Question

Answer each of these questions in about two hundred and fifty words:

Explain in detail objectives and three important Primary functions ofNABARD.

Answer 1

National Bank for Agriculture and Rural Development (NABARD): On 15th December, 1981, National Bank for Agriculture and Rural Development (NABARD) Bill was passed in the Parliament, which started functioning on 1st July, 1982. NABARD was established according to the Preamble to the Act, for providing credit for the promotion of:

1. Agriculture
2. Small-scale Industries
3. Cottage and Village Industries
4. Handicrafts and other rural crafts
5. Other economic activities in rural areas with a view for promoting IRDP.

Objectives:

1. The bank will serve as a financing institution for institutional credit such as long-term, short-term, and for the promotion of activities in rural areas.
2.  To provide direct lending to any institution as may be approved by the central government.

Functions: The primary functions of NABARD can be classified under three heads:

1. Credit Functions: NABARD provides different types of refinance to eligible institutions. They assist entrepreneurs through:Short-term credit to State Cooperative Banks, Regional Rural Banks and Other financial institutions approved by RBI.
2.  Developmental Functions:
   • NABARD coordinates the operations of rural credit institutions.
   • It develops expertise to deal with agricultural and rural problems so as to assist in rural development efforts.
3. Regulatory Functions:
   • NABARD is empowered to undertake inspection of RRBs and Cooperative Banks, other than the Primary Cooperative Banks.
   • Toopenanew branch, arecommendation ofNABARD is imperative by RRBs or Cooperative Banks to seek permission from RBI.