NABARD

National Bank for Agriculture and Rural Development (NABARD) offers financing solutions with interest rates starting from 4.5% p.a. They offer short- and long-term refinancing along with direct lending. The tenure of the refinancing can range from 18 months to more than 5 years.

What is NABARD?

NABARD is a financial institution that was set up by the Indian government to promote sustainable agriculture and rural development in the country. The functions of NABARD include the propagation of technological innovations, financial and non-financial solutions, and institutional development.

Key Achievements of NABARD

Some of the activities undertaken by NABARD for rural development include:

• Provision of refinance support
• Improving rural infrastructure

• Preparation of credit plans at a district level and encouraging banks to achieve these targets
• Supervision of Regional Rural Banks (RRBs) and Cooperative Banks
• Development of sound banking practices within the economically backward sections of India
• Training artisans to develop handicraft activities and offering them help in marketing their produce

• The SHG Bank Linkage Project that was developed by NABARD has become one of the most noteworthy micro finance projects at a global level.

• NABARD has designed the Kisan Credit Card that has benefitted crores of farmers in the country.
• NABARD takes credit for having financed one-fifth of the rural infrastructure of India.
• The institution pioneered watershed development for climate proofing.

Interest Rate Charged by NABARD to Banks for Refinance under Different Schemes

Financial Initiatives of NABARD

Let us take a look at the financial initiatives from the National Bank for Agriculture and Rural Development:

Direct Finance

This includes the following categories of credit:

1. Loans for food parks and food processing units in specific food parks

In 2014, the government announced a special fund for the provision of term loans at attractive interest rates to Designated Food Parks (DFP) and food processing units at food parks. An amount of Rs.2,000 crore was set aside through NABARD for the same.

Purpose

• Development of the food processing sector
• Reduction in wastage of agricultural goods

• Creation of employment opportunities in rural India

Eligible entities for the loan

• State Governments
• Institutions promoted by the government
• Joint ventures (JVs)

• Cooperatives
• Federations of Cooperatives
• Special Purpose Vehicles (SPVs)
• Farmers’ Producer Organisations
• Companies

• Corporates
• Entrepreneurs

Extent of term loan

• For state governments and institutions promoted by state governments, up to 95% of the eligible total project outlay will be provided.
• For all other types of borrowers, up to 75% of the eligible total project outlay will be offered.

Interest rate

• For state governments and state-promoted entities guaranteed by the state government, the interest rate will be the Bank Rate (on the date of loan disbursal) minus 1.50%.
• For private sector entities and state-promoted entities not guaranteed by the state government, the interest rate is linked to the Prime Lending Rate (PLR) that NABARD fixes.

Security for the loan

Type of borrower	Security
State Government	An undertaking that specifies that the state government will repay the loan amount and interest on time. Budgetary allocations will also be made to facilitate the repayments.
Institutions promoted by the state government with government guarantee	Government guarantee, primary security, and collateral security based on NABARD guidelines.
Private sector entities and institutions promoted by the state government without government guarantee	Collateral security and primary security based on NABARD guidelines.

Loan repayment tenure

Type of borrower	Repayment terms
State Government	Tenure - 7 years (2 years initial moratorium; loan repayable in 5 annual installments)
Institutions promoted by the state government with government guarantee	Tenure - 7 years (2 years initial moratorium) Principal shall be paid in quarterly, half-yearly, or annual installments, based on the project.
Private sector entities and institutions promoted by the state government without government guarantee	Tenure – Shall not exceed 7 years from the date of disbursement of the first loan installment.

2. Loans to warehouses, cold chain infrastructure, and cold storage

This initiative supports the creation of infrastructure that can help in the storage of agricultural produce.

