Committed to Rural Prosperity

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT GENESIS The Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) set up by Reserve Bank of India in 1979 recommended formation of “NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)” as a “new organisational device for providing undivided attention, forceful direction and pointed focus to the credit problems arising out of integrated rural development”. National Bank for Agriculture and Rural Development (NABARD) was established on 12 July 1982 by an Act of the Parliament. The agriculture credit functions of the Reserve Bank of India (RBI) and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC) were transferred to NABARD on its formation. MANDATE NABARD was set up as a Development Bank with a mandate for providing and regulating credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas, and for matters connected therewith or incidental thereto. CORPORATE MISSION Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives. CAPITAL STRUCTURE The paid up capital of NABARD is Rs.2,000 crore with Government of India (GoI) holding Rs.1,980 crore and the remaining by Reserve Bank of India (RBI). ORGANISATIONAL SETUP NABARD, with its Head Office at Mumbai, has 30 Regional Offices located in States and a Union Territory, a Cell at Srinagar, Training Establishments at Bolpur, Hyderabad, Mangalore and Lucknow and 395 District Development Managers functioning at district level. NABARD has 2,833 officers supported by other staff.

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Committed to Rural Prosperity

MANAGEMENT STRUCTURE Chairman

3 Directors out of the Directors of RBI Managing Director

Composition of Board of Directors of NABARD

3 Directors from officials of Central Govt.

3 Directors from amongst experts in various fields

Directors representing share holders other than RBI and GoI 4 Directors from officials of State Govt.

FUNCTIONS AT A GLANCE Credit Planning and Monitoring, Coordination with various agencies and institutions Refinance to Rural Financial Institutions for investment and production credit purposes in rural areas Loans to State Governments for developing rural infrastructure and strengthening the Cooperative Credit Structure Co-financing Assist in policy formulation of GoI, RBI and State Governments on matters related to agricultural credit and rural development Institutional development and capacity building of Cooperatives and Regional Rural Banks (RRBs) Statutory inspection and off-site surveillance of Cooperatives and Regional Rural Banks (RRBs) and voluntary inspection of SCARDBs and other agencies Promotional and developmental initiatives in the areas of farm, non-farm, micro finance, financial inclusion, support to research and development, etc. Consultancy services

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PARTNER INSTITUTIONS Partner Institutions Credit related

State Govts

Development oriented

Scheduled Commercial Banks

RRBs RRBs

NABARD NBFCs Scheduled Urban Coop. Banks

Rural Dev. & Self Empl. Trng. Insttns

NABARD

SCBs & DCCBs

SCBs & DCCBs

Rural Innovators

NGOs & VAs

SCARDBs

SCARDBs

OPERATIONS IN BRIEF CREDIT PLANNING District Level Potential Linked Credit Plans (PLPs) are prepared annually for all the districts in the country • •

Mapping the potential available in agriculture and rural sectors that could be tapped with institutional credit Highlighting the infrastructure and non-credit input support to be extended to sustain credit flow.

PLPs form the basis in the preparation of Annual Credit Plans by banks. State Level • •

State Focus Paper is prepared for each state by aggregating the potential estimated in PLPs for agriculture, allied and other rural sectors that could be tapped with institutional credit. State Credit Seminars are convened by associating Government Departments, Banks, etc., for action planning in agriculture and rural sectors with credit and non-credit support.

CREDIT FUNCTIONS Short Term (ST) Credit 3

Committed to Rural Prosperity

Seasonal Agricultural Operations (SAO) To ensure timely availability of credit to farmers for seasonal agricultural operations, NABARD provides refinance at concessional rate of interest to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs). The maximum period of loan is upto 18 months. Interest Subvention GoI provides interest subvention to banks to ensure availability of crop loans upto a maximum of Rs.3 lakh at 7% interest. NABARD, as nodal agency, coordinates the interest subvention scheme for Cooperative Banks and RRBs. In 2009-10, interest subvention to banks was 2% with an additional subvention of 1% to farmers for prompt repayment. For 2010-11, interest subvention to banks is 1.5% and additional 2% subvention for prompt repayment by farmers. State Cooperative Agriculture and Rural Development Banks (SCARDBs) are eligible for short term refinance. During 2009-10, refinance was extended to Kerala and Rajasthan SCARDBs amounting to Rs.95.92 crore for lending to farmers at 7% interest. Short Term (ST) – Others Refinance support is extended for various activities, other than SAO, to : Cooperative Banks for financing       

Agriculture, allied and marketing activities, Marketing of crops, Pisciculture, Industrial cooperative societies (other than weavers), Labour contract and forest labour cooperative societies including collection of minor forest produce, Rural artisans including weaver members of functional societies, Procurement of agricultural inputs (fertilisers, seeds, etc.).

Regional Rural Banks for financing :    

Marketing of crops, Pisciculture, Production and marketing of activities of artisans (including handloom weavers) and village/cottage/tiny sector industries, Persons belonging to weaker sections of the society engaged in trade/business/service activities including distribution of inputs for agriculture and allied activities.

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Committed to Rural Prosperity

Weavers’ Finance Refinance is provided to State Cooperative Banks (SCBs)/District Central Cooperative Banks (DCCBs) for financing the working capital requirements of Primary Weavers’ Cooperative Societies, Individual Weavers, Handloom Weaver Groups and Master Weavers for production and marketing activities. Refinance assistance is provided to State Cooperative Banks for financing the Apex/Regional Weavers Cooperatives for procurement and marketing of products of primary weavers cooperatives and for trading in yarn. State Handloom Development Corporations engaged in procuring and marketing of products from decentralised weavers’ units outside the cooperative fold are also extended refinance through State Cooperative Banks and Commercial Banks. Weavers’ Finance - Outside Cooperative fold The weavers outside the Cooperative fold, organised into handloom weavers’ groups on the lines of Joint Liability Groups (JLGs), Mutually Aided Cooperative Societies (MACS) and Producer Group Companies, are also supported by way of refinance to promote handloom sector.

Refinance Support for Short Term Credit (Rs. Crore) 30000 25000 20000 15000 10000 5000

25661 24715 19627 18291 16089 16352 17212 14168 11260 12080 10769 9954 8763 9451 7038 6967 4447 3614 1658 1231

0 1983

1993

2003 Sanction

2004

2005

2006

2007

2008

2009

2010

Utilisation

NABARD sanctioned short term loans of Rs.25,660.72 crore to SCBs and RRBs during 2009-10 against which the maximum outstanding was Rs.24,715.47 crore.

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Committed to Rural Prosperity

Medium Term Credit Medium Term (Conversion) Loan Substantial crop loss on account of natural calamities, affecting the farmers’ ability to repay their production credit dues to banks, whenever declared by State Governments, refinance by way of medium term conversion loan is granted to State Cooperative Banks and Regional Rural Banks to enable them to convert the short term loans of farmers into medium term loans. This facilitates the farmers to become eligible for fresh crop loans. The repayment period of such converted loans is 3 years, which could be extended to a maximum of 7 years, in case of recurring calamities. Investment Credit NABARD provides refinance for creation of assets in farm and non-farm sectors, leading to capital formation, and thereby facilitating increased production, productivity and incremental income to farmers. The tenor of the loan varies based on the investment, which generally is upto 15 years. Eligible Institutions a. State Cooperative Agriculture and Rural Development Banks (SCARDBs) b. State Cooperative Banks (SCBs) c. Regional Rural Banks (RRBs) d. Commercial Banks (CBs) e. Scheduled Primary Urban Cooperative Banks (PUCBs) f. North East Development Finance Corporation Ltd. (NEDFI) g. Non Banking Financial Companies (NBFCs) Refinance Support for Investment Credit (Rs. Crore) 14000 10535

12000 10000

7419

8000 6000 4000 2000

8577

8622

8795

9046

2005

2006

2007

2008

12009

2359 703

0 1983

1993

2003

2009

2010

NABARD provided refinance support of Rs.12,009.08 crore for investment credit during 2009-10 showing a growth of 14% over the previous year.

