NABARD Scheme: Driving Rural Progress and Empowering Farmers

NABARD stands for National Bank for Agriculture and Rural Development. Since its establishment in 1982 with an initial capital of ₹100 crore, this institution now finances approximately one-fifth of the country's total rural infrastructure.

The development of rural areas nationwide is one of the prime objectives of this financial institution. It aims for sustainable rural development through technology, innovation and institutionalised initiatives while offering financial assistance to farmers through microfinance schemes.    

Some of the milestones achieved by NABARD include the development of the SHG Bank Linkage Project. It is the world's largest microfinance project.

Kisan Credit Cards, designed by NABARD, is a prime example of its successful financial inclusion projects.

NABARD implements most of its schemes through direct finance or refinance. Some of its main activities include:  

• Providing loans to food parks and food processing units 
• Granting loans to cold storage, warehouses, and cold chain infrastructure 
• Offering credit facilities to marketing federations  
• Implementing Rural Infrastructure Development Fund    
• Promoting producer organisations (POs)

The National Bank for Agriculture and Rural Development has made its presence felt across the country. It is active in most states and union territories. Working with banks and other financial institutions, it aims to strengthen the economically weaker sections of society. Some of its prominent functions include -

• generating employment
• promoting entrepreneurship
• making finance accessible to rural areas 

Farmers, artisans, rural youth and women have benefited immensely from NABARD schemes. It has also been instrumental in implementing various public welfare schemes and projects. Implementing newer technology in farming, promoting organic farming, and conserving natural resources have also been some of its key considerations. 

NABARD's Rural Innovation Fund (RIF) serves as a platform for conducting innovative experiments in various sectors, including microfinance, agriculture, and non-farm activities.

This article offers in-depth insights into the role of NABARD in building an empowered and financially inclusive rural India. It also discusses the salient features and objectives of NABARD schemes.

Main functions of NABARD 

NABARD is not just a development bank but an institution that strives to provide credit, technology and other facilities in rural areas. Here are some of the key benefits it has to offer:

1. Supports rural artisans

NABARD conducts marketing initiatives to help artisans promote and sell their products in the market. Artisans can get financial assistance by participating in these activities. 

2. Organises rural exhibitions

NABARD organises exhibitions to promote rural art development. These events allow rural inhabitants to showcase their traditional art or crafts. These initiatives contribute towards an increase in income and the creation of sustainable livelihoods for the village population. 

3. Organises rural haats and marts 

NABARD organises rural marts or haats to help artisans sell their products directly in the market. These experiments create a source of employment and livelihood in rural areas. 

4. Funds rural housing and sanitisation schemes

It extends financial assistance to rural housing and sanitation projects and facilitates funds to eligible beneficiaries from financial institutions. 

5. Supervises banks

The National Bank For Agriculture and Rural Development supervises Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), and District Central Cooperative Banks ((DCCBs). It verifies their financial soundness and protects the interests of the depositors. 

NABARD checks whether these financial institutions abide by the rules and guidelines of the government and the Reserve Bank of India (RBI). It finds ways of strengthening these institutions and enables them to play a pivotal role in making the rural credit system efficient and viable. 

6. Development of the farm sector

NABARD protects and manages natural resources for the farm sector through the Farm Sector Development Department (FSDD). FSDD prepares farmers to utilise credit opportunities and promotes modern farming technologies. 

NABARD's programmes aim at skill building, implementation of the best agricultural practices, and generating rural employment.

7. Tribal development 

As a premier institution for finance, NABARD aims to enhance the livelihood of tribals through orchard farm systems. Its Tribal Development Fund (TDF) promotes the holistic development of tribal communities. 

Under Adivasi Development Programmes (ADP), NABARD is developing the 'Wadi' agri-horti-based livelihood model across the nation. 

8. Innovations in micro-credit system 

NABARD has been a pioneer for many microfinance initiatives in the country. Through the Micro Credit Innovations Department, it facilitates financial services in remote areas of the country. 

