letter of transmittal

Letter of Transmittal

Preliminary.p65 7/14/2009, 5:45 PM1

Board of Directors

Directors appointed

under Section 6(1)(b) of the

NABARD Act, 1981

Directors appointed

under Section 6(1)(c) of the

NABARD Act, 1981

Directors appointed

under Section 6(1)(d) of the

NABARD Act, 1981

Directors appointed

under Section 6(1)(e) of the

NABARD Act, 1981

Umesh Chandra Sarangi

Chairman

Dr. Ram S. Tarneja Dr. Anup Kumar

Sinha

Usha Thorat Lakshmi Chand Shashi Rekha

Rajagopalan

T. Nandakumar Dr. Rita Sharma Amitabh Verma

Shakuntala Jakhu O. Nabakishore Dr. S. Chellappa Amarendra

Singh Pratap Singh

Dr. K. G. Karmakar

Managing Director


ContentsPage No.

NABARD at a Glance

Key References

Principal Officers

Highlights .................................................................................................................................................................................. 1

I. Rural Economic Environment ...................................................................................................................................... 16

� Global Economy ........................................................................................................................................................ 16

� Indian Economy ......................................................................................................................................................... 17

II. Development Initiatives ................................................................................................................................................ 29

� Farm Sector ................................................................................................................................................................ 29

� Rural Non-Farm Sector .............................................................................................................................................. 36

� Financial Inclusion ..................................................................................................................................................... 39

� micro-Finance ............................................................................................................................................................ 40

� Research and Development Activities ........................................................................................................................ 46

� Training Personnel of RFIs ......................................................................................................................................... 48

III. Business Operations ...................................................................................................................................................... 50

� Production Credit ....................................................................................................................................................... 50

� Investment Credit ....................................................................................................................................................... 55

� Loans under Rural Infrastructure Development Fund ................................................................................................ 64

� NABARD Consultancy Services ................................................................................................................................. 72

� Management of Resources ......................................................................................................................................... 73

IV. Capacity Building of Client Institutions .................................................................................................................... 77

� Institutional Development .......................................................................................................................................... 77

� Supervision over Banks ............................................................................................................................................. 91

V. Organisation and Management ................................................................................................................................... 95

Auditors’ Report .................................................................................................................................................................... 102

Balance Sheet ....................................................................................................................................................................... 103

Profit and Loss Account 2008-09 ...................................................................................................................................... 104

Consolidated Financial Statements 2008-09 .................................................................................................................. 127

Regional Offices/Sub-Office/Training Establishments .................................................................................................... 133

Abbreviations ....................................................................................................................................................................... 135

1.1 National Mission on Sustainable Agriculture ............ 28

2.1 Financial Inclusion Projects

sanctioned during 2008-09 ..................................... 39

2.2 Rating Support tp MFIs: Salient Features ................. 44

2.3 Capital Support to Start-up

MFIs: Salient Features .............................................. 45

3.1 Agricultural Debt Waiver and Debt Relief Scheme,

2008: Salient Features ............................................. 53

Boxes

3.2 Cold Chain Infrastructure for Apples in HP ............. 60

3.3 Accretion to Rural Infrastructure and

Employment ............................................................. 67

3.4 Public Private Partnership for Rural

Infrastructure Projects ............................................. 68

4.1 Special Package for NER: Highlights ........................ 86

4.2 Asset-Liability Management ..................................... 92


NABARD AT A GLANCE

Sources of Fund 2009 2008 Net

Accretion

Capital 2000 2000 0

Reserve & Surplus 9535 8603 932

NRC (LTO) Fund 14016 13615 401

NRC (Stabilisation) Fund 1555 1544 11

Deposits 482 106 376

Bonds and Debentures 23704 28700 -4996

Borrowings from GOI 354 370 -16

Borrowings from

Commercial Banks 500 2500 -2000

Foreign Currency Loan 498 508 -10

Certificate of Deposits 1816 1422 394

Commercial Paper 181 0 181

Term Money Borrowings 244 0 244

RIDF Deposits 47023 30593 16430

STCRC Fund 4622 0 4622

Other Liabilities 4279 3089 1190

Other Funds 7367 5656 1711

Total 118176 98706 19470

(Rs. crore)

Uses of Funds 2009 2008 Net

Utilisation

Cash and Bank Balances 13842 9850 3992

Collateralised Borrowing

and Lending Obligation 133 464 -331

Investment in

a) GOI Securities 1555 1422 133

b) ADFC Equity 16 16 0

c) AFC Equity 1 1 0

d) SIDBI Equity 48 48 0

e) AICI Ltd. 60 60 0

f) NCDEX Ltd. & MCX Ltd. 6 6 0

g) Nabcons 5 5 0

h) Mutual Fund/VCF 1005 764 241

i) Treasury Bills 157 260 -103

j) Commercial Paper 143 0 143

Loans and Advances

a) Production &

Marketing Credit 16896 17381 -485

b) Conversion of Production

Credit into MT Loans 20 118 -98

c) Liquidity Support 2591 1940 651

d) MT & LT Project Loans 33335 32401 934

e) LT Non Project Loans 252 290 -38

f) Other Loans 48 27 21

g) RIDF Loans 45616 30649 14967

h) Co-finance

(Net of Provision) 94 66 28

Fixed Assets 247 257 -10

Other Assets 2106 2681 -575

Total 118176 98706 19470


KEY DATA REFERENCES

Page Particulars Unit Numerical Value Amount (Rs. crore)

No. 2007-08 2008-09 2007-08 2008-09

Economic Indicators17 Overall GDP1 % Growth 9.0 Q 6.7 RE - -17 Agri GDP1+ % Growth 4.9 Q 1.6 RE - -18 Share of Agri GDP in total GDP % 18Q 17 RE - -21 Foodgrains production million tonnes 231 230 - -21 Oilseeds production million tonnes 30 28 - -21 Sugarcane production million tonnes 348 289 - -21 Cotton production million bales++ 26 23 - -20 South-west Monsoon2 % deviation from normal 5 -2 - -20 North-east Monsoon2 -32 -31 - -24 GLC % increase 11 13 2,54,658 2,87,14925 KCC Issued lakh 85 68 - 38,245 CL

Development Initiatives29 Watersheds No. 63 S 38 S 28 D 58 D

33 NABARD-KfW Projects No. 8 8 242 D 32 D

31 FIPF- projects No. 29 S 14 S 2 G 230 Tribal development projects No. 16 S 74 S 49 G 203 G

31 FTTF No. of projects - 12 S - 2 S

32 Farmers’ Club No. of clubs 5,277 9,989 - -36 RIF- promotional programmes No. of projects 29 S 65 S 8 S 12 S

36 DRIP - Units set up lakh 0.7 1 1,178 GLC 1,378 GLC

36 - Employment generated lakh persons 1.5 2 275 RF 133 RF

38 REDP No. 1,422 2,083 8 G 13 G

38 SCC Issued lakh 1.6 1.5 679 CL 628 CL

39 FITF & FIF No. of projects - 9 - -40 SHG Credit Linked lakh 5.52 10.81 2,542 BL 11,132 BL

46 R&D Fund- Sanction No. of projects 10 S 12 S 2 S 0.87 S

46 - Disbursement 7 C 10 C 7 D 9 D

Business Operations50 Financial Support by NABARD - - - 38,767 50,577

Refinance - ST Credit51 ST (SAO) - SCB No. 18 20 14,826 S 15,448 S

52 - RRB No. 75 72 2,940 S 3,547 S

52 ST (OSAO) - RRB - - - 151 S 191 S

51 Weavers’ - SCB No. 8 5 332 S 266 S

56 Refinance - Investment Credit 9,046 D 10,535 D

58 Farm Sector - - - 3,777 D 4,172 D

58 NFS - - - 2,748 D 2,707 D

58 SHG - - - 1,616 D 2,620 D

59 Co-financing projects No. 12 S 12 S 27 D 37 D

65 RIDF Loans - Sanction No. of projects 36,964 S 85,527 S 12,795 S 14,719 S

65 - Disbursement - - 8,035 D 10,459 D

69 ERR on rural bridge projectsunder RIDF % 44 38 - -

72 Consultancy Assignments - Contracted No. of projects 321 109 9 17

72 - Completed 366 122 8 10

74 Market Borrowings - - - 33,606 27,77974 Total Working Funds - - - 98,706 1,18,176

Performance of RFIST Co-operatives

78 & 79 SCB in profit @ No. 27 26 p 548 $ 466 $P

78 & 79 DCCB in profit @ No. 271 261 P -32 $ -28 $P

LT Co-operatives78 & 80 SCARDB in profit @ No. 9 9 P 239 $ 99 $P

78 & 80 PCARDB in profit @ No. 371 350 P -69 $ -184 $P

ST Co-operatives - NPA Position79 SCB- NPA @ % to loan O/S 14 12 P 6,704 6,169 P

79 DCCB - NPA @ % to loan O/S 18 18 P 16,374 18,741 P

LT Co-operatives - NPA Position80 SCARDB - NPA@ % to loan O/S 30 33 P 5,643 6,125 P

80 PCARDB - NPA @ % to loan O/S 36 44 P 4,316 5,140 P

RRB89 RRB in profit No. 82 * 81 * 1,384 $ 1,746 $P

89 & 90 RRB- NPA Position % to loan O/S 6.0 5.6 P 3,566 -91 Inspection of banks^@@ No. 385 343 - -91 Co-operative banks@@ No. 292 273 - -91 RRB@@ No. 74 51 - -