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Committed to Rural Prosperity

Eligible purposes for refinance Minor and micro irrigation, land development, waste land development, dry land farming, farm mechanisation, plantation and horticulture, animal husbandry, fisheries, storage godowns and market yards, renewable sources of energy, post harvest management, agro and food processing, hi-tech projects, agri export zones, non-farm sector including rural industries, rural housing, micro finance, joint liability groups, contract farming, agri clinic and agri business centres, purchase of land by small/marginal farmers, share croppers, etc., and disbursements under poverty alleviation programmes like SGSY, SC/ST action plan, etc., are eligible for refinance. NABARD also assists partner institutions in the techno-economic appraisal of projects in addition to providing refinance. Major thrust areas • Minor and micro irrigation • Water saving and conservation devices • Agriculture implements and small machinery • Waste land development • Dry land farming • Seed production • Animal husbandry • Fisheries • SHGs and JLGs • Non conventional energy Criteria for refinance • • •

Technical feasibility, financial viability and bankability of the investment/project. Adequate incremental income to ultimate borrower to repay the loan after leaving reasonable surplus within the economic life of the investment. Financial health of the borrowing institutions. Capital Investment Subsidy Schemes

NABARD, as a nodal agency, facilitates the operationalisation of the following capital investment subsidy schemes of Government of India. • • • • • •

Construction of cold storages, onion godowns and rural godowns Development/strengthening of agriculture marketing infrastructure, grading and standardisation Establishing Agri-Clinics and Agri-Business Centres by agriculture graduates Supporting bankable projects for commercial production of organic inputs like biofertiliser, vermiculture hatchery and composting units of fruit and vegetable wastes, etc. Venture capital for dairy and poultry sectors Artificial recharge of ground water through dug wells

12 model bankable schemes on organic farming were prepared and circulated among banks by NABARD. 7

Committed to Rural Prosperity

New schemes launched by GoI and implemented through NABARD • • •

Establishment and modernization of Rural Slaughter Houses on a pilot basis in Uttar Pradesh, Andhra Pradesh and Meghalaya with emphasis on hygiene, environmental friendliness and value addition. Integrated development of small ruminants and rabbits in 124 districts of 24 states for improving the breed quality of the existing breeds and to promote rearing, breeding on commercial basis. Development of poultry estates on the lines of industrial estates, with common infrastructure facilities, supply of inputs and marketing arrangements. Cofinancing

NABARD has executed MoU with select banks for cofinancing agricultural projects. During 2009-10, 8 projects with a total financial outlay of Rs.62.13 crore were sanctioned taking the cumulative sanction to 48 projects with a total financial outlay of Rs.807.52 crore and NABARD’s commitment of Rs.229.44 crore.

DIRECT CREDIT – LOANS TO STATE GOVERNMENTS Loans to State Governments Rural Infrastructure Development Rural Infrastructure Development Fund (RIDF) was set up by Government of India, in 1995-96 with a corpus of Rs.2,000 crore, to provide term loans to State Governments at concessional rate of interest for financing rural infrastructure projects. The fund is sourced from the shortfall in priority sector lending including agriculture of Scheduled Commercial Banks. The total corpus of RIDF has reached Rs.1,00,000 crore in 2009-10. Dr. Manmohan Singh, the then Hon’ble Union Finance Minister, while announcing the establishment of the Rural Infrastructure Development Fund in 1995, stated : “Inadequacy of public investment in agriculture is today a matter of general concern. This is the area which is the responsibility of the states. But many states have neglected investment in infrastructure for agriculture. There are many rural infrastructure projects which have been started, but lying incomplete for want of resources. They represent a major loss of potential income and employment to rural population”

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31 activities, covering almost all aspects of rural infrastructure, are funded under RIDF. Broad classification of eligible activities under RIDF           

All irrigation projects- community, medium, major Rural roads and bridges Soil conservation, flood protection, land reclamation Watershed development Reclamation of water logged area Forest development, joint forest management Marketing infrastructure, infrastructure for rural industries Infrastructure for animal husbandry and fisheries Mini hydel power projects Drinking water, public health, rural education E-connectivity and ICT based infrastructure

A separate window for funding rural roads component of Bharat Nirman was created in 2006-07. Rs.18,500 crore has been provided to National Rural Roads Development Agency (NRRDA) till 2009-10.

Loan quantum and period The loan quantum of RIDF projects relating to agriculture and related sectors including irrigation, social sectors and rural connectivity, is 95%, 85% and 80% respectively of the eligible project cost. For projects in North Eastern States and Hill States, the quantum of assistance for ‘social’ sectors and rural connectivity sector is 90%. Each drawal by the State Government is treated as a separate loan repayable in 7 years with a grace period of 2 years. Funds – Allocation, sanction and drawal (Rs. crore) RIDF

FUND

CUMULATIVE SANCTION

ALLOCATION

UPTO

31 MARCH 10 CLOSED TRANCHES I to IX ONGOING TRANCHES X XI XII XIII XIV XV SUB TOTAL NRRDA G. TOTAL

CUMULATIVE DISBURSEMENT

31 MAR 10

% UTILISATION

34,000

34,271.33

30,337.73

89.23

8,000 8,000 10,000 12,000 14,000 14,000 100,000 18,500 118,500

7,671.71 8,320.34 10,411.15 12,705.64 14,708.02 15,629.82 103,718.01 18,500.00 122,218.01

6,489.35 6,604.80 7,278.39 7,602.63 6,652.50 3,474.34 68,439.74 18,500.00 86,939.74

81.12 82.56 72.78 63.36 47.52 24.82 68.44 100.00 73.37

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Committed to Rural Prosperity

Of the total RIDF loans sanctioned to State Governments, 43% has gone to agriculture and allied sectors, including irrigation and power; 13% to health and education; while the share of rural roads and bridges was 33% and 11% respectively.

The allocation under RIDF XVI (2010-11) is Rs.16,000 crore. Cumulative Sanction and Disbursements 103718

(Rs. crore)

68440 5753

9503

20000

1301

1980

40000

7979

13611

60000

31419

33342

80000

21987

100000

45282

120000

0 Irrigation

Roads & Bridges

Social Sector

Power

Amt Sanctioned

Agri Related

Total

Amt. Disb.

Impact of RIDF Accretion to rural infrastructure and employment generation S.No. 1 2 3 4 5

6 7

PARTICULARS Irrigation potential Rural Bridges Rural Roads Recurring Employment Non- recurring employment Irrigation Rural Roads & Rural Bridges Others Power Sector (Hydel Power & System Improvement) Social Sector A. Health Centres B. Primary & Secondary Schools C. Rural Drinking Water Supply

ADDITIONAL BENEFITS CREATED 156.53 Lakh hectares 5,83,637 Mts. 3,04,337 Kms. 81,16,613 Jobs 24,643.94 Lakh persondays 32,210.25 Lakh persondays 16,022.49 lakh persondays 180.45 MW Hydel Power Generation & Saving of T & D Losses – 22,315 Lakh Units per year 390.77 lakh People 92.04 lakh Students 907.35 lakh People

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Committed to Rural Prosperity

Contribution to the share capital of Cooperative Banks NABARD provides loans to State Governments, on reimbursable basis, against contribution to the share capital of Cooperative Credit Institutions for augmenting its owned fund position, subject to compliance to Vaidyanathan Committee recommendations. THRUST AREAS Ground level credit to agriculture and allied sector Providing adequate credit to farmers is a priority for Government of India and annual targets are announced in the Union Budget. NABARD is closely involved in monitoring and coordinating with banks for fulfilling the expectations of Government of India. The target and achievement for the last two years are as under : Agency-wise performance vis-a-vis target set by Government of India

Agency Commercial Banks (Public & Private Sector) Cooperative Banks Regional Rural Banks Total

