation Fund has been created in NABARD with
effect from 1 October, 2005 by transferring the balance available under the erstwhile
Rural Promotion Corpus Fund (RPCF) (including interest accrued thereon till date) and
the (Credit and Financial Services Fund (CFSF). Innovations in farm and non-farm sectors
will be actively promoted with this fund while the existing promotional activities will
continue to get support as hitherto. The administration of the Fund will be guided by a
Steering Committee headed by the Chairman, NABARD as Chairman and prominent
Economists and Social activists as members.

Rural Promotion Fund

A separate fund i.e. Rural Promotion Fund has been created by crediting all the flows,
etc. from the erstwhile RPCF and CFSF after 30 September, 2005 and reflow emanating
out of Rural Innovation Fund. This fund will be utilized for supporting promotional
programmers which are outside the purview of RIF, but needs promotional assistance.
This fund can also be utilized for up scaling the programmed funded under RIF.

Rural Entrepreneurship Development Programme

Rural Entrepreneurship Development Programme (REDP), introduced on an experimental basis
in the early nineties, as a means to support capacity building of rural unemployed persons to
enable them to set up their own enterprises, is firmly entrenched as a successful model for
employment generation in the rural areas. During the year, 871 REDPs were supported covering
26,130 persons and involving grant assistance of Rs.454.39 lakh. So far, grant assistant of
Rs.3185.64 lakh has been extended for conducting 7159 REDPs covering 2.15 lakh persons. The
programmer has been institutionalised since 2004-05 by associating Rural Development and
Self-Employment Training Institutes (RUDSETI) and banks in conduct of training programmes.
District Rural Industries Project (DRIP)
The project was launched by NABARD in 1993-94 in 5 select districts with the objective of
generating sustainable employment opportunities through enhanced credit flow to Rural Non
Farm Sector together with promotional measures in a coordinated manner. Under the project, a
common action plan is prepared and implemented in coordination with all the Government and
non-governmental agencies involved in promotion of rural industrialization in district.
Considering the success of the programme, it was decided to extend the project to 100 more
districts in 5 years commencing from the year 2001-02. As at the end of 31 March 2006,
cumulative number of districts covered was 106 facilitating setting up of more than 10.79 lakh
units and generating employment opportunities for over 22.93 lakh persons.

Scheme for Strengthening of Rural Haats

The scheme was introduced in 1999 mainly to boost the trade of Rural Non farm Products.
Assistance in the form of grant (90% of the project cost or Rs. 3.0 lakh whichever is lower) is
available to Panchayati Raj Institutions (PRI) for providing minimum infrastructure (raised
platforms with shed, drinking water facilities, cycle stand, toilets etc.) to new haats or existing
haats. Over and above this, soft loan upto Rs. 2.0 lakh is available for bringing in additional
facilities to the haat viz. Medical shop, atta chakki, cycle repair shop, PCO etc. The soft loan at
prevailing interest rate is repayable in half yearly installments over 7 years including moratorium
of one year. The scheme is extended to all DDM districts. In the North Eastern states, the scheme
can be implemented even in non DDM districts. During 2005-06, 8 units were sanctioned under
the Scheme for Strengthening of Rural Haats viz. 3 in Uttaranchal 2 in Nainital, 1 in Tehri
Garhwal), 1 in Tamil Nadu (Tiruchirapalli), 1 in Maharashtra (Aurangabad), 1 in Karnataka
(Bagalkot), 1 in Madhya Pradesh (Indore), 1 in Punjab (Muktsar), involving grant assistance of
Rs.22.513 lakh. Cumulatively, as on 31 March 2006, 27 schemes have been sanctioned with
grant assistance of Rs.64.604 lakh.
15
Cluster Development
Implementation of 56 cluster development programme across 17 States under GoI
National Programme for Rural Industrialization (NPRI) has proved that Cluster
Development Approach is an ideal medium / vehicle to usher in all-round development
in rural non-farm sector, especially in traditional and handicraft sector.
Encouraged by the success of the NPRI Programme, NABARD has unveiled a new policy to
develop 50 clusters on partnership basis with other agencies with an outlay of Rs.15 lakh
each and 5 clusters on stand-alone basis at a cost of Rs.1 crore per cluster. (24 cluster
development proposals received from 16 States were approved under the New Policy.)

Capacity Building initiative for Nodal Agencies

Two Capacity Building Programmes were organized at NRCD, NISIET, Hyderabad. In all,
18 NGOs, 22 DDMs and 20 ROs officials participated in two training programmes. The
prime objectives of the programme were to give an insight into various aspects of
cluster development viz. conducting diagnostic studies, preparation of action plan for
development of identified clusters, monitoring methodology and strategies for effective
implementation.
Skill Upgradation & Design Development for Handloom Weavers (SUDHA)
The scheme was introduced in 2002-03 with a view to supporting development of newdesigns
for handloom products and upgrade skills of traditional handloom weavers for improving their
marketability both within and outside the country. Under the scheme, grant assistance is given to
Apex Handloom Co-operative Societies and NGOs involved in promotion of handloom sector
for conducting market surveys, design development, skill upgradation training, engaging design
consultants and marketing efforts. During 2005- 06, a project was sanctioned to ISI, Patiala for
providing training to 30 women in tailoring, embroidery and designing. 3 proposals with grant
assistance of Rs.11.77 lakh have been sanctioned.

Swarozgar Credit Card (SCC) Scheme

The SCC scheme, formulated by NABARD in consultation with RBI and GoI, envisages
adequate and timely credit, both working and block capital, to small artisans, handloom weavers,
service providers, fishermen, self-employed persons, rickshaw owners, other micro
entrepreneurs, in rural and urban areas in a flexible, hassle free and cost effective manner from
the banking system. The facility also includes a reasonable component for consumption needs.
As on 31 March 2006, 4.68 lakh cards were issued by the Co-operative Banks and RRBs
involving credit limit of Rs.1943.19 Crore.

Rural Housing Scheme

Although large number of credit institutions finance housing sector, few address the
rural needs comprehensively and there is need for more institutional credit efforts in
this sector. Recognizing the importance of housing finance in rural areas, NABARD has
been providing refinance support to eligible banks against their financing for rural
housing. The salient features of the Rural Housing Scheme of NABARD are as follows:

Eligible Borrowers
A. Individuals, Co-operative Housing Societies, Public Bodies, Housing Boards/ Housing
Development Authorities/ Improvement Trusts, Local Bodies, Voluntary Agencies,
NGOs and Housing Finance Companies registered with NHB.

B. Financing made under Golden Jubilee Rural Housing Scheme and Schemes of the
Govt. of India, Ministry of Rural Development shall also be eligible for NABARD
refinance.

