Nabard aman

NABARD

BY AMAN SHARMA (4152013) Dept. of Business Administration National Institute of Kurukshetra

GENESISOF NABARD

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 insistence 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.

https://www.nabard.org/

The Committee’s interim report, submitted on 28 November 1979, outlined the need for a new organisational device for providing undivided focus to credit related issues linked with rural development.

Its recommendation was formation 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. 5,000 crore as on 31 March 2016. Consequent to the revision in the composition of share capital between Government of India and RBI, the Government of India today holds Rs. 4,980 crore (99.60%) while Reserve Bank of India holds Rs. 20.00 crore (0.40%).


MISSION"Promote sustainable and

equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives."

HEAD OFFICE DEPARTMENTS

1. Accounts Department2. Business Initiatives Department3. Central Vigilance Cell4. Corporate Communications Department5. Corporate Planning Department6. Department of Economic Analysis & Research7. Department of Financial Inclusion and Banking

Technology8. Department of Information Technology9. Department of Premises, Security and

Procurement


Cont…

10. Department of Refinance11. Department of Storage and Marketing12. Department of Subsidiaries and Strategic

Investments13. Department of Supervision14. Farm Sector Development Department15. Finance Department16. Human Resource Management Department



17. Risk Management Department18. Secretary’s Department19. State Project Department20. Institutional Development Department21. Inspection Department22. Farm Sector Policy Department 23. Law Department24. Micro Credit Innovations Department25. Off Farm Development Department26. Rajbhasha Prabhag


MAIN FUNCTIONS OF NABARD

DEVELOPMENTA

DIRECT FINANC

E

SUPERVISORY

REFINANCE

FINANCIALDirect Finance

Direct finance to agriculture shall include short, medium and long term loans given for agriculture and allied activities directly to individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual farmers without limit and to others (such as corporate, partnership firms and institutions) up to Rs. 20 lakh.

SCHEMES OF DIRECT FINANCE

a) Loans to Warehouses, Cold Storage and Cold Chain Infrastructure

b) Credit Facilities to Marketing Federations

c) Rural Infrastructure Development Fundd) Financing and Supporting Producer

Organisationse) Loans for Food Parks and Food

Processing Units in Designated Food Parks

A) Loans for Food Parks and Food Processing Units in Designated Food Parks

Taking this agenda further, the Finance Ministry, in 2014, announced setting up of a Special Fund of Rs. 2,000 crore in NABARD for providing direct term loans at affordable rates of interest to Designated Food Parks (DFPs) and food processing units in the DFPs.

The objectives of the Fund are: To provide impetus to development of the food

processing sector on a cluster basis in the country

To reduce wastage of agricultural produce To create employment opportunities especially

in rural areas. https://www.nabard.org/

CONT. The Fund provides Term loans for: Development/establishment of all infrastructure

required in the DFPs Augmentation/modernization/creation of additional

infrastructure in the DFPs Setting up of individual food processing units or

any other unit that is established for supporting the operations of the food processing units within the DFPs; and

Modernization of existing processing units in the DFPs resulting in process technology up-gradation, automation, increased efficiency, improvement in product quality, reduction in costs, etc.

CONT… Eligible Borrowers• State Governments• Entities promoted by State

Governments or Government of India• Joint Ventures• Special Purpose Vehicles (SPVs)• Cooperatives• Federations of Cooperatives• Farmers’ Producer Organizations• Entrepreneurs etc

B) Credit Facilities to Marketing Federations

Marketing federations and cooperatives are playing a very important role in agribusiness and value/supply chain management of the various agricultural commodities. Major activities undertaken by these institutions are:

• Procurement of agricultural commodities including milk• Aggregation, storage and value addition in few select

commodities like milk, etc. • Marketing The marketing operations by these federations and

cooperatives require seasonal and timely short-term credit facility to support their day-to-day operations.


Eligible Institutions

The following institutions will be eligible for funding under Credit Facility to Federations (CFF)

I. State/Central Govt. Agricultural

Marketing Federations, CorporationsII. Dairy Co-operatives/FederationsIII. Agriculture Marketing Co-

operatives/FederationsIV. Registered Companies

Eligibility CriteriaI. State/Central Govt. Agricultural Marketing

Federations, Corporations It must have been established or constituted by or under any Central Act, or State Acts and major share of the paid up capital is held or controlled by the Central / State GovernmentEarned profit during the last three years and not having accumulated lossesEntities with poor financials will be considered based on the merit of the proposal and if backed with Government Guarantee

Cont..II. Dairy and Agriculture Co-operatives and

Federations

It must be a registered bodyEarned profit during the last three years

and not having accumulated lossesProfessional Management and democratic

setupAudit of accounts is regularNo history of defaults in repayment of

loans

Cont….III. Registered Companies It must be a registered body under

Companies ActEarned profit during the last three years

and not having accumulated lossesProfessional ManagementThe minimum credit rating of the

promoting company should be at 'AA' by CRISIL or CARE

Should not have a history of defaults in repayment of loans

CONT..Nature of Loan Short-term credit facility (less than 12 months) for

meeting working capital requirement. The limit can be operated for 12 months and the outstanding at the end of 12th month is required to be repaid.