2008-09 Target Disbursement

(Rs.Crore) 2009-10 Target Disbursement

1,95,000

2,28,951

2,50,000

2,85,800

55,000

46,192

45,000

63,497

30,000 2,80,000

26,765 3,01,908

30,000 3,25,000

35,217 3,84,514

Kisan Credit Card (KCC) To mitigate the difficulties faced by farmers in accessing timely and hassle-free credit for meeting their production credit needs, Kisan Credit Card (KCC) scheme was introduced in August 1998. The scheme, implemented across the country by Commercial Banks, RRBs and Cooperative Banks, has facilitated in augmenting credit flow for agricultural activities. The scope of KCC has been broad based to include term credit and consumption needs. KCC scheme covers all categories of farmers including oral lessees, tenant farmers, share croppers, etc. The card holders are covered under Personal Accident Insurance Scheme (PAIS) against accidental death/permanent disability. Kisan Credit Cards issued (March 2010) Commercial Banks Cooperative Banks 412.08* 378.88 * position as at the end of December 2009

RRBs 134.21

(No. lakh) Total 925.17

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Committed to Rural Prosperity

Watershed Development Watershed development programme facilitates effective management of natural resources to enhance production and productivity. NABARD’s participatory watershed development programme is a pioneering natural resource management initiative, which has two phases : •

Capacity Building Phase (CBP) implemented through identified NGOs, where a small area of the watershed is taken up for treatment to develop capacity and conviction among the farmers to undertake the project activities ; Full Implementation Phase (FIP) is taken up after successful completion of CBP.

•

An area of 1.9 million hectares is under various watershed development programmes. Indo-German Watershed Development Programme (IGWDP) The programme initiated in 1992 in Maharashtra through NGOs and village level community based organizations was subsequently extended to cover Andhra Pradesh, Gujarat and Rajasthan. The successful implementation of programmes in phases has reached phase III in Maharashtra. Progress under IGWDP (March 2010) • • •

104 projects completed. 212 projects under implementation in Andhra Pradesh, Gujarat, Maharashtra and Rajasthan. Grant assistance of Rs.158.70 crore disbursed.

Impact of the Watershed Programme Major Findings of Impact Evaluation Study conducted by Action for Food Production (AFPRO) in 10 completed watersheds under IGWDP, Maharashtra • • • • • • • •

Significant recharge of ground water Reduction in runoff and soil erosion Improvement in vegetable cover Reduction in waste land and fallow land Increase in area under Rabi Increase in yield of cereal crops Improvement in drinking water conditions Increase in household income from agriculture

Watershed Development Fund Watershed Development Fund (WDF) was set up in NABARD during 1999-2000 with a corpus of Rs.200 crore contributed equally by GoI (Ministry of Agriculture) and NABARD for creating

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Committed to Rural Prosperity

replicable watershed development models. With subsequent contribution by NABARD, the fund has augmented to Rs.1,103 crore as on March 2010. Progress as at the end of March 2010 Cumulative disbursement Capacity Building Phase Full Implementation Phase Total projects taken up

: : : :

228 292 210 502

In addition, watershed projects aggregating 30,000 ha in each of the 31 distressed districts are being implemented in a holistic manner using WDF in 4 states, viz., Andhra Pradesh, Karnataka, Kerala and Maharashtra, under the Prime Minister's Relief Package. An area of 9,38,378 ha has been identified in these districts and an amount of Rs.144 crore has been disbursed cumulatively as on March 2010.

Integrated Watershed Development in South Bihar A participatory watershed development project, covering 80,000 ha of waste land in eight districts of South Bihar, is implemented under the Special Plan for Bihar component of Rashtriya Sam Vikas Yojana (RSVY). The grant based Rs.60 crore project, routed through NABARD by Planning Commission, is implemented in association with NGOs, watershed communities, SHGs, etc. 30 CBP and 49 FIP projects have been sanctioned and a disbursement of Rs.13.98 crore made as on March 2010. Non-Farm Sector Rural Non-Farm Sector (RNFS) is one of the thrust areas for NABARAD as it holds key to faster economic development through employment generation and increased income in rural areas. It helps in reducing the pace of rural migration to urban areas. Credit Support The manufacturing, processing and service activities in the small and micro enterprises sector with a focus on cottage, village and tiny industries, rural artisans and rural crafts, rural housing sector, Industries, Service and Business (ISB) components of Government sponsored programmes are supported with NABARD refinance. Training Programmes institutions NABARD provided a refinance support of Rs.3,465.99 crore including Rs.704.69 crore for rural housing under rural Non-Farm Sector, during 2009-10 to banks.

for

client

To diversify the loan portfolio and accelerate the credit flow to rural nonfarm sector, the partner financial institutions, viz., RRBs and Co-operative Banks, were extended necessary exposure. During 2009-10, 47 training programmes were conducted through training centres of NABARD for 1220 officers of rural financial institutions.

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Promotional support NABARD provides grant, grant cum soft loan assistance to Rural Development and Self Employment Training Institutes (RUDSETI) and similar institutions, NGOs, voluntary agencies, trusts and promotional and developmental organisations with the objective of employment creation and income enhancement in rural areas on a sustainable, demonstrative and cost effective manner. Rural Entrepreneurship Development Programme (REDP) and Skill Development Programme (SDP) Rural Entrepreneurship Development Programme (REDP) aims at capacity building of rural unemployed youth facilitating setting up their own enterprises. Skill Development Programme (SDP) aims at upgrading skills for higher wage income. Both these initiatives have created positive impact. A grant assistance of Rs.1,253 lakh was sanctioned for conducting 2,627 REDPs/SDPs benefiting 0.62 lakh rural youth, during 2009-10. A cumulative grant assistance of Rs.7,101.53 lakh was provided for conducting 14,532 REDPs/ SDPs benefiting 3.62 lakh persons. Construction/strengthening of rural haats To give fillip to marketing of rural farm and non farm produce and products, grant assistance not exceeding Rs.5 lakh is extended to Panchayati Raj Institutions (PRIs), Primary Agriculture Cooperative Societies (PACS), Village Development Boards (VDBs), NGOs, SHGs Federations, etc., for providing minimum infrastructure facilities like raised platforms with shed, drinking water facilities, cycle stand, toilets, etc., in the new or existing haats. A grant assistance of Rs.460.56 lakh for 96 rural haats was sanctioned during 2009-10. 197 haats with a grant assistance of Rs.791.37 lakh have been cumulatively sanctioned. Rural Mart Financial assistance in the nature of grant assistance is extended for setting up of marketing outlets, known as 'Rural Mart', at district and sub-district level by producers' groups, self help groups and their federations, activity groups, farmers' clubs, etc., for marketing farm and non-farm products including products of rural artisans/ handicrafts sector. The support is intended to cover the risks involved in the initial stages of rural retail marketing. Grant assistance ranging from Rs.0.90 lakh to Rs.1.45 lakh is extended to meet the cost of establishment of rural marts, for an initial period of 15 months, at sub-district and district levels. Non-governmental organisations facilitating the setting up of rural marts are also paid a lump sum grant ranging from Rs.10,000/- to Rs.15,000/-. 119 Rural Marts with a grant assistance of Rs.134.04 lakh were sanctioned during 2009-10. 321 rural marts with a grant support of Rs.332.65 lakh have been sanctioned cumulatively. 14