Eligible purposes
Construction of New as well as Repairs/ Renovation of existing houses in rural areas.
Cost of construction of Rain Water Harvesting Structures and Sanitary Latrines for new
houses and also under renovations.

Ceiling on the Cost

The cost of a dwelling unit may not exceed Rs.20 lakh. In case, land is being acquired,
the land cost may be reckoned as margin money. Otherwise, cost of land should not be
included in the project cost.
Mode of refinance
Refinance is available under Automatic Refinance Facility (ARF) subject to ceiling of
Rs.15 lakh and Rs.5 lakh for renovation / repairs of loan amount per housing unit in case
of Commercial Banks / RRBs / SCBs / SCARDBs/ scheduled urban cooperative banks and
NEDFI. Financing Banks need to obtain prior sanction in respect of group proposals. Refinance
will be 90% of bank loan. The quantum of refinance will be 100% for SCARDBs, DRIP
districts, NER including Sikkim.

microFinance Initiatives
The SHG Bank Linkage Programme started as a pilot project in 1992 for credit linking 500 Self
Help Groups (SHGs) with banks with the objective of extending formal banking services to the
unreached rural poor by evolving a supplementary credit delivery strategy in a cost effective
manner. Today, it covers 22.38 lakh SHGs, making it the largest microFinance programme in the
world in terms of outreach and sustainability.

Innovations under SHG – Bank Linkage Programme

A. microEnterprise Promotion by SHGs - NABARD has initiated a pilot project in 9 select

districts , viz., Panchmahal (Gujarat), Kangra (Himachal Pradesh), Mysore (Karnataka),
Chandrapur (Maharashtra), Puri(Orissa), Ajmer (Rajasthan), Madurai(Tamil Nadu), Rae
Bareilly (Uttar Pradesh) and 24 North Parganas (West Bengal), in association with Marketing
And Research Team (MART) as the Technical Partner. The project will adopt the 3M Model
Approach developed by MART, wherein identified resource NGOs will act as micro Enterprise
Promotional agencies (mEPA) and assist capable SHG members to take up income generating
activities on a sustainable basis. Survey of villages and SHGs by NGOs has already
commenced.During 2005-06, a focussed and location specific micro-enterprise development
programme (MEDP) on skill upgradation and development for sustainable livelihoods for
members of matured SHGs was launched. The MEDP aims at facilitating quick inputs to
members of matured SHGs on technical skills in micro entrepreneurial skills in microenterprises,
basic entrepreneurial inputs and aspects covering markets.

B. Grain Banks and SHGs - A pilot project aimed at building synergy between the Grain Bank
approach with the SHG Bank Linkage Programme is implemented in the tribal areas of
Kalahandi district of Orissa state in association with an NGO and RRB. The partnering NGO
has been given the responsibility of promotion and capacity building of SHGs and
establishment and management of Grain Banks while the RRB provides loans against the stock
of food grains and cash savings of the SHGs. The project thus enables the poor to save in
time, raise resources against such savings and provide access to self managed, participative
food security system. Three Grain Banks have been established in Silet, Sikerguda and
Maltipadar tribal villages in two blocks of Kalahandi district, Orissa. Grant assistance of Rs
3.78 lakh was sanctioned for the project. So far, 29 SHGs have saved upto Rs.72, 350 and
2,580 kg in cash and kind, respectively So far Rs 0.475 lakh has been released under the
project. Encouraged by the success of the concept NABARD extended the pilot project in the
predominantly tribal areas of Chhattisgarh State. A grant assistance of Rs. 2.37 lakh has been
sanctioned for construction and establishment of 5 Grain Banks each in Mylibeda and
Merkatola villages of Bastar and Kanker districts involving SHGs, who mainly belong to Adivasi
Communities.

C. Rural volunteers as Book Writers :

NABARD has launched a pilot project for associating Local Rural Volunteers as Book
Writers to SHGs to improve the regularity / accuracy in the maintenance of books of accounts
and to explore the possibility of evolving a MIS between the SHGs and banks. A grant assistance
of Rs. 7.5 lakh has been sanctioned to cover the honorarium to be paid to book writers, cost of
their training and the stationery required for book keeping of SHGs. The project is being
implemented in 5 RRBs in two districts of Uttar Pradesh and three districts of Bihar. So far, 41
volunteers have been trained and are maintaining books of accounts of 502 SHGs linked to
Poorvanchal, Gomti and Pratapgarh RRBs in Uttar Pradesh.

D. Pilot Project on Processor Cards

The project envisages introduction of processor cards and branch automation for clients
like KCC holders and SHGs as also automation of book keeping among SHGs with a view to
reduce paper work, save time and maintain up-to-date books and improve the efficiency
of field workers. The project is testing for experiment for the acceptability and adoption
of IT in rural areas as also MIS needs in rural banks. In the first phase, project was launched in 5
branches of Sri Visaka Gramin Bank, Andhra Pradesh with grant assistance of Rs. 25 lakh. In the
second phase 5 branches of Krishna Gramin Bank, Karnataka have been selected for the project.
Grant of Rs.35 lakh has been sanctioned of which Rs.19.07 lakh has been released.

E. Pilot Project on ‘e-Grama’

With the aim of equipping and enabling villagers/ SHGs members access
information, NABARD during 2005-06 has partly funded the establishment of 13
Village Information Centres (e-grama) through an NGO in Davanagare district of
Karnataka. The technology integrated information networks cover various areas
like weather conditions, crop inputs, product prices, land records and other
useful information for the rural folk. Besides this, many add-on services like book
keeping of SHGs, DTP, scanning, etc., are also envisaged to be provided. The
NGO has facilitated setting up 50 centres including 13 with NABARD's assistance.
Commercial banks and RRB are extending necessary credit support to
entrepreneurs. Grant assistance of Rs. 2.11 lakh has been released by NABARD
during the year.
F. Financing Joint Liability Groups
A pilot project for streamlining credit flow to mid-segment clients using Joint
Liability Groups aimed at identifying collateral substitutes like peer pressure/
social collateral, even for lendings of a higher order was initiated by NABARD
during 2005-06. The project is now implemented through 8 RRBs and 1 PCARDB
located in diverse agro climatic region covering 8 States (Maharashtra, West
Bengal, Tamil Nadu, Madhya Pradesh, Bihar, Karnataka, Kerala, Assam) by
adopting a flexible approach and giving the partner banks enough freedom to
implement the project, keeping the ground realities and context in perspective.
During the year the participating banks provided credit support of Rs. 7.93 crore
to 565 groups. Studies undertaken in three states, viz., Kerala, Maharashtra and
West Bengal to understand the progress made in implementation of the JLG
project revealed that financing JLGs could emerge as an effective mechanism for
purveying credit to small traders, small/marginal and tenant farmers who cannot
offer physical collaterals to avail loans from banks.

