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NABARD: full form, functions and exam facts
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NABARD stands for the National Bank for Agriculture and Rural Development. It is the apex development financial institution for agriculture, small industries and rural development in India. It was established on 12 July 1982 under the NABARD Act, 1981, on the recommendation of the B. Sivaraman Committee, and its head office is in Mumbai. It took over the agricultural credit and refinance functions that the RBI and the Agricultural Refinance and Development Corporation had earlier handled.
Three types of function
- Credit (refinance). It mainly lends to banks and institutions, not directly to farmers. Regional rural banks, state cooperative banks and district central cooperative banks borrow from NABARD to fund their rural lending.
- Development. It promotes projects and institutions: the Self Help Group-Bank Linkage Programme (since 1992), farmer producer organisations, watershed development and rural infrastructure.
- Supervision. It inspects and supervises state cooperative banks, district central cooperative banks and RRBs, while the RBI remains the regulator.
Funds it manages
- Rural Infrastructure Development Fund (RIDF), started in 1995-96. Banks that miss their priority sector lending targets can deposit the shortfall here, and it funds rural roads, irrigation and bridges for state governments.
- Financial Inclusion Fund and other funds for digital and cooperative sector development.
- Support for the Kisan Credit Card scheme, which it launched as a model scheme in 1998.
Ownership
NABARD was jointly owned by the RBI and the Government of India at the start. Today the Government of India holds 100% after the RBI's stake was transferred in 2019.
NABARD vs SIDBI
| Point | NABARD | SIDBI |
|---|---|---|
| Focus | Agriculture and rural development | Micro, small and medium enterprises |
| Established | 1982 | 1990 |
| Head office | Mumbai | Lucknow |
How bank exams ask about it
Common stems: "NABARD was established in", "on the recommendation of", "NABARD's head office", "which institution supervises RRBs and cooperative banks" and "RIDF is maintained by". It is also a recruiting body: NABARD Grade A is a separate exam, listed in the bank exams list. For awareness papers, see banking awareness.
Frequently asked questions
Does NABARD lend directly to farmers?
Mostly no. It refinances banks and cooperatives, which lend to farmers. It does give some direct support for projects and institutions.
Is NABARD a regulator?
It supervises rural cooperative banks and RRBs, but the RBI is the main banking regulator.
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