Committed to Rural Prosperity

Cluster Development For the development of rural non-farm sector and usher in rural industrialisation, NABARD is implementing a Cluster Development Programme. Under the participatory mode of cluster development, the grant support is limited to Rs.15 lakh per cluster for a period of 3 years and under the intensive mode, it is Rs.1 crore for a period not exceeding 5 years. The broad sectors identified under cluster development programme are : Agriculture and allied activities Food processing Small and micro enterprises in rural areas Traditional arts such as handicrafts and handlooms. Cluster programmes approved • 107 clusters including 2 National Programme for Rural Industrialisation (NPRI) clusters . • 56 handloom, 33 handicrafts, 6 rural tourism, 7 food processing and one each of leather, bee keeping and black smithy clusters. • Rs.171.03 lakh was disbursed during 2009-10 for taking the cluster development programme forward. are developed in Chhattisgarh, Jharkhand, Orissa and Madhya Pradesh states. Skill Upgradation and Design Development for Handloom Weavers (SUDHA) The scheme aims at supporting development of new designs for handloom products and upgrading the skills of traditional handloom weavers. Grant assistance is provided for conducting market surveys, design development, engaging design consultants, skill upgradation, training and improving marketing efforts. Marketing and other initiatives Promotional and financial support for marketing products of rural artisans, rural entrepreneurs, SHG members, etc., are extended by sponsoring/co-sponsoring of exhibition cum sales events, melas, etc., such as ‘SARAS-Mahalaxmi Fair’ in Mumbai and similar melas in other cities. This is intended to help the artisans and others to get exposure to urban markets and fine tune their product range and marketing strategies according to the emerging market preferences. 263 exhibition cum sales events were supported during 2009-10. Swarozgar Credit Card (SCC) scheme The Swarozgar Credit Card scheme envisages adequate and timely credit, both working and block capital, to small artisans, handloom weavers, service providers, fishermen, self-employed persons, rickshaw owners, other micro entrepreneurs in rural and urban areas, in a flexible, hassle free and cost effective manner from the banking system. This facility also includes a component for meeting consumption needs. 15

Committed to Rural Prosperity

10.48 lakh cards have been issued cumulatively by banks as at the end of March 2010 with a credit limit of Rs.4,254.88 crore. Rural Innovation Fund (RIF) The NABARD – Swiss Agency for Development and Cooperation (SDC) Rural Innovation Fund (RIF) was created in NABARD in October 2005 to support innovative, risk–friendly, unconventional innovations having the rural poor in focus, across the country. The activities supported from the fund have the rural poor in focus and which are innovative, experimental and demonstrative, leading to replicability and commercial viability. The innovations could be new products, processes, business models or any combination thereof aiming at increasing productivity of rural poor, reducing drudgery, increasing income levels, creating sustainable employment avenues and environmental friendly. Action research and studies contributing to better understanding of rural development issues, knowledge platforms, networking and community practices, policy and process implementation, etc., are also supported. Innovative projects sanctioned Converting mango peel into organic manure Popularising innovative jute retting technology Loan based skill training and placement model for school dropouts from poor families Setting up of wind mills on pilot basis to provide electricity to poor fishermen families 252 innovative projects with a Establishment of ‘Hydrogers’ to produce hydel electricity commitment of over Rs.38 croreSkill Training and Placement Cell for rural migrant labourers in South Rajasthan have been sanctioned under RIF GIS-based software to facilitate project monitoring upto March 2010. Software to help farmers take farm investment decisions Developing a commercially viable model for providing clean drinking water to rural areas in Andhra Pradesh, Gujarat and Manipur Investment in Aavishkaar India Micro Venture Capital Fund to provide venture capital assistance to innovative ventures in rural areas

Micro Finance The Self-Help Group (SHG)-Bank Linkage Programme, formally launched in 1992 by NABARD, attempts to link the poor to the formal banking system in a sustainable and cost effective manner. The programme embodies the collective strength of the poor, manifesting the basic human trait of self-worth. The ‘savings and internal lending first’ concept developed by NABARD facilitated the groups to acquire matured financial behaviour and credit worthiness, enabling them to access institutional credit, paving way for financial inclusion. The Self Help Group (SHG) Bank Linkage Programme is one of the largest and fastest growing cost effective micro finance programme in the world. 16

Committed to Rural Prosperity

SHG – Bank Linkage Scenario 2009-10

Particulars

No.

Savings accounts with Banks

69,53,250

Amount (Rs. crore) 6,198.71

Loans disbursed

15,86,822

14,453.30

Loans outstanding

48,51,356

28,038.28

691

8,062.74

1,513

10,147.54

Bank loans disbursed to MFIs during the year Bank loans outstanding with MFIs Support to Partner Agencies

NABARD, along with non-governmental organisations, voluntary agencies, community based organsiations, local bodies and banks, promotes SHG-Bank linkage programme. The grant assistance to channel partners for promoting and nurturing SHGs, refinance to banks on their loans to SHGs, assistance for capacity building and training of personnel provide impetus to the SHGBank linkage programme.

Grant assistance extended to partners in SHG - Bank Linkage Programme (Rs. lakh) Sanction during 2009-10 Cumulative Sanction Agency No. Amount Cooperative Banks RRBs NGOs Farmers’Clubs Individual Rural Volunteers Total

7 4 306

63.23 40.14 2620.10

2

154.70

319

2878.17

No of SHGs

No. Amount

5230 102 626.36 3395 117 429.44 53393 2624 9025.81

No. of SHGs

Cumulative Progress Amount released

SHGs formed

SHGs linked

59105 47985 345173

252.95 189.23 3469.69 61.96

44618 54271 244367 14858

29075 36155 157831 7986

684.46

40483

63.91

9991

5636

71268 2911 10766.07

492746

4037.74

368105

236683

9250 68

Capacity Building of Partner Agencies To fine tune the strategies for up-scaling support to micro finance sector, NABARD conducts awareness and sensitisation programmes, arranges exposure visits for SHG members, Bankers, Government Officials, representatives of Panchayati Raj Institutions, etc. Grant assistance for computerisation is provided to NGOs, which promote a minimum of 250 SHGs. 17

Committed to Rural Prosperity

Initiatives in Less Developed Regions Rajiv Gandhi Mahila Vikas Pariyojana (RGMVP) in Uttar Pradesh The project, an initiative of Rajiv Gandhi Charitable Trust, in technical collaboration with Society for Elimination of Rural Poverty, for promotion, credit linkage and forming federation of SHGs in select districts of Uttar Pradesh, is supported by NABARD with the involvement of banks and NGOs. The project envisages formation of 22,000 SHGs. 21,868 SHGs have been promoted, of which 12,749 have been credit linked as on 31 March 2010. 676 cluster level and 15 block level federations have been formed. Rural Women Empowerment and Livelihood in mid Gangetic plains The programme, known as “Priyadarshini Project’, launched in December 2009, envisages holistic empowerment of 1 lakh plus poor women and adolescent girls through 7200 SHGs in Sultanpur, Bahraich, Shravasti and Rae Bareily districts of Uttar Pradesh and Madhubani and Sitamarhi districts of Bihar. This eight year programme, funded by International Fund for Agriculture Development (IFAD), has a project outlay of US $ 32.73 million. NABARD is the designated Lead Programme Agency. Scaling up Micro Finance programme Micro-Enterprise Development Programme (MEDP) The Programme, launched in 2005-06, intends to provide skill development and skill upgradation training and development of sustainable livelihoods for venturing into micro-enterprises by matured SHG members. During 2009-10, 1530 MEDPs were supported, benefiting 38,313 SHG members. 2843 MEDPs supported cumulatively, benefiting 71,518 SHG members. Activities covered under MEDP Bee keeping, soyabean cultivation, mushroom cultivation, organic farming, horticulture and floriculture activities, agarbathi making, garments making, beauty parlour, areca leaf plates making, jute crafts, screen printing, crotia and chiken works, motor coil rewinding, decoration works, lantana basket weaving, etc. State specific support in North Eastern Region (a) The ‘Micro-Finance Vision 2011’ project of Government of Arunachal Pradesh is supported by NABARD. Assistance was extended to Essomi Foundation Trust for setting up a