Financing Rythu Mitra Groups

Rythu Mitra Groups have been promoted by the Govt. of Andhra Pradesh to bring
about holistic development in the lives of small, marginal and landless farmers
through collective action. The Groups are expected to serve as conduits to its
members for technology transfer, accessing markets and market information,
extension activities like soil testing, training and camps, etc. NABARD provides
resource and grant assistance for conducting training and capacity building of
different stakeholders. A pilot project for financing RMGs by banks was launched in 13
districts during 2005-06. Encouraged by the success, the project was extended to all
the districts of the states. During the year 12468 RMGs have been extended loan
amount of Rs.131.77 crore by 20 commercial banks, 16 RRBs and 9 DCCBs
participating in the project. A study of 67 groups from three districts was conducted
to assess the functioning of RMGs.

G. Social Security System for SHG Members

With a view to creating a community based social security system (i.e. provision of a package
of health insurance, life insurance etc for SHG households by paying premium generated
through discounts offered by service providers like grocery shop, cloth merchant etc in the
project area) for SHG members in rural areas, a pilot project has been sanctioned involving a
grant assistance of Rs.8 lakh in two villages covering 500 poor households from Betul district
of Madhya Pradesh. The project will be implemented through an NGO-Organization for
Awareness of Integrated Social Security (OASIS). Self Employed Groups (SEGs) from SHGs
would be formed by the NGO to provide various services involving selling of products at a
discount.

microFinance Development and Equity Fund (mFDEF)

The micro-Finance Development Fund (mFDF) maintained by NABARD has been redesignated
as micro-Finance Development and Equity Fund (mFDEF) and the quantum of fund has been
enhanced to Rs.200 crore. Besides being used for scaling-up of the SHG-Bank Linkage
21
programme and other micro-finance initiatives, the fund is being used for providing capital
support to MFIs. During the year an amount of Rs.11.35 crore was utilized from the fund for
MF related activities.
An Advisory Board consisting of representatives from RBI, commercial banks, professionals
with domain knowledge and NABARD met three times during the year. Based on its
recommendations, a draft legal framework for Micro-Finance Institutions (MFIs) has been
prepared and forwarded to GoI.
Watershed Development Programme
Watershed development has proved to be a comprehensive approach to enhance
productivity of dry land through conserving soil, rainwater and vegetation. NABARD has
been actively supporting Watershed Development Programmes.
Programme Phases
Watershed Development programme has two phases:
First - Capacity Building Phase (CBP) implemented through Watershed Organisation
Trust (WOTR)
Second - Full Implementation Phase (FIP) is taken up only after successful completion
of CBP.
Watershed development Programme – Progress as on 31 March 2006
Cumulative Disbursement : Rs. 29.40 crore
Capacity Building Phase : 427 projects with grant assistance of Rs. 21.01 crore
Full Implementation Phase : 140 projects
Impact of the Programme
 Improvement in drinking water availability
 Rise in ground water recharge, leading to increased irrigation and in turn increase in
agricultural production, productivity, crop diversification including dairy activity
 Improved local employment reducing distress migration
 Improvement in the condition of the land less, due to continuous wage availability
during project implementation and increased agricultural activity in the post project
period
 The demand for credit had gone up significantly and dependence on money lenders
reduced due to self help group activity.
 With strong community involvement, loan repayments have improved
 Secondary impact such as improved quality of life, housing, health and school
22
Watershed Development Fund
The GOI, set up the Watershed Development Fund (WDF) in NABARD in 1999-2000 with a
corpus of Rs. 200 crore contributed equally by GOI (Ministry of Agriculture) and NABARD.
Women & Development
Women constitute one third of the labour force. Various schemes for financing farm and
non-farm sector activities through banking system are available both to men and
women. In order to give focus to women in various developmental activities and to
increase their access to institutional credit, NABARD has formulated various
programmes:
A. Gender Sensitization Programmes
With the objective of facilitating internalization of gender concerns in credit as also to
improve the outreach of the banks in respect of women clients, NABARD has supported 402
gender sensitization meets/workshops conducted by the bankers at the district and state
level covering over 8000 bank personnel.

Support to Weaker Sections

NABARD has introduced special programmes for upliftment of the weaker sections of society
like the Small and Marginal Farmers, Scheduled Castes and Scheduled Tribes (SCs/STs) and
people living below the poverty line (BPL).

Support to Small and Marginal Farmers (SF & MF)

As per NABARD’s refinance policy for production credit, the banks are required to
earmark a certain percentage of their lending to small and marginal farmers.

Special Lines of Credit for Tribals

In consonance with the policy to step up credit to tribal population, a separate line of credit on
liberal terms known as Development of Tribal Population has been extended in predominantly
tribal areas. Short Term credit limits are also sanctioned to cooperatives for financing collection
and marketing of various types of minor forest produce by Scheduled Tribes.

SC/ST Action Plan

Investment credit is made available to the SC/ST population by identifying investment potential
and preparing a banking plan with allocation of credit to banks. NABARD provides 100%
refinance under the plan.

Tribal Development Fund

During 2005-06, NB has sanctioned 11 projects under TDF in the states of AP, MP,
Chattisgarh, Jharkhand, Manipur, Meghalaya, Orissa, Rajasthan, West Bengal & UT of
Dadra & Nagar Haveli with a total project cost of Rs.35.07 crore, involving 9900
families. State Govts. (Meghalaya & West Bengal) have been sanctioned loan assistance under
the project. The grant assistance released during the year was to the tune of Rs.51.80 lakh.

Adivasi Development Programme (Wadi Project)

Wadi’ (small orchard) project is implemented for upliftment of tribals in Gujarat and
Maharashtra with grant support from KfW, Germany. Two NGOs viz., DHRUVA & MITTRA,
promoted by BAIF Development Research Foundation, Pune act as the Principal Implementing
Agency in Gujarat and Maharashtra respectively. Under this Project, 13663 families have been
covered in Gujarat against the target of 10000 families. Through sustainable horticulture
production and social sector interventions, the project is expected to rehabilitate 14,000 families
and 1,000 landless women in Maharashtra against which 13,848 families have been covered as
on 31.03.06. Wadi Project has resulted in
A. Rise in employment opportunities
B. Reduction in migration
C. Increased production of fruits and cashew nuts
D. New avenues for processing activities
E. Enhanced entrepreneurial skill and empowerment of women
Swarnjayanti Gram Swarozgar Yojana (SGSY)
The GoI introduced the Swarnjayanti Gram Swarozgar Yojana (SGSY) in 1999 by
restructuring various Self-employment programmes viz. IRDP, TRYSEM, SITRA, DWCRA
etc. It envisages formation of SHGs by 'Swarozgaries' and financing them by banks in
different stages. It is a holistic scheme covering all aspects of self-employment such as
organisation of the poor into Self Help Groups, training, credit, technology,
infrastructure and marketing. The Central theme of the scheme is to bring every
assisted family above the poverty line by providing them income generating assets
through a mix of bank credit and government subsidy. The rural poor such as those with
land, landless labour, educated unemployed, rural artisans and disabled are covered
under the scheme.