Eligible ActivitiesProcurement and marketing of agricultural

commoditiesProcessing and marketing of agricultural

commoditiesProcurement, processing and marketing of milkSupply of Agricultural inputs including animal feed https://

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Cont… Quantum of Loan and Margin/ borrower contribution Loan and Margin/Borrower's contribution will be as per the

guidelines issued by RBI from time to time. The quantum of loan depends upon the type of beneficiary and nature of loan as given below:

I. State/Central Govt. Agri Marketing Federations, Corporations 100% for the procurement operations under decentralised

procurement operations of food grains and Minimum Support Price (MSP) Scheme

90% for other marketing interventions


CONT…II. Dairy Co-operatives/Federations/ Agri.

Marketing Co-operatives/Federations and Registered Companies

Maximum of 75% of the working capital

assessment. The following method will be adopted for assessing the working capital :

WC = Total Current Assets - Current liabilities

other than bank borrowings and finance *75%. Borrower will bring in minimum of 25% margin.


Cont..Rate of interest The rate of interest will be as per the rate decided by the

Asset-Liability Management Committee (ALCO) of NABARD. Further, interest is dependent upon the type of borrower, type of security offered, availability of guarantee, type of project, credit rating of the entity and the prevailing market conditions. Interest will be due and paid at monthly rests for short term loans. Interest rate is linked to the risk rating.

Security for Loan The security requirement will depend upon the rating of the

borrowing entity, type of operations etc., and as per requirements/stipulations laid down by RBI from time to time. The primary security would be hypothecation of assets, stocks, receivables, and book debts. Additional collaterals in the form of unencumbered assets, fixed deposits, guarantees etc., will be insisted depending on the borrowing entity and purpose of limit.

Cont..Appraisal Fee Appraisal fee/upfront fee

charged from the promoter will be specific to the proposal and the maximum fee would be restricted to 1% of the project cost.

Short Term Refinance

Long Term Refinance

Eligible schemes for Refinance

under Off Farm Sector

RefinanceNABARD refinancing is a way for banks to get funding in respect of term loan for both Farm

Sector and Non - Farm Sector activities for a period of 3-15 years and is released to only eligible institutions viz. SCARDBs, SCBs, RRBs or Scheduled commercial banks or any other

financial institution, approved by RBI as defined under Section 25 of NABARD Act.

Eligible schemes for Refinance under Off-Farm Sector

Automatic Refinance Scheme (ARF) The various schemes formulated over the years have been

categorized into five distinct and compact schemes. A. Composite Loan Scheme (CLS) Under this scheme, refinance is given to meet the block

and /or working capital requirements of small/micro enterprises. Maximum refinance available is Rs. 10 lacs per unit.

B. Integrated Loan Scheme (ILS) Under this scheme, refinance is given to block capital

and working capital for one operating cycle. Maximum refinance available is Rs. 15 lacs per borrower.

CONT…C. Self-Employment Scheme for Ex-servicemen (SEMFEX) The scheme has been in operation since 15 January 1988. SEMFEX is

specially designed to provide a comprehensive package of credit for encouraging ex-servicemen to undertake agricultural and allied activities or to set up off-farm units in rural areas to earn their livelihood and lead a dignified life. NABARD provides refinance assistance under Automatic Refinance Facility (ARF) to eligible banks for a wide spectrum of manufacturing, processing and service sector activities under RNFS (Investment Credit).

D. Soft Loan Assistance for Margin Money (SLAMM) The scheme is to provide financial assistance to prospective

entrepreneurs who have the requisite talent and skill of entrepreneurship but lack necessary monetary resources to meet the margin requirements stipulated under relevant refinance schemes of NABARD.

CONT…E. Small Road and Water Transport Operators

(SRWTO) Under this scheme, financial assistance is provided for

acquisition of transport vehicles, which are to be used for transportation of farm produce/industrial products to rural/urban marketing centers, including passenger transport vehicle and water transport units. Margin money assistance will be extended on a very selective basis, up to 10% of the cost of the vehicle.

Rural Housing Housing in the rural areas, for both agriculturists and non-

agriculturists, serves both business as well as dwelling needs, thereby leading to overall rural development. NABARD is giving refinance (investment credit) to eligible banks to support rural housing.