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Resource Centre at Itanagar to provide various capacity building initiatives. Earlier, assistance was extended to the Trust for setting up a micro finance support centre. (b) The ‘State Support Project on SHGs’ of Government of Tripura is supported by NABARD by providing technical and capacity building support for smooth implementation of the project. The project aims to credit link 11,500 existing SHGs, forming and credit linking 35,000 new SHGs and promoting livelihood activities among its 3 lakh members by March 2012. Pilot Project for Promotion of Micro Enterprises The pilot launched in 2005-06, in 9 districts of 9 states, has concluded successfully. Of the 11,714 SHG members identified, 96% underwent orientation training in their chosen enterprise and 7177 members successfully started micro-enterprises. The experience gained from the pilot is being evaluated to draw strategies for launching a full scale programme. Support to Joint Liability Groups (JLGs) The success of the pilot on Joint Liability Groups, to bring small, marginal and tenant farmers, oral lessees, etc., together, to take up farm and non farm activities with credit support from Rural Financial Institutions (RFIs), has enabled NABARD to upscale the programme. Grant assistance is extended to promotional agencies for facilitating formation, nurturing and capacity building of JLGs. Capacity building, exposure visits, etc., to bank staff are also supported by NABARD to familiarise them on JLG financing. Support to Micro-Finance Institutions (MFIs) Registered MFIs in various legal forms, which supplement the efforts of formal banking system in providing credit support to the unreached poor and for financial inclusion, is supported with grant and soft loan assistance. (i) Capital Support and Revolving Fund Assistance Capital support is extended to enable MFIs to leverage funds from banks so that financial services at an affordable cost could be provided to the poor and help the MFIs to achieve sustainability in 3 to 5 years. Rs.6.87 crore sanctioned in 2009-10 to 10 agencies. Cumulative sanction stands at Rs. 27.87 crore to 33 agencies. (ii) Revolving Fund assistance is selectively provided to MFIs for experimenting and innovating an alternative credit delivery system, for on lending to the unreached poor. Greater support is provided to start up MFIs on soft terms to make them sustainable. Rs.23 crore sanctioned during 2009-10 to 13 agencies. .

Cumulative sanction stands at Rs.74.02 crore to 42 agencies.

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(iii) Support for rating of MFIs NABARD provides assistance to commercial banks and RRBs to avail the services of select rating agencies to rate MFIs. The assistance is for the first rating of MFIs with a loan outstanding between Rs.50 lakh and Rs.10 crore. During 2009-10, Rs.6.76 lakh was sanctioned for rating services Successful Pilot Projects SHG-Post Office Programme The project aims at utilising the vast network of Post Offices in rural areas for disbursing credit to the rural poor on an agency basis. NABARD sanctioned Rs.200 lakh as Revolving Fund Assistance (RFA) to India Post for on lending to SHGs in Tamil Nadu. 2828 SHGs have opened savings accounts, of which 1195 SHGs have been credit linked with a loan of Rs.3.21 crore. The project is also implemented in Meghalaya where a revolving fund assistance of Rs 5 lakh has been sanctioned to India Post for onward lending to 50 SHGs in East Khasi Hills. Collaborative Projects with international agencies (i)

Rural Financial Institutional Programme (RFIP)

NABARD, with the technical assistance from GTZ, undertook an inventorisation survey of NGOs working as Micro Finance Organisations in 13 Priority States, to map its profile, nature of activities and assess their capacity development requirements. The survey revealed that 786 MFOs are operating in priority states. (ii) The NABARD-KfW Sewa Bank project implemented in Gujarat aims at providing access to rural and urban women to micro-credit. Rs.2.94 crore has been released during 2009-10 to SEWA Bank taking the cumulative disbursements to Rs.6.87 crore.

Support to Weaker Sections and Women •

Support to Small and Marginal Farmers (SF & MF)

NABARD's refinance policy on production credit (short term loan) stipulates a minimum of 30% of the total lending to small and marginal farmers.

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•

Development of Tribal Population

For the benefit of tribal population, in predominantly tribal areas, a separate line of credit known as “Development of Tribal Population” is extended on liberal terms. Short term credit limits are also extended to cooperatives for financing collection and marketing of minor forest produce by scheduled tribes. •

Adivasi Development Programme (Wadi Project)

‘Wadi (small orchard) project’ is implemented through NGOs for the upliftment of tribals in Gujarat and Maharashtra with grant support from KfW, Germany since 1994-95 and 2000-01 respectively. In Gujarat, 13,663 tribal families have been covered under this programme against the target of 10,000 families through sustainable horticulture production and other supportive interventions like development of water resources, women development, health and sanitation. The phase II of the programme, with an outlay of Rs.42.47 crore is under implementation where 4,700 additional families are expected to be covered. In Maharashtra, 13,848 tribal families in 258 villages have been covered under the programme with a wadi area of 12,294 acres.

Impact of Wadi Project      

•

Rise in employment opportunities Reduction in migration Increased production of fruits and cashew nuts New avenues for processing activities Enhanced entrepreneurial skill Empowerment of women.

Gujarat • 488 SHGs formed. • Income generating activities such as raising nursery, vermincompost, marketing , etc., have been taken up

Maharashtra • 5 village level processing units set up • ‘Vikas Arth’, a credit programme, is under implementation • Credit of Rs.3.44 crore has been extended • Cent percent recoveries

SC/ST Action Plan

NABARD provides refinance to the banks for extending investment credit to the SC/ST population.

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Empowerment of women To address gender discrimination in credit and support services, NABARD has introduced special programmes for women empowerment. •

Women Development Cell (WDC) RRBs and Cooperative Banks are extended grant assistance to set up Women Development Cell. The WDC are intended to facilitate increased credit flow to women, organizing gender sensitisation meets and awareness programmes. 58 WDCs in RRBs, 55 in Cooperative Banks and 3 in SCARDBs have been supported as at the end of March 2010.  

Marketing of Non-Farm products of Rural Women (MAHIMA) Assistance to Rural Women in Non-Farm Development (ARWIND)

The SHG-Bank Linkage Programme, mainstreamed by NABARD, has resulted in empowerment of women in large numbers. DEVELOPMENT OF NORTH EASTERN REGION (NER) STATES - INITIATIVES Short Term Credit 5% relaxation in net Non-Performing Assets (NPA) norm has been granted to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs) to avail of refinance from NABARD. The quantum of refinance for SCBs and RRBs is kept 10% higher than other parts of the country. Long Term (Investment) Credit 5% relaxation in net Non-Performing Assets (NPA) norm has been granted to State Cooperative Banks (SCBs) and 3% for Regional Rural Banks (RRBs) to avail of refinance from NABARD. The rate of interest on refinance has been fixed at 50 basis points lower for Commercial Banks compared to other parts of the country. 100% of refinance is provided to all agencies for eligible purposes. Rural Infrastructure Development Loans The quantum of loan extended from RIDF to various eligible activities under social sector and rural connectivity projects has been kept at 90% as against 85% and 80% respectively in other parts of the country. A maximum phasing of 4 years, as against 3 years for other states, is granted. 30% of the total loan of the RIDF project is sanctioned as mobilisation advance as against 20% to other states. Financial Sector Plan 22

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Based on the recommendations of the Committee on Financial Sector Plan for North Eastern Region, the following relaxations have been extended • •

Minimum number of members in a Self Help Group relaxed to 5 in the hilly districts of NER for consideration of refinance and grant assistance from NABARD. Grant assistance for promoting and nurturing of SHGs by NGO SHPIs working in the hilly districts of NER fixed at Rs.5,000/- per SHG.

Financial Inclusion Commercial Banks, Cooperative Banks and RRBs in NER are provided 100% support of the project outlay from FIF and FITF.