The scheme is funded by the centre and the States in the ratio of 75:25 and is being
implemented by Commercial Banks, Regional Rural Banks and Co-operative Banks.
DRDAs, NGOs, Technical Institutions etc. in the district are involved in the process of
planning, implementation and monitoring of the scheme. NGO's assistance is sought in
nurturing of SHGs as well as in monitoring the progress of Swarozgaries. Besides
providing refinance to banks under the scheme, NABARD is a member of District, State
and Central level co-ordination committees constituted to review the implementation of
the scheme. NABARD is also a member of the Central Monitoring Committee on SGSY,
constituted by Ministry of Rural Development, GoI and convened by RBI to assess the
ground level operational problems in implementation of the scheme.
The total number of swarozgaries assisted stood at 59.83 lakh of which 30.10 lakh were
SHG members and 29.83 lakh individuals, since its inception.
26
Other Developmental Initiatives
Farm Mechanization Scheme
During the year 2005-06, NABARD decided to dispense with the practice of advising
banks, the names of individual makes and models of tractors and power tillers in the
light of the fact that banks have gained adequate experience in financing farm
equipment / machinery over a period of time. Banks are, therefore, at liberty to use
their commercial judgement in financing tractors / power tillers. As far as NABARD
refinance is concerned the tractors financed by banks should comply with the Minimum
Performance Standards (MPS) as stipulated by Govt. of India, Ministry of Agriculture and
the banks should certify such compliance.
Development of North Eastern Region – Special Package for NER
NABARD continued its policy of facilitating larger flow of credit to the NER and Sikkim by
granting relaxations to co-operative banks and RRBs operating in these areas. The
salient features of this policy followed during the year are given below:
Production Credit
The relaxations provided in the eligibility norms relating to NPAs for availing of ST credit
limits by co-operative banks and RRBs in NER remained unchanged during 2005-06.
Concessional rate of interest to SCBs (at the minimum level of 5.5% p.a.) on ST (SAO)
credit limits and (at 5.75% p.a.) for ST weavers’ finance as against interest rates ranging
between 5.5 and 5.75 per cent p.a. and 6 per cent p.a., respectively, charged in other
states. RRBs in NER were allowed to draw unrestricted and restricted refinance if the
percentage of NPAs did not exceed 17 and 30 as against 12 and 25 for the rest of the
country, respectively. Co-operative banks in NER were allowed to draw unrestricted
refinance if gross NPAs did not exceed 30 per cent as on 31 March 2005 or recovery of 50
per cent or more as on 30 June 2004 as compared to gross NPAs upto 20 per cent or
recovery exceeding 70 per cent in other parts of the country. Restricted refinance was
available to co-operative banks if their NPAs were between 30 and 40 per cent or
recovery was less than 50 per cent. For thrust areas and NFS activities, cent per cent refinance
was provided to all financial institutions.\

The rate of interest on refinance was fixed at the lowest slab of 6.5 per cent for all agencies and
for all activities in NER compared to the range of 6.5 and 7 per cent for
the rest of the country.

