National Bank for Agriculture and Rural Development

NABARD Full Form in English, letter by letter

NABARD is the National Bank for Agriculture and Rural Development, India's apex development bank for agriculture and rural credit, set up in 1982.

NABARD Full Form in Indian Languages

NABARD is the National Bank for Agriculture and Rural Development, the apex institution behind rural lending in India. Here is the name in six Indian languages.

How NABARD was set up

NABARD, the National Bank for Agriculture and Rural Development, was created under an Act of Parliament passed in 1981 and was established on 12 July 1982. It was formally dedicated to the nation in November that year.

It was formed on the recommendation of the B. Sivaramam Committee, which had reviewed how institutional credit reached agriculture and rural areas. The new bank took over the refinance functions of the Reserve Bank of India and merged the Agricultural Refinance and Development Corporation and the RBI's rural planning and credit cell into one body.

Headquartered in Mumbai, NABARD is not a bank in the ordinary sense. It does not take deposits from the public and does not lend directly to farmers. Its clients are banks, cooperatives and state governments.

What NABARD actually does

Its core job is refinancing. NABARD provides short-term and long-term funds to regional rural banks, state cooperative banks, district central cooperative banks and commercial banks, which then lend onward to farmers and rural businesses.

It also inspects and supervises regional rural banks and cooperative banks, while the Reserve Bank regulates banking more widely, and it advises state governments on rural credit plans. That inspection is how the system checks whether rural credit actually reaches borrowers.

Beyond credit, NABARD funds rural infrastructure such as roads, bridges, irrigation, storage and market yards through the Rural Infrastructure Development Fund, started in 1995-96.

Programmes you will hear about

The SHG-Bank Linkage Programme, which began as a pilot in 1992, is NABARD's best-known work. It channels bank loans through self-help groups, mostly of women, and is regarded as one of the largest microfinance programmes in the world.

NABARD also supports farmer producer organisations, watershed development and rural livelihood projects, and it is an implementing agency for the government's scheme to form 10,000 FPOs, which gives small farmers a stronger position when they buy inputs and sell produce.

Its consultancy subsidiary, NABCONS, handles advisory work, and its microfinance subsidiary, NABFINS, lends in the field.

Where NABARD's money comes from

NABARD raises funds by borrowing from the government and the Reserve Bank, and from the market through bonds. It also holds reserves built up over the years that allow it to support rural lending in difficult periods.

The government sets an annual target for agricultural credit that banks are expected to meet, and NABARD's refinance pipeline is one of the channels through which that credit reaches the village level.

Each year NABARD also prepares Potential Linked Credit Plans for districts, estimating how much credit the banks of that district could usefully lend, based on its crops, livestock and enterprises. State governments and district planning bodies use these documents as a reference for rural lending.

A loan from application to refinance

Take a farmer in Maharashtra who wants a loan to buy a drip irrigation set. She applies at her bank branch, which may be a cooperative bank or a rural bank, with land records, identity proof and a quotation for the equipment. The branch decides the loan on its own judgment. NABARD does not see the application.

Later, the bank can ask NABARD for refinance against such loans, and NABARD may also provide a subsidy-linked scheme depending on what the central or state government has announced at the time. So the farmer deals only with the branch, but the money behind it often comes through NABARD.

NABARD, RBI and commercial banks compared

The Reserve Bank is the central bank, regulating banks and handling monetary policy. NABARD is a sectoral apex body, focused on agriculture and rural development, with supervision limited to rural banks and cooperatives.

Commercial banks and RRB branches are where a farmer actually borrows. NABARD sits behind them, supplying funds, standards and schemes. That chain explains why an announcement in Delhi can take months to show up as a cheaper loan in a village.

NABARD sits behind almost every rural loan in India, deciding how funds and schemes reach the last branch. Anyone studying banking or rural development should know where it fits between the RBI, the commercial bank and the borrower.

NABARD Full Form: Common Questions