by 5paisa Research Team Last Updated: 2023-06-28T14:35:36+05:30
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The full form of NABARD is National Bank for Agriculture and Rural Development which is the apex bank for agricultural and rural development in India. It is a financial institution that serves as a guiding light for the farmers, empowering them and shaping their destinies. 

But to know what is NABARD in detail, it is essential to delve deep into all the objectives and functions performed by the body. This article will focus on delivering an all-encompassing knowledge of the National Bank for Agriculture and Rural Development. If you are eager to learn about NABARD, a thorough reading until the end will prove helpful. 

NABARD Meaning

NABARD, which stands for the National Bank for Agriculture and Rural Development, was established in 1982 to promote sustainable rural and agricultural development across India. The financial body operates under the domain of the Reserve Bank Of India and the Ministry of Finance of the Government Of India. After learning what is NABARD it is essential to know the central objective behind it. 

The main motto of the National Bank for Agriculture and Rural Development is to promote the flow of credit in rural and agricultural sectors and enhance their overall development. One of the most crucial roles played by the NABARD is the channelization of institutional credit to various rural entities, farmers, rural entrepreneurs, and cooperatives. 

NABARD also offers monetary support and assistance for various schemes and programs to ensure that rural and agricultural communities can access the necessary funds for their development. Besides this, it also focuses on providing technical guidance, expertise, and assistance to rural entrepreneurs and farmers, thereby promoting the latest agricultural practices, modern farming methods, and efficient utilization of resources.
Therefore by focusing on the overall development and growth of rural infrastructure, it improves the quality of living in rural areas and makes the dream of millions come true through its implementation of environmental and social initiatives. 

Objectives of NABARD for Offering Long-Term Loans

There are various objectives that NABARD aims at for providing Long-Term Loans, all of which are listed below:

●    Offering support on capital investment in various sectors such as agriculture, poultry, horticulture, fishery, etc. 
●    Initiating the flow of credit concerning all the activities incorporated by both the government and NABARD.
●    Refinancing the amount of credit related to subsidy on the government’s capital investment under the NABARD subsidy’s authority. 
●    Extension of assistance and support for various projects on climate adaptation and mitigation.
●    Identifying all the requirements encompassing credit for joint-liability groups and self-help groups as well as their fulfillment. 
●    Promoting employment opportunities in the non-agricultural sector by motivating rural and semi-rural people to opt for alternate options for jobs.

NABARD Functions

NABARD being the apex developmental bank for rural and agricultural development in the country, accomplishes several functions, which are listed below:

●    NABARD offers refinancing support to various commercial banks, cooperative banks, regional rural banks, cooperative banks, and other financial institutions intending to extend credit to rural and agricultural sectors
●    The financial institution also plays a crucial role in the promotion and financing of rural infrastructure development, offering support to the construction of rural irrigation systems, bridges, cold storage, warehouses, roads, as well as various electric projects.
●    It also motivates the adoption of innovative and modern agricultural technologies and practices. 
●    Offers finacial support for the progressing technologies of agriculture and modern techniques in farming.
●    NABARD also aims to strengthen the agricultural institutions of rural India, promoting rural development.
●    The institution engages in the formation of policies and collaborates with RBI, the government, and various other stakeholders to develop strategies, guidelines, and policies.
●    It evaluates the progress of its projects and scheme and the impact of it on rural areas. 
●    NABARD initiates various programs on capacity building and training initiatives for rural entrepreneurs, stakeholders, and farmers.
●    It undertakes studies, surveys, and research to secure insights and knowledge on the challenges, opportunities, and emerging trends in various rural and agricultural sectors. 

NABARD Formation

The foundation of NABARD can be traced back to the Shivaraman Committee’s recommendation on Rural Credit. The committee was established in 1979 to initiate the functioning of the rural credit system in India. This establishment was held under the former chairmanship of the Reserve Bank Of India. 

Based on the recommendation of the committee, the Indian government introduced the National Bank for Agriculture and Rural Development Bill in 1981 in Parliament. The aim of the bill was to establish NABARD as the country’s apex development bank for rural development and agriculture. 

However, it received the approval of the Parliament and came into existence officially on July 12th, 1982, after the president’s accent to the act. The financial institution was established as an autonomous institution headquartered in Mumbai, Maharashtra. The operation is conducted under the framework of RBI and the guidance provided by the Ministry Of Finance. 

As time passed by, NABARD has developed into a pivotal institution that plays a crucial role in the landscape of rural development and agriculture in India. It has successfully undertaken various initiatives, schemes, and programs to channel institutional credit, develop rural infrastructure, and provide technical assistance. 