Pilot Scheme
The Pilot Scheme introduced during 2003-04 for accelerating the flow of credit to the
NER by routing it through Village Development Boards (VDB) in Nagaland was in
operation during 2005-06. Of the 25 VDBs identified for implementation of the scheme,
17 VDBs have availed of loan from the implementing bank, State Bank of India (SBI).
Government of Nagaland has proposed to enhance the pilot scheme to additional 25
VDBs.
Collaboration with Tata Tea
In order to accelerate development in NER, NABARD has taken initiative to collaborate
with private sector corporates and entered into a MoU with Tata Tea and Globally
Managed Services (GMS) in this context. The parties agreed and identified their role
perspective for projects: (i) Developing Boro design through training of Boro Women in
Tata Tea Industrial Institute, Routa and (ii) Fisheries and dairy projects in Hathikuli and
Borjon Tea Estate, Golaghat
Financial Sector Plan for NER
In order to improve financial inclusion in NER, RBI has constituted a Committee on
Financial Plan for NER in January 2006 under the Chairpersonship of Smt. Usha Thorat,
Deputy Governor, RBI. Managing Director, NABARD is one of the members of the
Committee.
Environmental Promotional Assistance
NABARD has recognized the need to identify the causes of deterioration of natural resources
and
various eco-systems to ensure sustainable development and to find out alternatives to tackle the
issues. It has spread awareness through demonstration and promotion of environment-friendly
alternatives and technologies. Accordingly it assists NGOs and other research organizations for
this purpose. It supports promotion of commercial ventures like vermicompost, biodynamic
fertilizers, bio-pesticides, etc. with credit linkage.
Farmers’ Club Programme
The Farmers’ Club (earlier called Vikas Volunteer Vahini) programme was conceptualized as an
experiment in social engineering reflecting NABARD’s concern for reducing the mounting
overdues at ground level. The programme propagates the five principles of Development
through Credit and aims at instilling better credit discipline among the rural clientele through a
body of successful rural borrowers called farmers’ clubs. Financial support is provided by
NABARD for opening and maintenance of clubs and for organizing various training programmes
under the aegis of farmers’ clubs. As an innovative measure, NABARD has initiated formation
of
farmers’ clubs through various bank branches, empowering them to hire technical services of
Krishi Vigyan Kendras (KVKs)/Agricultural Universities /NGOs. During 2005-06, 4312 clubs
were
launched. As on 31 March 2006, the programme had spread to 524 districts covering 40885
villages through 17976 clubs. Cumulative grant assistance of Rs. 6.65 crore was sanctioned for
Farmers’ club programme against which the disbursement was Rs.3.87 crore
28
Five Principles of “ Development through Credit”
A. Credit to be used in accordance with suitable methods of science and technology
B. Respect terms and conditions of credit
C. Work with skill to increase production and productivity
D. Save a part of the additional income created through credit
E. Repay installments on time so as to recycle credit
In addition to above, the role of Farmers’ Clubs has been enlarged to be development of farmers
through credit, technology transfer, awareness and capacity building.
Promotion of Bamboo Farming, Technology and Trade
NABARD continues to give pointed focus for development of Bamboo farming in tune
with the action plan prepared under the National Mission on Bamboo Technology and
Trade Development by GoI. The special initiative taken during the year includes
preparation of a policy document highlighting the requisite interventions in four broad
areas via policy and promotion, capacity building, financial assessment and state
specific strategy and Action plan. With a view to design a strategy for implementation of
Bamboo Development Programme a ‘National Consultative Meet on Bamboos was
organized by NABARD on 12 May, 2005 at HO, Mumbai. The Meet was attended by about
200 delegates across the country representing all important stakeholders like Planning
Commission, Ministry of Forest and Environment, National Mission on Bamboo
Application, INBAR, Bankers, Industries, NGOs and prominent training institutes like
CBTC and IPIRTI engaged in bamboo development. Based on the strategy envisaged in
the National Consultative Meet, NABARD has taken initiatives in advocating for State
specific Bamboo policy in Bihar, Himachal Pradesh, Karnataka, Kerala and Orissa.
District wise potential for Bamboo farming in states and its credit need for this sector
were also assessed in Potential Linked Credit Plans. NABARD will further collaborate
with INBAR and other partner agencies for promotion of bamboo farming and developing
bamboo based technology and trade.
In consonance with the action plan prepared by the National Mission on Bamboo
Technology and Trade Development, NABARD would be providing credit and promotional
support for pre-harvest, planting and post-harvest stages of bamboo cultivation. A
perspective plan to finance a nursery network involving investment outlay of Rs.1000
crore during the X plan period in the potential States was prepared.
Promotion of cultivation of Medicinal & Aromatic Plants (MACs)
Medicinal, Aromatic and Herbal Crops remained the focus activity through
consolidation of various initiatives undertaken by NABARD. Accordingly, regular
monitoring of the various schemes under National Medicinal Plant Board and State
Medicinal Plant Boards and financing of Medicinal, Aromatic and Herbal Crops were
29
undertaken at National and State level. A total of 61000 acre new area was covered
under MACs through credit linked subsidy scheme being implemented by NMPB since
2002-03. A total of Rs. 52.22 crore of subsidies has been sanctioned under 2024 schemes
in 25 states. A total of 26 MACs have come under the purview of cultivation in different
states of which 16 crops have been emerged under Commercial cultivation for the first
time.
The district-wise assessment of potential and credit requirement under different
Medicinal and Herbal crops has been done during the year for the first time. In addition
providing 100% refinance to all banks, MACs have been covered under AEZ also.
NABARD has assessed an annual credit potential of Rs. 500 crore in this sector. Keeping
in view the GoI’s decision to provide incentives to growers and industry in terms of
credit linked subsidy, the draft guidelines have been formulated by NABARD for making
the scheme operational. NABARD has also initiated dialogues with corporate houses such
as Reliance Life Sciences, Zandu Pharmaceuticals, Healthy Herbals, etc., to enable
stable market and remunerative prices for MACs grown by farmers. A National
Consultative Meet on Medical, Aromatic and Herbal Crops was organized in May 2004 by
NABARD at HO, Mumbai involving 160 stakeholders.
As a result of promotional measures taken by NABARD there has been a flow of credit of
Rs. 9974 lakh under Investment credit and Rs. 20000 lakh under production credit.
Bio-Fuels
Global demand for fossil fuel is currently rising at more than 2% per year, India ranks
sixth in the world in terms of energy demand accounting for 3.5% under Commercial
energy. India needs to import crude oil to the tune of 147 Million Metric tonnes per year
by 2006-07 involving a foreign exchange outgo of $15.7 Billion. In this context, Bio-Fuel
from Jatropha and other Tree Borne Oil Seeds (TBOs) as an alternative resource is
gaining importance globally and locally.
NABARD has issued detailed circular with three models to the Banking industry for
financing of Jatropha plantation. The Bank is also closely associated with the Ministry of
Rural Development and Ministry of Petroleum and Natural gas and National Oilseeds and
Vegetable Oil Development Board, being the stakeholders for promoting bio-diesel.
NABARD will support one lakh h. wastelands annually under Jatropha Plantation,
involving institutional finance to the tune of Rs. 200 crore.
Farm Innovation and Promotion Fund
To extend financial support for promoting various innovative initiatives being taken up
in the field of agriculture and related areas by the NGOs, Research Institutes,
Agriculture Universities, KVKs, Individuals, etc., NABARD created a Farm Innovation and
Promotion Fund, with an initial corpus of Rs.5.00 crore, out of its operating surplus.
30
NABARD has sanctioned a grant assistance of Rs.3.00 lakh from Farm Innovation and
Promotion Fund (FIPF) to Mahatma Phule Krishi Vidyapeeth Rahuri, District Ahmednagar,
for implementation of a project viz. "Demonstration of Fresh Water prawn (Scampi)
farming at Chalisbigha farm” through Agricultural Research Station, K. Digraj District -
Sangli Maharashtra. The objective of the project is to demonstrate fresh water prawn
(Scampi) farming technology to the farmers in salt affected soils. The technology
involved in this project has the potential of not only bringing back the wasteland to
productive use but also reclaim the same within 4-5 years. Two projects from
Chhattishgarh and Jharkhand each and one project from Karnataka and Meghalaya each
are in pipeline.
Rashtriya Sam Vikas Yojana (RSVY)
The Planning Commission, GoI formulated Rashtriya Sam Vikas Yojana (RSVY) for
development of 147 backward districts in 27 states of the country. The main objective
of the scheme is to address the problems of low agricultural productivity,
unemployment and to fill critical gaps in physical and social infrastructure. Rs. 15 crore
per district per year will be made available by GoI to the State Govt. from funds
available under Development and Reform Facility (DRF) on 100% grant basis. The
