The National Bank for Agriculture and Rural Development (NABARD) is India's apex development bank established by an Act of Parliament in 1982. It functions under the Department of Financial Services, Ministry of Finance, Government of India.

NABARD's main objective is to promote sustainable and equitable agriculture and rural development in India. They play a central role in coordinating and facilitating financial and non-financial interventions. Farmers, small-scale industries, self-help groups (SHGs), and joint liability groups (JLGs) involved in rural economic activities can benefit from NABARD. They provide concessional credit with attractive interest rates for rural borrowers to help agricultural productivity, improve livelihoods, and foster inclusive economic growth in rural areas.

Functions of NABARD

NABARD, National Bank for Agriculture and Rural Development, is an apex development finance institution in India that focuses on providing credit and other facilities for the promotion of agriculture, small-scale industries, cottage and village industries, handicrafts, and other rural crafts.

The table below provides the several functions of NABARD to give you an insight into how NABARD improves India's rural sector.

Functions Description
Promotion and development Leads initiatives for the advancement of the rural economy.
Refinancing Acts as a refinancing institution for agricultural and rural loans.
Financing Directly finances certain rural development schemes and projects.
Planning Prepares annual credit plans for all districts in India
Monitoring and supervision Monitors the performance of banks involved in rural lending and supervises cooperative banks and RRBs

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NABARD Scheme Interest Rates

NABARD offers refinance schemes at concessional rates to banks and financial institutions that lend to rural borrowers. However, the actual interest rate charged to the borrower ultimately depends on the lending institution and its internal policies.

NABARD Short-Time Refinance Interest Rates

The table below presents the interest rates of short-time refinance from NABARD.

Short-Time Refinance Interest Rate
State Cooperative Banks for financing crop loans 4.5%
RRBs for financing crop loans 4.5%
DCCBs directly financing for crop loans 4.5%
Commercial Banks./RRBs in respect of their finance to PACS towards crop loans 4.5%
StCBs/RRBs - Conversion of Short Term- crop loans into Medium Term loans 8.10%

NABARD Direct Lending Interest Rates

NABARD provides financial assistance for building or improving warehouses. The table below presents the interest rates of Direct Lending for Warehouse Infrastructure Fund (WIF).

Direct Lending (Warehouse Infrastructure Fund (WIF)) Interest Rate
State Governments (Bank rate–1.50)%
State Government Corporation (with State Govt. Guarantee) (Bank rate – 1.50)%
Entities promoted by State / Central Government owned/assisted (without State Govt. Guarantee) PLR + Risk premium

Food Processing Fund is a dedicated fund established (by NABARD) to support businesses involved in processing food products. The table below presents the interest rates of Direct Lending for Food Processing Funds (FPF).

Direct Lending (Food Processing Funds (FPF)) Interest Rate
State Governments (Bank rate–1.50)%
Entities promoted by State Governments (with Govt. Guarantee) (Bank rate – 1.50)%
Entities promoted by State Governments (without Govt. Guarantee) PLR + Risk premium

NABARD Borrower's Interest Rate

Banks and financial institutions that borrow from NABARD add a margin to the refinance rate to determine the interest rate charged to the borrower. This margin covers their operational costs and profit.

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Types of Loans Offered By NABARD

NABARD, or National Bank for Agriculture and Rural Development, is a financial institution in India that provides financial services to the rural sector. They don't directly lend to individuals, but instead, they refinance loans provided by other banks, known as indirect finance.

Here are the two main types of loans offered by NABARD:

  • Refinance: This is the primary function of NABARD. They provide refinance to cooperative banks, regional rural banks, and commercial banks for loans they have sanctioned to farmers and rural industries. Refinance can be short-term, for crop loans, or long-term, for farm equipment or infrastructure projects.
  • Direct Lending: NABARD also provides direct lending in a few specific cases, such as for rural infrastructure development, warehouses, and food processing units.

NABARD Refinance Schemes

The table below shows the refinance schemes offered by NABARD.

