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In 2012-13, the National Bank forAgriculture and Rural Develop-ment (NABARD) disbursements

crossed the `1 lakh crore mark at`1,06,562 crore, as against `81,000crore during 2011-12, registering agrowth rate of 31.55 per cent. Dur-ing the same period, the aggregate

assets held by NABARD increased to`2,13,000 crore from `1,82,075 croreas on 31 March 2012, an increase of17 per cent.

Once an institution hits a par-ticular milestone, it has to reposi-tion itself and its range of products.This is also true for NABARD. Partic-ularly, when the environment inwhich we operate is undergoing dra-matic changes. Agriculture in 2020will change and we need to changethe way we work. To remove the

imbalances, we are contin-uously evaluating in terms ofintroduction of new products andprocesses, explains Prakash Bakshi,the 59-year-old chairman of NABARD,a financial institution that continuesto extend support to a wide rangeof institutions co-operative banks,

regional rural banks (RRBs), commer-cial banks, state governments, Cen-tral government, NGOs, voluntaryorganisations and other formal andinformal outfits at the national, stateand village levels through its finan-cial and developmental interven-tions. As the apex body it has beensupporting and promoting agricul-ture and rural development.

In fact, NABARDs efforts are sup-plementing the financial system. Weare helping the financial institutions

and banks to enhance their outreachto the rural strata of society. We have

demonstrated how rural business cantake place. We are first investing andthen catalysing, says Bakshi, whohas been with the institution fromday one, when it was formed in 1982.Starting his professional career as alecturer in Raipur, in 1977, he movedon to join Agriculture Refinance andDevelopment Corporation (ARDC) asagricultural economist in 1979 andthen to NABARD. Bakshi held severalimportant positions in developmentand micro credit till two years ago,

when from an executive directorsposition, he got elevated to take overas the chief.

In the past 31 years,NABARDwhichhas been set up under an act of Par-liament by merging the agriculturecredit department and rural plan-ning and credit cell of the RBIand theARDChas been a low profile institu-tion. However, its balance sheet hasbeen growing by leaps and bounds,from a mere `5,000 crore (1982) to

`50,000 crore (in 1993), then to

`1,00,000 crore in 2003 andnow to `2,13,000 crore (2013),as the institutions mandateexpanded from developmentto the business of refinancing

and the additional role of super-vising co-operative banks, RRBs, etc.

It may sound like a conflict ofinterest, but we maintained cleardemarcations of these roles, tilldate, says V. Ramakrishna Rao, ED,NABARD. Rao has also been with theinstitution since inception and been

one of the key members of the teamthat has witnessed its transforma-tion from providing pure agricul-tural loans to co-financing activitiesfor projects in the sunrise industries,where major commercial banks havenot yet entered.

Not many people would know thatin the late 80s, it was NABARD thatcreated the Self Help Group (SHG)concept for the poor to save with-out going to the bank. Built on trust,these groups pool their resources and

Changing environment

Bakshi:

investing to

catalyse

PHOTOS

:SANJAYBORADE

NABARD is

repositioningitself to face

the emergingchallenges

beyond 2020

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gave small loans within the groupwith no transaction costs. Later onas the corpus grew, these SHGs werelinked to the banks and the moneyis deposited in the groups name. In1992, we linked 500 groups to thebanks as a pilot project. Today there

are 9 lakh groups (average size of 15members). Banks have started lend-ing to these SHGs in multiples whichhas gone up to around `16,000 croreannually, adds Bakshi.

Over the years, RBI and the gov-ernment, the two main contributorsto NABARDhave been slowly distanc-ing themselves from the financingside and allowing it to function andflourish on its own, particularly sincereforms were initiated. For instance,NABARDwas getting `500 crore for its

long-term operational fund for invest-ment credit. This stopped in 1993.

Revamping businessNABARDs current business restruc-turing plans are based on develop-ing its own funding sources. It hasbeen borrowing around `15,000-20,000 crore annually from the mar-ket after RBIstopped its support fromthe general line of credit (GLC) in2007 and from the rural credit (long-term operation) fund in 1992. It used

to receive `6,000 crore a year fromRBIunder the general line of credit.Besides this, the institution enjoyeda tax exemption status, which wasalso withdrawn.