Planning Commission, GoI has entrusted monitoring of implementation of RSVY to
NABARD through DDMs /DDOs.
Price Stabilization Fund Scheme (PSFS)
Price Stabilization Fund Scheme was launched in April 2003. The objective of the Price
Stabilization Fund Scheme is to provide financial relief to the growers of tea, coffee,
rubber and tobacco, when the prices of these commodities fall below a specified level.
The scheme is implemented through the Price Stabilization Fund Trust in coordination
with the High Power Committee, Commodity Boards and NABARD.
A small farmer with operational holding of 4 hectare or less under tea, coffee, rubber or
tobacco with any proof towards land holding as acceptable to the respective Commodity
Board shall be eligible for membership under the scheme.
The PSF has been established with a corpus of Rs. 500 crores. GoI has so far released
Rs.432.88 crore and the deposits from growers amount to Rs.2.25 crore. For the present,
scheme will be operative for a period of 10 years commencing from April 2003. The
balance outstanding can be withdrawn by the grower including the Government's
contribution and the interest earnings.
When the prices fall below the lower bound of the band, the PSF Trust contributes
Rs.1000 to the PSF SB A/c of each member. When the prices remain within the band,
the PSF Trust contributes Rs.500 to the PSF SB A/c. of the member and the member also
contributes Rs. 500/- to his own PSF SB A/c. When the prices exceed the upper level of
the Band only the member contributes Rs.1000/- to his PSF SB A/c. The banks would
receive appropriate instructions from PSF Trust through Commodity Boards every year
regarding deposit and withdrawal.
31
No. of members enrolled upto 31.3.06 is as follows;
Rubber : 18,744
Coffee : 11,561
Tea : 11,883
Tobacco: 0
National level Commodity Exchanges - NABARD’s Participation
NABARD had equity participation in National Level Commodity Exchanges with a view to
enhancing the efficiency of agricultural commodities markets and improving the price
discovery mechanisms. It is expected that participation of NABARD in the equity of
commodity exchanges will facilitate integration of agriculture credit, securitization of
agricultural produce and futures markets, leading to more efficient price discovery of
farm produce. Accordingly, equity contribution in two national level commodity
exchanges – National Commodity Derivative Exchange (NCDEX) and Multi Commodity
Exchange (MCX) was made.
There is a need to evolve mechanisms to ensure that farmers get easy access to price
information (both spot and futures market rates). The National Commodity Exchanges,
particularly MCX and NCDEX are taking steps to integrate APMC markets to provide
market information to farmers on a real-time basis. There is a need to associate and
facilitate this process by enabling Farmers’ Clubs and SHGs to benefit from the above
initiative of commodity exchanges.
Agricultural Insurance
Agriculture Insurance Company of India Ltd. (AICI) was established in 2002 with the
authorized and paid up capital of Rs.1,500 crore and Rs.200 crore, respectively.
NABARD and General Insurance Company (GIC) have contributed 30 and 35 per cent,
respectively with four other Insurance Subsidiaries contributing 8.75 per cent each, to
the equity. One of the objectives for the formation of AICI was to act as the
implementing agency for the Government's 'National Agriculture Insurance Scheme'
(NAIS). The company has obtained Certificate of Registration from Insurance Regulatory
and Development Authority (IRDA).
NAIS is in operation since rabi 1999-2000 and is implemented by 23 states and 2 UTs. As
on 31 December 2005, a total of 199.69 lakh farmers have been covered under the
scheme. Farm Income Insurance Scheme (FIIS) was conceived to provide income
protection to the farmers by integrating the mechanism of insuring production as well as
market risks. During rabi 2003-04, the scheme was implemented on a pilot basis in 18
selected districts of 12 states for wheat and paddy crops covering 1.9 lakh ha. area. The
scheme was continued during kharif 2004 also covering 2.11 lakh ha. area of 2.35 lakh
farmers. The Government has withdrawn this scheme with effect from Rabi 2004-05
season.
32
Agri-Export Zones (AEZs)
60 AEZs covering 230 districts in 20 states were notified by the Agriculture & Processed
Food Products Export Development Agency (APEDA) for promotion of 35 identified crops.
A scheme for financing farmers by Commercial banks/cooperative banks/Regional Rural
Banks in Agri-Export Zones (AEZs) was introduced by NABARD for enabling increased
production of commercial crops and creating marketing avenues for farmers. During the
year 2005-06 refinance to the tune Rs.552.35 crore has been disbursed by NABARD.
Agro-Processing
Considering the perishable nature of Agri products and also the high levels of wastage
due to lack of proper processing facilities, Government of India has identified food
processing as a thrust area and accorded high priority for development of this sector.
Pursuant to the efforts made by GoI, NABARD has taken several initiatives by
implementing schemes for food processing sector. As against the production of over 150
million tonnes of fruits & vegetables per annum, over 2% of agri produce is processed
when compared to 60 to 70% in developed countries. A one day National level
Consultative Meet on Fruit and Vegetable Processing was organized at HO, Mumbai on 07
December 2005 with the objectives of providing a platform for all stakeholders involved
in the fruit and vegetable sector to come together and to draw up a road map for the
promotion of this sector. About 250 delegates representing various stakeholders across
the country (including 75 from financial institutions) and representatives of FAO and
USAID attended the meet. Important recommendations emerged during the consultative
meet include setting up of a Standing Forum comprising of NABARD, EXIM Bank, Ministry
of Food Processing Industry (MoFPI), GoI and APEDA for promotion and development of
Fruit and Vegetable Processing Sector. Recommendations have also been made for
modification of the legislations to facilitate smooth functioning of various unorganized
small scale units under this sector. It has also been proposed to set up a dedicated fund
of Rs.1000 crore each for infrastructure development & market development for Agro
processing sector.
Hon'ble Finance Minister in his Budget speech for the year 2006-07 has announced
creation of a separate window in NABARD with a corpus of Rs.1000 crore for financing
Food Processing Industry especially for Agro-processing infrastructure and Market
Development.
Other developmental initiatives
a. Scheme for Capacity Building for Adoption of Technology
NABARD has been in the forefront in facilitating adoption of new technology by
farmers/agri-preneurs, through various institutions/agencies like banks, corporates,
NGOs, SHGs, Farmers’ Clubs etc. With a view to widening the horizon of new agrotechnology,
NABARD conceptualized and launched a special scheme titled Capacity
Building for Adoption of Technology (CAT ), in December 2004.
33
During the year 2005-06, a total of 1591 farmers were taken on exposure visits across 20
states, the expenditure therefore being Rs 21.79 lakh. The exposure programmes were
conducted in collaboration with some select Research Institutes like ICAR, CPCRI,
Livestock Research Station, Agri Research Stations, KVKs, Agriculture Universities,
Farmers Clubs and NGOs etc.
During the exposure visits, farmers were exposed to technologies such as integrated pest
management, organic farming, banana tissue culture, rain water harvesting, livestock
management, improved rice cultivation technology (SRI), integrated farm management,
poly house technology, pest control through bio technology, vermi compost by drum and
NADEP technology, etc.
Other initiatives
NABARD has been taking initiatives for designing, formulating and supporting
appropriate schemes in keeping with the requirements of agriculture and rural sector.
These include:
 Scheme for setting up of Agri-clinics and Agri-business centers by agricultural
graduates through financial assistance from banks to augment extension services for
agriculture. As on 31 March 2006, 10047 agricultural graduates have been trained by
MANAGE through its nodal training institutes and 3071 units were set up. The banks
have extended loans to 1095 units amounting Rs.3656 lakh during the year 2005-06.
0 Scheme for purchase of land for agricultural purposes for making small and marginal
farmers’ holdings economically viable
 Popularizing Central Sector Capital Subsidy scheme for Investment Promotion for
developing non-forest waste lands
 The Pilot Project for Integrated Development of Backward Blocks was launched in 10
backward blocks of 5 states (Gujarat, Karnataka, Tamil Nadu, Andhra Pradesh &
Maharashtra) on a pilot basis. In view of the encouraging performance, the scheme
has been extended to 40 more blocks, 25 of them in 5 newly identified States.
 Grant assistance to ITC for a project called “Diagnostics for e- choupal” aimed at
bringing out an IT based Practical Handbook and diagnostic tools for production and
protection of major crops in Madhya Pradesh in collaboration with experts from
Agricultural Universities. More than 5200 e-choupals have been established covering
31000 villages in 6 States – Andhra Pradesh, Karnataka, Madhya Pradesh,
Maharashtra, Rajasthan and Uttar Pradesh.
Institutional Development
Credit is a critical factor in development of agriculture and rural sector as it enables
investment in capital formation and technological upgradation. Hence strengthening of
RFIs, which deliver credit to the sector, has been identified by NABARD as a thrust area.