The role of NABARD in the growth and development of agriculture is multifaceted. Below are given some of the critical roles accomplished by NABARD:

●    The primary role is to facilitate the flow of credit to the rural and agricultural sectors. 
●    It offers financial and refinancing support to various cooperative, commercial, and rural and regional banks for lending to agricultural cooperatives, rural entrepreneurs, and farmers. 
●    It entertains active participation in the formation of policies and planning strategies to enhance agricultural and rural development. 
●    NABARD implements various schemes and programs to promote the productivity of agriculture, enhancement of rural livelihood, and the development of rural infrastructure. 
●    NABARD is also responsible for conducting various workshops, training programs, and seminars with the aim of enhancing the knowledge of the individuals involved in agriculture.
●    NABARD evaluates and monitors the impact of the initiatives concerning rural; development and measures the progress of the projects it has undertaken.  
●    It also offers support to the establishment of Microfinance institutions as well as self-help groups as well as invigilates their functioning. 

NABARD Functions:

The critical functions of NABARD involve refinancing, planning, supervision, monitoring, financing, planning, and promotion of development in the agricultural sectors in rural areas. Below are given some of its credit-related as well as non-credit-related functions in detail:

Credit-Related Functions:

●    Offering loans to the governments of the states for frugal infrastructure development and cooperative credit structure strengthening. 
●    Lending directly to cooperatives and the organization of the producers.
●    Offering support to state-owned corporations and institutions.
●    Refinance for investment credits to Rural Finacial institutions( loans for the long term) and credit for marketing and production (loans for the short term)
●    Granting loans for the infrastructure of warehousing

Non-Credit Related Functions:

●    Monitoring and planning of credit as well as cooperation with various institutions and agencies.
●    Gelps in the formulation of policies of state Government, Reserve Bank of India on rural development, and matters encompassing agricultural credit. 
●    Initiatives for development and promotion in the oeuvre farm. Micro-finance, off-farm, inclusions of finance, and merged government-sponsored programs. 
●    Enhancing research facilities, rural innovations, and other developmental strategies. 
●    Emphasise Microenterprises and the promotion of opportunities for livelihood. 

NABARD Scheme Features:

The NABARD scheme is initiated to support agricultural and rural development in India. The key features of this scheme are as follows:

●    Offering financial assistance through grants, loans, refinancing, or subsidiaries. This aims at meeting the requirement of credit on the part of the agricultural cooperative, rural entrepreneurs, farmers, and various other rural entities. 
●    The scheme is specially designed to target specific beneficiaries like the marginalized section of society, rural artisans, women entrepreneurs, self-help groups, or farmers. 
●    The scheme also caters to various sectors within the oeuvre of agricultural and rural development, especially in areas like horticulture, production of crops, fisheries, and animal husbandry, among many more. 
●    The particular emphasis on NABARD schemes is on the training programs and capacity building with various modern techniques of farming.
●    It also adopts the promotion of environmental conservation and sustainable practices of agriculture.
●    NABARD schemes often involve partnerships and collaborations with a variety of stakeholders, including financial institutions, government agencies, NGOs, and community-based organizations, among many more.  

NABARD Scheme Interest Rates

The table below shows the interest for NABARD loans for refinancing to NBFCs and various banks under 2022 schemes.

Assistance on Short Term refinance

Starting from 4.50% 


State Cooperative Banks for the purpose of financing crop loans


For financing crop loans to RRBs

RRBs to finance crop loans


Direct crop loan financing DCCBs


RRBs ir commercial banks for their finance to PACS for loans encompassing crops



5.50% for ST – adding

SCARDBs (Annual Product)-SAO/ST(Others)/ST (SAO)


8.10% for RRBs /StCBs/– the transformation of Short Term loans of crops to medium term loans

Assistance on Long Term refinance

Starting from 8.50%

State Cooperative Banks (StCBs) and

Regional Rural Banks (RRBs)

Starting from 8.35%

State Cooperative Agriculture and Rural Development Banks (SCARDBs)

Starting from 8.35%

Lending directly

Bank Rate- 1.50%


Various Types of Loans Offered By The NABARD

The NABARD schemes allow for the following types of loans:

Loan For Short Term:

Short-term loans are especially crop-oriented loans that various financial institutions offer to farmers for refinancing the production of crops. 

Loans For Long-Term:

Various financial institutions offered these loans for either non-farm or farm-related activities. The term for loans is much longer than that of short-term loans. The tenure usually ranges from 18 months to 5 years. 

Rural Infrastructure Development Fund:

This fund was introduced by RBI as a part of the scheme as a result of the shortfall in lending to the prioritized sectors that require support for rural development. 

Long-Term Irrigation Fund:

This was initiated as a NABARD loans part for the provision of funding 99 projects on irrigation with a total disbursal amount of Rs 20,000 Crores.