Q : Quick Estimate RE : Revised Estimate P : Provisional S : Sanction D : Disbursement RF : Refinance 1 : At Factor Cost at 1999-2000 pricesBL : Bank Limit + : Includes agriculture, forestry and fishing ‘++: Of 170 kgs each 2: During calendar year ^: Voluntary inspections‘@@: Statutory Inspections CL : Credit Limit *: After amalgamation G: Grant assistance sanctioned ‘-’ : indicates loss @ : Data pertains to financial years 2006-07 & 2007-08 C: Completed $ : Net amount


PRINCIPAL OFFICERS(31 March 2009)

EXECUTIVE DIRECTORS

S. K. Mitra Amaresh Kumar P. L. Behera Dr. Prakash Bakshi

CHIEF GENERAL MANAGERS

(Rural Development Banking Service)

D. B. Gore K. V. Raghavulu V. Ramakrishna Rao Sukhbir Singh Madan Mohan@ Bhawar Puri J. R. Sarangal

(Karnataka) (Tamil Nadu) Maharashtra (Kerala) (Punjab & Haryana)

B.B.Mohanty A. K. Mathur C. R. Patnaik B. S. Shekhawat G. S. Menon S. G. Rathod R. Narayan

(Jammu & Kashmir) (Orissa) (Rajasthan)

A. K. Jain S. Mohapatra C. K. Gopalakrishna P. Satish K. C. Shashidhar Pankaj Pandit Dr. Venkatesh Tagat

(Assam) (Madhya Pradesh) (Jharkhand)

S. K. Chatterjee* S.C.Kaushik P. Mohanaiah S. T. Raghuraman P. Das B. K. Mahunta Suraj Bhan

(West Bengal) (Himachal Pradesh) (Uttarakhand)

J. C. Mishra J. K. Kanojia D. P. Mishra M. V. Ashok V. Sreenarayanan G. C. Panigrahi S. G. Siddesh

(Uttar Pradesh) (NBSC) (Gujarat)

@ Chief Executive Officer, Nabcons

* Officer on Special Duty, Bankers Institute of Rural Development


K. K. Gupta T. Moharana S. Akbar A. K. Srivastava B. B. Nayak

(Chhattisgarh) (Andhra Pradesh)

CHIEF GENERAL MANAGERS

(Economic / Legal / Technical Service)

Dr. A. K. Bandyopadhyay U. N. Srivastava Dr. K. Ravindra Rao R. B. Haranal Dr. Sandip Ghosh

(Economic) (Legal) (Technical) (Technical) (Technical) (Bihar)

GENERAL MANAGERS IN-CHARGE OF REGIONAL OFFICES/

TRAINING INSTITUTIONS

Arvind Mohan P. C. Mohanty S. Chakrabarty P. C. Sahoo K. Jindal

(Meghalaya) (RTC, Mangalore) (RTC, Bolpur) (Mizoram) (Tripura)

H. R. Dave A. P. Sandilya B. G. Mukhopadhyay

(New Delhi) (Goa) (Arunachal Pradesh)

DEPUTY GENERAL MANAGERS IN-CHARGE OF

REGIONAL OFFICES/SUB-OFFICE

Subrata Gupta K. C. Panda A. B. Das R. Nithyanandan

(Sikkim) (Nagaland) (Manipur) (Port Blair Sub-Office)

ASST. GENERAL MANAGER IN-CHARGE OF SRINAGAR CELL

P. L. Negi


1

Highlights

Rural Economic Environment

1. The international financial sector witnessed a

major collapse during 2008-09, brought about by the

sub-prime crisis in USA. The tremors of the global

economic crisis were felt in India too, though with

lower intensity. The contribution of agriculture and

allied sectors to the growth rate of the GDP during

2008-09 was 1.6 per cent as compared to 4.9 per cent

during 2007-08.

Indian Economy

2. The Indian economy registered a GDP growth

of 6.7 per cent (at 1999-2000 prices) during

2008-09 due to consistent high growth trend of the

services sector (9.7%).

3. The share of the agriculture and the industry

sector in total GDP, however, declined to 17 and

26 per cent, respectively, while that of the services

sector increased to 57 per cent during 2008-09. The

savings and investments ratios during the Tenth Plan

stood substantially higher at 31.4 per cent each

compared to the Ninth Plan. Annual inflation (y-o-y),

measured in terms of variation in wholesale price index

(WPI) was 0.26 per cent, as at end-March 2009, owing

to fall in commodity prices reflecting global trends.

4. The relative share of private consumption and

GFCF in GDP during the Tenth Plan stood at 61 and

27 per cent, respectively. Gross domestic savings and

investments, as proportion to GDP at 38 and 39 per

cent, respectively, during 2008-09, improved by

2 percentage points over 2007-08.

5. The share of agriculture in total exports of the

country improved from 10 per cent in 2006-07 to

11 per cent in 2007-08. However, both total exports

and imports registered a growth of 3.4 and 14.3 per

cent, respectively, during 2008-09 over the previous

year. Cumulative value of trade in agricultural

commodities during the year was Rs.6,27,303 crore,

registering a decline of 33 per cent compared to the

previous year. The Forward Market Commission,

permitted NCDEX to accredit the warehouses of

producers/processors and similar participants, within 50

km of the municipal limits of the delivery centres to

enable such participants to deliver their goods on the

exchange platform.

6. In spite of the ‘near normal’ precipitation during

southwest monsoon 2008, the erratic temporal as

well as spatial distribution of rainfall affected the

farmer community. The cumulative rainfall recorded

during the entire southwest monsoon season (June-

September) was 2 per cent lower than the normal

Long Period Average rainfall. The northeast monsoon

was subdued, resulting in the cumulative rainfall

being 31 per cent below normal. Of the

36 meteorological sub-divisions, 30 received normal

rainfall, while 2 recorded excess and 4 deficient

rainfall.

7. The crop coverage during kharif 2008 at

101.5 million ha. showed a drop of 2.4 million ha. In

spite of shortfall in northeast monsoon, sown area

under rabi crops increased by 1.8 million ha. Overall

foodgrains production during 2008-09 is estimated at

230 million tonnes as against the target of 233 million

tonnes and the previous year’s production of

231 million tonnes. During the year, production of all

crops, except rice, is expected to be lower compared to

last year, the reduction being largest in the case of

sugarcane (17%).

8. Tea production in the country rose to

9.81 lakh tonnes during 2008-09. To fund re-plantation

and rejuvenation activities aimed at improving

productivity of plantation crops, GoI during 2008-09

has set up Special Purpose Funds for tea, rubber,

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2

coffee and cardamom. The Funds shall be operational

till the end of the Eleventh Plan. The contribution of

the livestock and poultry sector to agriculture and total

GDP during 2006-07 was 32 and 5 per cent,

respectively.

9. As against the target of Rs.2,80,000 crore

of credit flow to agriculture for 2008-09, the banking

system disbursed Rs.2,87,149 crore achieving 102 per

cent of the target. Commercial banks, co-operative

banks and RRB disbursed Rs.2,23,663 crore,

Rs.36,762 crore and Rs.26,724 crore achieving

around 115, 67 and 89 per cent of the targets,

respectively.

10. The Kisan Credit Card (KCC) Scheme has

facilitated in augmenting the GLC flow for crop loans.

In addition to ST credit and term loans for agriculture

and allied activities, a certain component of loan

through KCC also covers consumption needs. During

the year, 67.95 lakh cards were issued with a credit

limit of Rs.38,245 crore, taking the cumulative to

828.70 lakh cards as on 31 March 2009.

Development Initiatives

Farm Sector

11. The corpus of the Watershed Development

Fund (WDF) was augmented by Rs.561 crore during

2008-09, taking the cumulative amount to

Rs.1,125 crore as on 31 March 2009. During the year,

38 watershed projects were sanctioned taking the

cumulative number to 454, spread over 94 districts in

14 States. With a total commitment (loan and grant)

of Rs.257 crore under these projects, an area of

4.54 lakh ha. is expected to be covered. Under the

Prime Minister’s Relief Package for 31 districts in four

States, 1.90 lakh ha. has been taken up for

implementation during the year, taking the cumulative

area covered to 5.88 lakh ha., involving total financial

commitment of Rs.706 crore. During 2008-09, an

amount of Rs.49.83 crore and Rs.8.10 crore were

disbursed as grant and loan, respectively.

12. NABARD is implementing the participatory

watershed development programme under the Special

Plan for Bihar component of Rashtriya Sam Vikas

Yojana (RSVY) to develop 80,000 ha. of wasteland in

eight districts of south Bihar with an allocation of

Rs.60 crore. During 2008-09, 18 watershed projects

with grant assistance of Rs.21.60 crore were sanctioned

and Rs.3.61 crore disbursed.

13. The pilot project for integrated development

(PPID) of backward blocks launched in 2003 was

expanded to 139 blocks across 16 states. The project

aimed at enabling integrated development through

credit and convergence of development programmes in

these blocks. As on 31 March 2009, PPID was being

implemented in 40 blocks across 6 states. Keeping in

view the identical nature of interventions under PPID

and Village Development Programme (VDP), it was

decided to restrict the duration of PPID to three years

only, except wherever it was felt necessary to merge

with VDP. NABARD through ‘Capacity Building for

Adoption of Technology’ (CAT) scheme undertakes

sensitisation of farmers to facilitate them in adopting

new/innovative methods of farming through exposure

visits and training. During the year, 116 exposure visits

involving 3,048 farmers were conducted under CAT on

vermi-culture, organic farming, poly-house technology,

cultivation of medicinal and aromatic crops, etc., in

collaboration with research institutes, KVK and

Agriculture Universities.