Various initiatives have been taken to strengthen the cooperative credit structure and
34
the Regional Rural Banks by NABARD, so that adequate and timely credit is made
available to the needy.
DAP- MoU
As a result of various institutional developmental, capacity building supports, etc., there has
been considerable improvement in the profitability performance of the banks in ST structure.
a) Support for Revitalization of RRBs:
NABARD provided assistance in the implementation of the recapitalisation plan of the
Government of India for RRBs. Accordingly, 187 RRBs out of 196 RRBs have been
extended recapitalisation support of Rs.2171.09 crore as on 31 March 2006.
b) Amalgamation of Regional Rural Banks (RRBs)
In order to make the new entities vibrant rural credit institutions, NABARD, in consultation with
the Sponsor banks, also finalized organizational structures, other related issues in the
postamalgamation
scenario including the inter-se seniority of the employees and officers of the
amalgamated RRBs. After amalgation and merger of RRBs, the total number RRBs as on 31
March
2006 remained 133.
Cooperative Development Fund (CDF)
Cooperative Development Fund has been constituted for supporting various developmental
activities like infrastructure development for Primary Agricultural Credit Societies (PACS),
computerization, purchase of vehicles for recovery work, human resource development,
publicity of Kisan Credit Card (KCC) Scheme, etc. As on 31 March 2006, disbursements from
the
fund aggregated to Rs.61.44 cr.
Organisation Development Intervention (ODI) & related initiatives
As at the end of 31 March 2006, ODIs have been taken up in 155 RRBs (pre-amalgamated
position), 15 SCBs and 60 DCCBs. Besides, conduct of ODI, 25 Exposure Visits for staff of
RRBs and 08 exposure visits of staff of DCCBs / SCBs were organized to best practice
areas to gain insights into their working and internalize the same. 50 persons from NGOs
were also exposed to good working RRBs / DCCBs / other institutions.
During the year 2005-06, 62 ODIs in RRBs and SCBs/DCCBs had been conducted. The
expenditure was met out of R&D fund. Under this initiative, potentially viable
cooperative banks, not complying with the provisions of Section 11(1) of BR Act (AACS)
are to be supported with conduct of ODI.
Besides, conduct of ODIs a few programmes on Sensitization meets, exposure visits and
programmes like Ridge to Valley were accomplished during 2005-06 by various Regional
Offices/ Training Establishments.
Other Institutional Development initiatives
A. Providing financial assistance to cooperative banks and RRBs for establishment of
Technical, Monitoring and Evaluation (TME) cells
B. Providing financial support to training institutes of cooperative banks and RRBs
C. Instituting Annual Best Performance Award to motivate cooperative institutions for better
performance
35
Recommendation of Vaidyanathan Committee :
The major observations, conditionalities for assistance and recommendations of the Task
Force are as under :
A. The Co-operative Credit Structure (CCS) is impaired in governance,
managerial and financial fronts and hence, needs to be revived and
restructured
B. The financial re-structuring shall be contingent on commitment and
implementation of legal and institutional reforms by State Governments.
C. Financial assistance will be available for
a. wiping out accumulated losses,
b. covering invoked but unpaid guarantees given by State Governments,
c. to attain stipulated Capital to Risk Weighted Asset Ratio (CRAR),
d. retirement of government share capital and
e. assistance for technical support.
IMPLEMENTATION OF VAIDYANATHAN COMMITTEE
A. Status on revival of Short Term Cooperative Credit Structure (STCCS):
The Task Force on Revival of Rural Co-operative Credit Institutions set up under the
Chairmanship of Prof. A. Vaidyanathan submitted its report on STCCS to Government of
India in February 2005. GoI accepted the recommendations in principle and after
extensive discussions with the State Governments, finalized a Revival Package
encompassing the financial assistance as well as legal and institutional reforms.
Financial assistance to the STCCS would cover cleansing of the Balance Sheets, support
for minimum capital requirements, developing uniform accounting system and
computerization. Funding the financial package, estimated at Rs.13596 crore will be
shared by the Central Government, State Governments and CCS based on origin of loss
and existing commitments. Gujarat, Madhya Pradesh, Maharashtra, Orissa, Andhra
Pradesh and Rajasthan Governments have so far agreed , in principle, to implement the
revival package. A National Level Implementing and Monitoring Committee under the
Chairmanship of the Governor, Reserve Bank of India, has been setup to guide and
monitor the revival package. NABARD as the implementing agency, devised and field
tested formats for special audit of PACS to arrive at the exact extent of accumulated
losses. A batch of 220 trainers from Maharashtra has been trained to guide the auditors
in taking up special audit.
B. Status on revival of Long Term Co-operative Credit Structure (LTCCS)
On submission of the report on STCCS, the Task Force was advised by GoI, to suggest an
implementable action plan for revival of Long Term Cooperative Credit Structure also.
The Task Force, submitted its Draft Report to GoI on 28.12.2005. The report was placed
on the public domain soliciting suggestions from all concerned agencies and individuals.
Responses on the draft report have been received from NCARDB’s Federation, a few
36
banks and individuals. The report is expected to be finalized and submitted to GoI after
factoring in the responses received.
Supervision
Apart from the role of a Development Bank, NABARD undertakes supervisory functions in
respect
of Cooperative Banks and RRBs under the Banking Regulation Act. The objective of
NABARD’s
supervision is to assess financial and operational soundness and managerial efficiency of these
banks and their compliance with banking regulations.
NABARD undertakes on-site inspection of RRBs, SCBs and DCCBs which is statutory in
nature.
Off-site surveillance of the cooperative banks and RRBs was introduced in 1998-99 as support to
on-site inspection.
NABARD has constituted a Board of Supervision as an Advisory Committee to the Board of
Directors of NABARD, which provides guidance/suggestions in respect of policies and on
matters
relating to supervision and inspection.
Inspection of SCARDBs and apex non-credit cooperatives are undertaken on a voluntary basis.
Number of Banks under supervision –
State Cooperative Banks 31(Scheduled 16)
District Central Cooperative Banks 366(Licenced-73)
Regional Rural Banks 133 (consequent on amalgamation)
State Co-operative Agriculture
and Rural Development Banks 20
NABARD Consultancy Services (NABCONS)
Technology is changing at a rapid pace. High productivity and quality standards have to be
achieved in a viable and sustainable manner. It is imperative in this context that a great deal of
professional advice is needed to make Indian agriculture efficient and competitive. For this,
there is a great need for professional advice from a competent and cost effective consultancy
service provider. Various Government and developmental agencies would also like to evaluate /
modify their programmes based on critical studies by credible agencies. To meet such felt
needs, NABARD started a consultancy wing in July 2002. To give further impetus and focus,
this
wing has been registered on 17 November 2003 as a separate company called “NABARD
Consultancy Services (NABCONS)”. In delivering its services and advice, the vast experience
and
data pool of NABARD is being made use. Its services are utilized by various agencies including
Government of India, State Governments, Banks, International Bodies, Corporate entities and
individual in wide fields and purposes like agricultural and rural development, especially
multidisciplinary projects, banking, institutional development, infrastructure,
training, monitoring & evaluation, etc.
It has already undertaken as many as 200 assignments with a business of Rs.16.60 crore in a
short
span of about 3 years. Several clients have appreciated and immensely benefited from this
initiative.
37
Sources and Uses of funds
The total assets of NABARD as on 31 March 2006 were Rs.67605 crore and the owned funds
were
Rs.23,679 crore. While the loans and advances of NABARD outstanding as on 31 March 2006
increased by Rs.9,733 crore, the increase in outstanding in respect of Bonds and Borrowings and
RIDF deposits aggregated Rs.8,415 crore.
The gross income of NABARD amounted to Rs.3, 936 crore as on 31.03.2006 and the income
before tax was Rs.1, 171 crore. From the year 2001 02, NABARD’s surplus income is taxable
and
surplus after tax for the year 2005-06 works out to Rs. 857 crore. Out of surplus available for
appropriation, a sum of Rs. 30 crore has been transferred to National Rural Credit (Long Term
Operations) Fund to be utilized to provide refinance for investment purposes and Rs.10 crore has
been transferred to NRC (Stab) Fund. Further, contribution to the extent of Rs. 450 crore has
been made to the Special Reserve Fund created in terms of section 36 (i) (viii) 0f Income tax
Act , 1961 apart from appropriation to the other funds.
Risk weighted capital adequacy ratio of NABARD as at the end of March 2006 was 34.44% as
against the 9% stipulated by RBI. There were no Non Performing assets in the books of
NABARD as
on 31 March 2006.
NABARD’s resource base comprises of its capital, NRC (LTO) and NRC (Stabilization) funds,
RIDF
Deposits, borrowings from GoI, general line of Credit from RBI, Foreign currency loans and