DEVELOPMENTAL INITIATIVES Tribal Development A Tribal Development Fund (TDF) was set up in April 2004, with a corpus of Rs.50 crore out of profits, to support developmental models and creating sustainable livelihoods for tribal population. Assistance from the fund is available for a range of interventions such as raising of suitable horticultural crops, soil and water conservation measures through people's participation and various social sector interventions. The fund is augmented periodically. Financial assistance of Rs.236.19 crore was sanctioned for 79 projects benefiting 63,113 families during 2009-10. 191 projects with a commitment of Rs.543.62 crore were sanctioned in 22 states and 2 UTs benefiting more than 1,56,300 tribal families as on March 2010,. Collaborative projects with Coconut Development Board, Central Silk Board and Corporate Houses are under implementation. Financial Inclusion Financial Inclusion is intended to ensure timely and adequate credit at an affordable cost and provide access to financial services to weaker section of the population, who still are outside the ambit of basic banking system. Financial Inclusion Fund (FIF), for developmental and promotional activities to secure greater financial inclusion and Financial Inclusion Technology Fund (FITF), for supporting suitable technology and innovations for financial inclusion, have been set up with NABARD on the recommendations of the ‘Committee on Financial Inclusion’ headed by Dr. C. Rangarajan. The corpus of the funds is Rs.500 crore each, contributed by GoI and RBI (40% each) and NABARD (20%).

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Two separate Advisory Boards have been constituted by GoI for guiding and tendering policy advice on various aspects of providing assistance from the funds. As on 31 March 2010, the total contribution under FIF and FITF stood at Rs.50 crore each. Few projects sanctioned under FIF during 2009-2010 • Pilot project to establish Farmers’ service centres / Village knowledge centres, mobile credit counselling centres, promotion of financial literacy and farmer education through mass media to promote financial inclusion in 8 districts of Kerala. • Viability gap funding for biometric card project through BC/BF model in North East Region for Smart card based accounts. • Support for Certificate Course for Business Correspondents (BCs) and Business Facilitators (BFs) to Indian Institute of Banking and Finance (IIBF) to cover 20,000 candidates over a period of 2 years, i.e., 2009-10 and 2010-11. • Support to Thrissur District Cooperative Bank for setting up of Information Dissemination cum Human Resource Development Centre. • Using Post offices as Business Correspondents of RRBs. • Micro credit programme in Nagaland with Village Development Boards (VDBs) as intermediaries, by augmenting their corpus. • Project for Financial Inclusion with Farmers’ Clubs acting as BF of RRB in Assam.

Few projects sanctioned under FITF during 2009-2010 i. Financial Inclusion Project for implementing Core Banking Solution through usage of ‘COIN’ software developed by National Informatics Centre (NIC). ii. Pilot Project for extending financial services through Business Correspondents and enabling contact less smart card and biometric fingerprint scanning technology. iii. Banking services through 1 lakh new accounts using BC model and bio-metric enabled mobile services. iv. Financial services to rural households through Information, Communication Technology (ICT) and ATMs. v. Financial transaction facilities in villages by establishing Point of Sale (POS) with technical and infrastructure support.

Micro Finance Development and Equity Fund (MFDEF) The MFDEF is intended for promoting various microfinance activities such as formation and linkage of SHGs through SHPIs, training and capacity building of stake holders, capital and soft loan assistance to MFIs, livelihood propagation, studies, documentation, etc. During 2009-10, Rs.80.91 crore was released from the fund, of which Rs.20.49 crore as grant for promotional activities and Rs.60.42 crore to MFIs as capital support and revolving fund assistance.

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Farmers’ Technology Transfer Fund (FTTF) A ‘Farmers’ Technology Transfer Fund’ (FTTF) was set up by NABARD, with an initial corpus of Rs.25 crore in April, 2008. The fund intends to support transfer and dissemination of appropriate technology for enhancing production and productivity, reduction in cultivation costs, arranging training-cum-exposure visits, organising informal association of farmers, viz., Joint Liability Groups, Producers’ Groups, Producers’ Companies, etc. The corpus of the fund has been enhanced to Rs.50 crore. During 2009-10, 151 proposals were sanctioned in 22 states involving grant assistance of Rs.4.88 crore and the cumulative disbursement was at Rs.14.60 crore as on March 2010.

Major projects sanctioned • Promotion of organic cotton cultivation • Promotion of sustainable organic farming • Nutrient management in rice • Establishment of Farmers’ Science Museum • Transfer of technology in seed production and certification • Promotion of indigenous honey bee keeping with fixed bee hives and movable frames • Project on management of fruit flies in mango and cucurbits using new technology • Scientific integrated pig-cum-fish farming • Livelihood support through vegetable cultivation and dehydration of vegetables • Improvement in sericulture productivity through technological interventions

Prepaid vouchers of Reuters Market Light (RML), facilitating SMS based personalised information on mobile phones relating to market prices, crops and weather were provided to select Farmers’Clubs in Karnataka, Maharashtra and Rajasthan, for sharing important information with other farmers in the villages.

Farm Innovation and Promotion Fund (FIPF) Farm Innovation and Promotion Fund (FIPF) set up with a corpus of Rs.5 crore in April 2005, was enhanced to Rs.50 crore in April 2009. The fund intends to promote innovative and feasible concepts and projects in farm sector, developing commercially viable prototypes, acquiring new and innovative technology, obtaining patent, extension support for marketing and knowledge dissemination, etc. In 2009-10, 17 proposals in 11 states, with a financial assistance of Rs.1.55 crore were sanctioned of which the grant component was Rs.1.35 crore. Cumulatively, 78 Projects have been sanctioned involving a financial assistance of Rs.6.18 crore of which 25 projects with a financial assistance of Rs.1.04 crore have been completed.

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Major projects sanctioned • Extraction of zero calorie white powder sweetener from stevia plant • Development of prototype machinery for filling vermicompost production pits • Promoting system of wheat intensification • Enhancing productivity of castor through drip irrigation • Demonstrating hand held device – mobile TV for online technology transfer • Increasing sugarcane productivity through trench planting • Cost effective shrimp farming

Village Development Programme (VDP) The Village Development Programme (VDP), introduced in 2007, aims at developing identified villages in a holistic manner by involving the local populace, governmental agencies, banks, NGOs, etc. The programme covered 953 villages in 437 districts of 25 states in the first phase. An additional 1,500 villages are proposed to be covered in the second phase.

Impact of VDP • Financial Inclusion • Mobilising villagers into Self Help Groups, Farmers’ Clubs, Joint Liability Groups • Availability of clean drinking water and improved sanitary conditions • Better road connectivity • Development of infrastructure like school buildings, health centres, etc. • Soil and water conservation initiatives • Improved agricultural practices • Use of solar energy Capacity Building for Adoption of Technology (CAT) The ‘Scheme for Capacity Building for Adoption of Technology’ (CAT) facilitates exposure visits and training to farmers for adopting new and innovative methods of farming. Farmers, preferably marginal and small are taken on exposure-cum-training visits to innovative agriculture and allied sector projects where proven technologies are developed by research institutes, corporate houses, NGOs and progressive farmers/entrepreneurs. 261 exposure visits were arranged for 6,516 farmers, in collaboration with select research institutes, Krishi Vignyan Kendras and Agriculture Universities covering areas such as medicinal plants, tissue culture, vermicompost, poultry farming, drip irrigation, off-season hybrid vegetable cultivation, sericulture, ornamental fish and aquarium maintenance, etc., during 2009-10.

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Farmers' Club Programme The ‘Vikas Volunteer Vahinee’ programme launched in November 1982 to promote the five principles of “Development through Credit” was rechristened in 2005 as Farmers’ Club Programme. Farmers’ Clubs – Mission Development of rural areas through credit, technology transfer, awareness and capacity building.

The basic objective of the programme is to organise farmers into an informal association to forge better relationship with banks, arrange interface with subject specialists in the area of agriculture, crop cultivation and maintenance, liaise with input suppliers and marketing network. It also intends to address the counseling needs in areas of credit, technology, marketing, etc. Five Principles of “Development through Credit” • • • • •

Credit must be used in accordance with the most suitable methods of science and technology, The terms and conditions of credit must be fully respected, Work must be done with skill so as to increase production and productivity, A part of the additional income created by credit, must be saved, Loan installments must be repaid in time and regularly so as to recycle credit.