The old guards (previous chair-men), who have been contributors inNABARDs journey had recognised thisfact. We were compelled to look fornew avenues to raise resources fromthe market. And once we started todo that, the whole functioning of theinstitution has undergone a change,

explains A.D. Ratnoo, CGM, depart-ment of refinance, who currentlyhandles `1,00,000 crore (50 per centof the total business).

Refinancing of co-operatives andRRBs is still the biggest business ofNABARD which continues to growyear-on-year (Y-o-Y), as it penetrates.The refinance under short term loans(production credit) to these entities,during 2012-13 was `66,180 crore,up by 37.87 per cent on a y-o-y basis.The State Co-operative Banks (SCBs)

and RRBs in Punjab, Rajasthan, Mad-hya Pradesh, Maharashtra, AndhraPradesh, Uttar Pradesh and Karnat-aka received major share of this refi-nance. Then the investment creditfor capital formation in agricultureand allied sectors, non-farm sector

activities and services sector to com-mercial banks, RRBs and co-operativebanks stood at `17,674 crore during2012-13, as against `15,424 crore inthe previous year. The share of com-mercial banks was 49 per cent of thetotal disbursement, followed by RRBs(27 per cent), SCBs (12 per cent) andbalance of another 12 per cent.

As part of setting about a changein our business model, we have rea-lised the need to finance infrastruc-ture loans related to agriculture andrural areas. We have begun lendingdirectly to infrastructure projects atcommercial rates as part of this trans-

formation. The idea is to support thedevelopment of rural infrastruc-ture besides increase the revenueof NABARD, says Bakshi. Besidesbudget allocations by the govern-ment under various schemes, NAB-ARD receives funds from banks thatfail to meet priority sector targets, asinvestments in NABARDs Rural Infra-structure Development Fund (RIDF).Under RIDF in 2012-13, NABARD hasdisbursed to state governments alone`16,292 crore, as against `14,970

crore in the previous year.RIDFwas instituted in NABARDout

of shortfall in priority sector lendingby banks with an announcement inthe 1995-96 Union Budget with aninitial corpus of `1,000 crore. Thesole objective was to give supportto states and state-owned corpora-tions for quick completion of ongo-ing projects related to irrigation, soilconservation, watershed manage-ment and other rural infrastructure.Every year, the allocation to RIDF is

being met through the Union Bud-get. Since its inception, 18 tranchesof RIDFhave been implemented andin the current year (2013-14), a cor-pus worth `20,000 crore has beenallocated. The project propos-als received from the state govern-ments are appraised by NABARD. Byfinancing incomplete infrastructure

Business restructuring plans

Direct NABARD Infra Producers Org Credit Facity Total loan Devp Assistance Devp Fund to Federations (`crore)

2010-11 Sanctioned 100 42 0 0 142

Disbursed 0 0 0 0 0

2011-12 Sanctioned 1,547 891 40 0 2,478

Disbursed 938 423 7 0 1,368

2012-13 Sanctioned 3,385 2,819 186 3,039 9,429

Disbursed 2,363 860 78 2,500 5,801

2013-14 Sanctioned 400 495 70 200 1,166

Disbursed 208 75 7 60 350

Total Sanctioned 5,432 4,247 296 3,239 13,214

Disbursed 3,509 1,357 93 2,560 7,519

Rao: eyeing rural infra projects

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projects, RIDF has unlocked sunkinvestments already made by thestate governments, points out Rat-noo. Currently, every year between`15,000 and 16,000 crore is beingdisbursed with the current outstand-ing on the balance sheet standing at

`75,000 crore. So far all the moneyhas come back and there are zero NPAon the book.

A new leagueThe entry of NABARD into directinfrastructure lending brings it incompetition with commercial banksand specialised infrastructure lend-ing companies, says an analyst.Banks invest in RIDFat a certain percent, we just add a small 0.5 basispoint and we lend to state govern-

ments to fund agriculture relatedinfrastructure projects like irriga-tion, power etc, says M.I. Ganagi,CGM-corporate planning, NABARD.

NABARDs entry into this hasbeen a positive for the infrastructurefunding starved industry. It can com-pete with conventional lenders as theinstitution (NABARD) has deep pock-ets, lower cost of funds and enjoys ahigher credibility, adds an analyst.