Market Borrowings.
History-

NABARD was established on the recommendations of Shivaraman Committee, by an act of

Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural
Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural
Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and
Development Corporation (ARDC). It is one of the premiere agencies to provide credit in rural
areas

Role-

NABARD:

1. serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas
 2. takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc.
3. co-ordinates the rural financing activities of all institutions engaged in developmental
work at the field level and maintains liaison with Government of India, State
Governments, Reserve Bank of India (RBI) and other national level institutions
concerned with policy formulation
4. undertakes monitoring and evaluation of projects refinanced by it.

NABARD's refinance is available to State Co-operative Agriculture and Rural Development

Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs),
Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate
beneficiaries of investment credit can be individuals, partnership concerns, companies, State-
owned corporations or co-operative societies, production credit is generally given to individuals.

NABARD has its head office at Mumbai, India

NABARD operates throughout the country through its 28 Regional Offices and one Sub-office,
located in the capitals of all the states/union territories. Each Regional Office[RO] has a Chief
General Manager [CGMs] as its head, and the Head office has several Top executives like the
Executive Directors[ED], Managing Directors[MD], and the Chairperson. It has 336 District
Offices across the country, one Sub-office at Port Blair and one special cell at Srinagar. It also
has 6 training establishments.

NABARD is also known for its 'SHG Bank Linkage Programmed' which encourages India's
banks to lend to self-help groups (SHGs). Because SHGs are composed mainly of poor women,
this has evolved into an important Indian tool for microfinance. As of March 2006 2.2 million
SHGs representing 33 million members had to been linked to credit through this programmed..[4]

NABARD also has a portfolio of Natural Resource Management Programmers involving diverse
fields like Watershed Development, Tribal Development and Farm Innovation through dedicated
funds set up for the purpose.

Rural Innovation-

NABARD's role in rural development in India is phenomenal. National Bank For Agriculture &
Rural Development (NABARD) is set up as an apex Development Bank by the Government of
India with a mandate for facilitating credit flow for promotion and development of agriculture,
cottage and village industries. The credit flow to agriculture activities sanctioned by NABARD
reached Rs 1,574,800 million in 2005-2006. The overall GDP is estimated to grow at 8.4 per
cent. The Indian economy as a whole is poised for higher growth in the coming years. Role of
NABARD in overall development of India in general and rural & agricultural in specific is
highly pivotal.
Through assistance of Swiss Agency for Development and Cooperation, NABARD set up the
Rural Infrastructure Development Fund. Under the RIDF scheme Rs. 512830 million have been
sanctioned for 2,44,651 projects covering irrigation, rural roads and bridges, healthy and
education, soil conservation, water schemes etc. Rural Innovation Fund is a fund designed to
support innovative, risk friendly, unconventional experiments in these sectors that would have
the potential to promote livelihood opportunities and employment in rural areas. The assistance
is extended to Individuals, NGOs, Cooperatives, Self Help Group, and Panchayati Raj
Institutions who have the expertise and willingness to implement innovative ideas for improving
the quality of life in rural areas. Through member base of 250 million, 600000 cooperatives are
working in India at grass root level in almost every sector of economy. There are linkages
between SHG and other type institutes with that of cooperatives.

The very purpose of RIDF is to promote innovation in rural & agricultural sector through viable
means. Effectiveness of the program depends upon many factors, but the type of organization to
which the assistance is extended is crucial one in generating, executing ideas in optimum
commercial way. Cooperative is member driven formal organization for socio-economic
purpose, while SHG is informal one. NGO have more of social color while that of PRI is
political one. Does the legal status of an institute influences effectiveness of the program? How
& to what an extent? Cooperative type of organization is better (Financial efficiency &
effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs.

Recently in 2007-08, NABARD has started a new direct lending facility under 'Umbrella
Programmed for Natural Resource Management' (UPNRM). Under this facility financial support
for natural resource management activities can be provided as a loan at reasonable rate of
interest. Already 35 projects have been sanctioned involving loan amount of about Rs 1000
million. The sanctioned projects include honey collection by tribal’s in Maharashtra, tussar value
chain by a women producer company ('MASUTA'), eco-tourism in Karnataka etc.