National Bank for Agriculture and Rural Development (NABARD)


NABARD is apex rural credit institution which plays an active role in implementation of various Rural Development Programmes. The NABARD came into existence in July 1982.

It took over the function of providing rural credit from the Reserve Bank of India and also the refinancing and developmental function of Agricultural Refinance and Develop­ment Corporation (ARDC).

NABARD provides refinance for promoting agricultural ac­tivities as well as non-farm sectors particularly programme covered under poverty allevia­tion.


NABARD plays the key role of a leader in rural credit management. NABARD has to ensure that there is adequate flow of credit for seasonal agricultural operation to maintain agricultural production.

Similarly, NABARD has to accelerate the flow of credit for long- term investment in agricultural sector. NABARD provides support through formulation of some innovative non-farm schemes, which are very helpful in raising the income level of rural people and bring them above the poverty line. NABARD has two funds to finance agricultural operations. They are,

(a) National Rural Credit (Long-term Operation) Fund

(b) National Rural Credit (Stabilization) Fund


The contribution to these funds is received mostly from the Reserve Bank of India. Apart from these funds, NABARD has general lines of credit from the Reserve Bank of India for meeting the credit requirements of seasonal and other than agricultural opera­tions. Some important promotional activities supported by NABARD are discussed below:

For enlarging the scope for catalyzing credit flow, NABARD has formulated the fol­lowing strategies:

(a) Involving state level functional and financial-cum-developmental corporations, voluntary agencies, Khadi and village commission under automatic refinance facility as also under group/bulk landings.

(b) Supporting units jointly with Small Industries Development Bank of India and formulating credit linked area development plans.


(c) Increasing the limits under composite and integrated loans.

(d) Removal of certain constraints under agro-industries and service sector units.

Remember, like a commercial bank, NABARD does not extend direct credit facilities to production units/individual borrowers.

A major portion of the money (usually between 70 and 90 per cent) lent by commercial, co-operative and regional rural banks for agricul­tural and other approved activities will be refinanced by NABARD at certain interest rate. It also extends refinance facilities to Land Development Banks.


The total quantum of agri­cultural credit provided by commercial banks, co-operative banks and regional rural banks with or without assistance from NABARD amounted to Rs. 31,698 crore during 1997-98. This credit is expected to increase further to Rs. 38,054 crore in 1998-99 as per NABARD Annual Report for 1998-99.

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