While RIDF has benefitted thefarming community by laying down

roads which have boosted their abil-ity to market their produce, theirrigation works have allowed thefarmers to undertake crop diversifi-cation and enhance both productionand productivity.

Interestingly, in the past 2-3years, NABARDhas set up NIDA(NAB-ARD Infrastructure Development

Assistance, a new line of credit sup-

port for funding rural infrastructureprojects, where NABARD disbursed`860 crore to state-owned and sup-ported entities, as against `423 croredisbursed during 2011-12. Powertransmission projects, restorationpower distribution network projects,hydro power projects and warehous-ing projects received the major share.In the past three years `5,000 crorehas been sanctioned and these loansare given for a longer period, beyondseven years and the interest is being

serviced regularly.RIDFand NIDAhave given NABARD

officers the experience in appraisaland monitoring infrastructure proj-ects. We are now leveraging thisexperience to finance rural infra-structure projects outside the RIDFand NIDA portfolio, using our ownresources. As part of this exercise, we

have been looking at supporting andfinancing producers organisations,explains Rao, who has set up the Pro-ducers Organisation DevelopmentFund (PODF). Producers Organisa-tion and Primary Agricultural CreditSocieties (PACS) as multi-service cen-

tres were financially supported to theextent of `78 crore during 2012-13,as against `7 crore during 2011-12.A total of 28 producer organisationsand 728 PACS have been supported,of which 279 have been assisted forcreation of godowns alone. Afterproducing, they need to store to getthe best rate from the market.

NABARD has helped PACS to con-vert into one-stop-shops dealing infarm inputs and helping them totake up new businesses, such as ware-

housing, leasing out farm equipmentand providing e-enabled services fordissemination of information onweather, market prices, technicaladvices and land records.

NABARD in consultation withthe Andhra Pradesh State Cooper-ative Bank (APCOB) and select Cen-tral Cooperative Banks (CCBs) in thefew districts has taken the initia-tive to launch a scheme to transformPACS into MSCs. The regional officeof NABARDtogether with APCOBcon-

ducted regional workshops in a fewdistricts, namely, in Krishna, Guntur,Kakinada and Visakhapatnam, ini-tially to create awareness among thePACSstaff and to build their capabil-ity for multi-tasking benefitting theirmembers and building their busi-ness, says Nethi Muralidhar, generalmanager (loans department), APCOB.

Ratnoo: looking for new avenues

As a part of sustainable cot-ton initiative programme,Dilasa Janvikas Pratishthan, an

NGO, took up the initiative forpromoting economic use of

water through drip irrigation

technology for cotton cultiva-

tion in Aurangabad, district

of Maharashtra. The project,

basically a watershed plus

activity is supported under

UPNRM. The interventions

included installation of micro

irrigation units, short-term

crop loan to 1,400 farmers,

dissemination of cultivation

technology for new crops/methods like transplanted

cotton, potato and ginger

cultivation. At the channel

partner level (Dilasa), loan

assistance was sanctioned

for coal making, biomass bri-

quette making (using waste

cotton stalks) and vegetable

dehydration units. Total loan

sanctioned was to the tune of

`44.05 million and grant was

of `3.59 million.

Dilasa Janvikas Pratishthanis also facilitating certification

under Better Cotton Initiative

(BCI) in its area of operation.

Under this programme, fields

of 1,351 farmers (including

288 UPNRM loanee farmers)

have received the BCI certifi-

cation. The ginning mills in

the area are offering `200-

400 extra per quintal of BCI

certified cotton. For very poor

farmers, Dilasa is also facili-

tating IDEdrip irrigation tech-

nology wherein with total

investment ranging from`5,000`10,000 the partici-

pants could grow vegetables

on one acre land. The evalua-

tion study of UPNRM, revealed

that the average yield of cot-

ton with drip irrigation was

14 qu. per acre as against 6/7

qu. per acre without drip.