CONT…Renewable Energy The Ministry of New and Renewable Energy (MNRE),

Government of India and the Jawaharlal Nehru National Solar Mission (JNNSM) are working earnestly to address India’s energy security challenges. In order to achieve this objective, the MNRE has launched a capital cum interest subsidy scheme for creation of off-grid, decentralised solar powered energy harvesting devices through application of photo voltaic technology. These devices will be used for purposes of lighting, heating, etc. at the level of domestic and mini commercial applications. NABARD is the nodal agency for assessing feasibility and providing refinance for eligible projects.

DEVELOPMENTAL

Institutional DevelopmentFarm Sector

i. Farm Sector Development Department (FSDD)

ii.Farm Sector Policy Department (FSPD)

Off Farm SectorFinancial InclusionMicro Credit InnovationResearch & DevelopmentCBS To Co-Operative Banks

A) Institutional Development

More than 50% of the rural credit is disbursed by the Co-operative Banks and RRBs. NABARD is responsible for regulating and supervising the functions of Co-operative banks and RRBs. In this direction NABARD has been taking various initiatives in association with Government of India and RBI to improve the health of Co-operative banks and Regional Rural Banks.

Who is it for ?• Rural Credit Cooperatives• State Cooperative Banks (StCBs)• Central Cooperative Banks (CCBs)• Primary Agricultural Credit Societies (PACS)• State Cooperative Agriculture and Rural Development Banks

(SCARDBs)• Primary Cooperative Agriculture and Rural Development Banks

(PCARD


B) Financial Inclusion the Government of India constituted a

“Committee on Financial Inclusion” under the Chairmanship of Dr. C. Rangarajan. The Committee submitted its final report to Hon'ble Union Finance Minister on 04 January 2008.

The Committee recommended setting up of two funds - Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF). Both these Funds have since been merged into a single Fund, the Financial inclusion Fund (FIF). The FIF is administered by an Advisory Board constituted by Govt. of India and maintained by NABARD.


Cont… Sources of Funds The contribution to FIF is from the interest

differential excess of 0.5% in respect of deposits placed by banks under RIDF and STCRC, which is credited to FIF w.e.f. 01 April 2012.

Additional Information

Monthly UpdateFormats

Guidelines on FIF

SUPERVISORY

Objectives of Supervision

Supervisory Process

Credit Monitoring Arrangements (CMA)

Board of Supervision (for SCBs, DCCBs and RRBs)

Other Initiatives

Penalties imposed on supervised entities

Latest Updates

A) Supervision Section 35(6) of the Banking Regulation Act, 1949, empowers

NABARD to conduct inspection of State Cooperative Banks (StCBs), Central Cooperative Banks (DCCBs) and Regional Rural Banks (RRBs).

In addition, NABARD has also been conducting periodic inspections of state level cooperative institutions such as State Cooperative Agriculture and Rural Development Banks (SCARDBs), Apex Weavers Societies, Marketing Federations etc., on a voluntary basis.

Objectives of Supervision To protect the interest of present and future depositors To ensure that the business conducted by these banks is in

conformity with the provisions of the relevant Acts/Rules, regulations/Bye-Laws To ensure observance of rules, guidelines, etc., formulated and

issued by NABARD/RBI/Government To examine the financial soundness of the banks andhttps://

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B) Board of Supervision (BoS) (for SCBs, CCBs and RRBs)

The Board of Supervision (BoS) (for StCBs, DCCBs and RRBs) has been constituted by NABARD under Section 13(3) of NABARD Act, 1981 as an Internal Committee to the Board of Directors of NABARD. The broad powers and functions of the Board of Supervision are as under:

Giving directions and guidance in respect of policies and on matters relating to supervision and inspection, reviewing the inspection findings and suggesting appropriate measures

Reviewing the follow-up action taken by Department of Supervision (DoS) on matters of frauds and internal checks and control

Identifying the emerging supervisory issues in the functioning of cooperative banks / RRBs such as recovery, investment portfolio, credit monitoring system, management practices, frauds, etc.

Suggesting necessary follow-up measures for improving the functioning of supervised banks

Suggest measures for strengthening supervisory mechanismhttps://www.nabard.org/


GOVT. SPONSORED SCHEMES

FARM SECTOR

OFF FARM SECTOR

FARM SECTOR SCHEMESDairy Entrepreneurship

Development SchemeRural GodownsSolar SchemesNational Livestock Mission

A) Dairy Entrepreneurship Development Scheme

(DAHD&F), GoI launched a pilot scheme titled “Venture Capital Scheme for Dairy and Poultry” in the year 2005-06.

The main objective of the scheme was to extend assistance for setting up small dairy farms and other components to bring structural changes in the dairy sector.

During a mid-term evaluation of the scheme, DAHD&F decided to make some key changes to the scheme, including changing its name to Dairy Entrepreneurship Development Scheme (DEDS).

The revised scheme has come into operation with effect from 1 September 2010.


