NABARD

INTRODUCTION :

NABARD is 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.
In discharging its role as a facilitator for rural prosperity, NABARD is
entrusted with

1. Providing refinance to lending institutions in rural areas

2. Bringing about or promoting institutional development and
3. Evaluating, monitoring and inspecting the client banks

Besides this pivotal role, NABARD also:

Acts as a coordinator in the operations of rural credit institutions

Extends assistance to the government, the Reserve Bank of India and
other organizations in matters relating to rural development
Offers training and research facilities for banks, cooperatives and
organizations working in the field of rural development
Helps the state governments in reaching their targets of providing
assistance to eligible institutions in agriculture and rural development
Acts as regulator for cooperative banks and RRBs

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Genesis :

At the instance of Government of India Reserve Bank of India (RBI),

constituted a committee to review the arrangements for institutional credit
for agriculture and rural development (CRAFICARD) on 30 March 1979,
under the Chairmanship of Shri B.Sivaraman, former member of Planning
Commission, Government of India to review the arrangements for
institutional credit for agriculture and rural development. The Committee, in
its interim report, submitted on 28 November 1979, felt the need for a new
organisational device for providing undivided attention, forceful direction
and pointed focus to the credit problems arising out of integrated rural
development and recommended the formation of National Bank for
Agriculture and Rural Development(NABARD). The Parliament, through
Act,61 of 1981, approved the setting up of NABARD. The bank came into
existence on 12 July 1982 by transferring the agricultural credit functions of
RBI and refinance functions of the then Agricultural Refinance and
Development Corporation (ARDC). NABARD was dedicated to the service
of the nation by the late Prime Minister Smt. Indira Gandhi on 05 November
1982.

NABARD was set up with an initial capital of 100 crore. Consequent to

the revision in the composition of share capital between Government of
India and RBI, the paid up capital as on 31 March 2013, stood at 4000
crore with Government of India holding 3,980 crore (99.50%) and
Reserve Bank of India 20.00 crore (0.50%).

Mission

Promote sustainable and equitable agriculture and rural prosperity through

effective credit support, related services, institution development and other
innovative initiatives.

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Functions

FINACIAL FUNCTIONS

1.Short term and medium term loan

Modern agriculture, as distinguished from traditional cultivation, involves

substantial investment of recurring nature for using high yielding varieties of
seeds, fertilizers, insecticides and costly agricultural implements. In such a
situation, arrangements for credit should go much beyond the simple
provision of credit and must be linked operationally with productivity and
other services. Production and productivity, marketing and raising the level
of surplus and savings must, therefore, be the major functions of credit.
The benefit of modern technology, the advantages of institutional credit,
infrastructural arrangements etc., should accrue to all classes of farmers.
Besides, on the supply side, there must be an arrangement for assessing
the requirements of funds on the basis of actual cost and raising the
resources there for. It was in this context, the crop loan system or the
production oriented system of lending was evolved and conceived as the
most appropriate mechanism for mass disbursement of production credit.

Production Credit Department (PCD) deals with short term refinance

facilities, for various types of production, marketing and procurement
activities, being provided to client institutions, as detailed below.

Short Term (Seasonal Agricultural Operations)

Refinance is provided for production purposes at concessional rate of

interest to State Cooperative Banks (SCBs) and Regional Rural Banks
(RRBs) by way

of sanction of credit limits. Each withdrawal against the sanctioned credit

limit is repayable within 12 months.
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Short Term Refinance to RRBs, PSBs and CCBs (directly) for

financing PACS for their Seasonal Agricultural Operations

A new refinance product for financing of PACS through PSBs & RRBs,
where ever Cooperative Banks are weak or not in a position to lend to
PACS adequately, was introduced during last year. (2011-12)

Short Term ( Others )

The ST ( Others ) limit would consist of different purposes viz. ST-

Agriculture and Allied Activities, ST - Marketing of crops, ST- Fisheries
Sector,ST- Industrial Cooperative Societies (other than weavers), ST-
Labour Contract and Forest Labour Cooperative Societies including
collection of Minor Forest produce. ST- Rural artisan including weavers
members of PACS/LAMPS/FSS, ST- Purchases, Stocking and Distribution
of Chemical Fertilisers and other Agricultural Inputs on the basis of bank
wise RLP for respective purposes. The limit is sanctioned to SCBs and
RRBs.

MT Conversion.

NABARD provides relief to farmers whose crops are damaged due to

natural calamities, by way of conversion of current short term agricultural
loans into medium term loans and replacement / reschedulement of
existing MT (Conversion) loans. Consolidated limit will be sanctioned to
RRBs and SCBs in respect of eligible DCCBs.

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Refinance support is available under ST (Weavers) as under :

1. Working Capital requirement of Primary/Apex/Regional Weavers Coop

Society - through State Coop Banks/DCCBs
2. Working Capital requirement of Primary Weavers Coop Society through
Scheduled Commercial Bank
3. Working Capital requirement of State Handloom Development Corporation
through Scheduled Commercial Banks & State Cooperative Banks
4. Working Capital and Marketing requirement of Individual Weavers,
Handloom Weavers Groups, Master Weavers, Mutually aided Coop
Societies, Societies outside Coop fold and Producer Group Companies
through Scheduled Commercial Banks & RRBs

2.Long term loans

Investment credit leads to capital formation through asset creation. It

induces technological up gradation resulting in increased production,
productivity and incremental income to farmers and entrepreneurs.This is a
long-term refinance facility. The credit is normally provided for a period of 3
to 15 years. It is intended to create income generating assets in the
following sectors:

1. Agriculture and allied activities

2. Artisans, small scale industries, Non-Farm Sector (Small and Micro
Enterprises), handicrafts, handlooms, power looms, etc.
3. Activities of voluntary agencies and self help groups working among the
rural poor

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Eligible Institutions

The Institutions Eligible for Refinance are :

1. State Co-operative Agriculture & Rural Development Banks (SCARDBs)

2. Regional Rural Banks (RRBs)
3. State Co-operative Banks (SCBs)
4. Commercial Banks (CBs)
5. State Agricultural Development Finance Companies (ADFCs)
6. Scheduled Primary Urban Co-operative Banks (PUCBs)
7. North East Development Finance Corporation (NEDFC)
8. Non-Banking Financial Companies (NBFCs)

II. Purposes :

a. Farm Sector :

Agriculture and allied activities such as minor irrigation, farm

mechanization, land development, soil conservation, dairy, sheep/goat
rearing, poultry, piggery, plantation/horticulture, forestry, fishery, storage
and market yards, bio-gas and other alternate sources of energy,
sericulture, apiculture, animals and animal driven carts, agro-processing,
agro-service centres, etc.

