History of nabard chairman
nabard chairman Y.V.R. Rajeev wrote a letter to Finance Minister Arun Jaitley recommending that a wholly-owned financial institution be created to facilitate priority lending to small businesses. Nabard is a statutory corporation under the Reserve Bank of India (RBI).
Rajeev said Nabard’s role in priority lending was “small in scale” and “remains inadequate.” He pointed out that as per RBI guidelines, the apex bank “recommends financial institutions to consider priority lending to priority sectors” such as micro, small and medium enterprises (MSMEs), rural areas, and exports. “At present, Indian financial institutions have limited exposure to MSMEs. The chairman of Nabard has been requesting to propose to the government for creation of a financial institution which will be wholly owned by the government.”
Sources said Jaitley had accepted the proposal in principle, and a detailed discussion is expected soon. Nabard is the apex financial institution for promoting credit and rural development in India.
To expedite the process of priority lending to MSMEs, Nabard had carried out field visits, data analysis and participated in inter-ministerial meetings in 2015-16 and 2016-17.
According to Nabard, MSMEs accounted for 9.9 percent of GDP and 63 percent of the gross value added (GVA) during 2015-16. The government has set a target of lending Rs 48,000 crore to MSMEs during 2017-18.
Rajeev said, “Such priority lending is required to expedite creation of MSME and self-employment opportunities, growth of self-employment and sustainable growth of the MSMEs. The government has approved the establishment of Nabard Fund Management Company under the Specified Bank Programme (SBP). This will provide for facilitation of priority lending to priority sectors.”
National Bank for Agriculture and Rural Development (NABARD) is a central financial institution promoting rural development and priority banking activities. It was set up as a financial institution by an act of Parliament in 1956, with headquarters at Hyderabad and headquarters transferred to Kolkata in 1968.
To enhance the financial resource base of the national banking sector through expansion and diversification of financial services, NABARD is undertaking credit enhancement, subsidizing and advancing credit and lending facilities to cooperative banks, regional rural banks (RRBs), regional rural banks (RRBs), and development banks.
Nabard is also responsible for the disbursement and management of funds to develop public infrastructure in rural areas, agriculture credit and irrigation, rural and agricultural marketing, rural housing, and irrigation schemes.
It is the nodal agency for strategic planning for agricultural transformation in India.
The chairman said NABARD is seeking additional funds from the government for fulfilling the ambitious ‘Task-2011’ under the centrally sponsored rural jobs program (RPF), which the Prime Minister identified. “An additional grant of Rs 5.45 billion (Rs 380 crore) has been sought for achievement of strategic goals for target of public infrastructure, agriculture, self employment and effective and efficient rural development under RPF.”
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According to NABARD, 723 infrastructure projects are being executed under RPF. The government approved, under RPF, a provision of Rs 53,000 crore for 2005-06. NABARD plans to disburse Rs 41,330 crore (54 percent) of the approved amount (Rs 56,200 crore) of RPF between April and September 2017.
The chairman said: “The program (RPF) is growing in terms of its targets and fund flow. It is expected that it will be the biggest and most beneficial rural jobs program in the country.”
The NABARD chairman said the board of directors had also identified 12 projects to be taken up under an institutional mechanism for early settlement of wage issues and strengthening labor movements. The chairman said NABARD was also exploring the possibility of forming the state governments and boards of education under the SPARC (Special Power Act), 1957, to enforce minimum education standards in higher education institutions.
The chairman said NABARD aims to generate 24,500 jobs and 115 units of farm income-generating businesses under its rural infrastructure project in eight states in 2017-18.
Further, NABARD said, through other infrastructure schemes, it aimed to provide services to 12.75 crore bank accounts in rural areas during 2016-17. “Out of these, 77 per cent accounts were in non-cash mode and disbursements of 6.8 million under different schemes were made. Total beneficiaries are 11.55 crore. NABARD is planning to conduct awareness programme on consumer protection in three major states in 2017-18,” he said.
The chairman said NABARD would explore the possibility of establishing an agency in partnership with banks under Section 22 of the Securities and Exchange Board of India (Regulation) Act, 1994, with a sunset clause of 10 years.
In a letter to Jaitley, Nabard’s chairman also sought “reinvestment of at least half of the pension fund earnings into priority sectors like housing, renewable energy, rural electrification, national highway projects and nutrition, food and agriculture.”
In the letter to Jaitley, the Nabard chairman also recommended increasing the Nabard chairman’s salary to match the Chairman, India Development Fund.
Chairman of Nabard is appointed by the central government and requires cabinet approval.
The government is also looking at appointing the chairman of the Nabard to the central government as chairman of the chairman’s board of directors.
Nabard’s chairman holds a chairman’s board of directors’ appointment for a period of five years, after which the chairman may be reappointed.
Another government financial institution – the Agricultural Finance Corporation of India (AFC) – was appointed by the central government in 2016 as the chairman’s board.
On its second day of launch, a government survey said the rural infrastructure needs a cash book identified another 124 million households filed as needing housing and financial assistance, including a separate housing fund.
Out of the total 211 million households, 125 million are located in rural areas, according to the Rural Land Financing Survey 2016.
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Earlier this month, a report by the Reserve Bank of India found nearly 90 percent of agricultural loans disbursed to farmers between January and July in 2014 did not benefit them since their income on those loans fell short by a third of the estimated.
The survey said that in 2012, out of a total of Rs 46,359 crore lent by banks in India, only Rs c lent 7,441 crores to farmers with a declared income of less than Rs 2.5 lakh per year.
About 59 percent of farmers obtained agricultural loans below the interest rate of 20 percent set by the government.
According to the study, this was in contrast to 91 percent of agricultural loans to industry, 91 percent to commercial banks, and 76 percent to other financial institutions.
“The odds of lenders making the crop loan adequate do not appear favourable to lenders,” the report said.
“The crop loan is an important part of the overall financial inclusion strategy,” it added.