Loan details – Loans are provided for the funding of projects that create storage infrastructure (with minimum aggregate capacity of 5,000 metric tonnes) for agricultural goods storage. This includes the following activities:

• Construction of silos

• Construction of warehouses
• Construction of cold storage, bulk coolers, controlled atmosphere stores, reefer vans, quick freezing units, etc.
• Upgradation or construction of Marketing Infrastructure Facilities of the APMC (Agricultural Produce Marketing Committee)

The improvement of existing storage infrastructure facilities will be considered based on the merits of the case.

Eligible entities for the loan:

• State Governments
• Government owned/assisted institutions, Cooperatives, Farmers’ Producers’ Organisations (FPOs), Federation of Cooperatives, Federation of Farmers’ Collectives, SPVs that are created under PPP mode, etc.
• Cooperative Marketing Societies (CMS), Primary Agricultural Credit Societies (PACS), or other such entities
• Companies, corporates, or individual entrepreneurs
• Agricultural Produce Marketing Committees (APMCs)

Loan amount, tenure, interest rate, and security:

For loans with RIDF interest rate:

For some loans, interest rates are based on Prime Lending Rate (PLR):

3. Loans to marketing federations

Marketing federations undertake the following activities:

• Procurement of agricultural products, including milk
• Collection, storage, and value addition in select commodities

• Marketing of these commodities

NABARD provides short-term loans to marketing federations to support their daily operations.

Loan details – This is a short-term credit facility (for less than 12 months) offered to meet the working capital requirements of marketing federations. The activities eligible for this loan are:

• Marketing and procurement of agricultural commodities
• Marketing and processing of agricultural produce

• Collection, processing, and marketing of milk
• Supply of agricultural inputs, such as animal feed

Eligible entities

The following entities are eligible for NABARD loans:

• State or Central Government Agricultural Marketing Federations and Corporations
• Dairy Federations and Cooperatives

• Agriculture Federations and Cooperatives
• Registered Companies

Quantum of loan

This varies based on the nature of the activity and the beneficiary:

Interest rate

The interest rate charged on the loan will be as decided by the Asset-Liability Management Committee (ALCO) of NABARD. It varies based on the type of borrower, security type, availability of guarantee, project type, and credit rating of the borrower.

Security

This varies based on the borrower’s rating and type of activity. The primary security is the hypothecation of stocks, assets, book debts, and receivables. The lender may request for additional security such as fixed deposits, unencumbered assets, guarantees, etc.

4. Rural Infrastructure Development Fund (RIDF)

The eligible categories under RIDF include:

• Agriculture and related industries
• Social sectors
• Rural connectivity

  Eligible entities

  The following entities are eligible for RIDF loans:

• State governments or union territories

• State-owned corporations
• Government supported organisations
• Panchayat Raj institutions, NGOs, Self-Help Groups (SHGs)

The projects should be submitted for approval through the nodal department of the government.

Loan amount – The rural connectivity and social/agricultural projects are eligible for loans that come up to 80%-95% of the project cost.

Interest rate – The interest rates are linked to the Bank Rate at the time of loan disbursal.

Loan tenure– All loans availed can be repaid in equal annual installments within 7 years from the disbursal date. This is inclusive of a 2-year grace period. The interest amount is paid at the end of each quarter.

Security – Loans are secured by mandates registered with the RBI or any other Scheduled Commercial Bank, TPN, unconditional guarantee from state governments, and acceptance of terms and conditions in the sanction letter.

5. Direct refinance assistance to cooperative banks

As part of this scheme, financial assistance is offered to cooperative banks to help in the expansion of their lendable resources. This also assists in the diversification of banks into several types of business operations.

Loan details

The loans under this category can be classified into two types:

• Short Term Multipurpose Credit Product – This includes the fulfillment of working capital requirements, repair, and maintenance of farm equipment. The storage, packaging, and grading of goods and associated marketing activities are covered under this product.
• Assistance to Cooperative Banks to Lend to Sugar Factories - Refinance assistance is offered to cooperative banks so that the funds can be utilised by farmers for the procurement of sugarcane. The funding can be used for meeting other agricultural expenses as well.

