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Direct Credit

Direct credit from NABARD constitutes loans to State Governments.

Supporting CooperativesIn order to strengthen the owned funds position of cooperative credit institutions and therebyincreasing theircapacity to leverage larger resources, NABARD provides loans to StateGovernments to contribute to theshare capital of these institutions.Rural Infrastructure Development

With the objective of assisting State Governments in the completion of ongoing ruralinfrastructureprojects and to take up new infrastructure projects, the Rural InfrastructureDevelopment Fund (RIDF) was set upwith NABARD in 1995-96 with contributions fromCommercial banks by way of deposits. The shortfall inagri/priority sector lending wasdeposited by the commercial banks with NABARD as part of their contribution tothe RIDF. Thetotal corpus covering RIDF I (1995-96) to X (2004-05) is Rs. 42,000 crore. Sanctions underalltrenches of RIDF as on 31 March 2005 were Rs.42948.51 crore against which thedisbursements were Rs.25384.02 cr.

Anticipated Benefits

It is anticipated that the projects sanctioned upto 31 March 2005 under RIDF would result in:Creation ofadditional irrigation potential in 92.47 lakh ha.Addition of 178000 km of rural road network & 331000 meter bridgelengthContribution to the GDP to the tune of Rs. 11058 croreGeneration of recurring employment of 48.01 lakh

jobs and non-recurring employment of 13681 lakh man days due to increased irrigationGeneration of non-recurring employment expected from non-irrigation projects: 23238 lakhperson days

Co-financing

To ensure substantial credit flow to agriculture and rural sector and to instill confidence inbanks for financing hi-tech/export oriented agriculture projects involving large financialoutlays/sunrise technologies, etc., NABARD hasentered into agreements for co-financing with12 Commercial Banks thereby sharing the credit risks with partnerbanks. Under this arrangement, projects have been sanctioned in areas like floriculture,organicfarming, milk processing, ethanol production, infrastructure development and forestry.Bulk-lending/ Revolving Fund Assistance

NABARD provides bulk-lending facilities to NGOs. As on 31.3.2005, 30 agencies have beensanctionedassistance of Rs 27.07 crore against which Rs.15.18 crore has been disbursed.

Production Credit

This is a short-term refinance facility, aimed at supporting

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Agricultural production operations and marketing of crops by farmers and farmerscooperativesMarketing anddistribution of inputs like fertilizers, seeds and pesticidesProduction and marketing activities of village cottageindustries, handicrafts, handlooms,powerlooms, artisans, small scale and tiny industries and other rural non-farmenterprisesEligible institutions for this facility are State Cooperative Banks (SCBs) and Regional RuralBanks(RRBs). The period of credit is 12 months.

Short Term Credit

1. Seasonal Agricultural Operations (SAO)

New line of credit for financing short-term agricultural /alliedandmarketing activities

To provide liquidity to the cooperative banks and to boost credit flow to the agriculture sector,a new line of creditwas introduced in 2003-04 encompassing loans for agricultural purposesagainst security of gold and securityother than charge on crops, working capital credit forallied agriculture activities, working capital credit forprocurement and distribution of agriculture inputs, marketing of agriculture/allied products, collection andmarketing of minorforest produce etc and short-term credit support provided to cultivators forhigher scales of finance for commercialisation of agriculture, exports and value addition.2. Marketing of Crops

With a view to improve the flow of marketing credit to cultivators for augmenting their holdingcapacity andchecking incidence of distress sale, NABARD encourages cooperative banks andRRBs to finance marketing ofcrops, through its refinance facility for this purpose. Each drawalagainst the sanctioned credit limit is repayablewithin a maximum period of 12 months.

3. Distribution of agri inputs

With a view to ensuring timely supply of agri inputs like fertilizers, pesticides etc. a line of credit is made available tocooperative banks for financing Apex/Primary Societies for stockingand distribution of agri inputs by way ofsanction of yearly limits. Each drawal is repayablewithin a period of 120 days.

4. Pisciculture Activities

Refinance facilities is extended to cooperative banks and RRBs for meeting the working capitalrequirements offarmers in pisciculture activities by way of sanction of ST credit limits. Eachdrawal is repayable within 12 months.

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5. Other than SAO (OSAO)Refinance is available to cooperative banks for financing the working capital requirement of PWCS/Apex

Weavers' Society, working capital requirements of industrial societies, financingindividual rural artisans, etc. Eachdrawal against the sanctioned credit limit is repayablewithin 12 months. OSAO refinance is available to RRBs forfinancing production and marketingactivities of artisans, village industries and also for financing persons belongingto weakersections engaged in trade/business/services. Refinance support is also available to commercialbanks

for financing the working capital requirements of PWCS. Refinance support is available to SCBs andCBs for meeting working capital requirements of State Handloom Development Corporations(SHnDCs).

Special InitiativesSpecial line of credit for oilseeds and pulses productionSpecial line of credit for development of tribals inpredominantly tribal areasLiquidity support to cooperative banks and RRBs for providing relief to farmers indistress andfarmers in arrearsRevision in methodology for fixing scale of finance

Refinance against Investment Credit

This is a long-term refinance facility. It is intended to createincomegenerating assets in the following:

Agriculture and allied activitiesArtisans, small scale industries, tiny sector, village and cottageindustries, handicrafts,handlooms, powerlooms, etc.Activities of voluntary agencies and self helpgroups working among the rural poor The credit is normally provided for a period of 3 to 15 years. Investment

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credit leads to capital formation through asset creation. It induces technologicalupgradationresulting in increased production, productivity and incremental income to farmersand entrepreneurs.

Eligible Institutions

SCARDBs, SCBs, RRBs, CBs, Scheduled Primary Urban Cooperative Banks,

North EastDevelopment Finance Corporation Ltd. (NEDFI) and NBFCs are eligible from NABARD fortheirinvestment credit in the rural sector.

Eligible PurposesSome of the major purposes covered under Investment credit are Minor Irrigation,

farmmechanisation, plantation/ horticulture, animal husbandry, storage/market yards, fisheries,post-harvestmanagement, food/agro processing, non-farm sector including rural industries,microfinance, purchase of land (forsmall/marginal Farmers, share croppers etc.), rural housingand disbursements under poverty alleviationprogrammes like SGSY and SC/ST Action Plan etc.Hi-tech projects and agri-export zones are identified as thrustareas and NABARD helps intechno-financial appraisal of such projects besides providing refinance. In recentyears, refinance support has been extended to new activities like financing of dieselgenerator sets in MadhyaPradesh and LPG kits to rural households all over the country.

CriteriaThe technical feasibility of the project, financial viability and generation of incremental incometo

ultimate borrowers thereby enabling them to have a reasonable surplus after repayment of the loan installmentsare the necessary conditions to be satisfied for sanctioning investmentcredit. The period of loan ranges between3 and 15 years depending on the purpose for whichit is provided.

The beneficiaries of the programme are individuals / group of individuals, SHGs, proprietory /partnership concerns,

companies, state-owned corporations or cooperative societies. The refinance is usually 90% to 100% of the loan amount. Thebalance, wherever applicable,will be met by the banks or the concerned state governments or the Governmentof India inthe case of SCARDBs. With a view to ensure credit flow to certain thrust areas, such as specialcategorybeneficiaries like SC/ST members, self help groups, etc., the quantum of refinance isenhanced to 100%.Interim FinanceSCARDBs are being extended interim finance in order to enable them to provide investmentcredit to ultimate borrowers foreligible purposes and avail refinance within 3 months againstthe same