Refinance Schemes Description
Composite Loan Scheme (CLS) Provides refinance to meet the working capital requirements of small enterprises in rural areas.
Integrated Loan Scheme (ILS) Provides refinance for both block capital and working capital for one operating cycle for small enterprises in rural areas.
Self-Employment Scheme for Ex-servicemen (SEMFEX) Provides refinance to ex-servicemen who want to set up agricultural or off-farm enterprises in rural areas.
Soft Loan Assistance for Margin Money (SLAMM) Provides financial assistance to entrepreneurs who lack the necessary margin money to meet the requirements of other NABARD refinance schemes.
Small Road and Water Transport Operators (SRWTO) Provides refinance for the purchase of transport vehicles used for transporting agricultural produce or industrial products to rural and urban markets.

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NABARD Direct Lending Scheme

The table below shows the direct lending schemes offered by NABARD.

Refinance Schemes Description
Warehouse Infrastructure Fund (WIF) Provides loans for the construction and renovation of warehouses and cold storage facilities.
Food Processing Fund (FPF) Provides loans for setting up food processing units in rural areas.
Rural Infrastructure Development Fund (RIDF) Provides loans for financing rural infrastructure projects such as roads, bridges, and irrigation schemes.
Pradhan Mantri Awas Yojana – Grameen (PMAY-G) Provides loans for rural housing under the Pradhan Mantri Awas Yojana scheme.
Swachh Bharat Mission-Gramin (SBM-G) Provides loans for the construction of toilets in rural areas under the Swachh Bharat Mission scheme.
Micro Irrigation Fund Provides loans for the development of micro-irrigation facilities in rural areas.

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Government Sponsored Scheme from NABARD

NABARD (National Bank for Agriculture and Rural Development) offers various government-sponsored schemes for the development of the agriculture and rural sectors in India.

NABARD Farm Sector Schemes

  • New Agricultural Marketing Infrastructure (AMI) sub-scheme of ISAM (Integrated Scheme of Agricultural Marketing).
  • Agri Clinics and Agri Business Centres Scheme (ACABC).
  • Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity.
  • Interest Subvention Scheme.
  • National Livestock Mission - Entrepreneurship Development & Employment Generation (NLM-EDEG).
  • Dairy Entrepreneurship Development Scheme (DEDS).
  • Commercial production units of organic inputs - National Project on Organic Farming (NPOF).

Check out more on Animal Husbandry Loan from the linked page.

NABARD Off Farm Sector Schemes

  • Stand-Up India.
  • Special Credit Linked Capital Subsidy Scheme (SCLCSS).

You can also check more on Emergency Credit Line Guarantee Scheme and CGTMSE Scheme from the linked page.

Subsidiaries Of NABARD

NABARD has established seven specialized subsidiaries to deepen its reach and impact. Each subsidiary uses NABARD's expertise and deploys its own team of specialists to address specific needs within the agricultural and rural development sector.

Subsidiary Name Description
NABKISAN Provides financial services and facilitates institutional development for Farmer Producer Organizations (FPOs)
NABSAMRUDDHI Finances non-farm activities in rural areas, with a specific focus on Green & Wellness finance
NABFINS Offers financial products and services to rural non-banking financial institutions.
NABFOUNDATION Collaborates with NGOs, startups, and CSR units of corporations to design and execute projects in rural areas
NABCONS Provides consultancy services for rural infrastructure development projects.
NABVENTURES Invests in early to mid-stage startups in agriculture, agri-food, and rural businesses.
NABSanrakshan Microfinance institution focused on financial inclusion and women empowerment in rural India.

