The National Bank for Agriculture and Rural Development, also known as NABARD, is a development bank in India. It focuses on rural development. It was established on 12 July 1982, by the special act of the Parliament of India. The main aim of NABARD is to promote sustainable and equitable agriculture and rural development. Here are few green business ideas.
The NABARD Loan Scheme contributes to the improvement of agricultural and rural economics by providing financial support. It promotes the rural infrastructure industry as well as similar fields.
NABARD scheme’s primary focus is the flow of loans for agricultural and other economic activities in rural areas.
| NABARD Scheme Highlights | |
| Plans and Interest Rates for Direct Lending (p.a.) | |
| Warehouse Infrastructure Fund (WIF) | Bank rate for state governments is 1.50%.State Government Corporation’s bank rate is 1.50% (with a guarantee from the state government).PLR + Risk Premium – Businesses backed or held by the State or Federal Government (without State Government Guarantee) |
| Current Bank Rate | 4.25 % |
| Current PLR | 7.75 % |
| Food Processing Fund (FPF) | Bank Rate for State Governments: 1.50%Bank Rate: 1.50% for State Government-Promoted Entities (with Government Guarantee)PLR + Risk Premium – State Government-Promoted Entities (without Government Guarantee) |
| Current Bank Rate for FPF | 4.25 % |
| Current PLR for FPF | 5.80% |
| Short Term Refinance Assistance | For the following entities, 4.50%:State Cooperative Banks for Crop Loan FinancingRRBs to support agricultural lendingDirect funding of crop loans by DCCBsCommercial Banks and RRBs about their funding of agriculture loans to PACS The annual product of 7.75% is allocated to ST – Additional SAO/ST(Others)/ST (SAO) – SCARDBs. Supplementary SAO (StCBs and RRBs)7.90% for the Annual Product of ST (SAO) -SCARDBs8.00% for Short-Term Crop Loans Conversion to Medium-Term Loans for StCBs and RRBs |
| Long Term Refinance Assistance | 5.80% – Long-term loan to State Government to add to Cooperative Credit Institutions’ Share Capital6.00% – LT loan to State Government to add to RRBs’ share capital |
| Regional Rural Banks (RRBs) & State Cooperative Banks (StCBs) | 8.20% for five years or longer when refinancing8.20% — Three- to less than five-year refinancing8.10% – 18-month to less than 3-year refinancing |
| State Cooperative Agriculture and Rural Development Banks (SCARDBs) | 8.30% for refinancing longer than five years8.30% – Refinance for a period of three to five years8.20% – 18-month to less than 3-year refinancing |
| Direct Lending | 1.50% is the bank rate. |
The NABARD authority and RBI alone have the final say over the interest rates listed, which are subject to change. On top of the above fees, there will be additional costs for GST and service tax. 1 The Interest Subvention of 1.5% will be maintained through FY 2023–2024.
What are the key functions of the NABARD Scheme?
The key functions of the NABARD Scheme are:
Rural Infrastructure Development:
NABARD supports the development of rural infrastructure. This includes irrigation projects, rural roads, and warehousing facilities. This contributed to the overall rural economic growth. Here is a few agriculture business plan to open an agricultural business.
Technology Adoption Initiatives:
NABARD encourages the adoption of modern technologies in agriculture. This is done by assisting in the implementation of advanced farming practices and techniques.
Implementation and Execution:
NABARD collaborates with financial institutions and government agencies to implement and execute its schemes effectively at the grassroots level.
Impact and Assessment of Success Stories:
Regular monitoring and evaluation are conducted to assess the impact of NABARD schemes.
Capacity Building Initiatives:
NABARD invests in capacity-building programs to empower farmers and rural communities. This is done with the necessary knowledge and skills for sustainable agricultural practices.
Support for Rural Non-Farm Sector:
The scheme facilitates the development of the rural non-farm sector by providing credit support and initiating various programs to diversify income sources in rural areas.
Financial Inclusion:
NABARD Loan promotes financial inclusion in rural areas by supporting the development of microfinance institutions, self-help groups, and other community-based organizations.
How does NABARD implement the schemes?
The NABARD Scheme implements its various agricultural schemes via the below-stated methods :
1. Collaborative partnerships with banks, financial institutions, and government agencies.
2. Grassroots-level engagement for specific implementation.
3. Credit Flow to farmers and rural ventures.
4. Integrations of technology for efficient digital processes.
5. Investment in capacity-building initiatives for local empowerment.
Impact of NABARD Scheme on Sustainable Agricultural Growth
In line with the Sustainable Development Goals of the UN, NABARD is playing a critical role in promoting sustainable development, as evidenced by its most recent Sustainability Report. NABARD has achieved great progress in promoting social justice, economic success, and environmental care through its Agriculture Scheme.
The ‘Ecosystem Restoration’ theme of the study highlights NABARD’s dedication to tackling urgent issues including natural resource management and climate change, while also recognizing the triple bottom line effect of its interventions.
Regional differences still exist, nevertheless, and are especially noticeable in the North Eastern Region (NER) despite significant advances. Access to credit is hampered in the NER by a lack of arable land and distinctive land ownership arrangements, which is indicative of larger issues with fair resource distribution. NABARD’s ongoing efforts to manage these difficulties and encourage inclusive growth confirm its role as a major driving force behind India’s sustainable rural development.
FAQ
What is NABARD’s main objective?
The National Bank for Agriculture and Rural Development’s (NABARD) main goals are to promote rural development and the establishment of sustainable agriculture. NABARD also supports rural banks in creating action plans for several development initiatives as part of its development objectives.
What is NABARD Loan?
While NABARD doesn’t provide direct loans, you can access subsidies through their scheme by applying for a business loan from a commercial or cooperative bank.
What programs does NABARD offer?
NABARD carries out several programs designed to support rural development and the agriculture industry. Two systems of note are as follows:
What is the Fund for Farm Sector Promotion (FSPF)?
The goal of FSPF is to make technology transfer easier so that agricultural productivity can be improved. This program focuses on implementing cutting-edge strategies to increase agricultural output.
What are Funds for Tribal Development (TDF) and Watershed Development (WDF)?
Supporting flagship initiatives under Natural Resource Management (NRM) is made possible by WDF and TDF. These funds, which prioritise sustainable livelihoods, support the development of watersheds and cater to the unique requirements of remote tribal populations.
Which bank classification does NABARD belong to?
NABARD functions as a Development Bank and is charged with managing and extending credit to promote rural areas’ small-scale and cottage industries, handicrafts, agriculture, and other relevant economic pursuits. The main goal is to use sustainable development programs to promote wealth in rural areas.