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.
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.
The initiatives of NABARD include the constitution of an empowered rural India. The institution has three goal-oriented departments for achieving its motive:
Some of the activities undertaken by NABARD for rural development include:
Interest Rate Charged by NABARD to Banks for Refinance under Different Schemes
|Short Term Refinance Assistance|
|RRBs for financing crop loans||4.50%|
|Commercial banks/RRBs in respect of their finance to PACs towards crop loans||4.50%|
|State co-operative banks for financing crop loans||4.50%|
|DCCBs directly financing crop loans||4.50%|
|ST-Additional SAO/ST (others)/ST (others)/ST (SAO) - SCARDBs||7.35%|
|StCBs/RRBs - Conversion of Short Term- crop loans into Medium Term loans (3% less than the interest rate charged by banks to ultimate beneficiaries subject to minimum interest rate at 8.10%)||8.10%|
|Long Term Refinance Assistance|
|State government for contribution to share capital of co-operative credit institutions||8..50%|
|RRBs/StCBs/SCARDBs||8.35% to 8.45%|
|Warehouse Infrastructure Fund|
|State governments||Bank Rate – 1.0%|
|State government corporation||Bank Rate – 1.50%|
|Entities promoted by central/state government owned/assisted||PLR + risk premium|
|Other entities||PLR + risk premium|
|Food Processing Fund|
|State governments||Bank rate – 1.50%|
|Entities promoted by state governments (without government guarantee)||PLR + Risk Premium|
|Entities promoted by state governments (with government guarantee)||Bank Rate – 1.50%|
|Other Entities||PLR + Risk Premium|
Let us take a look at the financial initiatives from the National Bank for Agriculture and Rural Development:
This includes the following categories of credit:
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.
Eligible entities for the loan
Extent of term loan
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.|
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:
The improvement of existing storage infrastructure facilities will be considered based on the merits of the case.
Eligible entities for the loan:
Loan amount, tenure, interest rate, and security:
For loans with RIDF interest rate:
|Borrower||Maximum loan amount||Loan tenure||Interest rate||Security|
|State Government||95% of TFO||7 years||Bank Rate minus 1.5%||A mandate that indicates that the state government will repay the principal and interest amount. Budgetary reforms will also be made for meeting the repayment requirements.|
|Government-owned corporations||95% of TFO||7 years||Bank Rate minus 1.5%||Several documents including government guarantee, collateral and primary security, hypothecation of rentals receivable, etc.|
For some loans, interest rates are based on Prime Lending Rate (PLR):
|Borrower||Maximum loan amount||Loan tenure||Interest rate||Security|
|Government owned or assisted entities without government guarantee||95% of TFO||7 years||PLR + Risk premium||Several documents including collateral and primary security, hypothecation of rentals receivable, etc.|
|Cooperatives, FPOs, SPVs, etc.||95% of TFO||More than 7 years||PLR + Risk premium + Tenure premium||Several documents including collateral and primary security, hypothecation of rentals receivable, etc.|
|Private companies, SPVs under PPP mode, corporates, individual entrepreneurs, etc.||75% of TFO||
Two options available:
||When tenure is 7 years – PLR + Risk premium When tenure is more than 7 years – PLR + Risk Premium + Tenure Premium||Several documents including collateral and primary security, hypothecation of rentals receivable, etc.|
Marketing federations undertake the following activities:
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:
The following entities are eligible for NABARD loans:
Quantum of loan
This varies based on the nature of the activity and the beneficiary:
|Government Agro Marketing Federations and Corporations||
|Dairy Cooperatives or Federations, Agri Marketing Cooperatives or Federations, and Registered Companies||Up to 75% of the working capital needs|
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.
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.
The eligible categories under RIDF include:
The following entities are eligible for RIDF loans:
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.
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.
The loans under this category can be classified into two types:
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.
The interest rates vary from time to time based on the market conditions. Interest is paid with quarterly rests on the outstanding balance.
The following support initiatives are undertaken by NABARD under the Producers Organization Development Fund (PODF):
The key objective of PODF is to meet the continued requirements of Producers Organisations (POs) and to ensure that they are completely sustainable.
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.
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
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.
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.
NABARD makes contributions to AIFs for the achievement of the following:
This is an initiative of NABARD aimed at funding and fast tracking the completion of major and medium irrigation projects that have pending work.
Interest rate and tenure
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.
This includes the following categories of credit:
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 – Weavers
Refinance support is available as follows:
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.
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:
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.
The final borrowers of the loan may be individuals, companies, proprietary or partnership institutions, state-owned corporations, co-operative societies, etc.
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.
This includes the following three schemes:
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, email@example.com.
Listed below are some of the contact details of the regional offices of NABARD:
|Andhra Pradesh||1-1-61, RTC 'X' Roads, Musheerabad , Hyderabad - 500020 Hyderabad - 500020. Musheerabad. Andhra Pradesh.||0402-7613152|
|Goa||3rd Floor, Nizari Bhavan, Menezes Braganza Road. Panaji. Goa.||0832-2420053/82770 72309|
|Gujarat||NABARD Tower, Opp. Municipal Garden, Post Box No. 8, Usmanpura Ahmedabad. Gujarat.||079-27552782|
|Haryana||Plot. No. 3, Sector 34-A, Post Box No. 7 Chandigarh. Haryana.||0172-5046728|
|Karnataka||46, NABARD Towers, Kempe Gowda Road, Karnataka. Bangalore.||8022-223125|
|Kerala||Punnen Road, Statue Thiruvananthapuram. Kerala.||0471-2710600|
|Madhya Pradesh||E-5, Area Colony, Bittan Market, Ravishankar Nagar, Post Box No. 513 Bhopal. Madhya Pradesh.||07552464775|
|Maharashtra||54, Wellesley Road, Shivaji Nagar, Post Box No. 5 Pune. Maharashtra.||02025541439|
|Delhi||24, Rajendra Place Delhi - 110008. Delhi.||1141-539353|
|Tamil Nadu||48, Mahatma Gandhi Road, Post Box No. 6074 Nungambakkam. Tamil Nadu.||9167712182|
|West Bengal||Abhilasha (2nd Floor),6, Royd Street, Post Box No. 9083 Kolkata. West Bengal.||033-22267943|
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 : firstname.lastname@example.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 : email@example.com 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 : firstname.lastname@example.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 : email@example.com|
|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 : firstname.lastname@example.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 : email@example.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 : firstname.lastname@example.org 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 : email@example.com|
Ans: The full form of NABARD is National Bank for Agriculture and Rural Development.
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.
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.
Ans: NABARD offers several financial, supervisory, and developmental schemes for the empowerment of rural India and for bringing about financial inclusion.
NABARD is a channel partner with the Government in schemes such as National Livestock Mission, Dairy Entrepreneurship Development Scheme, and Interest Subvention Scheme.
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.
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