Eligible entities

• The sanctioning of credit limit will be done only for financially strong A and B categories of CCBs and StCBs that are RBI licensed.
• Banks should adhere to the following criteria to be eligible for the refinance solutions from NABARD for on-lending to sugar factories:

• Sugar factories should have net worth that is positive
• Accumulated losses should not be seen
• There should be no violations of the CMA norms

• Factories should not have defaulted on repayments historically
• Annual accounts should be regularly audited
• The account should be a standard asset

Loan amount

The maximum limit is 100% of the bank’s lending for the Short Term Multi-Purpose Credit Product. For the on-lending product, 75% credit is provided.

Interest rate

The interest rates vary from time to time based on the market conditions. Interest is paid with quarterly rests on the outstanding balance.

Security

• The security will be determined based on the risk rating of the bank. This is usually unencumbered fixed deposit receipts issued by Scheduled Banks.
• For State Cooperative Banks, government guarantee or promissory notes can act as security.

6. Support of producer organisations

The following support initiatives are undertaken by NABARD under the Producers Organization Development Fund (PODF):

• Credit support such as loans and grants for building capacity and linkages to markets.
• Credit support towards share capital.

The key objective of PODF is to meet the continued requirements of Producers Organisations (POs) and to ensure that they are completely sustainable.

Eligible entities

• Loans are offered to Registered Producers Organisations
• Grant components are given to the registered POs or the implementing agency, or both.
• Grants are also given to non-government organisations and registered Community Based Organisations (CBOs).

• Other institutions that are approved by NABARD can also receive grants.

Quantum of finance - The maximum loan amount can be 90% of the total outlay of the project. However, this varies between projects and is dependent on the outlay, project size, financing means, and resource support from various sources.

Interest rate - The interest rate for the loan is determined by ALCO based on risk analysis using the collaterals and risk tools provided.

Repayment period - The repayment tenure of the loan can be 7-10 years. The moratorium period is 1-2 years.

Security - The loan can be secured through hypothecation or the mortgage of assets that are created from the fund assistance, mortgage of any other property (immoveable), hypothecation of moveable property, corporate or personal guarantee, or any other security that is agreed upon with NABARD.

7. NABARD Infrastructure Development Assistance (NIDA)

This is a line of credit support that can be used for financing rural infrastructure projects. NIDA also offers additional products such as annuity-based offerings, PPP, mezzanine capital, etc. based on the borrower’s needs.

Interest rate - The interest rate for the loan is variable as it is dependent on the risk profile of the borrower and the specifics of the project. The rates are also linked to the market borrowings of NABARD. Moratorium period of 2-4 years is available, based on project details.

Repayment period - The repayment tenure and schedule of the loan varies based on the borrower’s risk profile and the nature of the project.

How to obtain funding under NIDA

• The borrower is required to submit a Detailed Project Report (DPR) that covers the technical details of the project. The business plan will also be indicated there to give an overview of the financial viability of the borrower and the project.
• The loan proposal is submitted to the Chief General Manager of the regional office in the state.

8. Financing and development of PACS

Primary Agricultural Credit Societies (PACS) are registered cooperative societies that offer credit and other types of services to its members. Assistance is available for activities related to the upgradation of agro-storage centres, agro-service centres, agro-processing centres, agri marketing and transportation facilities, and agri-information centres.

Eligibility - PACS can be assisted under PODF, as it is a registered society with farmer memberships.

Interest rate – The interest rate under PODF is a value fixed by ALCO (Asset Liability Committee).

Repayment tenure – The maximum tenure is 9 years; this is inclusive of a 2-year grace period.

9. Umbrella Programme for Natural Resource Management (UPNRM)

NABARD has launched this programme to fund community-managed, sustainable rural livelihood initiatives that are NRM-based. These projects will have to pass an assessment at the Guiding Principles level. The interest rates for the funding under UPNRM will be based on the type of project, target groups, and channel partners.