1. Non-Farm Sector :

Artisans, Small & Micro Enterprises, handicrafts, handlooms, power looms,

etc

Loan Period :

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The loan period is upto a maximum of 15 years

3.Eligible schemes for Refinance under Non-farm Sector

Automatic Refinance Scheme (ARF)

The various schemes formulated over the years have been categorized into
five distinct and compact schemes.

i. Composite Loan Scheme (CLS)

Under this scheme refinance is given to meet the block and /or working
capital requirements of small/micro enterprises. Max. refinance of 10
lakh per unit.

ii. Integrated Loan Scheme (ILS)

Under this scheme refinance is given to block capital and working capital
for one operating cycle. Max. Refinance of 15 lakh per borrower.

iii. Self Employment Scheme for Ex-servicemen (SEMFEX)

The scheme has been in operation since 15 January 1988 which is

specially designed to provide a comprehensive package of credit for
encouraging ex-servicemen to undertake agricultural and allied activities or
to set up non-farm units in rural areas to earn their livelihood for leading a
dignified life. NABARD provides refinance assistance under Automatic
Refinance Facility (ARF) to eligible banks for a wide spectrum of

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manufacturing, processing and service sector activities under RNFS

(Investment Credit).

iv. Soft Loan Assistance for Margin Money (SLAMM)

The scheme is to provide financial assistance to the prospective

entrepreneurs who have the requisite talent and skill of entrepreneurship
but lack necessary monetary resources to meet the margin requirements
stipulated under relevant NABARD refinance schemes.

Small Road and Water Transport Operators (SRWTO)

Under this scheme the facilities for acquisition of transport vehicles, which
are to be used for transportation of farm produce/industrial products to
rural/urban marketing centers including passenger transport vehicle and
water transport units. Margin money assistance will be extended on a very
selective basis up to 10% of the cost of the vehicle.

Rural Housing

Housing in the rural areas, both agriculturist and non-agriculturists,

combine the business as well as dwelling needs and thereby leads to
overall rural development, NABARD is giving refinance (investment credit)
to the eligible banks.

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Renewable Energy

While addressing Indias energy security challenges, Ministry of New and

Renewable Energy (MNRE), Government of India and the Jawaharlal
Nehru National Solar Mission (JNNSM). In order to achieve this objective,
the MNRE has launched a capital cum interest subsidy scheme for creation
of off-grid, decentralized solar powered energy harvesting devices through
application of photo voltaic technology for the purpose of lighting, heating,
etc. at the level of domestic and mini commercial applications. NABARD is
the nodal agency for giving feasibility and Refinance for eligible projects.

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Refinance Window :

a. Automatic Refinance Facility (ARF) :

Automatic Refinance Facility (ARF) will be extended to the

Commercial Banks/State Coop Banks/ Regional Rural
Banks/Primary Urban Coop Banks/ADFCs/NEDFI/NBFCs
without any upper ceiling on quantum of refinance, bank loan
or TFO for all kinds of projects under Farm Sector (FS) & Non
Farm Sector (NFS). However, ARF will be extended to the
SCARDBs for projects with TFO up to 50.00 lakh for all
kinds of projects under Farm Sector (FS) and Non- Farm Sector
(NFS).

b. Pre-sanction Procedure :

In case, any bank intends to avail refinance under pre-sanction

procedure, they may submit projects to NABARD for project
based lending (Subject to Appraisal & Prior Sanction by
NABARD ).

Extent of Refinance :

The extent of refinance will be up to 100% of eligible bank loans

depending upon the purpose, location of the investment and agency
applying for refinance.

Criteria for Refinance :

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Technical Feasibility of the project

financial viability and bankability
Organizational arrangements for credit supervision

Ultimate Borrowers :

Although refinance is provided to SCARDBs / SCBs / CBs / RRBs /

ADFCs / PUCBs / NEDFC the ultimate borrowers of investment
finance may be individuals, proprietory/partnership concerns,
companies, state-owned corporations or co-operative societies.

Interim finance :

SCARDBs are being extended interim finance in order to enable them

to tide over the temporary liquidity problem, for a period of three
months, which can be converted into regular refinance.

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Direct Lending to Cooperative Banks Working Capital Loans to

SCBs/CCBs against Pledge limits to Cooperative and Private Sugar
factories

NABARD has been traditionally providing refinance assistance to SCBs on

behalf mop CCBs for various Short term credit activities under its Short
Term Credit policy. It has been observed that SCBs/CCBs have availed
refinance from NABARD mostly for seasonal agricultural operations and
other short term credit requirements are met mainly from their own
resources. In order to unlock the funds of SCBs/CCBs and enable them
to make prompt payments to farmers towards procurement of
sugarcane, it has been decided to provide refinance assistance to
SCBs/CCBs against pledge limits sanctioned to cooperative and private
sugar factories. Accordingly, a short term credit product for CCBs/SCBs for
sanction of pledge limits to cooperative and private sugar factories has
been developed. The features of the credit product are given as under:

i. Product:

Refinance assistance to cooperative Banks viz SCBs and CCBs against

loans to cooperative and private sugar factories against pledge of sugar
stocks so as to enable them to unlock their funds blocked for other
activities.

ii. Eligible banks:

The refinance would be provided to State Cooperative Banks (SCBs) and

Central Cooperative Banks (CCBs) which are rated as "A" or "B" category
as per the latest Inspection report of NABARD.

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iii. Purpose:

Refinance assistance will be provided to eligible cooperative banks i.e.

SCBs/ CCBs for sanction of pledge limits to sugar factories in cooperative
farmers towards procurement of sugarcane and also to meet out their
internal expenditure. The refinance assistance would also unlock their
funds so as to enable them to diversify their loan business.

iv. Provisions of NABARD Act:

The refinance would be provided to SCBs/CCBs for financing to sugar

factories against pledge limit under section 21 of NABARD Act 1981 as
given under:

PURPOSE SECURITY SELECTION OF

NABARD ACT,
State cooperative Loan is guaranted by 21(1) (iii) read with
bank (SCBs) bank state 21(3) (a) or 21(4) of
government or NABARD Act,
promissory note.

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Central cooperative FRDs issued by 21(1) (iii) read with

bank (CCBs) schedual bank and section 21(2) of
endorsement of DPS NABARD Act,
along with assignment
of the underlying
securities with usual
undertaking Quatum
of FDRs as per
Investment grade of
the bank as per DL
policy in vogue.

v. Extent of Refinance:

The refinance assistance is available from NABARD to the extent of 75% of

the limit sanctioned by SCB/CCB to the sugar factory.

vi. Criteria for Selection of Cooperative and Private Sugar factories:

The financial accommodation would be provided to SCBs/CCBs in the form

of refinance assistance in respect of loans to eligible sugar factories
against pledge of sugar stocks. The cooperative and private sugar factories

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should meet the following criteria in order to become eligible for refinance
assistance from NABARD.

Sugar factories should have Positive Net worth.

There should not be accumulated losses.
Sugar factory should not have defaulted in repayment of dues to borrowing
institutions.
Annual accounts are audited regularly and up to date. If necessary, Sugar
factory may be audited by a Chartered Accountant.
The account should be a standard asset with the bank

vii. Mode of sanction & Operative period of the limit:

The refinance will be provided to SCBs/CCBs in the form of credit limit

which can be sanctioned any time during the year. The CC limit will be
sanctioned for a period of 12 months from the date of the sanction. It can
be renewed after one year on the satisfactory operations on the limit by the
borrower.

viii. Sanction of limits to Sugar factories by SCBs/CCBs:

Banks may fix Cash Credit (Pledge) limits on the basis of valuation of
anticipated realistic peak level stocks likely to be reached by a factory
during the relevant crushing period and valued on the basis of levy price
fixed by the Government of India for levy sugar and, at the average price
realized in the preceding three months (moving average) or the current
market price, whichever is lower, for free sale sugar (including buffer
stocks), in the prescribed proportion. The bank should follow instructions
issued by RBI in this regard from time to time.

