In the light of recommendations of the committee of review arrangements for institutional credit for agricultural and rural development the govt. of India set up the National Bank for Agricultural and Rural Development.

National bank for agricultural and rural development was established on July 12, 1982, by merging the agricultural credit development of RBI and three other development banks.

It was actually as an agency for promoting integrated rural development and to provide all sorts of production and investment credit for agricultural and rural development.

NABARD has a dual role to play- As an apex institution and as a refinance institution.

It has inherited its apex role from RBI i.e. it is performing all the functions performed by RBI with regard to agricultural credit.

At the same time, NABARD has taken over the functions of ARDC and thus provides refinance facilities to all banks and financial institutions lending to agriculture and rural development.

Objectives of NABARD:

Following are the objectives of NABARD:

A) To give undivided attention and purposeful direction in integrated rural development.

B) To act as a centerpiece for the entire rural credit system at the national level.

C) To act as a provider of supplemental funding to rural credit.

D) To arrange for investment credit to small industries, village and cottage industries, handicrafts and other rural craft.

E) To improve the credit distribution system by institution-building, rehabilitation of credit institutions and training of bank personnel.

F) To provide refinance facilities of SLDBs, SCBs, RRBs and commercial for development purposes in rural areas.

G) To inspect, monitor and evaluate project getting refinance from the NABARD.

H) To coordinate the working of different agencies engaged in development work in rural areas at the regional level, and to have liaison with the government of India, RBI, state govt. and other policy-making institutions at the national level.

Different Functions of NABARD:

The NABARD is essentially a development bank for promoting agricultural and rural credit development.

Its main functions are to provide refinance credit to the state Co-operative Banks, the Regional rural banks and other financial institutions as may be approved by the RBI.

The main functions of NABARD are:

I) It serves as a refinancing institution for all kinds of production and investment credit to agriculture, small scale industries, cottage and village industries, handiworks and rural crafts and real artisans and other economic activities with a view to developing mixed rural development.

II) It gives short-term, medium-term and long term credits to state co-operative banks, regional rural banks, LBDs and other financial institutions approved by RBI.

III) It gives long term loans to state govt. to enable them to contribute to the share capital of Co-operative credit societies.

IV) It gives long term loans to any institution approved by the central govt. or give to the share capital or invest in securities of any institution’s interests with agriculture and rural development.

V) It has the efficiency to inspect RRBs and co-operative banks, other than primary Co-operative banks.

VI) It has the capacity to co-ordinate the actions of central and state govt. the preparation commission and other all India and state-level institutions committed with the development of small scale industries, village and cottage industries, rural crafts, industries in the tiny and decentralized sectors, etc.

VII) It has a Research and development fund to promote research in agriculture and rural development, to express and design projects and programs to suit the demands of different areas and to meet special activities.

VIII) It giving efforts to change and open into the fields of equipment leasing, merchant banking, venture capital, and mutual funds.




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