Its Self-Help Group Bank Linkage Programme (SHG-BLP) aims at providing financial services to poor households. Internal lending, regular discussions, and proper management of loan books are some of the key initiatives of SHG-BLP. It is the biggest microfinance programme when it comes to its penetration and client base. Farmer's Clubs, rural financial institutions, and NGOs working as Self Help Promoting Institutions (SHPIs) have been key contributors to this programme. 

NABARD provides refinance support to Joint Liability Groups (JLGs). JLGs are small groups of farmers who do not have a clear title for their farms. The members of JLGs engage in economic activities like saving money, repaying loans jointly, etc. It fulfils the credit needs of these groups via loans lent by rural banks. 

9. Initiatives to adapt to climate change

NABARD has taken several steps to address the climate challenges that make agro-based industries and rural livelihoods vulnerable. Being the only National Implementing Entity (NIE) for climate change projects, it undertakes the following activities to combat climate change:

• Conserving and managing coastal resources
• Improving the adaptive capacity of small farmers
• Leading Watershed Development Programmes
• Promoting sustainable agriculture through smart strategies

The role of NABARD at a glance

NABARD renders both financial and non-financial functions to meet its objectives. Some of its key objectives include:

• Providing short-term and long-term financing options to agriculture and allied sectors. It leads to the overall development and growth in these sectors. 
• Providing direct finance to entrepreneurs and farmers. If you start a business in rural areas, it will fund you directly or through its partnership with financial institutions. 
• Undertaking irrigation, warehouse facilities, and the development of rural roads to boost rural infrastructure development. 
• Promoting sustainable farming through technological development, research, and capacity-building initiatives. 
• Promoting the development of non-farm sectors by providing them with credit and other forms of support. 
• Supporting microfinance institutions, Self-Help Groups (SHGs), and other communities to provide access to financial support in rural areas.
   
• Undertaking soil conservation, watershed development and other initiatives to promote and support sustainable agriculture. 
• Identifying the best agricultural technologies and practices to strengthen its rural and agricultural development programmes.

Scope of NABARD 

NABARD designs its schemes to support overall rural development through the development of agriculture, cottage industries, and small-scale industries. It boosts the rural economy through the following initiatives:

1. Supports rural infrastructure: It offers refinancing schemes for the development of rural infrastructure.
2. Assists financial institutions: It monitors credit plans at the district level and mentors banks to achieve the targets.
3. Regulates banks: NABARD supervises Regional Rural Banks (RRBs) and Cooperative Banks to support them in developing the best banking practices. It also regulates them along with the RBI and other government authorities.
4. Development of public welfare schemes: It creates new development schemes to support ongoing schemes of the government. The schemes are of public interest and create income opportunities in remote areas of the country.
5. Promotes rural economy: It trains handicraft artisans and offers them a platform to sell their articles.      

Short and long-term refinancing

NABARD offers short-term and long-term refinance schemes. Let's take a closer look at them:  

Short-term refinance  

Through short-term refinancing, NABARD provides credit and loans for crop production. Stabilising food production in the country and yielding cash crops for exports is the main objective behind it.   

State Cooperative Banks and RRBs handle most of the short-term refinancing. NABARD provides funds by setting credit limits and each withdrawal made against this limit is to be repaid within one year. 

It offers to refinance schemes to support the marketing and working capital needs of handloom weavers, groups, and allied societies. Scheduled Commercial Banks and RRBs manage these refinance tasks.

Through State Cooperative Banks, NABARD finances 60% of the loan amount given to farmers on account of crop loss of 33% or more. Through RRBs, it finances 70% of the loan amount.

Long-term refinance  

NABARD encourages long-term refinancing to promote farm-related activities in rural areas. Long-term financing schemes range from 18 months to 5 years.

