Financial Banking Institutions in India

Financial Institutions for Agriculture

In India, there are financial institutions available for a different sector. As Indian economy is so large, every sector needs different institutions to manage its economy. To manage the agriculture sector, the government of India has established a national bank for agriculture and rural development which is also known as NABARD. There are other small financial institutions for agriculture in India which also helps and supports the farmers.

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Financial Institutions for Agriculture

The financial institutions for agriculture in India was developed with the purpose of financing the needy farmers and providing them the facilities to increase the efficiency of agriculture. As a result, NABARD was formed in 1982.

Financial Institutions for Agriculture

Thus, it was developed as an apex bank to help and support the agriculture section in India. Currently, the headquarters of NABARD is in Mumbai, Maharashtra and the chairman of the bank is Harsh Kumar Bhanwala.

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National bank for agriculture and rural development is considered a developmental bank in India. The bank was conceived and recommended by the committee for review arrangements for institutional credit for rural development and agriculture.

This was done under the chairmanship of Dr. B. Sivaraman. Also, the primary objective of establishing and setting up the NABARD was to uplift the rural sector of India by increasing the credit flow such that agriculture and rural nonfarming sectors are elevated.

Currently, RBI has 0.4% stake in NABARD while the government of India has a 96.4% stake in NABARD. Also, NABARD is actively looking for developing the financial inclusion policy. It is also a member of the alliance for this financial inclusion.

For the agriculture sector, NABARD has replaced three banks in India. Rural planning and credit cell ( RPCC), agricultural credit department is also known as ACD and Agricultural Refinance and development corporation which ARDC. Earlier these institutions were tasked with the development of the agriculture sector in India.

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Objectives of NABARD

NABARD is an active member of the financial inclusion alliance. The initial capital fro NABARD was Rs. 100 crores. Currently, the share of the government of India in NABARD is 99% while RBI holds a 1% share.

So, NABARD is responsible for taking measures for the institutions which are helping in improving the absorption capacity of the credit system. This delivery system includes formulating the rehabilitation schemes, training of the personnel, monitoring, and reshaping the credit institutions.

For financial activities in rural India, it coordinates with state governments, reserve bank of India, the Indian government, and various national banking institutions which are concerned with the formation of the policies. For more and more reach, NABARD currently has more than 330 district offices.

This also includes one special cell in Srinagar and a sub-office in Port Blair. NABARD refinances the financial institutions which finance the rural sector. Thus, these are available for many institutions which include state co-op banks, commercial banks, regional rural banks, and other financial institutions that are approved by the RBI.

Further NABARD is also named as a self-help group and under this program there 22 lakh SGHs which are credited. So, for national resource management, NABARD has a portfolio in fields of tribal development, farm innovation, and watershed development. So, there are guidelines by NABARD to RRBs, commercial banks, and cooperative banks. 

Practice Questions on Financial Institutions for Agriculture

Q. Which agency is exclusively concerned regarding the credit needs of rural development and all types of agricultural activities?

A. IDBI               B. SIDBI                   C. NABARD                 D. ICICI bank

Answer: C. NABARD

Q. The NABARD bank in India does not provide finances to

A. EXIM bank

B. State development bank

C. Agricultural activities

D. Rural development

Answer: B. State development bank

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