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ix. Extent of Refinance:

The refinance assistance is available from NABARD to the extent of 75% of

the limit sanctioned by SCB/CCB to the sugar factory.

x. Operations on the credit limit :

The credit limit sanctioned will be in the nature of cash credit

accommodation and SCB/CCB can withdraw as well as deposit amount
multiple times as per their requirement provided the outstanding in the
account does not exceed the sanctioned limit for the particular year.

xi. Repayment of drawal:

The outstanding balance in the account is repayable on demand. Each

drawal made on the credit limit will be treated as a separate loan and would
be repayable with in a period of 12 months from the date of drawal.

xi. Interest rate:

HO would decide the floor rate of interest on refinance to this product .The
final interest rate over and above the floor interest rate may be decided
based on risk rating of the bank and other relevant factors. The loan
committee would decide the interest rate. Interest is payable on quarterly
rests at the end of, June, September, December &March.

xii. Appraisal of the proposal

The extant risk rating tool for Direct lending to Cooperative banks would be
utilized to rate the bank. Going forward ,if need be, risk rating tool will be
refined to capture the risk parameters specific to sugar industry.

xiii. Security:

a. Limit Sanctioned to State Cooperative Banks:

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The Refinance facility to SCB in respect of their pledge limits sanctioned to

the cooperative sugar factory can be provided if the loan or advance is fully
guaranteed for repayment of principal and interest by the state
Government.

Or

The refinance can also be provided to SCB in respect of their pledge limits
sanctioned to the cooperative/private sugar factory against Demand
Promissory Note provided that the borrowing institution furnishes in writing
setting out the purpose for which it has made loans and advances.

b. Limit sanctioned to Central cooperative Banks:

1. The primary security shall be Demand Promissory Note (DPN) of CCB
concerned. Promissory Note of sugar factory supported by documents of
title goods will be transferred, assigned or pledged in favour of NABARD as
security for loan or advances sanctioned to the CCB.
2. Pledge of unencumbered Fixed Deposit Receipts issued by Scheduled
banks. The quantum of FDRs to be pledged should be 50% of the
refinance assistance.

In both the cases, the sugar factories will have to meet the eligibility criteria
as given in (V) above.

xiv. Other Statutory Provisions:

Any sums received by banks in repayment of loans and advances

refinanced either wholly or partly by NABARD shall be held in trust for
NABARD by the SCB or CCB and be paid to NABARD as per repayment
schedule specified by NABARD as per Section 29 of NABARD Act.

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xv. Other stipulations:

a. Compliance with CMA guidelines:

The SCB or CCB concerned should adhere to unit wise and Sector wise
exposure norms as prescribed by NABARD from time to time.

b. the gross NPAs of the bank in the sugar sector should not exceed 15% of
the exposure of the bank to the sugar industry.
c. Other terms and conditions:

The other terms and conditions of sanction will be as per the extant norms
adopted in the Short term Multipurpose credit Product under direct lending.

d. RBI guidelines:

Extant directives given by RBI from time to time govern margin and
valuation of sugar stock. The financing bank shall also comply with the
other directives issued by RBI from time to time on lending to sugar
factories.

e. Prudent practices to be followed by banks:

The financing banks should follow the following practices:

Periodical verification and valuation of stocks

Bank should follow standard procedures/precautions for storage and
identification of stocks
Bank is to maintain various registers such as sanction register, stock
register, Drawing Power register, cane payment register, market price
register etc.
Bank will take adequate insurance of the stocks pledged to the bank
covering the usual risks.

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Bank will ensure that the sugar factory will keep the godown in a good
condition and maintain suitable storage conditions so as to maintain the
shelf life of the product.
The pledged sugar stocks should not be more than 18 months old.
The financing Bank shall ensure verification of sugar stock by third party on
half yearly basis to ascertain the quantity and quality of sugar stocks
pledged with the bank.
The financing bank shall submit the certificate in this regard to NABARD.

f. List of Documents to be submitted by financing bank:

i. Bank will submit the application and other relevant information as per
formats prescribed under DL Product.
ii. An undertaking from the bank that bank it has not violated the unit level and
sectoral exposure norms prescribed by NABARD.
iii. Latest audited financial statements of the bank and sugar factory
concerned for last three years.
iv. Loan application submitted by the sugar factory concerned for sanctioning
of pledge limits.
v. Sanction letter issued by the financing bank and along with terms and
conditions of sanction
vi. Comments of the financing bank on the operation of various limits
sanctioned to sugar factory concerned and classification of the account.
vii. Gross NPAs of the bank in sugar financing.

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NABARD Infrastructure Development Assistance (NIDA)

NIDA is a new line of credit support for funding rural infrastructure projects.
NIDA is designed to fund State owned institutions/ corporations on both on-
budget as well as off-budget for creation of rural infrastructure outside the
ambit of RIDF borrowing. The assistance under NIDA is available on
flexible interest terms with longer repayment period upto 15 years ( 2-4
years repayment holiday).

Objectives of the NIDA Programme :

NABARD is deeply committed to rural development, and infrastructure is an

integral part of this development. Traditionally, NABARD has been closely
working with State Governments through RIDF to fund various
infrastructure initiatives. However, this channel for creation of rural
infrastructure faces certain issues:

Borrowing power of State Governments is limited under Article 293, thus

limiting the off-take of RIDF
Prioritizing infrastructure to be created through RIDF funds is often dictated
by the political environment
In the course of multiple interactions with State Governments, it was
understood that State Governments would like a wider range of financial
products to support creation of rural infrastructure. In addition, State
Governments are looking for avenues to borrow off-budget (eg. through
corporations) to avoid exceeding their borrowing power limits.
Based upon this, the NABARD Infrastructure Development Assistance
programme was designed for State Governments and other state-owned
organizations. NIDA aims to fund rural infrastructure creation by providing
assistance to state governments, outside of RIDF borrowing, and other

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state-owned organizations (eg. Corporations), through direct financing

based upon risk appraisal of the specific project.
Overview of the NIDA offering :

The following are the key features of the current NIDA credit offering. The
unique feature of NIDA is that the terms will be customized as per the
borrowers requirements, based upon the project and borrowers risk
profile.

Key features:

i) Types of loan Term loan

ii) Tenure Long term, up to 15 years.
iii) Interest Rate Will very based upon project and Risk profile of
borrower. Interest rate will be linked to NABARDs
market borrowing. As of now, NIDA product offer
fixed interest rate over the tenure of the loan;
borrower this can be reviewed in future
iv) Moraterism Based upon the specific project and borrower
moraterism of up to 2 to 4 years can be
considered.
v) Security Appropriate security will have to be provided by
borrower, based upon risk profile and nature of
project. State government, guarantee is not
mandatory, but can be requested based upon the
risk profile and nature of project.
vi) Repayment Repayment schedual can be designed based
upon borrower requirement, nature of project and
risk profile. E.g. based upon borrower cash flow, A
bolloning repayment schedual can be designed
with the grater share of principle repayment
structured toward the later tenure of the loan.

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The NIDA credit offering can be further refined, and additional products (eg.
annuity based products, mezzanine capital, PPP etc.) Can be structured
based upon borrower requirements and market demand.

In addition, NIDA also aims to leverage NABARDs existing development

schemes as well as technical expertise by offering Credit+ support to
infrastructure projects. The following areas have been identified as
potential credit+ support that can be offered with NIDA projects. The aim is
to offer credit+ support for a fee, in order to ensure it is a sustainable
venture for NABARD.