16,590 clubs were launched during 2009-10, taking the cumulative number of clubs to 54,805 covering 1,04,648 villages in 587 districts. District level presence – District Development Managers (DDMs) NABARD has set up residence-cum-office of DDMs to associate with the credit planning process in the districts. The DDMs are single referral point on matters related to agriculture and rural development. They are involved in monitoring implementation of credit plan of banks and credit linked programmes of Government and undertake various promotional and developmental initiatives of NABARD. The developmental interests and activities in districts not covered by DDMs are attended by District Development Officers (DDOs) from the Regional Offices of the States concerned. DDM Offices have been set up in 395 districts of the country with another 106 districts tagged to DDM districts, as on March 2010.

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Umbrella Programme on Natural Resources Management (UPNRM) NABARD and the German Development Cooperation launched a joint Umbrella Programme on Natural Resource Management (UPNRM) in 2007-08. The programme aims at improving livelihood situation in rural areas by promoting and funding sustainable use, management and conservation of natural resources. UPNRM envisages a shift from a project based to programme based approach, with growing emphasis on achieving strategic impact on development policies. A gradual shift from grant to loan based funding is also envisaged. 30 projects in 10 states, with a financial assistance of Rs.79.35 crore (74.29 crore loan and 5.06 crore as grant) have been sanctioned. The cumulative disbursement under UPNRM has reached 15.32 crore (14.33 crore loan and Rs 0.99.crore grant) by March 2010. Financing purchase of land for agriculture purposes A scheme for “Financing Purchase of Land for Agriculture Purposes”, which is under implementation since August 2001, aims at providing credit facility to small and marginal farmers, share croppers, tenant farmers for purchasing agriculture land with the objective of consolidation and having an economical unit for agricultural purposes, within the prescribed land ceiling of the state. Rs.30.51 crore was extended as credit to 687 beneficiaries in 8 states and refinance of Rs.25.88 crore during 2009-10. Pilot project for augmenting productivity of lead crops/activities NABARD has formulated a “Pilot project for augmenting productivity of lead crops/activities through adoption of sustainable agricultural practices”, with a focus on major/lead crops. The project is implemented in 4 to 6 clusters of 5 villages each, so as to cover 600-900 villages in different states. The project aims at augmenting income of the farmers, especially small and marginal farmers, through enhanced production and productivity. The focus is on 3 to 4 lead crops/activities such as cereals, pulses, oilseeds, vegetables, dairy, etc. Agricultural Insurance NABARD, as an equity holder, partners with Agriculture Insurance Company of India Ltd. (AICI) in achieving its objective of protecting both the loanee and non-loanee farmers, without any ceiling on the land holdings, against losses suffered on account of crop failure due to natural calamities, etc., and help them to be credit worthy. All food crops (cereals, millets and pulses) oilseeds and eleven annual horticultural/commercial crops are covered under the “National Agricultural Insurance Scheme” (NAIS). In the case of small and marginal farmers 50% of premium is given as subsidy. The Scheme is compulsory for loanee farmers and voluntary for non-loanee farmers. The claims are settled on the basis of actual yield after assessing the extent of crop loss, based on crop cutting experiments.

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A modified NAIS, to be piloted in 50 districts of 21 districts, with modified features, is on the anvil Weather Based Crop Insurance A 'Weather Based Crop Insurance Scheme (WBCIS)' on pilot basis, is under implementation, in select states since 2007-08. The scheme aims to provide insurance protection against adverse weather incidence affecting crops. Under the scheme, the difference between actuarial rates and flat rates in respect of food and oilseeds crops is equally shared by Central and State Government. Other parameters are identical to NAIS. NAIS will not be available in areas where WBCIS is implemented. AICI and 2 private insurers are implementing WBCIS. Cattle development project in Eastern Uttar Pradesh and Bihar NABARD is coordinating and facilitating implementation of ‘Cattle Development Project’ of GoI, which aims at providing gainful employment opportunities to rural poor through animal husbandry and live stock development. The project is implemented through an NGO in 13 districts of Bihar and 17 districts of Uttar Pradesh. Rs.2.12 crore and Rs1.64 crore have been released for Uttar Pradesh and Bihar States respectively during 2009–10, taking the cumulative disbursement to Rs.10.99 crore to each state, against the allocation of Rs.13.61 crore. Special Project on Livelihood Based Development in Uttar Pradesh The project envisages cluster based poverty alleviation approach by adopting multi activity interventions. 4,000 BPL families in Sultanpur and Rae Bareli districts are covered under the project. NABARD is coordinating the project and during 2009-10, Rs.6.98 crore was disbursed taking the cumulative disbursement to Rs.15.96 crore. INSTITUTIONAL DEVELOPMENT Rural Financial Institutions (RFIs) have a critical role in dispensing credit to agriculture and allied sector. A strong and viable rural institutional credit frame work is vital for the growth of rural economy. Strengthening these institutions, especially the Cooperative Credit Structure and the Regional Rural Banks, has been an area of focused attention of NABARD. To improve the health of these RFIs, various developmental, promotional and capacity building measures in the managerial and financial areas have been initiated by NABARD. Organisation Development Intervention (ODI) Organisation Development Intervention is a re-engineering process which facilitates to achieve the mission of the organisation. ODI is conducted by NABARD since 1994-95 as a tool to improve their financial health by involving the human resources of the organisation. The design and methodology of ODI have been revised to focus on sustainable viability against the backdrop of

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recent developments such as amalgamation of RRBs and implementation of revival package by the short-term cooperative credit structure .11 ODIs were conducted during 2009-10. Revival of Short-Term Rural Co-operative Credit Structure(STCCS) A package for revival of the Short-Term Rural Co-operative Credit Structure (STCCS), by making it a well-managed and vibrant medium to serve the credit needs of rural India, is under implementation. This package is based on the report of the Task Force under the chairmanship of Prof A. Vaidyanathan. NABARD is coordinating, facilitating and monitoring the implementation of this package, which has an outlay of Rs.13,596 crore. The package aims at providing financial assistance to bring the system to an acceptable level of health, introduction of legal and institutional reforms necessary for their democratic, self-reliant and efficient functioning and measures to improve the quality of management. Under the package, financial assistance is provided for cleansing of balance sheets of STCCS (as on 31 March 2004) and capital infusion to ensure minimum CRAR of 7 per cent. Twenty five States have executed the MoU with GoI and NABARD, to implement the package, covering 96 per cent of the STCCS in the country. Initiatives under the Revival Package • Sixteen states have amended their Cooperative Societies Act. • ‘Fit and Proper Criteria’ has been prescribed by RBI for appointment of Directors and Chief Executive Officers of State Cooperative Banks and District Central Cooperative Banks. • Common Accounting System (CAS) and a Management Information System (MIS) for PACS have been introduced to standardise the accounting systems and facilitate the decision-making process. • Guidelines on computerisation of CAS and MIS for PACS have been issued • For training of PACS functionaries and their Board Members, training modules along with • Training material in vernacular, elaborate trainers’ manual and guide have been developed. • 73,650 PACS secretaries have been trained in fourteen States and 1,00,107 elected members of PACS have been trained in eleven States under Phase I. • 61,644 PACS functionaries have been provided training on CAS/MIS along with 3,471 auditors/supervisors to provide handholding support to the PACS. • CEOs of CCBs have been trained in a special 5 day module on business development. • 1,699 board members of CCBs have been trained from fourteen States. Rs.7,972.22 crore has been released by NABARD as GoI share for full recapitalisation of 49,764 PACS in fourteen states, while the State Governments have released their share of Rs.752.88 crore. Recapitalisation of CCBs and SCBs will be taken up after recapitalisation of PACS.