Objectives of the schemeTo promote setting up of modern dairy farms

for production of clean milk To encourage heifer calf rearing, thereby

conserving good breeding stock To bring structural changes in the

unorganised sector so that initial processing of milk can be taken up at the village level itself

To upgrade the quality and traditional technology to handle milk on a commercial scale

To generate self-employment and provide infrastructure mainly for unorganised sector

Who can benefit from this scheme?Farmers, individual entrepreneurs, NGOs, companies,

groups of organised and unorganised sectors, etc. Groups of organised sector include Self-help Groups (SHGs), dairy cooperative societies, milk unions, milk federations, etc.

An individual will be eligible to avail assistance for all the components under the scheme but only once for each component

More than one member of a family can be assisted under the scheme provided they set up separate units with separate infrastructure at different locations.

The distance between the boundaries of two such farms should be at least 500 metres.

PREVELLING FRAMEWORK OF SCHEME

B) Solar SchemesAt present, to promote the use of solar energy, two capital linked subsidy schemes of Ministry of New and Renewable Energy (MNRE), GoI, ie. Solar Photovoltaic Water Pumping systems and MNRE Lighting Scheme 2016 are operated through NABARD.

A. MNRE Lighting Scheme 2016 MNRE,GoI has launched the MNRE Lighting Scheme -2016 to

support LED based systems w. e. f. 29.2.2016 . Loan sanctioned from 29 February 2016 and upto 31 March 2017 can be considered eligible for subsidy under the scheme. Under the scheme, subsidy support will be available only for 6 models of LED based lighting systems and 6 models of Solar Home Systems (Solar Power Packs-DC/AC models).Subsidy under the scheme is available only for solar systems that are procured from empanelled manufacturers/entrepreneurs by MNRE,GoI .

Who can benefit from the scheme Individuals, group of individuals, SHGs, JLGs, NGOs,

Trusts,Farmers’ Clubs, Registered Farmers Producer Organisations. Private/Public Limited Companies/Corporates will not be eligible. https://

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CONT….B. Capital Subsidy Scheme for promoting Solar Photovoltaic

Water Pumping systems for Irrigation and other purposesMNRE,GoI has launched a new scheme to support 30000 solar

pumping units per year with revised parameters which is effective from 3 November 2014. Main objective of the scheme is to replace diesel pumpsets with solar pumpsets as also to reduce dependence on grid power. The solar pumpsets are environment-friendly and offer tremendous benefits to farmers. They involve very low operating cost and provide uninterrupted power supply to farmers enabling increase in agriculture production and income. Subsidy under the scheme is available only for solar systems that are procured from empanelled manufacturers/entrepreneurs by MNRE,GoI for solar water pumping programme.

Who can benefit from the scheme Individuals, group of individuals, SHGs, JLGs, NGOs, Farmers’

Clubs, Farmers Producer Organisation, Farmers Producer Company. Private/Public Limited Companies/Corporates are not eligible.


C) Rural GodownsA network of rural godowns will enable small farmers to

enhance their holding capacity in order to sell their produce at fair prices and avoid distress sales. Accordingly, Grameen Bhandaran Yojana, a Capital Investment Subsidy Scheme for Construction/Renovation of Rural Godowns was introduced in 2001-2002.

Objectives of the SchemeCreation of scientific storage capacity with allied

facilities in rural areas to meet the requirements of farmers for storing farm produce, processed farm produce and agricultural inputs

Promotion of grading, standardisation and quality control of agricultural produce to improve marketability

Prevention of distress sale immediately after harvest by providing the facility of pledge financing and marketing credit


Cont…. Who can benefit from this scheme?

IndividualsFarmers/Group of farmers/growersPartnership/Proprietary firmsNon-Governmental Organisations (NGOs)Self-Help Groups (SHGs)Companies & CorporationsCo-operativesLocal Bodies other than Municipal

CorporationsFederations


D) National Livestock MissionNational Livestock Mission is an initiative of the

Ministry of Agriculture and Farmers Welfare. The mission, which commenced from 2014-15, has been designed with the objective of sustainable development of the livestock sector.

NABARD is the subsidy channelizing agency under

Entrepreneurship Development & Employment Generation (EDEG) component of National Livestock Mission. This includes:

Poultry Venture Capital Fund (PVCF)Integrated Development of Small Ruminants and

Rabbit (IDSRR)Pig Development (PD)Salvaging and Rearing of Male Buffalo Calves

(SRMBC) https://www.nabard.org/

Cont… Eligible financial institutions:

Commercial BanksRegional Rural BanksState Cooperative BanksState Cooperative Agriculture and

Rural Development BanksOther institutions eligible for

refinance from NABARDhttps://www.nabard.org/

OFF FARM SECTOR

Credit Linked Capital Subsidy Scheme

Weavers Package


THANK YOU

Nabard aman

Economy & Finance