Project evaluation and monitoring :

NABARD can support the borrower from the initial stages of DPR (Detailed
Project Report) preparation, to monitoring of the progress of the project to
ensure efficient use of funds for infrastructure creation. Going ahead,
appropriate IT tools may be developed (similar to World Bank, Andhra
Pradesh governments project monitoring tools) to monitor progress of
infrastructure creation

Technical advisory support :

NABARD can provide technical advisory support to the borrower, through

internal expertise as well as NABCONS. The technical advisory support
can help borrowers in designing the project, as well as ensuring successful
operationalization of the project.

Linkage with existing development schemes:

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NABARD has a host of development schemes that can be offered, as per

the requirements of the infrastructure project. The aim of offering these
schemes would be to enhance the utility of the infrastructure. Eg. POs and
Farmer Clubs can be created in the area where warehouse is being
constructed, and encouraged to utilize the new warehouse.

Submission of Detailed Project Report (DPR)

The Detailed Project Report (DPR) is the starting document required to be

submitted by the borrower. Most DPRs received for RIDF projects focus on
technical details of project only. Under NIDA, it will be critical to also have a
detailed business plan that indicates the financial viability of the project and
borrower. In addition, multiple other documents are required to support the
DPR. A typical DPR should contain

a. Details of the borrower, including company background, shareholding

pattern, existing bankers etc.
b. Details of management team (Executive team and board of directors with
qualification and experience)
c. Sector background and rationale for project
d. Project description and scope
e. Project cost and financial structuring
f. Project phasing and timelines
g. Project operation and maintenance planning
h. Sales and marketing plan
i. Procurement plan for raw materials/ inputs etc
j. Technical specifications of project, including drawings (if applicable)
k. Project financial viability and sustainability including
Detailed business plan, with investment and operating cost estimates
Details of loan sought, and security/ collateral offered
Cash flow estimates for debt service
Sources of funds/ means of financing
l. Information on existing business (apart from new project proposed)
Description of existing business

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Market size and market share, customer segments, product/ service sold
by borrower
Business plan for existing business (revenues, operating expenses
projected for tenure of loan)
Potential loan requirements for existing business (additional loans impact
capacity to repay NIDA loan)

In addition, the following documents should also be submitted by the

borrower, along with the DPR

a. Latest audited balance sheet for 3 years1

b. Latest audited P&L statement for 3 years1
c. Latest schedules to balance sheet and P&L, auditors notes and annexure
to balance sheet and P&L for 3 years1
d. Latest Income tax returns for 3 years
e. Details of all outstanding loans, as well as loans recently closed
f. Amount outstanding
g. Repayment schedule
h. Attached security/ collateral
i. Sources of funds/ plan of repayment of existing debt
j. Terms and conditions of loan
k. No due certificate from existing bankers, non-encumbrance certificate on
collateral/
l. security proposed, and report on conduct of account
m. Copy of approval documents including MOEF clearance, Forest
Department clearance, Pollution Control Board clearance, Water allocation,
Chimney height clearance from AAI etc. (as required)
n. Copy of land purchase agreement, approved resettlement and
rehabilitation program (if applicable)
o. Copy of contracts for engineering, procurement, construction, civil works
etc. awarded by the borrower
p. Title deeds for all collateral and security proposed
q. Lenders Engineer (LE) technical due diligence report (appointment of LE is
done on terms mutually agreed by lender and borrower)

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r. Appointment of Lenders Legal Counsel (LLC) and Lenders Insurance

agent, and receipt of LLCs due diligence report on enforceability of all

s. transaction documents including contract copies, financing

documents, project documents, land title deeds, security and
collateral documents etc. (Note: A search must be conducted on the
land title clearance, preferably over a 33 year period)
t. Relevant agreements specific to the sector (e.g. agreement with FCI for
storage warehouse rentals; for power sector, MOU with State Government,
bulk power transmission.

Where to submit the proposal

The proposal to be submitted to the Chief General Manager of respective

Regional Office of the State.

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FUNCTION Developments

Institutional Development

Role

Institutional Department Department has been initiating various programe

and initiatives for strengthening of cooperatives since 1982. The following
major initiatives and supports are being provided to Rural Credit
Cooperatives to attain our goal for evolving a sustainable Rural Financial
System to enhance ground level credit flow to farmers and others in rural
areas.

Objectives

The rural financial system in the country calls for a strong and efficient
credit delivery system, capable of taking care of the expanding and diverse
credit needs of agriculture and rural development. More than 50% of the
rural credit is disbursed by the Co-operative Banks and Regional Rural
Banks. NABARD is responsible for regulating and supervising the functions
of Co-operative banks and RRBs. In this direction NABARD has been
taking various initiatives in association with Government of India and RBI to
improve the health of Co-operative banks and Regional Rural Banks.

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Policy related to strengthening of Rural Cooperatives

Rural finance is an important tool for rural development and poverty

reduction . Building sustainable financial institutions is the key to
uninterrupted and steady supply of credit to the rural clientele. It is towards
this end that the following functions are being undertaken by NABARD.

Assisting GOI in policy matters relating to Rural Cooperatives.

Monitoring the viability of the Cooperative Banks through systematic data
collection and analysis of the same for policy inputs to GoI and RBI.
Assisting GOI in taking remedial measures to improve the health of weak
banks through recapitalisation / restructuring and other reform measures
Help Cooperative Banks in streamlining procedures, upgrading technology
and human resource development.
Professionalisation of the senior and middle level executives of
Cooperative banks.
Providing financial support for the training institutes of Cooperative banks
under SOFTCOB.
Provide organization development intervention (ODI) through reputed
training institutes like Bankers Institute of Rural Development (BIRD), Luck
now, ROs of NABARD, etc.
Monitor implementation of Development Action Plans of banks and their
fulfillment of obligations under MOUs.
Provide financial assistance to cooperative banks for building improved
management information system, computerization of operations,
development of human resources, etc.
Preparation of various policy notes for Govt. of India, RBI, Parliamentary
Committees and various other agencies.
Review of functioning of ST & LT cooperatives.
Implementation of GOIs Revival Package for STCCS.
Management of Cooperative Development Fund and provision of support to
cooperatives under CDF for infrastructure development and various other

27
 NABARD

approved activities including assistance to Coop. Training Institutions for

training of Coop. Banks & PACS personnel.
Coordination with apex Cooperative Credit Institutions as also State Govts.
and Govt. of India on the matters relating to cooperatives and convening of
periodical Meets of Registrars of Cooperative Societies and CEOs of
STCBs and SLDBs
Management of data relating to Cooperative Credit Institutions; publication
of statistical statements relating to Cooperative movement in India and
monitoring of progress.
Conduct of various special studies relating to Cooperative credit structure.

PACS development by various programe , formation of PACS Development

Cell at CCBs/STCBs and extending financial assistance for HR and
Management Development.

28
 NABARD

DEVELOPMENT :

Non Farm Sector

Overview

Promotion of Rural Non-Farm Sector assumes significance in the context of

reducing over dependence on agriculture of our rural population and to
provide alternate livelihood options. It also helps in arresting large-scale
migration of small and marginal farmers and agricultural labours to urban
areas in search of livelihood opportunities on account of
unemployment/disguised employment in the agriculture sector.

NABARD, according to its mandate, had evolved several refinance and

promotional schemes for development of Rural Non-Farm Sector over the
years and has been making constant efforts to broad base and refine /
nationalize the schemes in response to field level needs. The focus has
been on greater credit flow, credit to the unreached and provision of
linkages for small, cottage and village industries, handloom, handicrafts
and other rural crafts and service sector in the decentralized sector in the
rural areas.