Commercial banks, NBFCs, RRBs, SCBs, and other financial institutions execute long-term refinancing tasks. The key objectives of NABARD's long-term refinancing schemes are:  

• Boosting capital formation in agriculture and related activities to collectively promote agriculture, forestry, fishery, and other sectors
• Implementing climate change and mitigation projects
• Providing credit to promote the government's thrust activities
• Fulfilling credit needs of JLGs and SHGs
• Increasing employment in the rural and semi-urban areas via non-farm activities
• Refinancing the government's credit-linked capital subsidy schemes and channelising them

Operationalisation of NABARD schemes 

NABARD promotes its schemes through banks, NBFCs, and other credit-lending financial institutions. The table below gives details regarding its refinancing interest rates:

Note: The interest rates are subject to change. Additional GST rates are also applicable along with the interest rates. 

Different departments were set up by NABARD under State Project Department (SPD) to operationalise different projects, schemes, and programmes. Here are the details of some of the key departments that operate under its guidelines:

Prominent NABARD schemes 

1. Dairy Entrepreneurship Development Scheme 

If you want to start a small dairy farm, you can benefit from the Dairy Entrepreneurship Development Scheme. Some of the objectives of this scheme include:

• Breeding stock and encouraging calf-rearing 
• Setting up modern farms to produce organic milk
• Implementing the latest technology to manage milk production at a commercial level
• Boosting self-employment activities to enhance the lives of workers
• Improving infrastructure in the unorganised sector

2. Credit Linked Capital Subsidy Scheme

CLSS or Credit Linked Capital Subsidy Scheme was started by the government in 2000. NABARD arranges credit facilities under this scheme. This scheme promotes and encourages technological development and upgradation among Micro, Small, and Medium Enterprises (MSMEs).

This premier development bank offers financial aid to programmes like Aatmanirbhar Bharat. Via this scheme, it provides credit to farmers through regional and rural cooperative banks. 

3. NIDA

NABARD Infrastructure Development Assistance (NIDA) is a programme that provides credit to state-owned corporations and institutions. Stable and financially strong corporations and institutions are chosen for this program. 

4. MEDP 

Micro Enterprise Development Programme (MEDP) supports skill development. It helps SHGs in accessing finance from banks.

The main objective of this programme is to encourage skill development and optimise production activities. It offers financial support to training institutes that facilitate skill-development training in farm and non-farm sectors. It has granted financial assistance to around 5.47 lakh SHG members to date. 

5. LEDPs 

The National Bank for Agriculture and Rural Development offers Livelihood and Enterprise Development Programmes (LEDPs). The objective of these programmes is to create a livelihood for SHG groups and members. 

LEDPs provide skill development training in batches of 25 to 30 members. They cover agricultural and allied activities, along with off-farm activities in rural areas. Around 1.83 lakh members have benefitted from these schemes so far, which grant funds and promote sustainable livelihoods. 

6. Village-level programmes

Village-level programmes bridge the communication gap between SHGs, banks and other financial institutions. They do so by providing a clear understanding of credit-linked schemes, loan repayment, and other financial terms to the beneficiaries. 

7. Contribution to government schemes 

NABARD participates in the schemes that the government introduces for public welfare. For example, it offers loan assistance via NRIDA (National Rural Infrastructure Development Agency) to beneficiaries of Pradhan Mantri Awas Yojana - Gramin (PMAY-G). PMAY-G helps people living in rural areas build pucca houses. Basic facilities like water, electricity, sanitation, access to clean water, LPG, etc. are made available in these houses. 

NABARD also contributes immensely to the Swachh Bharat Mission - Gramin. Under this scheme, it extends loans via National Centre For Drinking Water, Sanitation and Quality (NCDWS&Q). Additionally, the government aims to stop open defecation and spreads awareness regarding cleanliness in rural areas. 

8. Kisan Credit Card Scheme 

Kisan Credit Card Scheme (KSCS) helps farmers get credits without any hassles. After establishing KSCS in 1998-99, there were some revisions in 2013. NABARD tries to meet these objectives with KSCS:

• It helps farmers access short-term credit for crop cultivation.
• It enables farmers to manage post-harvest expenses. Working capital requirements regarding farm assets and related activities are met via KSCS. 
• Farmers can meet their investment and credit requirements for agriculture and associated activities through this scheme.