14. Assistance under NABARD’s Tribal Development

Fund (TDF), created in 2004 with an initial corpus of

Rs.50 crore, is provided for developing the tribal

dominated areas through the wadi concept. It also

includes taking-up micro-enterprises by the landless,

women empowerment, community health, training and

capacity building and building people’s organisations.

As on 31 March 2009, the balance outstanding in the

fund was Rs.575 crore. During 2008-09, assistance of

Rs.203 crore was sanctioned for 74 projects benefiting

61,924 tribal families in 14 States.

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3

15. During the year, 14 projects involving grant

assistance of Rs.1.81 crore in six States were

sanctioned from the Farm Innovation and Promotion

Fund (FIPF). Projects financed included commodity

exchange, rainfed rabi cropping, ultra high density,

orcharding in guava, village farm development,

protected vegetable cultivation in villages and efficient

use of carbon and plant nutrients under dryland

agriculture.

16. The Farmers Technology Transfer Fund (FTTF)

was operationalised from 1 April 2008 with a corpus of

Rs.25 crore with the aim of promoting technology

transfer for enhancing production and productivity

in agriculture and farm related activities. During

2008-09, 12 proposals involving a grant assistance of

Rs.233 lakh in 6 states were sanctioned for activities

like oil-production, turmeric processing, information and

commodity trading center, technology transfer for seed

production, establishment of Outreach Center for North

and Middle Andamans districts, etc. Further, grant

assistance of Rs.80.20 lakh was sanctioned for

22 Farmers’ Training and Rural Development Centres.

During the year 9,989 Farmers’ Clubs (FC) were

launched, taking the total number of clubs to 38,215

covering 87,724 villages in 581 districts as on

31 March 2009. NABARD reviewed its policy for

supporting FC through various agencies and decided to

extend uniform support of Rs.10,000 for three years to

all commercial banks, RRB and co-operative banks

and grassroot level institutions like NGO, PRI, KVK,

Post Offices, etc.

17. Under externally aided projects supported by

KfW, which are at various stages of implementation,

an amount of Rs.32.01 crore was disbursed and

Rs.37.25 crore was received as grant assistance during

the year.

Rural Non-Farm Sector

18. Under the Rural Innovation Fund (RIF)

constituted in 2005, support is provided for innovative

projects in farm, non-farm and micro-Finance sectors

with potential to generate employment opportunities.

During the year, 65 projects with financial support of

Rs.12.37 crore were sanctioned.

19. The District Rural Industries Project (DRIP),

introduced as a pilot project during 1993-94, was

extended in phases to cover 106 districts by end-March

2007. During 2006-2009, the project was phased out

in 43 districts. NABARD would however, continue to

support various deserving developmental interventions

in these districts. During 2008-09, GLC flow in

63 DRIP districts covered under various phases reached

Rs.1,378 crore and refinance availed was Rs.133 crore.

In all, 1.05 lakh units were set up, generating

employment for 2 lakh persons.

20. The ‘Scheme for Strengthening of Rural Haats’

introduced in 1999 in DRIP districts, was extended to

all district, Village Bazaar Boards, SHG, NGO and to

PRI/PACS during the year. Under the scheme, the

ceiling was raised from Rs.3 lakh to Rs.5 lakh and

coverage extended to include permanent structures.

During 2008-09, grant support of Rs.186 lakh was

sanctioned for infrastructure in 46 haats in 14 states.

21. To promote rural industrialisation through the

cluster approach, NABARD had decided to

develop 55 clusters within a period of 3-5 years.

During 2008-09, 37 participatory, 1 intensive and 1

eco-tourism clusters were sanctioned involving grant

assistance of Rs.311 lakh. In view of GoI’s special

emphasis on developing the handloom sector,

NABARD decided to develop 50 handloom clusters in

partnership with other developmental agencies. As on

31 March 2009, 59 handloom clusters in 16 states

were approved.

22. NABARD has been supporting the Rural

Entrepreneurship Development Programme (REDP) and

the Skill Development Programme (SDP) as a proven

model for generating employment opportunities in rural

areas. During 2008-09, grant support of Rs.1,304 lakh

was provided for 2,083 REDP/SDP covering 50,264

rural youth. Further, an amount of Rs.88 lakh was

sanctioned to RUDSETI for capital expenditure. During

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the year, 1.50 lakh Swarozgar Credit Cards (SCC)

involving credit limits of Rs.628 crore were issued. As

on 31 March 2009, the banking sector had issued 9.84

lakh SCC involving an aggregate credit limit of

Rs.4,007 crore.

23. NABARD continued to support gender

development programmes through its various schemes

like Marketing of Non-Farm Products of Rural

Women (MAHIMA) and Assistance to Rural Women in

Non-Farm Development (ARWIND) programme. During

the year, grant assistance of Rs.6 lakh and Rs.7 lakh

were released under MAHIMA and ARWIND,

respectively. During 2008-09, the scheme for setting-up

Women Development Cells (WDC) was modified. As

on 31 March 2009, 102 WDC in 56 RRB, 43 DCCB

and 3 SCARDB were sanctioned.

24. NABARD supported 213 marketing events/

exhibitions across the country involving grant assistance

of Rs.111 lakh. The pilot scheme for setting-up rural

marts launched by NABARD in 2005 was extended to

all States. During the year, 73 rural marts were

sanctioned involving grant support of Rs.73 lakh. The

provision of ‘Product Gallery’ in Post Offices for

displaying SHG products was extended to all states.

25. NABARD continued to provide financial

support to BIRD - Lucknow, RTC at Mangalore and

Bolpur, NIRB - Bangalore, MDMI - Shillong and

IIBM-Guwahati for imparting training to participants in

various aspects of rural credit. Further, 45 programmes

covering 1,050 officers of client banks were conducted,

involving expenditure of Rs.118 lakh.

Financial Inclusion

26. The Committee on Financial Inclusion, headed

by Dr. C. Rangarajan, suggested measures to bring the

excluded population into the ambit of the financial

system. Based on the Committee’s recommendations,

GoI entrusted NABARD with the setting-up of two

funds, viz., Financial Inclusion Fund (FIF) and

Financial Inclusion Technology Fund (FITF). While the

FIF is responsible for supporting developmental and

promotional activities to secure greater financial

inclusion, the FITF will focus on enhancing investment

in information and communication technology with the

objective of promoting Financial Inclusion. Both the

Funds have been set up with a corpus of Rs.500 crore

each. During 2008-09, four and five projects were

sanctioned under FIF and FITF, respectively.

micro-Finance*

27. During 2008-09, 10.81 lakh new SHG were

credit linked and bank loan of Rs.11,132 crore

disbursed. The programme has covered more than

7.01 crore poor households, making it the largest

micro-Finance (mF) programme in the world. As on

31 March 2008, 50.09 lakh SHG maintained savings

worth Rs.3,785 crore with the banking sector. During

2007-08, bank credit of Rs.8,849 crore and

Rs.1,970 crore was disbursed to 12.27 lakh SHG

(including 2.46 lakh under SGSY) and 518 MFI,

respectively.

28. During 2008-09, grant assistance of

Rs.1,769 lakh was sanctioned to various agencies for

promoting 59,359 groups, taking the cumulative

assistance sanctioned to Rs.7,888 lakh for

4.36 lakh groups.

29. Under NABARD’s capacity building programmes

for its partner institutions, 25 exposure/field visits

for bank/NGO officials to SHG and pioneering

institutions, 324 awareness-cum-refresher programmes

for participants from banks and NGO, 45 sensitisation

programmes were arranged during the year. NABARD

also extended support for conducting 3,122 awareness

creation and capacity building programmes covering

1,41,984 SHG members.

30. To motivate and assist members of matured

SHG to take up income generating activities on a

sustainable basis, NABARD continued to promote

* Due to change in data and MIS, the reporting is for the position as on 31 March 2008.

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micro-enterprise development by SHG members. Under

the Micro-Enterprise Development Programme (MEDP),

564 such programmes covering 41,030 SHG members

were conducted during the year. The pilot project

launched during 2005-06 for promotion of micro-

enterprises among members of matured SHG, is being

implemented in nine districts across nine States,

involving 14 NGO acting as ‘Micro-Enterprise

Promotion Agency (MEPA)’. Cumulatively 6,107

micro-enterprises were established under the project,

involving bank credit of Rs.535 lakh, as on

31 March 2009.

31. NABARD selectively extends Revolving Fund

Assistance (RFA) to MFI for experimenting with

various mF models. During the year, RFA of

Rs.6.35 crore was sanctioned to four agencies taking

the aggregate support to Rs.43 crore. In addition,

NABARD provides financial assistance to commercial

banks and RRB to avail the services of credit rating

agencies for the purpose of rating of MFI and

empowering them to intermediate between the lending

banks and the clients. During the year, support

of Rs.3.40 lakh was extended to four agencies for

availing credit rating services. The Scheme to provide

capital/equity support to MFI was introduced by

NABARD to enable them to leverage capital/equity for

accessing funds from banks, providing financial services

at an affordable cost to the poor, and achieve

sustainability in their credit operations over a period of

3-5 years. During 2008-09, capital/equity support of

Rs.11.75 crore was sanctioned to 13 agencies.

32. NABARD in collaboration with the Rajiv Gandhi

Charitable Trust (RGCT) has designed the Rajiv

Gandhi Mahila Vikas Pariyojana (RGMVP), to

promote, credit link and form SHG Federations in

select districts of Uttar Pradesh. Till date 7,808 SHG

were promoted and 3,972 credit linked in 3 districts of

Uttar Pradesh as at end-March 2009.