Building an entrepreneurial culture and necessary skills among the rural

youth and women has also been a priority area for NBARD. Developing
markets for the rural non-farm sector had been another area where
NABARD had taken many initiatives. NABARD has also been actively
involved in promoting innovations in rural areas in farm and non-farm
sectors by creating a separate fund for this purpose.

29
 NABARD

Policy on Rural Non Farm Sector

As per extant policy, NABARD provides financial support to the projects for
providing end to end solutions for promotion of activities
generating/enhancing livelihoods under the Rural Non Farm Sector. A
project is expected to cover potential survey, capacity building,
infrastructure, support services, marketing aspects, etc., for viable activities
under RNFS. One or all activities could be covered for support depending
on the availability of multiple stake holders as part of end to end solutions

Support:

Financial support is provided as a grant, loan and grant or loan/Revolving

Fund Assistance depending on the nature of the project and activities
within the project, stake holders etc.

Eligible Institutions:

NGOs, SHG Federations, Farmers Club Federations, Producer

Organizations, Cooperatives (including PACS), government agencies,
Banks, NBFCs Companies (including Section 25 companies) and such
other agencies who are into livelihood promotional activities, which
approach us for the support.

With the introduction of RNFS Policy from 2012-13, the following stand
alone activities/promotional programmes in the old format ceased to
operate and no fresh sanctions will be given. However, projects sanctioned
earlier shall continue as per the phasing approved.

30
 NABARD

Rural Entrepreneurship and Skill Development Programmes

(through NGOs)

Training by Master Craftsmen

Training cum Production Centres

Vocational Training cum Skill Development Centre

Artisan Guild

Mother Unit

Market Oriented Training

SUDHA

Rural Mart

Rural Haat

ARWIND

MAHIMA

WDC

DEWTA

Gender Meets

Environment Meets

DRIP

31
 NABARD

Marketing Initiatives :

To enable the artisans not only to sell the products in marketing events, but
to market their artistry to the consumers and benefit directly from the
market feedback for better value realization in future. Financial assistance
by way of grant is provided on selective basis.

Entrepreneur and Skill Development :

Rural Entrepreneurship Development Programme (REDP), Skill

Development / Upgradation Initiatives (SDI)

Introduced on an experimental basis in the early nineties through NGOs

and other institutions, as a means to support capacity building of rural
unemployed youth to enable them to set up their own enterprises, is firmly
entrenched as a successful model for employment generation in rural
areas. NABARD had supported conduct of 28045 REDPs/SDIs with a
financial assistance of 101.35 crore imparting training to 7.16 lakh
unemployed rural youth.

RUDSETI / RUDSETI Type of Institutions / RSETIs

As an effort to institutionalize the Entrepreneurship and Skill Development

initiatives, NABARD provides support to specialized institutions viz.,
RUDSETI/RUDSETI type of Institutions & RSETIs which provide
entrepreneurship development and training to rural youth/women on
various skills which can generate better livelihood options. Assistance is
provided to these institutions which comply with the criteria stipulated by
NABARD such as post training placement of above 80%.

32
 NABARD

Government Sponsored Scheme - Non Farm Sector

Credit Linked Capital Subsidy Scheme (CLCSS) for Technology

Upgradation of Small Scale Industries (SSI)

The Credit Linked Capital Subsidy Scheme (CLCSS) for Technology

Upgradation of SSI was launched by the Government of India during 2000-
01 with the aim to facilitate technology upgradation by SSI units in the
specified products / sub-sectors by providing capital subsidy for induction of
proven technologies. NABARD, as nodal agency is implementing the
scheme through good working RRBs and Cooperative Banks (since 04
December 2002) and Commercial Banks (since 17 January 2005) and
NEDFI.

The eligible borrowers under the scheme are sole proprietorships,

partnerships, co operative societies, private and public limited companies in
SSI sector. Preference is given to women entrepreneurs. The scheme is to
benefit the entrepreneurs in the Tiny Industries and SSI sector.

As per the amended CLCSS which came into effect from 29 September
2005, ceiling on loan under the scheme has been raised from 40.00 lakh
to 1.00 crore, the rate of subsidy raised from existing 12% to 15% and
calculation of admissible subsidy done with reference to the purchase price
of plant and machinery instead of the term loan disbursed to the beneficiary
unit. At present, the scope of the scheme covers 45 subsectors of the SSI
sector which includes Khadi and Village industries. The CLCS Scheme was
approved for implementation till 2012-13 in the XII Five-year Plan. The
proposal for its further continuation in the XII Plan is being processed by
the Ministry of Micro, Small & Medium Enterprises. Meanwhile, the Office of
The Development Commissioner, MSME vide their letter dated 04 March
2013 had advised all Nodal Agencies/PLIs to continue to accept
applications and process the claim for subsidy in accordance with the
Scheme guidelines till further orders.

33
 NABARD

Sanction & Release of Subsidy

Regional Offices of NABARD located in all the States have been delegated
powers to sanction and release admissible subsidy to the eligible units
through the PLIs. Capital subsidy to the tune of 5741.46 lakh was
released by NABARD up to 30 September 2013 through 42 PLIs in respect
of 1154 eligible units financed by them.

Credit Linked Capital Subsidy Scheme :

Year No. of Units Subsidy released

2004-05 14 11.6912
2005-06 74 167.62213
2006-07 90 201.12794
2007-08 24 77.18393
2008-09 178 775.85128
2009-10 97 447.04972
2010-11 206 1116.8838
2011-12 82 495.87
2012-13 225 1399.47
2013-14 164 1048.70995
(Up to 30.09.2013)
TOTAL 1154 5741.45995

34
 NABARD

Research and Development

R&D Fund

Established by the Bank, in accordance with the provisions of the

NABARD Act 1981, the Research and Development (R&D) Fund aims at
acquiring new insights into the problems of agricultural and rural
development through in-depth studies and applied research and trying out
innovative approaches backed up by technical and economic studies. The
R&D Fund is utilized for formulating policies on matters of importance to
agricultural operations and rural development, including facilities for
training, dissemination of information and promotion of research by
undertaking techno-economic studies and other surveys in the fields of
agriculture, rural banking and rural development.

Corpus of the R& D Fund is 50 crore.

Grant support for:

o Research projects and studies.

o International, National and Regional Seminars/ Conferences/Symposia,
Workshops, etc.
o Occasional Papers and cost of other publications.
o Chair Units.
o Providing training for personnel of constituent banks.

Summer Internship Programme.

Training Institutes Supported Under R&D Fund

CAB, Pune,
BIRD, Luck now, Mangalore & Bolpur
IIBM, Guwahati,

National Institute of Rural Banking (NIRB), Bangalore.

35
 NABARD

NABARD invites Research Proposals

Detailed advertisement inviting Research Proposals to be funded

under NABARDs R&D Fund during

2014-15

Proposals are invited for undertaking sponsored research studies from the
recognized Research
Institutions who are able to undertake studies and thereby meet the policy
input requirements of
NABARD. The following are the salient features of the scheme:

1. Objectives

To widen the academic support from the research fraternity in supply of

inputs for policy making of NABARD.
To simplify the procedure and synchronise the research activities
supported by NABARD with that of organizational requirements.
To ensure timely and continuous flow of feedback from the ground level
realities.

