written by | April 11, 2022

NABARD: Schemes, Loan and Functions

The NABARD, or the National Bank for Agriculture and Rural Development, is the leading regulator of the country's first rural banking system and is recognised as the leading developer of financial institutions owned and established by the Indian government. 

The bank aims to regulate and provide local lending, which will be the first step in improving the country's rural development. 

What is NABARD?

NABARD has several responsibilities associated with policymaking, planning, financial development and operation in agriculture. NABARD fulfils this responsibility of developing and promoting local industries such as agriculture, cottage industry,  other small industries, local handicrafts, superior infrastructure and greater employment for people living in the area. 

The Indian government started this bank in consideration of all the guidelines of the National Agricultural Development Bank  Act of 1981. The National Bank for Agriculture and Rural Development or NABARD is the country's major and specific bank for rural and agricultural development. NABARD was established on  July 12, 1982, as a central regulatory body for agricultural financing and the rural sector. The Indian government established NABARD under the National Agricultural and Rural Development Act of 1981.

Did you know?

The NABARD was founded by the commission established on  March 30, 1979, and was chaired by Shri B. Sivaraman, a former member of the Planning Commission of the Indian Government.

Roles of NABARD

As the main regulator of agriculture and rural development, the National Bank for Agricultural and Rural Development (NABARD) plays many important roles. These roles are:

  • The NABARD provides investment and production financing for various development activities and projects in rural areas that help improve rural development and promote rural prosperity. Since this bank is the centre or major funding agency for all such development projects, it is the bank's responsibility to ensure that the projects receive adequate funding and support. 
  • NABARD is responsible for coordinating all institutions involved in the development project and all financing activities in rural areas. You need to keep in touch with the Government of India, the Reserve Bank of India or the RBI, the State Government, or all other major agencies, including other major agencies that may be part of ongoing agriculture and rural development activities.
  • NABARD is engaged in oversight, rehabilitation program strategy development, restructuring of credit institutions and training staff, etc., by improving the absorption capacity of the loan system and building a strong institution to realise it.
  • Since the National Bank is a specific bank responsible for all agriculture and rural development in the country, it refinances all agricultural and rural development projects or financial institutions that fund NABARD
  • After the bank refinances a development project or activity in a rural area, NABARD will also be responsible for monitoring and evaluating the project or activity. 
  • NABARD puts all client institutions under control and provides training opportunities to all institutions involved in rural uplift or planning to engage in rural development. 
  • In addition to all the above tasks, the National Bank for Agricultural and Rural Development also manages a portfolio of natural resource management programs.
  • NABARD also supports self-help groups or SHGs through the SHG Bank Liaison Program, which promotes SHG activities in rural areas and is a  step to help rural development.

Also Read: What is SIDBI? What are the Objectives of SIDBI and SIDBI Schemes?

What is the NABARD Scheme?

The NABARD manages all credit-related matters for agricultural and rural businesses, including policies, plans, and operations. In general, NABARD handles the financing of all agricultural activities related to rural development in India, as the institution's main goal is the national growth of the rural community in India. There are three sectors in which NABARD works: oversight, development and finance. Some of the NABARD schemes are mentioned below in the table. It should not be forgotten that the interest rate is subject to change depending upon NABARD and RBI. These rates, moreover, do not include service tax or GST.

NABARD Schemes

Interest Rate (%)

Long-Term Refinance Assistance


StCBs or State Cooperative Banks 


SCARDBs or State Cooperative Agriculture and Rural Development Banks 


RRBs or Regional Rural Banks


Short-Term Refinance Assistance


Features of the NABARD Schemes

The following are some of the features of the NABARD loan program. 

  • Provide loan or refinancing support. 
  • Infrastructure development in rural Indian communities. 
  • Create a credit plan available at the district level for these communities. 
  • Advice and support to help the banking sector achieve its own lending goals for the year. 
  • Implementation of supervision of co-operative banks and regional rural banks (RRBs) in India. Development of new projects to support rural development in countries. 
  • Implementation of government development plans aimed at supporting the growth of rural areas. 
  • Provide training services to artisans.

 The Main Aim of NABARD  

  • To increase the variety of cutting-edge farms for milk manufacturing. 
  • Technological enhancements grow milk manufacturing and sell it on an industrial scale. 
  • Promoting self-employment and making infrastructural improvements. 
  • Conserving breeding inventory and inspiring heifer calf-rearing. 
  • Other farming schemes introduced beneath NABARD 
  • Agri-hospital and agribusiness centres scheme 
  • National livestock mission 
  • GSS – ensuring end-use of subsidy 
  • Interest subvention scheme 
  • Credit-linked capital subsidy scheme (CLCSS) beneath neath NABARD 
  • Capital investment subsidy scheme for industrial manufacturing devices for biological/organic inputs.

