Must Knows

NABARD: All you need to know

[ecis2016.org] Read on to know about the various roles and functions undertaken by NABARD, a financial institution formed by the Indian government to promote rural development and sustainable agriculture by providing financial and non-financial solutions.

The Indian government formed NABARD to improve financial operations, promote sustainable agriculture, and increase rural development. The functions of this financial institution include the provision of financial and non-financial solutions for rural development. 

What is NABARD?

National Bank for Agriculture and Rural Development translates to the NABARD full form. It was set up as the country’s major regulatory agency for rural banking and is considered the country’s top developmental finance organisation, formed and controlled by the Indian government.

This bank intends to give and regulate loans to rural communities. It seeks to bring wealth and prosperity by providing opportunities to the rural population to lead prosperous and sustainable lives. 

NABARD has several responsibilities in agriculture and financial development, including policymaking, planning, and operations. NABARD efficiently fulfils these tasks by supporting and growing man-made enterprises in rural regions, such as agriculture, cottage industries, other small-scale industries, and rural crafts, to enhance infrastructure and job possibilities for residents. It helps in the development of wealth by providing such opportunities to the rural population. This automatically translates to the generation of wealth and prosperity in the country. 

The National Bank for Agriculture and Development Act of 1981, was used to establish this bank by the Indian government. National Bank for Agricultural and Rural Development is the country’s primary agricultural and rural development bank.

The establishment of NABARD

NABARD was established on July 12, 1982. The bank has been following the outlines and maintaining the regulations on which it was established. It was built by the government under the doctrines of the National Bank for Agriculture and The Rural Development Act, 1981, to provide sustainable employment to the rural regions of India. 

Primary functions of NABARD

The National Bank for Agriculture and Rural Development performs four primary duties to stay up with its responsibilities. 

Credit services

The National Bank for Agriculture and Rural Development which is the NABARD full form, conducts credit services as the principal provider of credit facilities in rural regions. The bank performs these tasks by providing, regulating, and monitoring credit flow in rural areas of the country through small and micro-lending institutions and financial entities. 

Monetary functions

NABARD has several client banks and organisations that aid and assist. The National Bank for Agriculture and Rural Development (NABARD full form), offers loans to various client banks and institutions. These client banks and microfinance structures aid in rural projects such as handicraft industries, food parks, processing units, projects done by artisans and craftsmen, etc., through fulfilling financial activities.

Supervisory responsibilities 

As part of this responsibility, the NABARD undertakes supervisory activities, which include keeping an eye on all client banks, institutions, and credit and non-credit societies that are involved in rural development projects.

Developmental functions

To adhere to its fundamental objective of fostering sustainable agriculture and promoting rural development, the National Bank for Agriculture and Rural Development, or NABARD, undertakes several development activities. The NABARD’s developmental duties include assisting rural banks in developing action plans for developmental initiatives.

The National Bank for Agriculture or Rural Development, which is the NABARD full form, effectively fulfils all of the following duties and tasks, and has a significant impact on the country’s agricultural success and rural development.

Major roles of NABARD

The National Bank for Agricultural and Rural Development, NABARD full form,  serves numerous vital tasks as the primary regulatory organisation responsible for the important functions to be achieved in the rural areas. 

Investment and Rural Development loans

The National Bank for Agriculture and Rural Development (NABARD) offers investment and production loans for multiple rural growth activities and projects that would bring rural development and prosperity.

This will allow the small business to get the funding required in the initial stages. As this bank serves as the focal point or primary funding source for all of these development programmes, it is up to it to guarantee that the funds and necessary investment are directed to the projects being developed. 

Coordinates financial efforts in rural areas 

NABARD’s role is to coordinate all financial efforts in rural areas with all organisations involved in development projects. It must keep in touch with all key institutions, including the –

  • Indian government,
  • The Reserve Bank of India,
  • State governments where they are set up, and
  • Any other major institutions participating in ongoing agriculture or rural development projects.

It acts as a bridge between the large financial institutions of the country and the other small sector banks and microfinance institutions operating in the rural development sector. It fulfils these duties seamlessly and provides synchronising efforts to promote rural growth and development. 

Strengthen loan delivery systems

NABARD works to strengthen the loan delivery system’s absorptive ability and develop a strong institution through monitoring, devising plans for rehabilitation programmes, restructuring credit institutions, training employees, etc.

Refinance

The National Bank refinances all financial institutions that fund development projects for Agricultural and Rural Development. NABARD is the country’s designated bank for all agriculture and rural development projects happening across the country.

Funding and financing schemes become the major roadblocks in various sectoral developments; thus, the importance of building on it and NABARD fulfils this responsibility.

Keeps track of client institutions 

After the bank has refinanced a rural development activity, the response by NABARD is to keep track of all client institutions. It gives training to all those working for rural development or intend to work for it in the future. 

Manages Natural Resource Portfolio

In addition to all of these responsibilities, the National Bank for Agriculture and Rural Development also manages the Natural Resource Management Programmes portfolio.

Assist self-help groups

NABARD also assists Self-Enable Groups (SHGs) through its SHG bank linkage initiative, which will help SHGs expand their operations in rural regions and contribute to rural development.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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