Business operations of NABARD-

Business operations of NABARD-

The total financial support extended by NABARD during 2011-12 registered a growth of 36.13% over 2010-11. The total financial support extended by NABARD presents a review of its refinance and loaning operations, their impact at the ground level, consultancy service provided by its subsidiary and mobilization and management of its own resources.

In order to ensure availability of timely credit to farmers, banks follow production-oriented system of lending. In this direction NABARD provides short term loans to State Co-operative banks (SCBs) and RRBs for production, marketing and procurement activities. During 2011-12, the total production credit disbursed was Rs 48981 crore, with a growth of more than 43% over the previous year.

Moreover NABARD also refinances term loans given by Commercial Banks, RRBs and Co-operative Banks for farm and non-farm sector activities. Long Term refinance facility is normally provided for a period of 3-15 years and includes advances for farm investments, allied activities, SMEs, agro processing, organic farming, non-conventional energy and rural housing. During 2011-12, the refinance disbursement was ` 15422 crore, with a growth of more than 14% over 2010-11, as against budget of ` 14995 crore.

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  NABARD supports SCBs and RRBs for Seasonal Agricultural Operations (SAO) including of land for sowing, usage of farm inputs and labour by the way of a consolidated limit of credit. The quantum of refinance to RRBs is linked to their net NPAs. During 2011-12, ST-SAO credit limits were sanctioned to 23 SCBs and 81 RRBs aggregating ` 33996 crore and ` 13926 crore respectively. The maximum outstanding of SCBs and RRBs in this direction was 100%.
  
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  NABARD also refinances for other than SAO (OSAO) i.e., agriculture, allied activities, marketing of crops, pisciculture, working capital requirements of industrial co-operative societies (other than weavers)/labour contract and forest labour co-operative societies and rural artisans. In this direction during 2011-12, ` 145 crore and ` 677 crore were sanctioned to SCBs and RRBs with a utilization rate of 85% and 96% respectively.
  
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  NABARD also refinances SCBs to meet the working capital requirements of primary, apex and regional weaver’s societies by sanctioned consolidated limits. During 2011-12, ST (Weavers) credit limits aggregating ` 190 crore were sanctioned to 3 SCBs as against ` 215 crore.
  

NABARD is also receiving interest subvention by the Indian Govt. for providing concessional refinance to SCBs and RRBs under “Interest Subvention” scheme of the Government. Aggregate interest subvention of ` 1689 crore and ` 2098 crore in 2009-10 and 2010-11, respectively, was provided by Indian Govt. The interest subvention for 2011-12 has been estimated at ` 3000 crore and so far an amount of ` 425 crore has been received from the Indian Govt.

NABARD also acts as nodal agency for routing the interest subvention to Co-operative Banks and RRBs under “Scheme for extending Financial Assistance to Sugar Undertakings 2007”. In this direction ` 383 crore was released to 212 sugar mills operating in 11 states out of ` 384 crore received from Govt. of Indian during the year 2011-12.

Investment Credit: Under investment credit NABARD provides refinance; co-finance; and assistance for government sponsored schemes.

NABARD provides term loans for Commercial Banks, SCARDBs, RRBs, SCBs, ADFCs/ NABFINS, and PUCBs. Out of these agencies CBs has always been availing the major share in the refinance disbursement. This share was 54.69% during 2011-12 followed by RRBs (20.1%), SCARDBs (15.85%), SCBs (7.73%), ADFCs/ NABFINs (1.37%) and PUCBs (0.35%). The eligibility criteria for refinance are linked to the Net NPA in case of CBs, SCBs, PUCBs and RRBs and recovery for SCARDBs.

The spatial distribution of refinance disbursement across the regions indicates that Southern Region of India has always been availing the major share in the refinance disbursement. This share was 48.30% during 2011-12 followed by 15.7% (Northern), 12.10% (Central), 11.60% (Eastern), 10.80% (Western) and 1.50% (North Eastern region). However NABARD is working to increase the credit flow in Eastern Region, North Eastern Region (NER) and Hilly States by providing several relaxations to SCBs, SCARDBs, and RRBs working there for rural development.

