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What is NABARD? What are Some of its Major Direct Finance Schemes?

February 26, 2018

What is NABARD? What are Some of its Major Direct Finance Schemes?

NABARD i.e. National Bank for Agricultural and Rural Development is a Mumbai-based specialized Indian bank that was established on the recommendations of B. Sivaraman Committee who wanted to implement the National Bank for Agriculture and Rural Development Act 1981.

When NABARD was set up in 1982, it replaced the Agricultural Refinance and Development Corporation (ARDC), Agricultural Credit Department (ACD), and Rural Planning and Credit Cell (RPCC) of the RBI.

Significance of NABARD

NABARD has been of great importance in bringing about all kinds of rural and social innovations. It’s always working on ways to improve the cottage industry, village industry, and small-scale industry across the nation.
The following are some of the main roles of NABARD:

  • To provide financial help to the rural economy
  • To promote various developmental activities in the rural areas
  • To provide training to the institutions working in the domain of rural development

NABARD Direct Finance Schemes

The following are some of the major NABARD direct finance schemes:

  1. Loans for Food Processing Parks and Units
    NABARD was provided Rs. 2,000 crores by the Reserve Bank of India during FY15 to provide credit to the food parks aka agro-processing units. Under this, eligible projects get loans up to 95% of the project amount for tenures up to 7 years
  2. Rural Infrastructure Development Fund (RIDF)
    RIDF aims at providing affordable credit service to the state governments and the institutions governed by them. Under this scheme, eligible entities can receive funding for all kinds of projects including irrigation, rural infrastructure, watershed management, etc.
  3. Loans for Warehouses, Cold Storage, and Cold Chain Infrastructure
    NABARD received Rs. 5,000 crores worth of funding from the RBI in FY15 to help develop an infrastructure for the storage of agricultural products. These include warehouses, cold storages, silos, etc.

NABARD has been instrumental in taking the rural sector to the next level and bring order and regulation for the same. It’s also one of the biggest taxpaying institutions in the country.

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