2. Eligibility

Approved research institutions, organizations, business school and other

agencies which are engaged in action-oriented, applied research would be
eligible to submit proposals.

36
 NABARD

3. Time Schedule for submission of application :

Hard copy of the completed application may be forwarded to The Chief

General Manager, Department of Economic Analysis and Research, 4 C,
NABARD, Head Office, Bandra Kurla Complex, Bandra (East), Mumbai
400 051. The applications completed in all sense, should reach NABARD,
HO on or before 15 August 2014. Soft copies may be sent to
dear@nabard.org.

4. Theme

The major themes of the research for 2014-15 are:

1. Agriculture Value chain

2. Rural Infrastructure and Rural-Urban Interface
3. Rural Service Sector
4. Resource Management options for rainfed agriculture

The studies may cover aspects of the themes indicated below. The issues
mentioned are tentative and researchers are free to cover other relevant
aspects they deem fit.

37
 NABARD

Agriculture Value chain :

Focusing on agricultural value chains is essential for improving the

efficiencies and tapping the synergies in the farm sector. The research
agenda on this theme should focus on

o Interdependencies among the various functions and stakeholders in the

nexus of agricultural production and agribusiness.
o Case Studies on existing Innovative financial practices, particularly in the
field of institutional finance, which have been able to bring agri-commodity
value chain to take advantage of the market opportunities. Lessons for
financing institutions to develop suitable financial products for Value Chain
Financing
o Policy environment conduciveness for growth of sustainable agri-
commodity value chain leading to greater level of food security /
Governance issues in agri-commodity value chain development
o Analysis of risk and risk perception along the agri-commodity value chain
o Strategies to encourage public private partnerships to address financial and
technical constraints to agri-commodity value chains to increase financial
intermediation, particularly to ensure increased and effective role of small &
marginalized section in the agri-commodity value chains

38
 NABARD

Rural Infrastructure and Rural-Urban Interface :

o Assessing the role and importance of rural infrastructure in accelerating

rural economic growth, enhancing agricultural productivity and alleviating
rural poverty
o Addressing the potential interventions through PPP for private sector
participation in strengthening rural infrastructure
o Determining the potential, feasibility and viability of supporting micro
infrastructure projects in rural areas.
o Exploring the constraints faced by the rural infrastructure sector and
suggests measures for enhancing the optimum potentials and benefits out
of rural infra projects.
o Exploring the issues and challenges associated with funding of rural
infrastructure projects.
o Providing urban amenities in rural areas such that there can be alternative
growth centres and proper geographical distribution of economic activitie.

Rural Service Sector

o Study the trend emerging in rural service sector, its subsectors and their
various features such as economic, cultural, legal, technical, etc.
o Look into the constituents of the rural service sector, especially on account
of new economic outlook, inroads created by corporate in rural area.
o Understand capital usage, labour intensity, skill level of
labour/entrepreneur, skill gap, etc. in Rural Service Sector and suggestion
to improve.
o Present financial pattern and financing requirements of the enterprises,
suggestion for improvement and development of financial products suited
for changed environment / requirement.

39
 NABARD

o Explore the constraints faced by the sector to the development and to

suggest measures to overcome them.
o Record location specific case studies / innovations / initiatives observed.

Resource Management options for rainfed agriculture

Rainfed areas are most vulnerable, socially, economically and ecologically.

In spite of best efforts of several stakeholders not much seems to have
happened. Hence, we may need to study what went right and what has to
be done. The studies should focus on the following broad issues and
should bring out actionable findings and isolate policy drivers.

o Status of efforts made so far for rainfed areas and their impact.
o Strategies to ensure sustainability of agriculture in rainfed areas through
managing the vulnerabilities of the rainfed areas from social, economic
and ecological perspectives and improving living of standards of People
o Identification of suitable technologies for dry lands for enhancing resource
use efficiency and conservation.
o Innovation in Delivery of inputs and services including credit and insurance.
o Evaluation of watershed, water harvesting, other program and interventions
to make them effective.

Methodology

The research must be empirical (i.e. an analysis of the primary data to be

collected by the agency through surveys or case studies and / or analysis
of secondary data already published by official or other agencies) in nature
having a bearing on rural service sector. The research should be original in
nature and should not repeat the work already done or being done by other
agencies. Except some part of survey works for data collection, research
project/study cannot be outsourced by the agencies entirely or partly.
However, NABARD may choose to collaborate in select projects by
involving its officers in suitable manner.

40
 NABARD

Selection Procedures

The applicant need to submit proposal in the prescribed application format

(Appendix 1). All the eligible proposals will be shortlisted. The proposals
will be examined in terms of objectives, methodology suggested, coverage,
etc. Principal Investigator (PI) of most appropriate 6 proposals will be
advised to make presentation before a Screening Committee in NABARD,
HO, Mumbai. Based on the merit and appropriateness of the proposals, 4-5
projects representing different regions/states will be selected for awarding
the study. Preference will be given for study involving primary data based
analysis. The track record of the institutions / Principal Investigator will also
be considered while considering for sanction. The selected
Institution/Agencies will be sanctioned projects with financial assistance
from R&D Fund of NABARD. NABARD reserves the right to (i) invite
applications outside of this fold of this advertisement and (ii) reject any
proposal based on its own set criteria without assigning any reason. Its
decision will be final in this regard and no further correspondence in any
manner will be entertained.

Since we are planning to contract multistate studies, researchers desirous

of taking up responsibility to coordinate the studies and consolidate the
reports at the end may indicate their preference and the cost estimate for
this on a separate sheet.

Duration of the Project

The project period will be 6 months from the date of commencement. The
Institute should submit a draft report within 6 months from the date of
acceptance of the offer/terms and conditions of the project. Extension of
time period will not be allowed under any circumstances.

41
 NABARD

Final acceptance of the Report

The draft report will be reviewed by the experts (internal/external) and

comments will be communicated to the agency for incorporating and
modifying the report. The Institution will be asked to present the modified
report in NABARD before the Screening/Expert Committee which will
finalise the report/or suggest modification for refining.

42
 NABARD

Budget and Release of fund :

o Each project will be given a consolidated budget of Rs.10.00 lakh + Service

Tax (wherever applicable). On acceptance of the terms and conditions of
the study, 50% of the sanctioned amount will be released to the agency, as
advance payment. Of the remaining amount 40 % will be released on
acceptance of draft report and the remaining 10% will be paid after
accepting the final report.

o If the revised draft report is also not acceptable to NABARD and found not
satisfactory, the remaining 50 % of the budget will not be released to the
agency. The agency has to refund the advance amount released to them,
in case of failure in submitting draft report of the project in time or
abandoning the project.

o In addition, travel costs of the Principal Investigator (airfare in respect of the

shortest route in economy class and eligible taxi fare), in case of pre-
sanction presentation and presentation of draft report will also be borne by
NABARD (on reimbursement basis).

43
 NABARD

Responsibilities of NABARD :

The agency involved has to accept the terms and conditions of the project
and adhere to the time schedule.

o Bi-monthly progress report of the project has to be sent in the prescribed

format to NABARD regularly (within 10 days of completion of respective
period).

o The Institute shall not publish the reports or the results of study project
without obtaining written permission from NABARD.

o NABARD shall have the sole right to use the report or results of research
for its internal use as also for training purposes after acknowledging the
source.

o Any statutory obligation arising out of the study Project / Programme, such
as payment of income tax, shall be the exclusive responsibility of the
agency. Exemption, if any, is required to be sought by the agency from the
competent authority and file the certificate of exemption with the bank to
avoid deduction at source. The details of this may be stated in the
proposals submitted for R & D fund assistance.

o NABARD retain the right to withdraw the sanction and recall the amount
released in case of non-starter projects or in cases of unsatisfactory
progress.