33. NABARD sanctioned Rs.39.15 lakh for

implementing the project ‘micro-Finance Vision 2011’

to Government of Arunachal Pradesh and

Rs.33.66 lakh to Essomi Foundation Trust for

setting-up Resource Centre at Itanagar. The ‘State

Support Project on SHG’ in Tripura aims to promote

livelihood activities, credit link 11,500 existing SHG

and form and credit link 35,000 new SHG.

34. NABARD introduced a scheme for supporting

small-scale Activity Based Groups (ABG) with the

objective of capacity building, production/investment

credit and market related support. Groups engaged in

homogenous economic activities would be formed to

improve production efficiency and achieve better

returns through economies of scale. It has both grant

and loan components.

35. Recognising the growing role of SHG federations

and their value addition to SHG functioning,

NABARD, during the year, decided to support such

federations on a ‘model neutral’ basis. Broad norms

for deciding grant of financial assistance were

formulated. Support would be extended to federations

by way of grant assistance for training, capacity

building, exposure visits of SHG members, etc. During

the year, grant assistance of Rs.11.54 lakh was

sanctioned to one federation.

36. During the year, Rs.35 crore was utilised from

the Micro-Finance Development and Equity Fund

(MFDEF) for mF related activities. The North-Eastern

Council (NEC), Shillong parked a fund of Rs.80 lakh

with NABARD during the year for facilitating

miscellaneous training interventions of government/

bank officials, NGO, SHG from States in NER and

Sikkim. As on 31 March 2009, the Fund was utilised

to the extent of Rs.72 lakh.

37. Under the ‘NABARD-GTZ Rural Finance

Programme’, training modules were developed to

sensitise bank branch managers and SHG members

for minimising risks in lending through early warning

system and circulated to training institutions involved

in mF. A ‘High Level Policy Conference on

micro-Finance in India’ was conducted with GTZ

support for mF practitioners from India and abroad to

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share their best practices. A study was undertaken to

assess the transaction cost of various agencies and MFI

in purveying mF through SHG or other types of groups.

The NABARD-KfW programme, ‘Financial Cooperation

with India-Capitalization Program SEWA Bank’ aims

at sustainable improvement in access of poor women

to micro-credit, both in rural and urban areas. During

the year, KfW released grant assistance of Rs.3 crore to

SEWA bank under the project.

Research and Development Activities

38. During the year, an amount of Rs.876 lakh was

utilised from the R&D Fund as grant assistance for

research projects/studies, training and other activities

like conduct of seminars, preparation of occasional

papers, etc., taking the cumulative disbursement to

Rs.109 crore. During 2008-09, 12 research projects/

studies involving grant assistance of Rs.87 lakh were

sanctioned while 10 projects/studies sanctioned earlier

were completed.

39. Grant assistance of Rs.78 lakh was sanctioned

during the year to various universities and research

institutes for conducting 103 conferences, seminars and

workshops. Two Occasional Papers were brought out

during the year. In addition, Rs.727 lakh was utilised

from the Fund during the year for capacity building of

the staff of Rural Financial Institutions (RFI) in the

NER. Under the Summer Placement Scheme, reports

on agriculture and rural development, allied sector,

agri-business and social development, were received

from 34 students, involving financial outlay of

Rs.10.48.

Other Development Initiatives

40. During the year, NABARD conducted 434

training programmes through its training establishments

for the benefit of 10,949 personnel of RFI and

supplemented the efforts of other training institutions in

this area by providing technical and financial support.

A Centre for Micro-Finance Research (CMR) was set up

at BIRD, Lucknow and four sub-centres of CMR were

set up in Guwahati, Chennai, Patna and Jaipur to

provide focused attention on mF related issues.

Financial support of Rs.331 lakh from CDF was

extended to JLTC, ACSTI and ITI for conducting 303

programmes covering 6,146 participants. National

Institute of Rural Banking (NIRB), Bangalore was

provided Rs.5.82 lakh for conducting 25 training

programmes. BIRD conducted specially designed

training programmes for the newly constituted RRB on

subjects like Core Banking Solutions (CBS), CRAR

norms, prevention of frauds and leakages and winning

trust. BIRD has been identified for setting-up a

‘National Training Certification Centre for CCS’ to

address the training requirements of the staff of

co-operative credit institutions after implementation of

the Revival Package.

Business Operations

41. NABARD through its refinance operations has

been facilitating the banking sector to augment credit

support for production and investment purposes in the

rural and agriculture sectors, in addition to its

continued involvement in developing rural infrastructure

by providing loans under RIDF to State Governments

for such projects. The total financial support extended

by NABARD increased by 30 per cent and stood at

Rs.50,577 crore during 2008-09 as against Rs.38,767

crore during 2007-08.

Production Credit

42. Short-term (ST) refinance support for SCARDB

was continued during 2008-09 and made available at

4.5 per cent for lending to ultimate borrowers at

7 per cent p.a. During the year, Rs.64 crore was

disbursed to Kerala and Rajasthan SCARDB for ST-

SAO purposes.

43. The quantum of refinance support for

co-operative banks for ST-SAO continued to be linked

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to their net NPA levels for profit-making SCB with no

accumulated losses and with gross NPA for others. The

ST credit limits sanctioned during 2008-09

(April-March) for SCB and RRB were Rs.15,448 crore

and Rs.3,547 crore, against which they have reached

the maximum outstanding levels of Rs.13,935 crore

and Rs.2,869 crore, respectively. A consolidated ST

(others) limit was sanctioned to SCB on behalf of

eligible DCCB for lending to agriculture/allied and

marketing activities. During 2008-09, Rs.176 crore was

sanctioned under this line of credit against which

utilisation was Rs.64 crore.

44. During the year, ST (Weavers’) credit limits

aggregating Rs.266 crore were sanctioned to Andhra

Pradesh, Orissa, Puducherry, Tamil Nadu and West

Bengal SCB for financing production/procurement and

marketing activities of Weavers’ Co-operative Societies

and maximum utilisation was Rs.167 crore. With a

view to reviving the handloom sector, NABARD has

attempted to finance weavers’ outside the co-operative

fold by forming Handloom Weavers’ Groups (HWG)

and financing Master Weavers. As at end-March 2009,

of the 2,968 HWG formed 1,781 were credit linked.

45. NABARD continued to provide long-term loans

to State Governments for contributing to the share

capital of co-operative credit institutions. However,

as per revised policy, loans will be provided on a

reimbursement basis. During 2008-09, profit earning

SCB/DCCB with no accumulated losses or net NPA

not > 10 per cent as on 31 March 2007 or 2008

(whichever was lower) were considered eligible. No loan

was sanctioned during the year, though an amount of

Rs.18 crore was drawn by governments of Haryana,

Kerala and Orissa against previous year’s sanctions.

46. The Union Budget 2008-09 had announced the

Agricultural Debt Waiver and Debt Relief (ADWDR)

Scheme, 2008, to address the indebtedness of farmers,

especially small and marginal farmers. The Scheme

covered all direct agricultural loans disbursed, (i) to

farmers between 31 March 1997 and 2007 by

Scheduled Commercial Banks, RRB and co-operative

credit institutions which were overdue as on

31 December 2007 and remained unpaid till

29 February 2008 and (ii) before 31 March 1997 but

were rescheduled/restructured in 2004 and 2006

through GoI’s special package/s and in the normal

course upto 31 March 1997, as per RBI guidelines on

account of natural calamity. NABARD is the nodal

implementing agency for co-operative banks/RRB. As

against claims for Rs.29,724 crore, an amount of

Rs.16,615 crore was disbursed to SCB (63%),

SCARDB (14%) and RRB (23%). To enable

co-operative banks and RRB tide over the temporary

liquidity crunch owing to the ADWDR Scheme,

NABARD provided liquidity support of Rs.1,551 crore

and Rs.302 crore to SCB and RRB, respectively, at

9 per cent p.a. during kharif 2008. During rabi

2008-09, liquidity support of Rs.2,993 crore was

sanctioned at 4.5 and 5.5 per cent to SCB and RRB,

respectively, against which Rs.2,415 crore was utilised.

47. The Union Budget 2008-09 announced the

continuance of interest subvention to enable banks to

provide crop loans upto Rs.3 lakh to farmers at an

interest of 7 per cent p.a., envisaging suitable interest

subvention to NABARD and 3 per cent interest

subvention on own involvement of co-operative

banks and RRB. As on 31 March 2009, against the

aggregate receipt of Rs.3,109 crore from GoI,

aggregate utilisation stood at Rs.2,539 crore. Interest

subvention payable for 2008-09 is estimated at

Rs.2,565 crore.

48. NABARD is the nodal agency for implementing

the ‘Package for Restructuring of Term Loans of

Co-operative Sugar Mills’ for co-operative banks. As

against Rs.139 crore received from GoI under the

package, interest subvention of Rs.116 crore was

released to co-operative banks in respect of

75 co-operative sugar mills. NABARD is also the nodal

agency for routing claims of co-operative banks under

the scheme for ‘Providing Financial Assistance to Sugar

Undertakings–2007’.

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Investment Credit

49. Consequent to the Government’s announcement

of ADWDR Scheme, 2008, NABARD agreed to

reschedule instalments of principal amount from

SCARDB falling due during June-December 2008 to

31 January 2009 or any other earlier date preferred

by the SCARDB, subject to certain conditionalities.