Non-farm Sector always has been on the top of the priority of the national bank. NFS is continuously accounting major share in refinance disbursement. Its share in refinance disbursement has been doubled over the last 11 years. For the same period the share of SHGs has shown a remarkable growth of 8 times.

During 2011-12, the major share of refinance has been accounted by Non-Farm Sector (23.18%) followed by Self Help Groups (19.92%), Farm Mechanisation (13.84%), Animal Husbandry (10.18%) and Plantation and Horticulture (10.03 %). The progressing share of NFS and SHGs are showing the diversifying economy of our country.

NABARD is also actively involved in co-financing of the projects having thrust areas where NABARD has an important role to play; projects involving Sunrise technologies where risk perceptions of banks are very high; projects for Geographical areas and sectors to which credit is not flowing for various reasons; and projects having large outlays and long gestation period. In this direction an amount of ` 1.91 crore was disbursed during 2011-12 taking the cumulative disbursement to ` 156 crore for 35 on-going projects.

NABARD also serves as nodal agency to implement Capital Investment Subsidy Schemes of the Indian Government for routing of subsidy admissible under the schemes, monitoring the progress of scheme and co-coordinating with banks, Central and State Government. These schemes are for Construction of Rural Godowns; Establishment of ACABCs; Development/ Strengthening of Agriculture Marketing Infrastructure, Grading and Standardization; Bihar Ground Water Irrigation Scheme; National Project on Organic Farming; Scheme for installation of Solar Off-Grid and Decentralised Applications; and other eight schemes related to Animal Husbandary. Till now NABARD has released a subsidy of ` 799 crore in respect of 22665 units of rural godowns under the scheme.

The national bank also conducts evaluation studies to evaluate the performance of the schemes. During 2011-12, 6 such studies were conducted. Moreover 19 investment specific studies and 2 special studies covering farm and rural non-farm sectors were conducted to identify the problems at the field level in the implementation of schemes, to estimate the benefits accruing from the investment, repayment performance, etc.

RIDF covers projects related to Agriculture and Allied Sectors (including irrigation projects, soil conservation, flood protection, watershed, reclamation of water logged areas, animal husbandry, plantation and horticulture, seed, agriculture and horticulture farms, forest development, fishing harbour/ jetties, riverine fisheries; market yards, godowns, marketing infrastructure, cold storages, grading/ certifying mechanisms, testing laboratories, hydel projects (upto 10 MW); village knowledge centres, infrastructure for IT in rural areas, desalination plants in coastal areas; and setting up of KVIC industrial estates/ centres), Social Sector (including drinking water, public health institutions; construction of toilet blocks in existing schools, and ‘Pay and Use’ toilets in rural areas, infrastructure for rural education, and construction of anganwadi centres); and Rural Connectivity (including rural roads and rural bridges).

RIDF is maintained by NABARD through contribution of domestic CBs to the extent of their shortfall in stipulated priority sector lending to agriculture, as stipulated by the RBI. Started with ` 2,000 crore, annual allocation to RIDF has now reached `18,000 crore, taking the cumulative allocation to ` 152500 crore. Additionally, a separate window was introduced in 2006-07 to finance rural roads component of the Bharat Nirman Programme, with cumulative allocation of ` 18,500 crore. Till now 462229 projects have been sanctioned under RIDF involving an amount of ` 142471 crore. Of the cumulative RIDF loans sanctioned till now, 42% went to agriculture and related sectors, 15% to social sector projects; while the share of rural roads and bridges was 31% and 12% respectively. In 2011-12, 6294 projects for rural roads have been sanctioned.

RIDF projects have not only assisted the infrastructural facilities but have also created additional employment opportunities in the rural areas. Till now a recurring employment of 8543283 jobs has been created. Moreover RIDF projects have been contributed a GDP of ` 24580 crore.

P= Number of Projects, A= Amount Sanctioned

Loaning for the projects related to farm and allied sectors is at 95% of project cost for all states; 90% of project cost for NER and Hill States and at 85% for all other states for social sector related project; and at 90% of project cost for NER and Hill States and at 80% for all other states for rural connectivity related projects. The cumulative amount of deposits, repayments, sanctions, and disbursements under RIDF stood at ` 111026 crore, ` 35919 crore, ` 130009 crore and ` 113924 crore respectively with a disbursement rate of 88%.