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Features & Benefits of NABARD Loan

Here is a list of major benefits of taking a loan from NABARD:

  1. Affordable Interest Rates: NABARD offers loans at competitive interest rates, making borrowing more affordable for farmers and rural entrepreneurs.
  2. Flexible Repayment Tenure: Loans from NABARD come with flexible and longer repayment periods, reducing the financial burden on borrowers and allowing better financial management.
  3. Diverse Project Support: NABARD loans can be used for various projects, including agriculture, rural infrastructure, and microfinance, enabling borrowers to undertake a wide range of development initiatives.
  4. Technical Assistance and Guidance: Borrowers receive comprehensive technical assistance and guidance from NABARD, ensuring the viability and success of their projects.
  5. Risk Mitigation: NABARD helps borrowers manage and mitigate risks associated with agriculture and rural projects through various schemes and insurance options, providing a safety net against uncertainties.

Eligibility Criteria to Apply For NABARD Schemes

NABARD offers refinance schemes for both agricultural activities (farm sector) and rural business ventures (off-farm sector). Here's the list of factors that generally influence eligibility for NABARD refinance schemes.

Farm Sector

  • Type of Farmer: Land Ownership status (small, marginal, large) and type of farming activity (crop production, dairy, fisheries) are often considered.
  • Project Purpose: The specific agricultural activity or infrastructure project being financed (irrigation, storage facilities) is crucial.
  • Land Records: Proof of land ownership or leasehold rights might be required, especially for loans requiring land as security.
  • Financial History: Past loan repayment record and creditworthiness are important factors for loan approval.

Off-Farm Sector

  • Nature of Business: The type of rural industry, service activity, or infrastructure project being undertaken is considered.
  • Project Cost and Viability: The estimated cost of the project and a well-defined business plan demonstrating its financial viability are essential.
  • Entrepreneur Profile: Skills, experience, and a strong business plan of the individual or group seeking the loan are evaluated.
  • Collateral Security: Land, property, or other assets might be required as security for the loan, depending on the specific scheme.

You can also check other loan schemes offered by SBI for farmers & small businesses. Check out the links provided below:

SBI Agriculture Loan SBI working capital loan
SBI e Mudra PM Svanidhi Loan SBI MSME Loan

Steps to Apply For Loan From NABARD

If you want to acquire funds from NABARD, you should identify your needs and choose a suitable scheme. Browse the various NABARD refinance and direct lending schemes.

  • Step 1: Identify your needs and choose a suitable NABARD scheme that aligns with your purpose (agriculture, rural housing, etc.).
  • Step 2: Find a cooperative, regional rural, or commercial bank that partners with NABARD for your chosen scheme.
  • Step 3: Contact the bank and inquire about the specific loan program details under the NABARD scheme.
  • Step 4: Prepare the required loan application documents, which may include a business plan, project report, land documents (for some schemes), and financial statements.
  • Step 5: Submit your completed application to the bank. They will process it and forward it to NABARD for approval (if needed for the specific scheme).
  • Step 6: The bank will keep you informed about the application status. Upon approval, the bank will disburse the loan amount as per the scheme's terms.

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Frequently Asked Questions

Yes, NABARD is a government bank. It is fully owned by the Government of India and was established under an Act of Parliament to promote agriculture and rural development in India.

NABARD is India's central bank for agriculture and rural development. It provides financial and technical support to promote sustainable growth in agriculture, small-scale industries, and other allied activities in rural areas.

No, NABARD is not a branch of RBI. They are both financial institutions in India, but RBI is the central bank responsible for monetary policy, while NABARD is a development bank focused on rural and agricultural development.

NABARD, India's apex development bank, supports agriculture and rural development through financial and non-financial interventions. This includes providing credit, promoting innovation, and fostering infrastructure development in rural areas.

A. NABARD offers refinancing to banks. To access NABARD benefits, apply for a loan from a commercial or cooperative bank that partners with NABARD for specific agricultural or rural development schemes.

NABARD offers refinancing to banks and other institutions that provide loans for agriculture, allied activities, and rural development projects. Eligibility for these loans depends on the specific scheme offered by the financial institution.

NABARD refinances loans provided by other banks to farmers. The interest rate charged by NABARD depends on the type of loan and the borrower.

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