NABARD

Q: Discuss NABARD(National Bank for Agriculture and Rural Development)

A:NABARD was set up with an initial capital of 100 crore. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 March 2015, stood at 5000 crore with Government of India holding 4,980 crore (99.60%) and Reserve Bank of India 20.00 crore (0.40%).

Q: How this BANK came into being.

A:The bank 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). NABARD was dedicated to the service of the nation by the late Prime Minister Smt. Indira Gandhi on 05 November 1982.

Q:What is mission of NABARD.

A:Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

Q: What are functions of NABARD.

A:Refinance and direct finance.

Q:Discuss Refinance.

A:Production Credit Department (PCD) deals with short term refinance facilities, for various types of production, marketing and procurement activities, being provided to client institutions, as detailed below:

Short Term (Seasonal Agricultural Operations)

Refinance is provided for production purposes at concessional rate of interest to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs) by way of sanction of credit limits. Each withdrawal against the sanctioned credit limit is repayable within 12 months.

Short Term Refinance to RRBs, PSBs and CCBs (directly) for financing PACS for their Seasonal Agricultural Operations

A new refinance product for financing of PACS through PSBs & RRBs, whereever Cooperative Banks are weak or not in a position to lend to PACS adequately, was introduced during last year. (2011-12)

Short Term ( Others )

The ST ( Others ) limit would consist of different purposes viz. ST- Agriculture and Allied Activities, ST - Marketing of crops, ST- Fisheries Sector,ST- Industrial Cooperative Societies (other than weavers), ST- Labour Contract and Forest Labour Cooperative Societies including collection of Minor Forest produce. ST- Rural artisan including weavers members of PACS/LAMPS/FSS, ST- Purchases, Stocking and Distribution of Chemical Fertilisers and other Agricultural Inputs on the basis of bank wise RLP for respective purposes. The limit is sanctioned to SCBs and RRBs.

MT Conversion.

NABARD provides relief to farmers whose crops are damaged due to natural calamities, by way of conversion of current short term agricultural loans into medium term loans and rephasement / reschedulement of existing MT (Conversion) loans. Consolidated limit will be sanctioned to RRBs and SCBs in respect of eligible DCCBs.

ST (Weavers)

Refinance support is available under ST (Weavers) as under :

Working Capital requirement of Primary/Apex/Regional Weavers Coop Society - through State Coop Banks/DCCBs

Working Capital requirement of Primary Weavers Coop Society – through Scheduled Commercial Bank

Working Capital requirement of State Handloom Development Corporation – through Scheduled Commercial Banks & State Cooperative Banks

Working Capital and Marketing requirement of Individual Weavers, Handloom Weavers Groups, Master Weavers, Mutually aided Coop Societies, Societies outside Coop fold and Producer Group Companies – through Scheduled Commercial Banks & RRBs

Q: Discuss long term loans of NABARD.

A: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.This is a long-term refinance facility. The credit is normally provided for a period of 3 to 15 years. It is intended to create income generating assets in the following sectors:

Agriculture and allied activities

Artisans, small scale industries, Non-Farm Sector (Small and Micro Enterprises), handicrafts, handlooms, powerlooms, etc.

Activities of voluntary agencies and self help groups working among the rural poor

Eligible Institutions

The Institutions Eligible for Refinance are :

State Co-operative Agriculture & Rural Development Banks (SCARDBs)

Regional Rural Banks (RRBs)

State Co-operative Banks (SCBs)

Commercial Banks (CBs)

State Agricultural Development Finance Companies (ADFCs)

Scheduled Primary Urban Co-operative Banks (PUCBs)

North East Development Finance Corporation (NEDFC)

Non-Banking Financial Companies (NBFCs)

Purposes :

Farm Sector :

Agriculture and allied activities such as minor irrigation, farm mechanisation, land development, soil conservation, dairy, sheep/goat rearing, poultry, piggery, plantation/horticulture, forestry, fishery, storage and market yards, bio-gas and other alternate sources of energy, sericulture, apiculture, animals and animal driven carts, agro-processing, agro-service centres, etc.