Eligibility for NABARD schemes 

NABARD does not provide loans directly to farmers or artisans. Yet, you can avail of financing and refinancing options from SCBs, RRBs and other financial institutions. 

Different eligibility criteria are applicable for different schemes. It is also possible to avail of subsidies from NABARD under various loan schemes.

Eligibility criteria for Dairy Subsidy Scheme

• You can apply for this scheme if you are a farmer, entrepreneur, member of SHG or a member of the organised or unorganised sector.
• You should be a member of a milk producer company or cooperative society. The milk producer company or cooperative society must register itself with NABARD first. 
• You must own a minimum of 10 cows.
• The milk production capacity of your dairy must be at least 200 litres per day.
• You need to install proper milking equipment in your dairy to avail of the scheme's benefits.
• You must complete the training from an approved training centre. 

Eligibility criteria for Dairy Farming Scheme

• You must hold Indian citizenship. 
• You must be a small or marginal farmer with a family income of less than ₹1,00,000 per year. 
• You must own / lease at least two hectares of land.

Besides farmers, NABARD also provides funds to companies, cooperatives, state governments, farmer-producer organisations, and entrepreneurs. The eligibility of these entities under various schemes may differ. 

You can visit the official website of banks or NABARD to check the interest rates, eligibility, and other procedures of NABARD schemes.

Documentation 

The documentation required differs across the NABARD loan schemes or the subsidy which you wish to avail of.

For instance, you have to submit the following documents to apply for the Dairy Farm Scheme:

• Sales deed / lease agreement of the land owned / leased by you.
• An income certificate showing that the annual income of your family is not more than ₹1,00,000. 
• Documents like your Aadhaar card, PAN card, etc. to verify your address and identity. 

You can visit the official website of the National Bank for Agriculture and Rural Development for clarity on the documents required for the scheme you wish to apply for. You can check the scheme PDF available on the website for more details on the documentation process.

Steps to avail of NABARD subsidy/scheme benefits 

In most cases, NABARD does not offer loans directly but provides loans through banks, credit unions, Non-Banking Financial Institutions (NBFCs), and other financial institutions. 

However, farmers, entrepreneurs, members of SHGs, cooperatives, and farmer-producer organisations can avail of subsidies under any of NABARD's loan schemes. It provides monetary assistance to financial institutions, which in turn provide you with a subsidy. 

Here are the steps to avail of the subsidy benefits:

• Step 1: Visit the official website of the National Bank For Agriculture and Rural Development. Here, you will find the online application form. Download it on your computer or smartphone.
• Step 2: Print the downloaded form and fill in the relevant details. Ensure that you provide the correct details in the form. 
• Step 3: After filling out the form, attach the required documents to it and submit it to the nearest NABARD office. 
• Step 4: The details of the district and nodal offices are available on NABARD's official website. You can also submit the application form and documents via courier or post.

To avail of a loan subsidy or other related benefits, you must register yourself on the portal first. Follow the steps to complete the registration formalities on NABARD's portal:

1. Visit NABARD's official website. Alternatively, you click on this link to visit the registration portal directly. 
2. Enter details like your name, email ID, and PIN code. Click on the 'Submit' button after providing all the details.
3. You will receive a notification on your registered email ID. The email will contain details regarding your user ID and password. It will also contain a link that you can click to log in to the portal. 

Not everyone stands eligible for NABARD schemes. However, if you are a farmer, entrepreneur, or someone who needs immediate funds, you can get the benefit of these schemes by visiting the FlexiLoans website for all the requisite details and guidance.

FlexiLoans is the right place for hassle-free business loans meant for Micro, Small and Medium Enterprises (MSMEs). Visit our website to find loans that best suit the requirements of farmers, entrepreneurs, members of the SHG, cooperatives, farmer-producer organisations, and more!

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