This has given additional ben-

efit of approximately `28,000

per acre to farmers. u

UPNRM: A success story

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The projects which have been ini-tiated by Bakshi and his team over thelast two years will take NABARD intoa new league. And these are someextremely bold and futuristic projectswhich promise to have a huge impacton the entire Indian rural economy,

says Bakshi. NABARDhas been influ-encing the flow of crop loans intothe agri sector through the refinanceroute since its very inception. Ourtarget for providing crop loan refi-nance has been enhanced to `80,000crore for the year 2013-14 which weplan to achieve well in time. Duringthis year we will be provided with anadditional `30,000 crore for the shortterm refinance fund for cooperatives,and an additional `20,000 crore forthe short-term refinance fund for

RRPs, says Ganagi.

Adding valueOn the cooperative front, the institu-tion is working towards a fully tech-enabled environment for cooperativebanks by encouraging them to on-board Core Banking Solution (CBS)platform which will allow them, forthe first time ever, to compete withcommercial banks by providing sim-ilar financial services. We havealready put almost 3,500 branches of

SCBs and CCBs on CBSand hope to seeall the 7,000-odd branches of SCBsand CCBs to be on CBSand linked tothe payment system through RTGSorNEFTby the year end, explains San-jeev Dalip Singh Rohila, AGM, finan-cial inclusion.

Simultaneously, NABARD hasintroduced schemes providing finan-cial support to RRBs and cooperativebanks to issue Rupay Kisan CreditCards to farmer clients and providepoint of sales (POS) terminals to agri

input suppliers which will allow thefarming community to benefit fromthe dynamics of cashless eco system.We are engaging with these bankson a one to one basis and the nexttwo years will see a definite prog-ress in this direction. The next twoyears, I also see a movement towardsmobile banking in rural India andNABARDwill be involved in agricul-tural transactions on this channel ofbanking, promises Bakshi.

Meanwhile, NABARD in

collaboration with KfW and GIZ(German government-owned enter-prises) to augment private invest-ment in the natural resources sectorthrough Umbrella Programme on

Natural Resource Management(UPNRM) has initiated many loan-cum-grant-based programmes (seebox) with the aim to support com-munity managed sustainable natu-ral resource management projects.

In addition to scaling up existingapproaches (watershed and adivasidevelopment), it also explores othersub-sectors like forestry, farming sys-tems management, agro-processing,natural resource-based livelihoods,etc. The programme envisages a total

fund of 30.90 million ( 19.40 millionfrom KfW, 8.50 million from GIZand 3 million from NABARD) underPhase-I. An amount of `3.15 crorewas received from KfW as Accompa-nying Measures (AM) and `0.52 crorewas received from GIZunder Techni-cal Component (TC) during 2012-13.Disbursement under the UPNRMdur-ing 2012-13 included loan of `82.50crore and grant of `3.28 crore. Thecumulative disbursement under theprogramme amounted to `217.57

crore, including, `207.23 crore asloan and `10.34 crore as grant.

A small beginning, since NABARDsigned agreements with KfW in 2012,for implementation of the secondphase of UPNRM, involving financialassistance of 54 million (approxi-mately `380 crore), including creditlines amounting to 52 million andAccompanying Measures of 2 mil-lion, says Bakshi pointing out thatUPNRMPhase II would also target ruralareas and aims to include socially and

economically disadvantaged groups(landless, small/marginal farmers andtribals) for funding viable and ecolog-ically sustainable natural resourcemanagement projects.

Looking at the near term, for theyear 2013-14, NABARDs target for dis-bursement is placed at over `1,35,000crore under various business initia-tives comprising production creditrefinance of more than `80,000crore, investment credit refinance of`17,000 crore, while disbursement

under RIDF and warehousing areexpected to be around `25,000 croreand disbursement under other busi-ness initiatives including NIDA areprojected at `11,500 crore. The tar-gets for 2018: to have a balance sheetsize of `5 lakh crore, raise fundson its own and provide more valueadded services to the farmers. How-ever, great autonomy from the gov-ernment could help NABARDgrow ata faster pace.

u L A N C E L O T J O S E P H

Haryana

36.2

Uttarakhand

145.7

State-wise sanctions under NIDA

All the states have sanctioned 1 ro ect each. *3 ro ects

Total: 2818.5crore

Term loan (` crore)

Rajasthan*

857.4

Gujarat

380.3

Tamil Nadu

708.9

Andhra Pradesh

200

Bihar

295.2

W Bengal

111.6Chattisgarh

83.2

Ganagi: we lend to states