During the year, NABARD rescheduled an amount of

Rs.1,061 crore. Further, to enable SCARDB tide over

the liquidity crunch in the wake of the scheme, the

Bank decided to extend interim finance, subject to

conditionalities, even if they had defaulted to

NABARD. During the year, Rs.70 crore was sanctioned

to Madhya Pradesh SCARDB.

50. During 2008-09, (i) restrictions on ceilings for

total financial outlay (TFO) and refinance under

Automatic Refinance Facility (ARF) for commercial

banks, RRB, SCB and PUCB were completely

removed, (ii) ceiling on TFO for SCARDB was raised

to Rs.50 lakh; cent per cent refinance was made

available for thrust areas and for all purposes in hilly

States, NER & Sikkim and Andaman & Nicobar

Islands, and (iii) refinance extended to Section 11

non-compliant SCB/DCCB in States that executed

MoU for implementing the recommendations of the

Task Force on Revival of STCCS. The relaxations in

eligibility criteria in respect of recovery, gross/net NPA,

hitherto available to NER, were extended to other hilly

States. SCB, SCARDB and RRB continued to be

classified under A/B/C/D categories based on their

gross/net NPA, recovery position, net worth and

profitability. However, (i) SCB with gross NPA > 20

per cent, (ii) SCARDB with recovery < 30 per cent,

(iii) commercial banks/PUCB/ADFC/NEDFi with net

NPA > 3 per cent, and (iv) RRB with deposit erosion

> 30 per cent were considered ineligible for availing

refinance during the year. Release of refinance to

SCARDB/SCB, eligible Section 11 non-compliant SCB/

DCCB and non-scheduled SCB (for farm sector) was

only against government guarantee (if not forthcoming,

alternative security like pledge of government securities

or fixed deposit receipts issued by scheduled banks).

This requirement was waived off for category ‘A’ and

profit making SCB/DCCB.

51. During 2008-09, refinance disbursement to

commercial banks, SCB, SCARDB and RRB

aggregated Rs.10,535 crore as against Rs.9,046 crore

during the previous year. Commercial banks continued

to be the single largest group availing refinance (56%),

while the share of RRB (18%) and that of

co-operative banks (26%) declined considerably during

the year.

52. The flow of refinance varied widely across

regions. Southern, northern and central regions

accounted for 41, 25 and 14 per cent, respectively, of

the total refinance disbursed during the year. The share

of southern and northern regions increased while that

of central region declined by around 5 percentage

points during 2008-09. The share of NER declined

further. Sector-wise, non-farm sector, including rural

housing, accounted for 26 per cent followed by

SHG (25%). While the share of farm mechanisation

(14%) declined, that of land development (9%)

and minor irrigation (5%) registered increase during the

year.

53. Under the scheme for financing purchase of land

for agriculture purposes, bank loan of Rs.20 crore and

refinance support of Rs.17 crore was made available to

607 and 548 borrowers, respectively, in eight states

during the year.

54. Of the total refinance disbursed under NFS

during the year, Rs.268 crore was towards rural

housing (10%). Agency-wise, commercial banks

accounted for the major share (57%), followed by

co-operative banks (33%) and RRB (10%). As on

31 March 2009, the cumulative refinance support

under NFS stood at Rs.24,061 crore.

55. During 2008-09, NABARD extended refinance of

Rs.2,620 crore under the SHG-bank linkage

programme. As on 31 March 2008, 36.26 lakh SHG

accounts had loans outstanding worth Rs.17,000 crore

from all agencies. The recovery position of banks

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with respect to SHG portfolios revealed that (out of

329 reporting banks) 68 per cent banks reported high

recovery (> 80%) and only 9 per cent reported very

low recovery (< 50%).

56. During the year, interest rates on refinance for

investment credit were revised six times depending on

the money market conditions and cost of incremental

market borrowings of NABARD. The rate of interest

on refinance for commercial banks and for

co-operative banks/RRB/PUCB/ADFC/NEDFi was fixed

at 9 and 8.5 per cent p.a., respectively, for all eligible

activities and at 8.5 per cent for all activities and

agencies in the NER & Sikkim, hilly states and

Andaman & Nicobar Islands. The rate of interest on

interim finance provided to SCARDB was enhanced to

9.75 per cent p.a. from 22 September 2008.

57. NABARD sanctioned 12 projects involving TFO

of Rs.95 crore, bank loan of Rs.64 crore and the

Bank’s share of Rs.31 crore under the co-financing

arrangement and Rs.37 crore was disbursed during

the year. As a nodal agency, NABARD continued

to oversee implementation of the various Capital

Investment Subsidy (CIS) schemes of GoI.

58. During the year, 37 investment and 5 scheme

specific studies under farm sector, rural housing and

cold storage projects were conducted in association

with banks and nodal departments of State

Governments to identify factors adversely affecting

schemes and ensuring prompt corrective measures.

Major findings and recommendations of 28 investment

specific studies were published as a booklet for wider

dissemination.

59. NABARD continued to review and refine its

district level Potential Linked Credit Plans (PLP). A

new chapter on ‘Financial Inclusion’ was included to

make it more contemporary. The Government

introduced Integrated Development Plan (IDP) process

for the 250 poorer districts under the Backward

Regions Grants Fund (BRGF), to embed the

participative planning process and provide funds to

local governments for filling gaps in flagship

programmes. NABARD, in association with the

Planning Commission, prepared the Manual of

Guidelines and conducted regional workshops to orient

state/district level officials for preparing IDP. The Bank

is also involved as a Technical Support Institution

(TSI) in IDP preparation in 17 districts from

Andhra Pradesh, Jharkhand, Maharashtra, Tripura and

Uttar Pradesh.

60. NABARD continued its policy of facilitating

larger credit flow to the NER and Sikkim by granting

relaxations to co-operative banks and RRB operating in

these areas in respect of eligibility criteria for refinance,

rate of refinance, etc. The interest rate on refinance

for commercial banks and RRB on loans to MFI

was 3 percentage points lesser than that charged by

banks subject to a minimum of 8.5 per cent.

Rural Infrastructure Development

61. The allocation under XIV tranche of RIDF was

raised to Rs.14,000 crore for 2008-09 and

Rs.4,000 crore allocated under a separate window for

funding rural roads component of Bharat Nirman

Programme. During the year 85,527 projects involving

a loan amount of Rs.14,719 crore were sanctioned

under RIDF XIV, taking the cumulative number of

projects to 3,65,003 and amount sanctioned to

Rs.88,359 crore. An amount of Rs.7,500 crore, was

disbursed under the Bharat Nirman Component during

2008-09. Of the total amount sanctioned during the

year, rural roads and bridges accounted for 46 per

cent, irrigation projects 28 per cent, social sector

projects 18 per cent and others 8 per cent. The share

of irrigation sector in the amount sanctioned during the

year as also the cumulative sanction (RIDF I to XIII)

declined, while that of rural roads and bridges and

social sector projects improved.

62. As per the phasing of projects, the total amount

phased (RIDF I-XIV) was Rs.73,734 crore against

which disbursements aggregated Rs.56,052 crore (76%

achievement). However, the slow pace of actual

utilisation of loans under RIDF in some states was due

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mainly to delay in administrative and technical

approval by the State Governments, land acquisition

problems, inadequate budgetary support, etc.

63. During the year, disbursements increased by

30 per cent to Rs.10,459 crore. Deposits of

Rs.18,805 crore (including Rs.6,647 crore under Bharat

Nirman) were received from commercial banks and

repayment amounting to Rs.2,998 crore was received

from the State Governments.

64. During the year 5,290 projects were monitored

through field visits. Major observations/issues were

taken up with the implementing department/s and

Finance Department of the concerned State

Governments for improving the pace and quality of

project execution.

65. To strengthen the implementing apparatus of

infrastructure deficient state, NABARD organised

awareness workshops for stakeholders to address

mutual concerns. Further, to leverage private resources

and implementing capacity for rural infrastructure

development, NABARD entered into a Memorandum

of Agreement with IL&FS to develop products/services

and fine-tune the design of innovative delivery

mechanism/s.

Impact Evaluation of Investments

66. NABARD continued its efforts to obtain

feedback on the performance of various investment

activities through evaluation studies. These studies were

undertaken to assess the impact of investments on

income, employment generation and their viability.

During 2008-09, one ex-post evaluation study on

projects supported under RIDF, two studies on

micro-entrepreneurship among SHG members and

three commodity specific studies on groundnut, mango

and sugarcane were completed.

NABARD Consultancy Services

67. The Board of NABARD Consultancy Services

Pvt. Ltd (Nabcons), a wholly owned subsidiary of

NABARD, was reconstituted during the year with two

new Directors inducted vice two, who superannuated.

The total number of Directors remained unchanged.

During the year, Nabcons acquired ISO 9001:2008

certification and also earned foreign exchange valued

at $1.10 lakh. During 2008-09, Nabcons contracted

109 assignments involving a consultancy fee of

Rs.17 crore and completed 122 assignments for a fee

of Rs.10 crore. The income and profits earned by the

company stood at Rs.11 crore and Rs.4 crore,

respectively, during 2008-09.

