In 2022, the rural population in India constituted 64.13% of the total population, as reported by the World Bank’s compilation of development indicators sourced from officially recognized channels. It is important to note that the rural population plays a crucial role in shaping India’s socioeconomic structure, preserving its cultural identity, and fostering comprehensive development.
It is crucial to tackle challenges and actively promote sustainable development in rural areas to secure the well-being and advancement of the entire nation. Keeping that in mind, the government of India established NABARD (National Bank for Agriculture and Rural Development) on 12th July 1982. The primary aim of the NABARD bank scheme is to promote rural development and sustainable agriculture in the nation.
To understand more about NABARD, and its features and functions, let’s go through it in detail!
A Bried History Of NABARD
The National Bank for Agriculture and Rural Development (NABARD) is a legal body formed under the National Bank for Agriculture and Rural Development Act, 1981. It came into existence by taking over the agricultural credit roles of the RBI and the refinancing functions of the Agricultural Refinance and Development Corporation (ARDC).
The main office of NABARD is in Mumbai, and it operates through 31 regional offices, 4 training establishments, and 414 district development managers. The organization aims to contribute to the nation’s development through financial and non-financial support, innovations, technology, and institutional growth in rural areas. Its development strategies primarily target villages by backing various industries.
Types Of NABARD Schemes
Here are some of the types of NABARD schemes for rural development:
Farm Sector:
- New Agricultural Marketing Infrastructure (AMI) and sub-scheme of ISAM
- Agri Clinics and Agri-Business Centres Scheme (ACABC)
- Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity
- Interest Subvention Scheme
Off-Farm Sector:
- Composite Loan Scheme (CLS)
- Integrated Loan Scheme (ILS)
- Self-Employment Scheme For Ex-Servicemen (SEMFEX)
- Soft Loan Assistance for Margin Money (SLAMM)
- Small Road and Water Transport Operators (SRWTO)
- Special Credit Linked Capital Subsidy Scheme (SCLCSS)
- Stand-Up India
Resource Mobilization:
- Long-Term Irrigation Fund (LTIF)
- Pradhan Mantri Awaas Yojana – Gramin (PMAY-G)
- Swachh Bharat Mission (SBM)
- Micro Irrigation Fund (MIF)
- Dairy Infrastructure Development Fund (DIDF)
- Fisheries and Aquaculture Infrastructure Development Fund (FIDF)
Natural Resource Management:
- Watershed Development Fund (WDF)
- Tribal Development Fund (TDF)
- Farm Sector Promotion Fund (FSPF)
Interest Subvention:
- Kisan Credit Card (KCC) Scheme
- KCC Saturation Drive
- Kisan Bhagidari Prathmikta Humaari
- Ghar Ghar KCC Abhiyan
Main Objectives Of NABARD Schemes
The NABARD bank scheme has two primary goals. They are as follows:
Encouraging Sustainable Agricultural Development:
NABARD strives to promote agricultural development through sustainable farming practices, meaning they can be maintained over the long term without harming the environment. The scheme, therefore, may promote practices that facilitate water conservation, organic farming, and so on.
Fostering Inclusive Rural Development:
NABARD is dedicated to carrying out fair and comprehensive development in rural areas. This involves ensuring that the benefits of economic growth, financial services, and infrastructure development are accessible to all segments of the rural population, particularly those who are marginalized or economically disadvantaged.
Key Features Of NABARD Schemes
Some of the key features of NABARD schemes for rural development are mentioned below:
Credit Delivery System:
The scheme employs credit delivery systems or programs, such as the Kisan Credit Card (KCC) scheme to make credit easily accessible to farmers. Such systems play an important role in promoting sustainable rural development, economic growth, and empowering communities in rural India.
Designed To Offer Financial Support:
The scheme is specifically designed to offer help to various institutions, including farmers, rural entrepreneurs, and agricultural cooperatives. This support can come in the form of loans, credit facilities, targeted development programs, and more.
High Focus On Sustainable Agriculture:
The NABARD refinance scheme supports sustainable agricultural practices for protecting the environment. By incorporating ways like reducing harmful chemicals, promoting biodiversity, optimizing land and water, and encouraging climate-resilient farming practices, the scheme ensures that sustainable practices benefit a wide range of farmers.
Encourages Technology Adoption & Innovation:
The scheme also recognizes the importance of technology adoption and innovation in driving overall rural development. To encourage and support this idea, NABARD has taken several initiatives and implemented schemes to promote the use of advanced farming techniques, modern types of machinery, and innovative solutions.