Non-Farm Sector :

Artisans, Small & Micro Enterprises, handicrafts, handlooms, powerlooms, etc

Loan Period :

The loan period is upto a maximum of 15 years

Refinance Window :

Automatic Refinance Facility (ARF) :

Automatic Refinance Facility (ARF) will be extended to the Commercial Banks/State Coop Banks/ Regional Rural Banks/Primary Urban Coop Banks/ADFCs/NEDFi/NBFCs without any upper ceiling on quantum of refinance, bank loan or TFO for all kinds of projects under Farm Sector (FS) & Non Farm Sector (NFS). However, ARF will be extended to the SCARDBs for projects with TFO up to 50.00 lakh for all kinds of projects under Farm Sector (FS) and Non- Farm Sector (NFS).

Pre-sanction Procedure :

In case, any bank intends to avail refinance under pre-sanction procedure, they may submit projects to NABARD for project based lending (Subject to Appraisal & Prior Sanction by NABARD ).

Extent of Refinance :

The extent of refinance will be upto 100% of eligible bank loans depending upon the purpose, location of the investment and agency applying for refinance.

Criteria for Refinance :

Technical Feasibility of the project

Financial viability and bankability

Organisational arrangements for credit supervision

Ultimate Borrowers :

Although refinance is provided to SCARDBs / SCBs / CBs / RRBs / ADFCs / PUCBs / NEDFC the ultimate borrowers of investment finance may be individuals, proprietory/partnership concerns, companies, state-owned corporations or co-operative societies.

Interim finance :

SCARDBs are being extended interim finance in order to enable them to tide over the temporary liquidity problem, for a period of three months, which can be converted into regular refinance.

Q: What are eligible refinance schemes.

A:Automatic Refinance Scheme (ARF)

The various schemes formulated over the years have been categorized into five distinct and co.mpact schemes.

Composite Loan Scheme (CLS)

Under this scheme refinance is given to meet the block and /or working capital requirements of small/micro enterprises. Max. refinance of 10 lakh per unit.

Integrated Loan Scheme (ILS)

Under this scheme refinance is given to block capital and working capital for one operating cycle. Max. Refinance of 15 lakh per borrower.

Self Employment Scheme for Exservicemen (SEMFEX)

The scheme has been in operation since 15 January 1988 which is specially designed to provide a comprehensive package of credit for encouraging ex-servicemen to undertake agricultural and allied activities or to set up non-farm units in rural areas to earn their livelihood for leading 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).

Soft Loan Assistance for Margin Money (SLAMM)

The scheme is to provide financial assistance to the prospective entrepreneurs who have the requisite talent and skill of entrepreneurship but lack necessary monetary resources to meet the margin requirements stipulated under relevant NABARD refinance schemes.

Small Road and Water Transport Operators (SRWTO)

Under this scheme the facilities 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, both agriculturist and non-agriculturists, combine the business as well as dwelling needs and thereby leads to overall rural development, NABARD is giving refinance (investment credit) to the eligible banks.

Renewable Energy

While addressing India’s energy security challenges, Ministry of New and Renewable Energy (MNRE), Government of India and the Jawaharlal Nehru National Solar Mission (JNNSM). 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 for the purpose of lighting, heating, etc. at the level of domestic and mini commercial applications. NABARD is the nodal agency for giving feasibility and Refinance for eligible projects.

Q: What is Rupay KISSAN CREDIT CARD.

A: Kisan Credit Card--NABARD, in January, 2013 set up Special Project Unit- Kisan Credit Card (SPU-KCC) with a mandate for encouraging cooperative banks and Regional Rural Banks across the country to issue Rupay KCC debit cards. The core objective of the unit is to facilitate issuance of cards by these banks through guidance, co-ordination with National Payment Corporation of India (NPCI), interaction with sponsor banks of RRBs and cooperative banks. The overarching goal is to develop cash-less eco system by enabling the farming community to avail all new banking facilities at par with urban area of the country. The SPU undertakes policy formulation, capacity building and networking with the various stake holders to achieve the above objectives.

The new KCC guidelines specify that all KCC customers should have the facility of withdrawal through ATM / Debit cards. NABARD, with a view to facilitate early action in this direction, has already floated schemes providing financial support to RRBs and cooperative banks for issuing these cards.