Pradhan Mantri Awaas Yojana - Gramin

Under Pradhan Mantri Awaas Yojana - Gramin, a loan of ₹9000 Crores was approved for carrying out its project of making pukka houses along with all the required amenities for needy households. 

NABARD Infrastructure Development Assistance

This is a sub-program under NABARD that specializes in offering credit to institutions or state-owned corporations that are doing well financially. 

\Fund For The Development Of Warehouse Infrastructure

The fund supports scientific and modern warehouse infrastructure for commodities of agriculture.

Other than all the types of loans mentioned above, it also offers:

●    Fund For Food Processing
●    Credit Facilities to Marketing Federations
●    Primary Agriculture Credit Societies
●    Direct lending

Various Advantages offered By NABARD Scheme

The NABARD scheme offers a variety of advantages, which are listed below:

●    Financial support in the form of refinancing, loans, grants, and subsidies
●    Promotion of agricultural productivity and rural development
●    Offers inclusive growth by targeting beneficiaries
●    Building and enhancement of capacity through various training programs
●    Enhanced productivity as a result of the support of modern agricultural equipment, machinery, and technologies.

Essential Contributions Offered By NABARD

The essential contributions of NABARD are:

●    Financial Inclusion
●    Development of rural infrastructure
●    Credit support for agriculture
●    Enhancement of rural livelihood
●    Conducting research and imparting knowledge on agriculture
●    Formulation of policies and advocacy 
●    Promotion of sustainable agriculture

NABARD Schemes For Dairy And Farming Sector:

The various NABARD schemes for farming and dairy sectors are mentioned below:

Schemes for the Farming Sector:

●    Farm Sector Promotion Fund (FSPF)
●    Dairy Entrepreneurship Development Scheme (DEDS)
●    National Livestock Mission (NLM)
●    Agriculture Refinance and Development Company (ARDC)
●    National Watershed Development Project for Rainfed Areas (NWDPRA)

Schemes for Dairy Sector:

●    Dairy Processing and Infrastructure Development Fund (DIDF)
●    Dairy Entrepreneurship Development Scheme (DEDS)

Main Objectives of NABARD For The Sector Of Farming

The key objectives of the farming sector adopted by NABARD are:

●    Increase in the amount of crop production as well as production of milk
●    Upgrades in technologies used in the production of crops and milk and its promotion on a commercial scale.
●    Promotion of self-employment and improvements in infrastructure. 

Other Farming Schemes Introduced under NABARD (H3) 50 - 100 words

Various other farming schemes have been introduced under NABARD; these are:
●    National Livestock Mission
●    Credit-Linked Capital Subsidy Scheme (CLCSS) under NABARD
●    Agri-clinic and Agribusiness Centers Scheme
●    Interest Subvention Scheme
●    GSS – Ensuring End-Use of Subsidy

What Are The Plans And Approaches That NABARD Schemes Would Aim At In The Future?

Some areas where there might be a consideration for future schemes on the part of NABARD are:
●    Adoption of the latest technology
●    Climate Resilience
●    Finacial Inclusion
●    Development Of Value Chain
●    Collaboration and partnerships
●    Enhancement of rural livelihood

List of Banks That Comes Under NABARD Scheme

NABARD work closely with a plethora of banks to implement its schemes, which include:
●    Commercial banks
●    Regional Rural banks
●    Cooperative banks
●    Urban and Rural cooperative banks
●    Primary Agricultural Credit Societies


In conclusion, NABARD, the National Bank for Agriculture and Rural Development, has emerged as a pivotal institution that enhances agricultural and rural development in India. With its diverse range of schemes, financial support, and capacity-building initiatives, NABARD continues to play a crucial role in promoting sustainable practices, empowering farmers, and enhancing inclusive growth in rural areas.

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Frequently Asked Questions

The creation of the NABARD scheme aimed at offering financial and developmental support to the rural and agricultural sectors in India. The scheme was specially developed for addressing the specific needs and challenges faced by the rural and agricultural sectors.

Farmers, rural entrepreneurs, farmer producer organizations (FPOs), financial institutions, and agricultural cooperatives are eligible to apply for the various schemes and programs of NABARD.

The age limit for the schemes of NABARD varied on the basis of different programs and schemes. The appropriate information can be secured by referring to the guidelines of the scheme. The specific scheme guidelines can be found on the official website of NABARD. 

NABARD offers various funds to support different initiatives and sectors. Some of the critical funds include the Rural Infrastructure Development Fund (RIDF), Micro Irrigation Fund (MIF), Farmers' Club Development Fund, Tribal Development Fund,  Farm Sector Promotion Fund, Watershed Development Fund, and Cooperative Development Fund.