Role and Function NABARD

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas.

NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premier agencies to provide credit in rural areas.RBI sold its stake in NABARD to the Government of India, which now holds 99% stake.

 Mission

• Promoting sustainable and equitable agriculture and rural development through effective credit support, related services, institution building and other innovative initiatives.
• In pursuing this mission, NABARD focuses its activities on:
• Credit functions, involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes
• Development functions, concerning reinforcement of the credit functions and making credit more productive
• Supervisory functions, ensuring the proper functioning of cooperative banks and regional rural banks

Role and Function of NABARD:

In discharging its role as a facilitator for rural prosperity NABARD is entrusted with

• Providing refinance to lending institutions in rural areas
• Bringing about or promoting institutional development and
• Evaluating, monitoring and inspecting the client banks

Besides this pivotal role, NABARD also:

• Acts as a coordinator in the operations of rural credit institutions
• Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development
• Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development
• Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development
• Acts as regulator for cooperative banks and RRBs

Microfinance and NABARD :

For a better reach of microfinance program a continuous check of the status, progress, trends, qualitative and quantitative performance comprehensively is required. Thus the Reserve Bank of INDIA and NABARD has laid out certain guidelines in 06-07 for the commercial banks, Regional Rural Banks and Cooperative Banks to provide the data to RBI and NABARD about the progress of the microfinance program. There are three aspects on which the data was collected, savings of self-help groups with banks, loan disbursed by banks to self-help groups default by self-help group’s repayment of the loans taken from banks. Banks also provides data regarding loans given by banks to the microfinance institutions.