NABARD Extends Financial Support to Bihar

• 04 Apr 2024

Why in News?

National Bank for Agriculture and Rural Development (NABARD) extended financial support of Rs 10372.86 crore in Bihar during the financial year 2023 – 24 in the form of refinance,direct finance, and grant support.

• This is the highest financial support extended by NABARD to the state in a year so far and recorded a growth of 21 % over the previous financial year (2022-23).

Key Points

• Refinance was extended for production credit, investment credit and for paddy procurement operations of different commercial banks, Regional Rural Banks (RRBs) and Co-Operative Banks, while direct finance support was extended to the state government for the creation of rural infrastructures.
  • The grant support was extended to various agencies for piloting developmental initiatives in the field of Farmers’ Producer Organisations (FPOs), Watershed Development, Tribal Development, Primary Agriculture Cooperative Societies (PACS) Computerisation programme, Skill and Enterprise Development, Financial Literacy and Awareness programmes in the rural areas.

National Bank for Agriculture and Rural Development (NABARD)

• It is a development bank focussing primarily on the rural sector of the country. It is the apex banking institution to provide finance for Agriculture and rural development.
• Its headquarter is located in Mumbai, the country’s financial capital.
• It is responsible for the development of the small industries, cottage industries, and any other such village or rural projects.
• It is a statutory body established in 1982 under the Parliamentary act-National Bank for Agriculture and Rural Development Act, 1981.

The Regional Rural Banks (RRBs)

• They were established in 1975 under the provisions of the Ordinance promulgated on 26th September 1975 and Regional Rural Banks Act, 1976.
• RRBs are financial institutions which ensure adequate credit for agriculture and other rural sectors.
• The RRBs combine the characteristics of a cooperative in terms of the familiarity of the rural problems and a commercial bank in terms of its professionalism and ability to mobilise financial resources.

Cooperative Banks

• It is an institution established on a cooperative basis to deal with the ordinary banking business. Cooperative banks are founded by collecting funds through shares, accepting deposits, and granting loans.
• They are Cooperative credit societies where members from a community group together to extend loans to each other, at favorable terms.
• They are registered under the Cooperative Societies Act of the State concerned or the Multi-State Cooperative Societies Act, 2002.
• The Co-operative banks are governed by the:
  • Banking Regulations Act, 1949.
  • Banking Laws (Co-operative Societies) Act, 1955.
• They are broadly divided into Urban and Rural cooperative banks.

Primary Agriculture Cooperative Societies

• PACS are cooperative societies that provide short-term credit and other services to their members, who are mostly farmers.
• They are the grassroots level institutions of the cooperative credit structure in India.
• PACS are being transformed by computerisation, undertaking multiservice, distribution of electricity, water, medicines and offering services as Common Service Centres (CSC).