Capacity & Skills-Building Programs:
One of the key features of the NABARD scheme for rural development is that it conducts capacity-building programs, workshops, and training sessions to create awareness and build the technical skills of farmers and rural entrepreneurs. Such programs focus on distributing as much information as possible about modern farming methods, the best agricultural technologies, and more.
Ensures Inclusive Growth:
It plays an important role in financial inclusion by supporting initiatives such as the Self-Helf Group (SHG) Bank Linkage Program, empowering rural households through microfinance. The organization actively works towards inclusive growth by ensuring that the benefits of development extend to marginalized and vulnerable sections of society.
Major Functions Of NABARD Schemes
NABARD has 3 types of functions that touch almost every aspect of rural progress. They are as follows:
Financial Functions:
Acting as a refinancing agency, NABARD bank schemes ensure credit availability for farmers and rural entrepreneurs by refinancing institutions like commercial banks and regional rural banks. It also backs cooperative banks, agribusiness projects, and microfinance institutions. Beyond traditional banking, the scheme also invests in developmental projects, technology adoption, and innovation, thus, sticking to its commitment to holistic rural and agricultural development.
Developmental Functions:
NABARD supports sustainable agricultural practices by funding and launching projects on organic farming, water conservation, land optimization, and more. It also invests in rural infrastructure development, including irrigation systems and roads, through initiatives like RIDF (Rural Infrastructure Development Fund). Additionally, capacity-building programs and inclusive growth initiatives contribute to the overall socioeconomic progress in rural areas.
Supervisory Functions:
Alongside its developmental and financial roles, NABARD carries out some crucial supervisory functions to ensure the stability and efficiency of rural development. This includes some mandatory inspections and audits of State Cooperative Banks (StCBs), Regional Rural Banks (RRBs), and District Central Cooperative Banks (DCCBs). These assessments help NABARD to evaluate the financial health and overall performance of banks and other institutions. Based on the findings of the inspection, NABARD offers guidance and recommendations for improvement.
Latest Interest Rate Of NABARD Schemes
| Particulars | Interest Rates |
| Short-Term Refinance Assistance | |
| State Cooperative Banks for financing crop loans | 4.5% |
| DCCBs directly financing for crop loans | 4.5% |
| RRBs for financing crop loans | 4.5% |
| Commercial Banks/RRBs in respect of their finance to PACS towards crop loans | 4.5% |
| StCBs/RRBs – Conversion of Short Term – crop loans into Medium Term loans (The interest rate for ultimate beneficiaries is 3% lower than the rate charged by banks, with a minimum interest rate set at 8.10%) | 8.10% |
| Direct Landing | |
| State Governments | (Bank rate – 1.50)% |
| State Government Corporation (with State Govt. Guarantee) | (Bank rate – 1.50)% |
| Entities promoted by State/Central Government owned/assisted (without State Govt. Guarantee) | PLR + Risk premium |
| Other entities | PLR + Risk premium |
| Food Processing Fund | |
| State Governments | (Bank rate – 1.50) % |
| Entities promoted by State Governments (with Govt. Guarantee) | (Bank rate – 1.50) % |
| Entities promoted by State Governments (without Govt. Guarantee) | PLR + Risk premium |
| Other entities | PLR + Risk premium |
Frequently Asked Questions
Some notable credit schemes for farmers encompass the Kisan Credit Card (KCC) Scheme, the Rural Entrepreneurship Development Program (REDP), and the Dairy Entrepreneurship Development Scheme (DEDS).
Individuals and organizations can access NABARD bank schemes through diverse financial institutions, cooperatives, and NABARD’s regional offices. Details about specific schemes are typically accessible on the official NABARD website.
NABARD, the National Bank for Agriculture and Rural Development, is the main authority overseeing regional rural banks and cooperative banks in India. It is entirely owned by the Ministry of Finance, Government of India.
NABARD follows the Banking Regulation Act of 1949. Section 35(6) of this act grants NABARD authority to inspect State Cooperative Banks (StCBs), District Central Cooperative Banks (DCCBs), and Regional Rural Banks (RRBs), collectively known as NABARD’s Supervised Entities.
NABARD’s tagline is “Gaon Badhe toh Desh Badhe”, highlighting the belief that the progress of villages contributes to the advancement of the entire nation. This aligns with NABARD’s focus on supporting industries in villages through its development policies.