Management of Resources

68. The financial resources of NABARD increased

by Rs.19,470 crore during 2008-09 as against an

increase of Rs.17,486 crore during 2007-08. The

resources were augmented by the issue of Corporate

Bonds (Rs.1,464 crore), Bhavishya Nirman Bonds

(Rs.2,767 crore), NABARD Rural Bonds (Rs.21 crore),

RIDF Deposits (Rs.18,805) crore, Term Deposits

(Rs.422 crore), Certificate of Deposits (Rs.1,816 crore),

Commercial Paper (Rs.181 crore) and Term Money

Borrowings (Rs.244 crore). The total working funds

increased by 20 per cent to Rs.1,18,176 crore,

as on 31 March 2009, from Rs.98,706 crore as on

31 March 2008. The outstanding market borrowings of

the Bank constituted 23 per cent of working funds as

on 31 March 2009.

69. The funds raised have been utilised for

schematic lending, ST/MT/MT (Conversion) loan

assistance and loans to State Governments under

RIDF and non-project loans. The outstandings

under schematic lending, ST loan advanced for

financing ST-SAO together with loans under

NABARD line of credit/other ST loans and loans

to State Governments under RIDF were at

Rs.33,335 crore, Rs.16,896 crore and Rs.45,616 crore,

respectively, as on 31 March 2009.

70. The total income of the Bank during the

year was Rs.7,051 crore (Rs.5,509 crore during the

previous year). After making provision for Income

Tax (Rs.597 crore), contribution to Special Reserves

(Rs.340 crore), transferring to NRC (LTO) Fund

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(Rs.400 crore) and NRC (Stabilisation) Fund

(Rs.10 crore), the balance income left over was

Rs.5,703 crore. After meeting an expenditure of

Rs.5,063 crore, the surplus amounted to Rs.640 crore

(includes withdrawals of Rs.48 crore from funds

against expenditure debited to P&L Account) which

was transferred to various funds maintained by

the Bank.

Capacity Building of Client Institutions

71. The financial health and growth of Co-operative

Banks and Regional Rural Banks (RRB) continue to be

an area of concern to NABARD. In view of their role

in credit dispensation and the changing economic

environment, NABARD has been striving towards

improving these institutions.

Institutional Development

72. During 2007-08, loans issued by SCB and

DCCB increased by 9 and 10 per cent, respectively,

while those issued by SCARDB and PCARDB declined

by 9 and 8 per cent, respectively, over the previous

year. The overall profit earned by 31 SCB was

Rs.466 crore. The profit earned by 26 SCB, which

were in profit during 2007-08, was Rs.515 crore. Out

of 370 DCCB, 261 earned profit of Rs.874 crore.

However, at the aggregate level, DCCB incurred a net

loss of Rs.28 crore during 2007-08, an increase of

12 per cent over the previous year. SCARDB generated

a net profit of Rs.99 crore, while PCARDB as a whole

continued to incur losses, aggregating Rs.184 crore

during 2007-08.

73. There were wide variations across the regions in

the performance of co-operative credit institutions.

During 2007-08, profits of SCB declined in all regions,

except the eastern and southern regions. Losses of

SCB in the NER increased substantially during 2007-08

over the previous year. In the case of DCCB,

profit improved across all regions during 2007-08. The

DCCB as a group, however, incurred a net loss. During

2007-08, SCARDB across all regions, except central

and northern, incurred losses. During 2007-08, in

the case of PCARDB, aggregate losses increased by

167 per cent.

74. As on 31 March 2008, of the reporting banks,

5 SCB, 108 DCCB, 9 SCARDB and 347 PCARDB

incurred losses, which together amounted to

Rs.1,617 crore. The poor recovery of loans/high NPA

to loans and advances outstanding ratio in co-operative

banks continued to be an area of concern. NPA level

of all co-operative banks (ST and LT) registered an

increase during 2007-08 over the previous year.

75. In view of the persisting weakness in the

co-operative credit structure, the revised/modified

Phase IV of preparing institution specific DAP by

co-operative banks and entering into MoU for ST and

LT structures is operational during the period

2007-2012. Further, to enable effective monitoring of

performance of co-operative banks, it was decided to

set up ‘State Level Task Force’ from 1 April 2008. As

on 31 March 2009, 22 RO have formed SLTF in their

States. Accounting for the changes in the environment

of RRB and co-operative banks, ODI for co-operative

banks is now known as ‘Business Revitalisation and

Managing Human Aspirations’ (BRAMHA). During

2008-09, 10 ODI for RRB and 5 BRAMHA for

co-operative banks were conducted.

76. Financial support through the Co-operative

Development Fund (CDF) is provided for supporting

developmental initiatives of co-operative credit

institutions. During 2008-09, Rs.5.95 crore was

sanctioned and Rs.3.81 crore was disbursed, including

earlier sanctions, taking the cumulative sanctions

and disbursements under CDF to Rs.88 crore and

Rs.78 crore, respectively, as on 31 March 2009.

77. The Revival Package for Short-Term Rural

Co-operative Credit Structure (STCCS) with an outlay

of Rs.13,596 crore, aims to redevelop the STCCS

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into a well managed and vibrant channel of credit

delivery through integrated measures of financial

management, legal/institutional reforms and capacity

building. During 2008-09, seven States executed MoU

with GoI and NABARD, taking the total number of

states to 25, covering 96 per cent of the units under

STCCS as at end-March 2009.

78. The special audit of the STCCS as on

31 March 2004 was completed in 78,391 (out of

84,726) PACS across 25 States, and for DCCB in 8

states as at end-March 2009. During 2008-09, four

States (Bihar, Maharashtra, Meghalaya and Tamil

Nadu) have passed bills to amend their Co-operative

Societies Acts (CSA), proposed amendments of nine

states is under scrutiny by NABARD and amendments

are being drafted in the case of the remaining six

states.

79. Emphasising on training of PACS’

functionaries, training modules, trainers’ manual and

guide, etc., have been developed. Training was

imparted to 227 Master Trainers from 16 States who

in turn trained 1,687 district level trainers. As at end-

March 2009, training was imparted to 63,789

secretaries/staff from 13 states and 89,242 elected

members of PACS from 10 States. In addition,

training was provided on CAS/MIS to 47,302 PACS

functionaries from 14 states.

80. During 2008-09, NABARD released

Rs.3,567 crore as GoI’s share towards recapitalisation

of eligible PACS in Andhra Pradesh, Chhattisgarh

Gujarat, Haryana, Madhya Pradesh, Maharashtra,

Orissa, Uttar Pradesh and West Bengal

enabling full recapitalisation of 33,411 PACS.

The total support released, as at end-March 2009,

stood at Rs.6,166 crore, including State

Government share of Rs.474 crore. Keeping in

view the health of the STCCS in the NER

and Sikkim, their present business, training, etc.

GoI announced a special package for the STCCS

in NER.

81. The revival package proposed by the Task

Force (Chairman: Prof. A. Vaidyanathan) on

Long-Term Co-operative Credit Structure (LTCCS)

has been approved by the Union Cabinet.

82. A Working Group on Human Resource Policy

for Co-operative Banks (Chairman: Shri S. K. Mitra,

ED, NABARD) was constituted to study norms

of recruitment/promotion/training/computerisation in

co-operative banks and suggest a rationalised policy.

83. Following amalgamation (2005-06 onwards),

the number of RRB was reduced from 196 to 86

(15,235 branches) as on 31 March 2009. In all, 81

RRB improved their performance and reported gross

profit of Rs.1,746 crore during 2008-09, an increase

of 26 per cent over 2007-08. The net worth of RRB

increased to Rs.6,750 crore (10%) and accumulated

losses declined by 3 per cent during 2008-09 over the

previous year. The performance of RRB varied widely

across regions. While all RRB were in profit in the

southern and western regions, 28 in central, 14 in

northern, 11 in eastern and 5 in north-eastern regions

were in profit.

84. The recovery performance of 87 RRB as on

30 June 2008 declined to 78 per cent though RRB in

four states, viz., Tamil Nadu, Punjab, Mizoram and

Kerala had very high recovery (above 80%). Out of

87 RRB, 36 had recovery of above 80 per cent and

2 below 40 per cent.

85. There was a decline in gross NPA position of

all RRB as a percentage of loans and advances

outstanding from 6.05 as at end-March 2008 to 5.58

as at end-March 2009. However, 56 RRB had NPA

levels below the national average of 5.58 per cent

and only 3 RRB had NPA levels above 20 per cent

as at end-March 2009. Lowest level of NPA was

observed in the case of RRB in southern (2%) and

northern (3%) regions.

86. As on 31 March 2009, an amount of Rs.898

crore was released as GoI share towards

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recapitalisation support announced for 27 RRB. Till

date, 26 and 1 RRB have been fully and partially

recapitalised, respectively. State Governments and

sponsor banks have contributed Rs.266 crore and

Rs.620 crore, respectively, as their share.

87. In accordance with the announcement in the

Union Budget 2007-08, RRB opened 474 branches

and 758 licenses were issued by RBI during 2008-09.

RBI relaxed the branch licensing norms for opening

branches subject to certain stipulations. As part of

financial inclusion as at end-March 2008, RRB had

opened 929 lakh accounts (deposits and loans).

Further, as recommended by the Committee on

Financial Inclusion, 15 RRB from 14 states operating

in the most financially excluded districts in the

country were identified for a R&D project with ICT

based solutions under the PPP model. As part of

the Village Adoption and Debt Swap Programme,

RRB have adopted 20,981 villages as on 31 March

2009, of which 7,811 have been freed from debt to

money lenders.

Supervision over Banks

88. NABARD inspects SCB and DCCB in terms

of the powers vested under Section 35(6) of the

B.R. Act, 1949 (AACS), and of RRB under

Section 35(6) of the B.R. Act, 1949. Keeping in view

the need for effective supervision over a sizeable

number of weak banks, NABARD’s inspections are

focussed on ensuring conformity with banking

regulations and facilitating internalisation of prudential

norms. Accordingly, statutory inspections of all SCB,

DCCB and RRB not complying with minimum capital

requirements and voluntary inspections of all

SCARDB continued to be conducted annually. The

statutory inspections of DCCB and RRB having

positive net worth and voluntary inspections of Apex

Co-operative Societies/Federations are conducted once

in two years.