10. Alternative Investment Funds (AIFs)

NABARD makes contributions to AIFs for the achievement of the following:

• Complementing the current refinance and co-finance products of NABARD and other developmental activities.
• Encouraging entrepreneurship in agricultural and rural development activities.
• Facilitating the development of model units so that the rural poor can emulate it.

• Encouraging investment in innovative activities in the rural development and agricultural sectors.
• To help units that cannot upscale their operations due to lack of funds.
• To assist units that are engaged in infrastructure development or employment generation activities.

Eligible entities

• The AIF should be registered under SEBI Regulations, 2012. Funds falling under Categories I and II of these regulations are eligible.
• The maximum life period of the Fund should be 10 years.
• Sector agnostic funds are usually eligible if these invest at 200% of NABARD’s commitment to the Fund in rural and agricultural development projects.
• The investment managers should have been associated with AIF activity for a minimum of 5 years, with a good track record.
• The structure of the Asset Management Company (AMC) should adhere to several statutory and regulatory requirements.

11. Long Term Irrigation Fund (LTIF)

This is an initiative of NABARD aimed at funding and fast tracking the completion of major and medium irrigation projects that have pending work.

Eligible entities

• State governments can borrow funds from NABARD under LTIF.
• National Water Development Agency (NWDA) that functions under the Ministry of Water Resources can borrow from LTIF.

Interest rate and tenure

• The interest rate under LTIF is around 6%.

• Repayment tenure can go up to 15 years. Moratorium period is 3 years.

12. Pradhan Mantri Aawas Yojana

Grameen (PMAY-G) - By the year 2022, the PMAY-G programme aims at setting up pucca houses for all families that are currently staying in kutcha houses. This is an undertaking of the Ministry of Rural Development (MoRD). Out of the complete financial requirement for the construction of these houses, a specific amount is expected to be met from budgetary sources. The remaining amount will be funded by NABARD.

Refinance Offerings

This includes the following categories of credit:

1. Short term refinance

The crop loan system of NABARD was set up for the disbursement of production credit for borrowers in the agricultural sector. This includes the following categories of operations:

• Short-term – Seasonal agricultural operations – Refinance is provided by NABARD at concessional interest rates for production purposes to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs). Credit limits are sanctioned in this regard. The withdrawals made under the approved credit limit should be repaid in 12 months.
• Short-term – Others – Funding under this category is provided for ST - Agriculture and allied activities, ST – Fisheries, ST – Marketing of crops, ST – Industrial cooperative societies (not including weavers), ST – Labour contract and Forest labour cooperative societies, ST – Rural artisans including weavers, ST – Stocking, purchase, and distribution of chemical fertilisers.

Short-term – Weavers

Refinance support is available as follows:

• Working capital needs of Primary, Apex, or Regional Weavers Coop Society through state coop banks or DCCBs.
• Working capital needs of Primary Weavers Coop Society through Scheduled Commercial Banks.
• Working capital needs of State Handloom Development Corporation through Scheduled Commercial Banks and State Cooperative Banks.
• Working capital and marketing needs of individual weavers, handloom weavers' groups, societies outside the coop fold, mutually aided coop societies, and master weavers through Scheduled Commercial Banks and RRBs.

NABARD also provides medium-term credit limits as relief to farmers facing crop damage from natural calamities. The short-term loans would be converted to these medium-term credit limits when there is a loss of 33% or more.

2. Long term refinance

NABARD offers long-term and medium-term refinance solutions to banks so that it can be passed on to farmers and rural artisans. The following income generating activities will be covered under this refinance product:

• Agriculture and associated activities
• Small scale industries, artisans, handicrafts, non-farm sector, handlooms, and powerlooms
• Initiatives of self-help groups and voluntary agencies that work among the poor people in rural India

The technical feasibility and financial viability of the project is taken into consideration for providing refinance. Credit supervision of the institution is also a criterion for refinance.