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Impact of the Revival Package – Changes brought in  Amendments to the State Cooperative Societies Act have made the STCCS memberdriven and autonomous, affording them freedom in financial and administrative matters.  49,764 PACS have been fully recapitalised, substantially improving their net worth  Settlement of dues of PACS to upper tier has resulted in enhanced borrowing powers.  Appointment of CEOs and Professional Directors on Boards of SCBs and CCBs as per ‘Fit and Proper’ criteria prescribed by the RBI is expected to bring professionalism.  Preparation of Balance Sheet of the PACS as per a Common Accounting System (CAS), generation of information as per prescribed MIS formats and computerisation would lead to uniformity in accounting procedures, minimise scope for misappropriation and frauds and ensure transparency.  PACS’ have started preparing Business Development Plans for prudent utilisation of funds and business diversification.  Statutory audit of CCBs and SCBs is being conducted by Chartered Accountants. The implementation of the Package is guided and monitored by Implementing and Monitoring Committees at the national (NIMC), state (SLIC) and district (DLIC) levels. Cooperative Development Fund (CDF) The Fund was constituted in 1992-93 for supporting various developmental activities like infrastructure development of Primary Agriculture Credit Societies (PACS), computerisation, human resource development, etc. The scheme has been revamped to include establishment of Business Development Department in SCBs aand DCCBs, computer labs in training establishments, ISO certification of Cooperative Banks, etc. The fund has a corpus of Rs.125 crore which is replenished by NABARD periodically. The disbursement during 2009-10 has been Rs.4.24 crore, taking the cumulative disbursement to Rs.81.98 crore. Development Action Plan and Memorandum of Understanding (DAP-MoU) NABARD has been guiding and facilitating preparation of institution specific Development Action Plan (DAP) and execution of Memorandum of Understanding (MoU) by Cooperative Banks since 1994-95 to enable them to function as viable and sustainable entities. The implementation of DAPMoU in three phases had come to an end in 2006-07 and the modified phase IV (2007-08 to 20112012) is under implementation covering both Short Term and Long Term Credit Structure. Primary Agriculture Credit Societies were also covered in the DAP- MoU exercise during the third phase of the programme. A high powered ‘State Level Task Force (SLTF)’ has been constituted for effective monitoring of performance on quarterly basis. 28 states have constituted SLTF.

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OTHER INITIATIVES Capacity Building of short term cooperative credit structure To familiarise with the developments in banking sector in general and cooperative sector in particular, create awareness on their responsibilities, oversee the performance of the bank's operations, ensure that they function in accordance with the guidelines issued by the RBI, NABARD, GoI, State Government, etc., training programmes are organised by NABARD for the benefit of Directors in the Board of Cooperative Banks. As part of capacity building initiative, 81 training programmes were conducted for 1,413 Directors from 200 DCCBs and SCBs. Exposure visit of PACS staff NABARD, in association with GTZ, organised 13 exposure visits for the staff of weak PACS to enable them to replicate the successful functioning of the revamped PACS through improved system and procedures, innovative financial products, new techniques and better recovery strategy. Human Resource Policy for cooperative credit structure As part implementation of the revival package for short term cooperative credit structure, a Working Group was constituted under the Chairmanship of Shri S.K. Mitra, Executive Director, NABARD to formulate comprehensive human resource policy guidelines. Based on the recommendations of the Working Group, guidelines have been issued to all SCBs and DCCBs. The Working Group has also recommended constitution of a State Level Steering Group for preparation of a road map for implementing the recommendations of the Working Group and monitoring and review thereof. Computerisation in SCBs and DCCBs To introduce advance technology to stimulate the functioning of Cooperatives, a Working Group under the Chairmanship of Dr. Prakash Bakshi, Executive Director, NABARD, has been constituted to make suitable recommendations. Amalgamation and recapitalisation of Regional Rural Banks (RRBs) To achieve the objective of structural consolidation of RRBs, the state-wise/sponsor bank-wise amalgamation process has resulted in reduction of RRBs to 82 including 36 are stand-alone RRBs. As part of recapitalisation, 27 RRBs with negative net worth were identified for capital support. The recapitalization amount of Rs.1,795.97 crore has been released by GoI, State Governments concerned and Sponsor Banks. NABARD coordinated and facilitated the amalgamation and recapitalisation exercise of Government of India. Branch Expansion by RRBs 120 new branches were opened during 2009-10, as part of branch expansion programme of RRBs announced in the Union Budget 2007-08, taking the total number branches to 15,301.

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Financial Inclusion with ICT solution RRBs have been functioning as intermediaries for financial inclusion in rural areas. To extend banking services in 256 most excluded districts identified by the Committee on Financial Inclusion, 15 RRBs in 14 states were identified for an R & D project on financial inclusion with ICT based solution through use of smart cards, Point of Sale (POS) devices and mobile technology in different regions and client groups. The project, in a Public-Private Partnership model, is supported by World Bank and with incentive from NABARD under the Financial Inclusion Fund.

SUPERVISION The statutory inspections of SCBs, DCCBs and RRBs and voluntary inspection of SCARDBs and select apex non-credit cooperatives are undertaken by NABARD. The objectives of NABARD's inspection are to assess the financial and operational soundness, managerial efficiency and compliance to various statutory provisions so as to protect the interest of the depositors and stake holders. The findings and observations brought out through inspections are communicated to the banks concerned, Registrar of Cooperative Societies (RCS), State Governments and in respect of RRBs to sponsor banks. Off-site surveillance of the Cooperative Banks and RRBs is also undertaken and appropriate warning signals are issued to enable the banks to take corrective measures. The Board of Supervision, constituted as an Advisory Committee to the Board of Directors of NABARD, provides guidance and suggestions on policies and matters relating to supervision. Banks under NABARD’s supervision State Cooperative Banks (SCBs) District Central Cooperative Banks (DCCBs) Regional Rural Banks (RRBs) State Cooperative Agriculture and Rural Development Banks (SCARDBs)

: 31 : 370 : 82 : 18

360 banks were inspected during 2009-10. A partnership has been forged with GTZ, Financial Intelligence Unit of the Ministry of Finance, etc., for a holistic and effective approach towards supervision and to strengthen the internal checks and control system in the banks supervised.

RESEARCH AND DEVELOPMENT NABARD has constituted a Research and Development Fund for supporting research projects, studies, training, conduct of seminars and other related activities on matters of importance to agriculture and rural development. During 2009-10, nine research projects on different subjects involving a grant assistance of Rs.1.37 crore were sanctioned. Grant assistance of Rs.0.89 crore was sanctioned to Universities, Research Institutes, NGOs and other agencies across the country for organising seminars,

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Committed to Rural Prosperity

conferences, workshops and symposia on subjects like farm business economics, agri-extension, agri-marketing, rural infrastructure, commodities futures, micro-credit, bio-technology, fisheries, plantation and horticulture, etc. An amount of Rs.9.83 crore was utilised from the fund for research projects, studies, seminars and other activities during 2009-10. The cumulative disbursement at the end of March 2010 was at Rs.118.52 crore.

NABARD CONSULTANCY SERVICES (NABCONS) NABARD Consultancy Services Pvt. Ltd. (NABCONS) is a wholly owned subsidiary of NABARD. It has established reputation as a professional consultancy service provider in the field of agriculture and rural development. The services of NABCONS are contracted by various agencies like Government of India, State Governments, banks, international bodies, corporate entities and individuals in a wide range of projects fields and purposes. NABCONS has so far contracted 1035 assignments worth Rs.69.12 crore.

SOURCES AND USES OF FUNDS The total assets of NABARD as on 31 March 2010 were Rs.1,36,292 crore and the owned funds were Rs.28,657 crore. The loans and advances outstanding increased by Rs.21,653 crore during 2009-10. The gross income has been Rs.7,965 crore and the surplus after tax worked out to Rs.1,558 crore. Out of the surplus, Rs.400 crore was transferred to National Rural Credit (LTO) Fund to be utilised to provide refinance for investment credit purposes and Rs.10 crore to NRC (Stabilisation) Fund for conversion of short term loans. Rs.350 crore has been contributed to the Special Reserve Fund created in terms of Section 36(1)(viii) of Income Tax Act, 1961 apart from appropriation to the other funds. The Capital to Risk Weighted Assets Ratio (CRAR) as at the end of March 2010 was 24.95%. The percentage of net Non-Performing Assets to Net Loans and Advances was a nominal 0.02%.

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