44
 NABARD

FINANCIAL ASPECTS :

1. Non recurring expenditure

Sr. No
Particulars Amount (Rs.)
1
2
3
4
5

Recurring

Particulars Month1 Month 2Month 3Month 4Month 5Month 6

Sr. No.
1 Salary / Honorarium
2 Travel
3 Stationery, typing, printing
etc.
4 Contingencies(specify)
5 Other (specify)
Total

Grand Total (10.1+10.2) _____________________

45
 NABARD

CORE BANKING SOLUTION(CBS) TO CO-OPERATIVE

BANKS

In one of the biggest initiatives towards institution building, NABARD is

facilitating the process of bringing the Co-operative Sector onto Core
Banking Solution (CBS) platform. A total of 201 State and Central Co-
operative Banks with 6818 branches from 16 states & 03 UTs of the
country namely Punjab, Haryana, Gujarat, Maharashtra, UP, Chhattisgarh,
MP, Bihar, Karnataka, Tamil Nadu, Kerala, Uttarakhand, Sikkim, Himachal
Pradesh, Jammu & Kashmir, Arunachal Pradesh, Chandigarh, Puducherry
and Andaman & Nicobar, have joined NABARD initiated Project on CBS in
Co-operatives. Two vendors TCS and Wipro are implementing the
ambitious project across the country. Of the 201 banks with 6818 branches
under NABARD Project, 199 banks and 6795 branches are fully on CBSas
on 31st March 2014. Another 87 branches opened in these banks during
the process of implementation, have also been put on CBS.

The model followed in the initiative is Application Service Provider(ASP)

model using the concept of cloud computing. The roll out process is in the
final stage and branches are being migrated on CBS platform on a regular
basis.

Once these century old banks start functioning in the CBS environment,
they will be at par with the technological platform of the Commercial Banks
and also Regional Rural Banks and match up with these institutions in
providing similar kind of services in the hinterland of the country. These
banks would also be able to extend commensurate services to its existing
and new clients keeping in sight the changing scenario and expectation
level of the clientele. In time, their clients would be in a position to receive
various Government incentives/ subsidies and also other financial inputs
directly in their accounts maintained with the co-operative banks.

46
 NABARD

Bringing the Co-operative Banks under Core banking Solution would

provide the following advantages

Bring them at par with the technological platform of the Commercial Banks
and also RRB and match up with these institutions in providing similar kind
of services in the hinterland of the country.
Transparency and regular reconciliation and balancing of books of account
to arrest pilferage.
Once the Banks are on a technology platform they will be in a position to
utilize technological solution furthering the financial inclusion initiative in
rural India
The customer of the Banks can avail facilities like Any Branch Banking, e-
transfer of funds to anywhere of the country, etc.
This will also enable GOI to transfer incentive/subsidy/other payments to
the account holders based on Aadhaar number.
Technological solution is expected to release staff members so that there
will be more follow-up with the customers and also help bring in new
customers/ clients to the Banks thus improving the business portfolio.

47
 NABARD

NABARD Warehousing Scheme (NWS) 2013- 14

Consequent upon the announcement of an allocation of 5000 crore to

NABARD in the budget for 2013- 14, for supporting creation of
infrastructure for storage of agricultural commodities, Reserve Bank of
India (RBI) issued guidelines for creation of Warehouse Infrastructure Fund
(WIF) in NABARD. With a view to operationalising WIF, NABARD has
formulated a scheme viz., NABARD Warehousing Scheme 2013- 14
(NWS), which envisages extension of loans to Public and Private Sectors
for construction of warehouses, silos, cold storages and other cold chain
infrastructure. The Scheme has been approved by Government of India
(Copy enclosed as Appendix).

Funds under this scheme would be utilized for meeting the growing
demand for storage capacity for agricultural commodities in the entire
country and also in the wake of enactment of National Food Security Act
2013. Priority will be given for the projects proposed in Eastern & North
Eastern and food grain deficit states.

The salient features of the Scheme are indicated below:

1) Eligible Institution: State government

Agencies owned by state government.

Agency owned by government of india,

special purpose vehicles set up under the
project in public, private partnership made,
corporation, Farmer producers
organization, federation of farmers,
collection Apex marketing Boards. Private

48
 NABARD

companies, Individual entrepreneurs, etc.

2) Activities covered Loan will be provided for project involving

creation of strong infrastructure with a
minimum capacity of 5000 metric
construction

a) Warehouses
b) Silos
c) Cold storage, controlled
Atmosphere store other cold
chain activities like refers
vans, bulk coolers,
Individually Quick Frozen
units chilling infrastructure,
etc.

3) Registration by WDRA Loan will be provided in respect of only

those strong projects which not only
conform to the norms laid down by
warehousing development and regulatory
authority but also give an undertaking for
obtaining registration from WDRA on
completion of the infrastructure.
4) Priority segments Funds under this scheme would be utilized
for meeting the growing demand for
storage capacity for agricultural
commodities and also in the wake of
enactment of national food security Act,
2013 from the following segments.

Food grain procurement agencies, like FCI

central warehousing corporation, state
warehousing corporation, state

49
 NABARD

government Department.

State civil suppliers Department for Public

Distribution system and supply of essential
commodities

Priority will be given for the project

proposed in Eastern and North Eastern
Region and In food grain deficit state.
5) Loan to Public sector Loans to state government, Agencies
owned by state government and
Panchayat will be governed by the extent
Rural Infrastructure Development fund
guidelines.
6) Loan to Private sector Direct loan to private sector and to the
entities owned by the state government.
Which are not covered by mandate, would
be governed by the terms of lending
Indicated.
7) Implementation The scheme will be operational during the
year 2013-2014.

50
 NABARD

GOI Approved NABARD Warehousing Scheme 2013-14

While presenting the Budget for the year 2013-14, the Honble Union
Finance Minister announced that a sum of 5000 crore will be made
available to NABARD to finance construction of warehouses, godowns,
silos and cold storage units designed to store agricultural produce, both in
the public and tOhe private sectors. This window will also finance, through
the State Governments, construction of godowns by Panchayats to enable
farmers to store their produce.

RBI vide their Letter No. RPCD. CO. Plan/51/04.09.58/2013-14 dated 01

July 2013 advised allocation of 5000 crore under separate fund called
Warehouse Infrastructure Fund (WIF). RBI has further advised that the
fund will be utilized for financing construction of warehouse infrastructure to
store agriculture and allied produce both in the public and private sector.

This allocation of 5000 crore is proposed to be utilized by implementing/

operationalising a scheme viz. NABARD Warehousing Scheme 2013- 14.
The salient features of the proposed scheme are indicated in the following
paragraphs:-

1. Mode of Financial Support

NABARD will provide direct financial support for public and private sector
by sourcing funds from WIF.