89. During the year, statutory inspections of 324

banks (30 SCB, 243 DCCB and 51 RRB) and

voluntary inspections of 17 SCARDB and 2 apex

co-operative societies were conducted. Some of the

supervisory concerns relating to these banks brought

out by the inspections were, improper application of

IRAC norms resulting in inflated profit/reduced losses,

high level of NPA/erosion of assets, inadequate risk

management strategies, deficiencies in sanction and

disbursement of loans, ineffective funds management,

weak internal checks and control systems, violation of

CMA norms, etc.

90. The Board of Supervision [BoS] (for SCB,

DCCB and RRB) met thrice during the year. The

issues reviewed by BoS included, (i) functioning of

SCB and SCARDB, (ii) functioning of co-operative

credit institutions and RRB of Kerala, Bihar and

Rajasthan, (iii) functioning of insolvent weak

DCCB and RRB, (iv) impact of supervision on

banks’ performance, (v) scheduling of amalgamated

RRB, (vi) supervisory trends pertaining to rating

of banks, (vii) banks compliance to various important

statutory provisions, (viii) appropriate guidelines

to banks detailing the methodology for valuation

of properties and ensuring accountability of

values, etc.

91. As on 31 March 2008, 5 SCB and 108 DCCB

were not complying with Section 11(1) of the B.R.

Act, 1949 (AACS). The total erosion in the value of

assets of these non-compliant co-operative banks

aggregated Rs.15,107 crore, which had affected

deposits to the extent of Rs.4,937 crore in addition to

their entire share capital.

92. NABARD issued revised inspection guidelines

for all banks keeping in view the latest development

and policy environment. The revised guidelines

stressed on - Asset Liability Management, Codes of

Standards and Fair Practices, Lenders Financial

Discipline, CRAR norms, etc. To improve the quality

and effectiveness of inspection, NABARD conducted

three Regional Supervision seminars for officers

engaged in supervision, convened the 7th National

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14

Seminar on Audit, conducted workshops on

implementing the ALM system/anti-money laundering

and KYC, initiated dialogue with ICAI for

strengthening the audit mechanism of co-operative

banks.

93. NABARD initiated measures towards

re-engineering of the supervisory tasks. Licences for

use of an IT-based product, Regulator Plus were

obtained for strengthening knowledge management of

inspecting officers.

Organisation and Management

94. During the year, the Board of Directors of

NABARD met five times. The Executive Committee,

and the Audit Committee met four times each while

the Sanctioning Committee for loans under RIDF and

the Risk Management Committee of the Board met

six and three times, respectively, during the year. As

on 31 March 2009, the Board of NABARD

comprised six new directors under Sections 6(1)(d)

and 6(1)(e) of the NABARD Act, 1981.

95. Reserve Bank of India conducted the financial

inspection of NABARD with reference to the financial

position as on 31 March 2008 between 6 January

and 19 February 2009.

Training and Skill Enhancement

96. During the year, 91 training programmes

covering 1,816 officers were conducted at NBSC,

Lucknow in functional, behavioural and technical

areas and 9 programmes for 232 officers of client

banks on various finance related issues. New

programmes on bio-diesel, bamboo cultivation,

financial inclusion, etc., were introduced during

the year. Besides, 40 officers were deputed for

tailor-made programmes on software development,

outdoor management, etc. As many as 218 officers

were deputed for 118 off-the-shelf programmes,

workshops/seminars/conferences at reputed institutions.

Further, 223 officers were deputed abroad for various

overseas training programmes, exposure visits,

seminars, etc. During the year, 18 exposure visits were

organised with funding support from GTZ to study

mF co-operatives and MFI regulation in Indonesia,

Bangladesh, Sri Lanka, Philippines, Malaysia,

Germany and South Africa. Chairman also attended

the study visit programme on Deposit

Protection Mechanism for PACS in Germany

and Hungary. He also attended the Excom Meeting

of APRACA held in Moscow. In addition, 62 training

programmes covering 771 employees were conducted

at NBTC, Lucknow and ZTC, Hyderabad.

Pre-promotional training programmes were also

conducted for 11 Group B staff for promotion to

Grade ‘A’ in Secretarial Service.

97. During the year, 33 employees availed of

facilities under the modified incentive scheme, for

professional studies in part-time and distance learning

courses. Study leave was granted to one officer

under the Staff Scheme for higher studies to pursue

Post Graduate Diploma in Management at Institute of

Management Technology (IMT), Ghaziabad.

Other Matters

98. The process of recruiting 102 officers in

Grade ‘A’ of RDBS and Rajbasha Services and

Grade ‘B’ of Legal Service was completed during the

year and the process of recruiting 120 officers in

Grade ‘A’ in RBDS during 2009-10 has been

initiated. Further, 269 promotions were effected in

various grades of the officers’ cadre. As at

end-March 2009, NABARD has total staff strength of

4,886 employees.

99. Preventive Vigilance Inspection of six RO/TE

and one Chief Technical Examiner type inspection of

civil/electrical work was undertaken during the year.

The Bank observed Vigilance Awareness Week from

3-7 November 2008.

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15

100. During the year, LAN was set up in 34 units

(HO/RO/SO/TE) of the Bank and limited accessibility

to the Bank’s network was extended to ex-staff

members. The services of M/s. KPMG were engaged

during the year to study the activities, systems,

processes and IT applications currently in vogue in

the bank and also to suggest a suitable IT Road

Map. It has also been decided to set up a video

conferencing system in the Bank.

101. Inspection of 21 RO, 2 TE and 14 HO

Departments were undertaken during the year. In

order to improve the efficiency and effectiveness of

the staff posted in Concurrent Audit Cell at RO/TE,

two workshops were organised. Pursuant to the

directions of the Board of NABARD, ICRA

Management Consulting Services Ltd (iMACS) was

assigned a study on Risk Management System in

NABARD and their recommendations were submitted

to the top management. The Operational Risk

Management Committee met twice during the year.

102. The Central Complaints Committee at HO

and Committees in RO are functioning for prevention

of sexual harassment of women at the work

place.

103. The Bank continued to promote the use of

Hindi in its day-to-day working. In addition to

56 customised workshops, a three-day orientation

programme to sensitise senior officers was conducted

during the year. The Drafting and Evidence

Sub-Committee of the Parliamentary Committee

on Official Language reviewed the use of Hindi

in Sikkim and Kerala RO and NBSC, Lucknow,

while the Official Language Implementation

Committees at HO/RO/TE undertook quarterly

reviews on the use of Hindi in their respective

offices. The Committees found the performance of

these offices satisfactory. During the year ‘Rashtriya

Bank Srijana’ bagged three National Level Awards.

Many RO brought out PLP and inspection reports

in Hindi.

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16

Rural Economic EnvironmentI

The year 2008-09 witnessed major international

financial collapse starting off with the sub-prime crisis in

US. The tremors of the global economic crisis have been

felt in India too though with a lesser intensity. The

Government of India and the Reserve Bank of India

announced a series of stimulus packages, including fiscal

and monetary measures, for arresting slow down. The

rural economy, nevertheless, has been impacted to a

certain extent and in the near future also is likely to

operate in an environ of the global crisis.

1.2 The Indian economy recorded 6.7 per cent

growth in GDP, powered by higher growth rates in the

services sector than in the industry sector. Consistent

with the trend, growth rates of 9.7 and 3.9 per cent in

the services and industry sectors, respectively, have

contributed to the GDP growth of 6.7 per cent during

2008-09. The impressive sectoral growth rates have

enabled per capita income (at 1999-2000 prices) to

increase from Rs.15,881 during 1999-2000 to

Rs.25,494 during 2008-09. Inflation concerns have

abated in the light of the global commodity prices,

specifically crude, coming down. Inflation declined and

was at 0.26 per cent as on 28 March 2009. Revenue

and fiscal deficits, are expected to be 4.6 and

6.2 per cent of GDP during 2008-09 as against 1.1 and

2.7 per cent, respectively, during 2007-08.

1.3 Agriculture growth at 1.6 per cent during

2008-09 was lower than 4.9 per cent during 2007-08

in spite of anticipated growth rates of 6.0 per cent in

horticultural crops, 5.5 per cent in livestock products

and 6.0 per cent in fisheries. The ensuing sections

review the trends in agriculture and rural sectors in the

Global and Indian economies.

1.4 Growth in the global economy witnessed

deceleration from 3.8 per cent in 2007 to 2.1 per cent

2008, on account of the global melt down in the

advanced economies and is expected to dip to -2.5 per

cent in 2009. The growth rate of emerging and

developing economies also declined to 6.1 per cent in

2008 as against 8.3 per cent in 2007 and is expected to

further decline to 1.6 per cent in 2009 (Table 1.1). Due

to the global financial crisis, there was a significant

impact on the economic growth of developing

economies like China (9.0%) and India (7.3%) in 2008

and this is expected to decline further to 6.5 per cent

and 4.5 per cent, respectively, in the year 2009.

1.5 The world production of cereals and pulses, as

per FAO estimates, increased by about 5.1 and 3.4 per

cent, respectively, during 2007 in comparison to 2006.