The credit-linked subsidy scheme is another scheme introduced in 2000 to facilitate the modernisation of small industry units (SSIs). These units must be contained in a sub-sector as defined in the schema.

NABARD has made significant contributions to promoting agriculture and rural development in India through consistent support. Support is extended through financial and non-financial schemes, and programs are typically provided through local cooperative banks and local banks. Other business segments that can take advantage of these benefits include farmers, fish farmers, and ranchers. Taking a loan for an agricultural business can help you reach your financial goals.

Functions of NABARD

To carry out its mission, the National Bank for Agricultural and Rural Development play four central functions. These four key functions are credit, finance, monitoring, and development. To understand all four features of NABARD, let's look at them all one by one.

Credit Function 

As the leading provider of credit lines in rural areas, the National Agricultural and Rural Development Bank (NABARD) performs the credit function. As part of these functions, banks create, regulate and monitor credit flows in rural areas of the country. 

Financial Functions 

NABARD has several client banks and institutions supporting local development activities. The National Agricultural and Rural Development Bank or NABARD will lend to these client banks, craft factories, food parks, processing units, artisans, and other institutions by fulfilling its financial function. 

Supervision Function 

As mentioned above, NABARD is a leading institution dealing with agriculture and rural development. For this reason, this agency is responsible for monitoring and managing all development activities and projects. With this feature, NABARD performs oversight functions that need to manage all client banks, institutions, credit and non-credit companies as part of the rural development task.

Development Function 

You should now be well aware that the main mission of the National Agricultural and Rural Development Bank (NABARD) is to focus on the development of sustainable agriculture and the promotion of rural development, but the banks are honest. Perform development functions to live in this role.  NABARD helps local banks develop action plans for development activities as part of their development capabilities. The National Bank of Agriculture or Rural Development (NABARD) efficiently performs all of the above roles and functions. It has a major impact on agricultural progress and rural development.

Also Read: What You Missed in the Budget - See Highlights and Summary

The NABARD Loans

Loans are available under the NABARD program. Some of them are mentioned below.

1. Short Term Loans 

These are crop-oriented NABARD loans offered to farmers by financial organisations to  refinance their crop production. The loan also provides food security to farmers and rural communities. If the farm is seasonal,  the NABARD program has approved ₹55,000 crores for short-term loans from various financial institutions from FY17-18. 

2. Long Term Loans 

These loans are offered by several financial institutions for either agricultural or non-agricultural activities. Their term is much longer than short-term loans ranging from 18 months to  5 years. In 2017-18, NABARD refinanced nearly ₹65,240 crores to financial institutions and covered the concessional refinancing of ₹15,000 crores to the Regional Bank of India (RRB) and credit unions.

3. RIDF or "Rural Infrastructure Development Fund"

RBI introduced  RIDF as part of its NABARD program because it identified a shortage of loans to priority sectors needing assistance in rural development. Due to the focus on rural infrastructure development, ₹24,993 crores of loans were provided in FY17-18. 

4. LTIF or long-term irrigation fund

It was introduced as part of the NABARD loan and provided financing for 99 irrigation projects and a loan of ₹22,000 crores

5.  PMAYG or "Pradhan Mantri Awaas Yojana Gramin" 

Under this financial plan, NRIDA or the National Rural Infrastructure Development Agency requires household 2022 and the total amount of ₹9000 crores was consolidated. 


NABARD was established on  July 12, 1982, by transferring the agricultural lending function of RBI and the refinancing function of the then Agricultural Refinancing Development Corporation. It was placed in national service by the late Prime Minister Smt. Indira Gandhi on  November 5, 1982. The initial capital was ₹1000 crores, and the paid-in capital as of  March 31, 2020, was ₹14800 crores. As a result of revising the equity capital structure between GOI and RBI, NABARD  is now wholly owned by GOI. 

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Q: What is the mission of NABARD?


The mission of NABARD is to promote equitable, rural and sustainable agricultural development through participatory financial and non-financial interventions, innovation, technology and the development of institutions to ensure prosperity.

Q: When was NABARD established?


NABARD was established on  July 12, 1982, as a central regulatory body for agricultural financing and the rural sector. The Indian government established NABARD under the National Agricultural and Rural Development Act of 1981.

Q: What is the NABARD scheme?


NABARD is involved in disseminating various programs through various banks and other leading financial institutions nationwide called NABARD schemes.

Q: Which banks are under NABARD?


The banks under NABARD are Regional Rural Banks, State Cooperative Banks, District Central Cooperative Banks, Primary Agricultural Credit Societies, Primary Cooperative Agriculture and Rural Development Banks and State Cooperative Agriculture and Rural Development Banks.

Q: Write three main functions of NABARD?


The main functions of NABARD include development and promotion, refinancing- financing,  planning and monitoring.

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