2. Eligible Institutions/ Entities

The following institutions/ entities would be eligible for assistance:

o State Governments- by way of loans (on the lines of RIDF)

o Agencies Owned/Sponsored by State- by way of loans (on the lines of
RIDF)
o Panchayati Raj Institutions- by way of loans through respective State
Governments (on the lines of RIDF)

51
 NABARD

o Agencies owned/ sponsored by Government of India, Cooperatives &

federations of cooperatives, individual entrepreneurs, corporates/
companies, etc.
3. Purpose/ Activities

Financial support from NABARD would be provided for the projects

involving creation of storage infrastructure for agricultural produce,
including:

o Warehouses/ Godowns
o Silos
o Cold storage/ other cold chain activities like controlled atmosphere (CA)
storage, reefer vans, bulk coolers, individually quick frozen (IQF) units,
chilling/ freezing infrastructure, etc.
o Modernization/ renovation/ repairs of the existing storage infrastructure
4. Priority Segments

Funds under this allocation would be utilized for meeting the growing
demand for storage capacity for agricultural commodities from the following
segments:

o Food grain procurement agencies like FCI (including under PEG Scheme),
Central Warehousing Corporation, State Government Departments/
Agencies, SWCs, etc.
o Panchayats, PACS and other Co-operative Societies (including
modernization/ renovation/ repairs of the existing warehouses) for enabling
farmers to store their produce and avail concessional post harvest loans
o State Civil Supplies Departments/ Corporations from for Public Distribution
System (PDS) and supply of essential commodities
o Private sector entities for storing food grains as well as other agricultural
commodities, like pulses, oilseeds, cotton, spices & condiments and
perishables, like fruits & vegetables, dairy/ poultry/ meat/ fish products
o Special focus to be given to projects in Eastern & North Eastern States and
food grain deficit States.

52
 NABARD

5. Rate of Interest, Quantum of Support and Repayment Period

The financial support for various eligible institutions/ entities would be

provided as follows:-

Rate of Repayment
Sr.
Type of Facility Interest Period
No.
(% p.a.) (Years)*

Loans to the State Governments, Agencies

As per RBI
1 Owned/Sponsored by State Governments and 07
norms
Panchayati Raj Institutions

Loans to Corporates/ Companies, Individual As per RBI

2 07
Entrepreneurs, etc. ** norms

* - Including a moratorium of 02 years

** - The modalities of funding would be in accordance with RBI stipulations.

1. Accreditation by WDRA

Financial assistance under the scheme will be provided in respect of only

those projects, which conform to the norms laid down by Warehousing
Development and Regulatory Authority (WDRA).

2. Implementation Period

The Scheme will be operational during the year 2013- 14. Financial
assistance from NABARD would be available against the proposals
sanctioned on or after 01 April 2013.

53
 NABARD

Warehousing Infrastructure

Department of Storage and Marketing - Initiatives

Consequent upon a separate allocation of 2000 crore in 2011-12, as a

part of Rural Infrastructure Development Fund (RIDF), for supporting
creation of storage infrastructure for agricultural commodities, NABARD set
up the Department of Storage and Marketing (DSM) in the Head Office.
The primary objective of DSM is to provide financial assistance to various
stakeholders for supporting creation of agriculture storage infrastructure
including warehouses, silos and cold chain activities (cold storage,
controlled atmosphere store, reefer vans, pre-cooling units, etc.), as also
taking suitable steps/initiatives aimed at putting in place mechanism to
empower farmers to realise a better price for their produce by improving
access to the wider markets. In addition, DSM also collaborates with
Warehousing Development and Regulatory Authority (WDRA) for
facilitating accreditation/registration of warehouses in the rural areas. Some
of the initiatives taken by DSM to achieve its objectives are listed in the
following paragraphs.

A. Direct lending to State Owned Entities

Although RIDF guidelines provided for direct lending to state owned entities
for implementing infrastructure projects in rural areas, NABARD had never
lent directly to state owned agencies out of RIDF so far. Consequent upon
the allocation of 5000 crore for supporting creation of storage
infrastructure for the year 2012-13, DSM, for the first time, provided direct
financial assistance to 07 state owned entities for the construction of 117
new warehouses with the total project cost of more than 400 crore. This
would result in the creation of an additional storage space of almost 1.00
million MT in the states of Andhra Pradesh, Haryana, Karnataka, Punjab,
Odissa and Uttar Pradesh. Direct assistance to state owned entities is likely
to reduce the time taken for the completion of the projects.

54
 NABARD

B. Accreditation/Registration of Warehouses

Government of India (GoI) enacted Warehousing Development and

Regulation Act in the year 2007 and constituted Warehousing Development
and Regulatory Authority (WDRA) in 2010. WDRA is responsible for the
implementation of the provisions of WDR Act and development & regulation
of warehousing sector in the country. One of the initiatives taken by WDRA
pertain to the registration of warehouses, subject to fulfillment of certain
benchmarks, thereby enabling them to issue Negotiable Warehouse
Receipts (NWRs). DSM, at the request of WDRA, prepared separate
norms/benchmarks for smaller warehouses in the rural areas, so that they
could easily fulfill the requirement of WDRA for accreditation/registration
and issue NWRs. This will help a large number of small and marginal
farmers to avail concessional post harvest loans against NWRs. DSM has
also helped Tamil Nadu and Andhra Pradesh ROs in their efforts to get
warehouses owned by Primary Agricultural Cooperative Societies
accredited/registered by WDRA.

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Capacity Building by Stakeholders

An important function of DSM is to undertake steps with a view to building

up capacities/capabilities of all the stakeholders, so as to achieve its
mandate more effectively. In this direction, DSM has helped BIRD to
organise training programs for the Officers of NABARD and also for the
Officers of Commercial Banks, RRBs and Cooperative Banks. DSM also
organised a 5 day exposure program for the senior executives of NABARD
with a view to providing them an insight into various facets of agricultural
storage and marketing sector in the country.

Similarly, during 2012-13, DSM in collaboration with National Collateral

Management Service Ltd. (NCMSL), implemented a pilot project for
creating awareness among the farmers and warehousemen about scientific
storage and foodgrain management. As part of this project, 100 awareness
workshops/programs were conducted for farmers and another 20 for the
warehousemen in 10 districts of 5 states viz., Rajasthan (Bikaner and
Sriganganagar), Gujarat (Junagadh and Rajkot), Madhya Pradesh (Indore
& Devas), Andhra Pradesh(Guntur and Karnool) and Karnataka (Gulbarga
& Davengere).

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Conclusion
14.01 The financial system in India has grown rapidly in the last three
decades and more. The functional and geographical coverage of the
system is truly impressive. Nevertheless, data do show that there is
exclusion and that poorer sections of the society have not been able to
access adequately financial services from the organized financial
system. There is an imperative need to modify the credit and financial
services delivery system to achieve greater inclusion. The
implementation of the recommendations made in this Report could go
a long way to modify particularly the credit delivery system of the banks
and other related institutions to meet the credit requirements of
marginal and sub-marginal farmers in the rural areas in a fuller
measure. However, creating an appropriate credit delivery system is
only a necessary condition. This needs to be supplemented by efforts
to improve the productivity of small and marginal farmers and other
entrepreneurs so that the credit made available can be productively
employed. While banks and other financial institutions can also take
some efforts on their own to improve the absorptive capacity of the
clients, it is equally important for Government at various levels to
initiate actions to enhance the earnings capacity of the poorer sections
of the society. The two together can bring about the desired change of
greater inclusion quickly.

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WEBLOGRAPHY

www.google.com

www.wikipedia.com

www.nabard.co.in

BIBLOGRAPHY

Indian Financial System

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