Eligible entities

• State Cooperative Agriculture and Rural Development Banks (SCARDBs)
• Regional Rural Banks (RRBs)
• Commercial Banks (CBs)

• State Cooperative Banks (StCBs)
• District Central Cooperative Banks (DCCBs)
• North East Development Finance Corporation (NEDFC)
• State Agricultural Development Finance Companies (ADFCs)
• Scheduled Primary Urban Cooperative Banks (PUCBs)

• Non-Banking Financial Companies (NBFCs and NBFCs-MFIs)

The final borrowers of the loan may be individuals, companies, proprietary or partnership institutions, state-owned corporations, co-operative societies, etc.

Loan tenure

The maximum loan period is 15 years

Extent of refinance

Refinance will be provided to the extent of 95% - 100% of the eligible bank loans based on the purpose of the loan, location of investment, and the borrower.

3. Schemes under off farm sector

This includes the following three schemes:

• Automatic Refinance Facility (ARF) - There are five compact programmes under this scheme:

• Composite Loan Scheme (CLS) - Refinance under this scheme is provided to meet the working capital expenses of micro/small enterprises. The maximum refinance available under the scheme is Rs.10 lakh per unit.
• Integrated Loan Scheme (ILS) - Refinance is provided to working capital and block capital for one operating cycle. Maximum refinance offered under this scheme is Rs.15 lakh per unit.
• Self-Employment Scheme for Ex-servicemen (SEMFEX) - The scheme offers loans to encourage ex-servicemen to participate in agriculture and allied activities. Off-farm activities are also supported under this scheme.

• Soft Loan Assistance for Margin Money (SLAMM) - This scheme provides financial aid to entrepreneurs who have the talent but are short on finances to meet margin requirements under relevant refinance schemes offered by NABARD.
• Small Road and Water Transport Operators (SRWTO) - Financial help is provided under this scheme for the acquisition of transport vehicles that will be used in transporting industrial products or farm produce to marketing centers. This includes water transport units and passenger transport vehicles. Margin money may also be provided for specific cases, up to 10% of the vehicle’s cost.

• Rural Housing - Under this scheme, NABARD provides refinance facility to banks to support rural housing for both agriculturists and non-agriculturists. This results in overall rural development.
• Renewable Energy - In order to address India’s challenges associated with energy security, the Ministry of New and Renewable Energy (MNRE) has introduced a capital cum interest subsidy scheme. This programme will help in the creation of off-grid solar power harnessing devices through the use of photo voltaic technology. The devices can light up houses and provide heating. NABARD assesses the feasibility of the project and provides refinance for the same.

Where is the head office of NABARD?

The head office of the Department of Financial Inclusion and Banking Technology, Department of Refinance, Farm Sector Development Department, Institutional Development Department, and Off-Farm Development Department of NABARD is at the following address:

4th Floor, 'E' Wing C-24, 'G' Block Mumbai - 400051. Bandra Kurla Complex, Bandra (East). Maharashtra.

The Chief General Manager can be reached at 02226530024 and the email ID, dfibt@nabard.org.

National Bank for Agriculture and Rural Development Regional Offices

Listed below are some of the contact details of the regional offices of NABARD:

What are the NABARD branches?

NABARD has a wide coverage in India with a head office, regional offices in different states, and district offices in each state. It also has training establishments in Birbhum, Mangalore, and Lucknow. There is a sub-office in Srinagar and PMUs in Gujarat, Rajasthan, and Madurai. The addresses of the head of training establishments, sub office, and PMUs are as listed below:

Training Establishments	Smt T S Raji Gain Chief General Manager Sector H - LDA Colony, Kanpur Road Lucknow - 226012. Kanpur Road Uttar Pradesh Contact No. 1 : 0522-2421954 Email Id 1 : bird@nabard.org Bibhuti Bhusan Sahoo Joint Director Bankers Institute of Rural Development, Bolpur - 731204. Bolpur Lodge, Birbhum, West Bengal Contact No. 1 : 03463-253261 Email Id 1 : bird.bolpur@nabard.org Shri K Lakshminarayan Joint Director BIRD Campus, Behind Government Polytechnic for Women, Mangalore - 575008. Krishna Nagar Road, Bondel. Karnataka Contact No. 1 : 0824-2888501 Contact No. : 9969810594 Email Id 1 : bird.mangaluru@nabard.org Shri S.V. Sardesai Chief General Manager/ Principal Sector H - LDA Colony Uttar Pradesh - 226012. Kanpur Road. Lucknow Contact No. 1 : 0522-2421065 Contact No. : 8600999464 Email Id 1 : nbsc@nabard.org
Sub Office	Shri Qamar Javed DGM/OIC NABARD, SRINAGAR CELL Hotel Ashai Annexe, Opp. Presentation Convent Public School, Rajbagh, Srinagar - 190008. Srinagar. Jammu & Kashmir Contact No. 1 : 0194-2310479 Email Id 1 : srinagar@nabard.org
PMUs	Mr. R. V. Dave Deputy General Manager OM Bhavan, Shantikunj Society Mandavav Road, Dahod - 389151. Govindnagar. Gujarat Contact No. 1 : 02673223167 Contact No. : 8141867258 Email Id 1 : igwdpgujarat@rediffmail.com Mr. Sukanta Sahoo Assistant General Manager Nabard 38, Syphon Colony Behind Jain Mandir, Near Syphon Chorah Bedla Road. Udaipur - 313001 Rajasthan - 313001. Fatehpura,. Udaipur Contact No. 1 : 02942451754 Contact No. : 9414029140 Email Id 1 : igwdp.udaipur@gmail.com Shri W Nagarajan Deputy General Manager 2/582, Alli Veedhi, Gomathipuram 6th Street, Madurai 625020 Tamil Nadu - 625020. 6th Main Road, Gomathipuram . Madurai Contact No. 1 : 04522568760 Email Id 1 : wdfmadurai@nabard.org

NABARD FAQs

1. What is the full form of NABARD?

   Ans: The full form of NABARD is National Bank for Agriculture and Rural Development.

2. Who is the chairman of NABARD?

   Ans: Dr. Harsh Kumar Bhanwala is the chairman of NABARD since 18 December 2013. He has been conferred with honorary doctorate in Science by Tamil Nadu Agricultural University, Coimbatore and the Indian Council of Agricultural Research – Central Institute of Fisheries Education (ICAR-CIFE), Mumbai.

3. When was NABARD established?

   Ans: NABARD was established on 12 July 1982 through the merger of agricultural lending functions of RBI and the refinance functions of ARDC (Agricultural Refinance and Development Corporation). The organisation was set up with an initial capital of Rs.100 crore by the late PM Smt. Indira Gandhi. The paid-up capital of NABARD was at Rs.10,580 crore on 31 March 2018. NABARD is now completely owned by the Indian Government.

4. What schemes are offered by NABARD?

   Ans: NABARD offers several financial, supervisory, and developmental schemes for the empowerment of rural India and for bringing about financial inclusion.

   • As part of its financial offerings, direct finance products and refinance schemes are provided to eligible borrowers.
   • The developmental activities include regulation and supervision of the functions of Regional Rural Banks and Cooperative Banks.
   • NABARD also conducts periodic inspections of state level cooperative units like Marketing Federations, Apex Weavers Societies, and State Cooperative Agriculture and Rural Development Banks.

   NABARD is a channel partner with the Government in schemes such as National Livestock Mission, Dairy Entrepreneurship Development Scheme, and Interest Subvention Scheme.

5. What are the functions of NABARD?

   Ans: The primary function of NABARD is to touch all aspects of rural economy. Apart from providing financial support to the underserved population of the country, the institution also monitors the functioning and regulation of banks. Over the years, the products offered by NABARD have been a boon to millions of rural families across the country.