India’s share, on a two-year average basis, was 11 and

23 per cent, respectively, in global cereal and pulse

production. India contributed to almost one-fifth of

world primary fibre production (Table 1.2). Low income

food deficit countries accounted for nearly half of World

cereals production and 70 per cent of fibre production.

Global Economy

Table 1.1: Overview of Global Economy

(Annual per cent change)

Growth 2007 2008 2009*

A. GDP (Real)

a. World Output 3.8 2.1 -2.5

b. Advanced Economies 2.7 0.9 -3.8

i. United States 2.0 1.1 -2.8

ii. Euro Area 2.7 0.9 -4.2

iii. Japan 2.4 -0.6 -6.2

iv. Newly Industrialised Asian Economies 5.7 1.5 -5.6

c. Other Emerging and

Developing Economies 8.3 6.1 1.6

i. Developing Asia 10.6 7.7 4.8

ii. China 13.0 9.0 6.5

iii. India 9.3 7.3 4.5

d. ASEAN – 5@ 6.3 5.8 -

B. Consumer Prices

a. Advanced Economies 2.2 3.4 -0.2

b. Other Emerging and Developing

Economies 6.4 9.3 5.7

C. World Trade Volume

(goods & services) 7.2 3.3 -11.0

a. Imports by Emerging and

Developing Economies 14.0 10.9 -8.8

b. Exports by Emerging and

Developing Economies 9.5 6.0 -6.4

D. Commodity Prices

a. Fuel (energy) 10.5 40.1 -94.4

b. Non-Fuel primary commodities 14.0 7.5 -27.9

* : Projections.@ : Includes Indonesia, Malaysia, Philippines, Singapore and

Thailand.

Source : (i) World Economic Outlook, IMF, April 2009.

(ii) RBI Bulletin, May 2009.

Ch-Eng-1 Pantone.p65 7/14/2009, 2:42 PM16

17

Table 1.2 Production of Major Crops in the World, 2007

(Million Tonnes)

Country/Group/ Cereals Production@ Pulses Production Fibre crops Production

% share in % share in % share in

2006 2007 World # 2006 2007 World# 2006 2007 World#

India 243 252 11 13 15 23 6 5 19

Net Food Importing

Developing Countries 249 248 11 12 13 21 5 5 16

Low Income Food

Deficit Countries 1052 1078 47 33 36 57 20 21 70

Least Developed Countries 163 167 7 9 10 16 2 2 7

European Union 270 266 12 4 3 6 1 0 2

Africa 150 146 6 11 12 19 2 2 6

Asia 1110 1141 49 28 30 48 20 20 69

World 2228 2342 100 59 61 100 28 29 100

@ : Rice is measured in terms of paddy (unhusked) # : Share based on average of 2006 & 2007

Source : FAOSTAT ; © FAO Statistics Division 2009 ; 08 May 2009

A. Economic Scenario

a. Gross Domestic Product

1.6 Indian economy registered an average annual

growth of 7.8 per cent during the Tenth Plan (2002-07)

which was the highest for any Plan Period though

marginally less than the targeted 8 per cent.

However, the growth in GDP is estimated at 6.7 per

cent (at 1999-2000 prices) during 2008-09, as against

9 per cent during 2007-08. The shortfall could be

attributed partly to the low growth in agriculture and

allied sectors (1.6%) and in the industry sector (3.9%).

Select economic indicators of the Indian Economy

are presented in Table 1.3.

1.7 Sectoral analysis of growth rates revealed that

deceleration in growth in agriculture and allied sectors

brought down its share in overall GDP further by

0.8 percentage points to 17.0 per cent during 2008-09.

While the share of services sector increased to 57.2 per

cent, that of industry sector declined to 25.8 per cent

during the year (Table 1.4).

b. Consumption, Savings and

Investments

1.8 Private final consumption expenditure, in

1999-2000 prices, as a proportion to GDP in the

economy declined from 63.2 per cent during 2007-

08 to 59.9 per cent during 2008-09. However, a

higher growth in Gross Fixed Capital Formation

(GFCF) is expected to improve its relative share in

Indian Economy

Table 1.3: Economic Indicators

Particulars 2006-07 2007-08 2008-09

Growth in (%)

Overall GDP ^ 9.7 9.0Q 6.7RE

GDP from Agriculture &

Allied Activities^ 4.0 4.9Q 1.6 RE

Food-grains Production 4.2 4.6# -

Industrial Production* 10.6 8.5P 2.4P

Inflation as measured by WPI 5.9 7.7 0.3B

Imports^^ 27.3 20.4RE 29.0P

Exports ^^ 25.3 14.7RE 16.0P

Gross Domestic Savings

(as % of GDP)^ 35.7 P 37.7Q 35.3

Gross Domestic Investment

(as % of GDP)^ 36.9 P 39.1 Q 37.5

Fiscal Deficit

(as % of GDP)^^ 3.4 2.7 6.2 P

Trade Balance (as % of GDP)^^ -6.8 -7.8 -12.0@

External Debt (as % of GDP)^^ 17.9 NA 26.2@

Q : Quick Estimate. RE : Revised Estimate.

P : Provisional NA : Not Available# : 3rd Advance Estimate 2007-08. * : At 1993-94 prices.

B : As at end-March 2009. ^^ : In current market price

^: At factor cost - 1999-2000 prices. @ : April-Dec., 2008

Source: (i) Economic Survey 2007-08. (ii) RBI Bulletin, May 2009.

Ch-Eng-1.p65 7/15/2009, 10:42 AM17

18

GDP (at market prices) to 32.2 per cent during

2008-09 as against 31.6 per cent during 2007-08.

The relative shares of private consumption and

GFCF in GDP during the Tenth Plan stood at

60.9 and 27.0 per cent, respectively. Indian

economy achieved higher saving and investment

levels during the Tenth Plan compared to the Ninth

Plan. The savings ratio during the Tenth Plan at

31.4 was substantially higher than that of Ninth

Plan at 23.6. The investment ratio during the Tenth

Plan averaged 31.4 per cent as compared to

24.3 per cent during the previous Plan period.

During the year 2007-08, the upward trend

continued as gross domestic savings and the

investment as a proportion to GDP (at current

market prices) improved by at least 2 percentage

points over the previous year to reach from

37.7 and 39.1 per cent, respectively (Table 1.3).

However, these ratios declined to 35.3 and

37.5 per cent, respectively, during 2008-09.

c. Inflation

1.9 Headline inflation, as measured by year-on-year

variations in the Wholesale Price Index (WPI) fell

from its intra-year peak of 12.91 per cent on August

2, 2008 to 0.26 per cent by 28 March 2009. The

fall in commodity prices, reflecting global trends, has

been the key driver of the sharp fall in WPI inflation

although effective management of domestic demand

too contributed. On the other hand, inflation

measured through various Consumer Price Indices

(CPI) was higher due to the firm trend in prices of

food articles.

B. Trade

1.10 The economy showed progress in integrating

with the world economy as evident from the improved

trade to GDP ratio at 34.8 during 2006-07 as

compared to 22.5 during 2000-01. The openness

indicator, by including services trade, showed further

improvement to 48 per cent as against 29.2 per cent

during the corresponding period. During 2008-09, both

exports and imports in US$ terms registered growth of

3.4 and 14.3 per cent, respectively. The exports

reached US $ 167.02 billion during April 2008 March

2009. Imports reached a volume of US $ 284.30

billion during the year. Share of agriculture in total

exports ranged between 10 and 11 per cent during

recent years (Table 1.5).

C. Agricultural Marketing and

Commodity Futures

1.11 Several states amended their APMC Acts to

ensure market reforms. GoI took initiatives to promote

modern terminal markets for fruits, vegetables and

other perishables in urban centres in ‘Hub-and-Spoke’

format. Andhra Pradesh, Bihar, Madhya Pradesh,

Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu,

West Bengal, Nagaland and the Union Territory of

Chandigarh have identified land for setting up terminal

markets.

1.12 Cumulative value of trade in agricultural

commodities during the financial year 2008-09 was

Table 1.4: Sectoral Growth Rates of Real GDP*

(Per cent)

Sector 2004-05 2005-06 2006-07Q 2007-08Q 2008-09 RE

Agriculture & Allied - (20.8) 5.8 (19.9) 4.0 (18.5) 4.9 (17.8) 1.6 (17.0)

Industry# 9.8 (26.0) 9.6 (26.1) 10.6 (26.7) 8.1 (26.5) 3.9(25.8)

Services 9.6 (53.2) 9.8 (54.0) 11.2 (54.8) 10.8 (55.7) 9.7(57.2)

Total GDP at factor cost 7.5 (100.0) 9.4(100.0) 9.6 (100.0) 9.0 (100.0) 6.7 (100)

Q : Quick Estimate. RE : Revised Estimate * : At 1999-2000 prices.

# : Includes mining & quarrying, manufacturing, electricity, gas and water supply and construction (ES 2003-04).

Figures in parentheses indicate percentage share in GDP Source: 1. Economic Survey 2007-08. 2. Central Statistical Organisation, GoI.

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19

Rs.6,27,303 crore registering a decline of 33.36 per

cent compared to the previous year. Total trade in

futures increased by about 29.01 per cent over last

year. Thus, share of agricultural commodities in total

trade declined from 23.1 per cent in 2007-08 to

12.0 per cent in 2008-09. An important development

during the year was that the Forward Market

Commission, on 16 March 2009, permitted NCDEX

to accredit the warehouses of producers/processors and

similar participants, within 50 km of the municipal

limits of the delivery centers, to enable such

participants to deliver their goods on the exchange

platform.

D. Support Prices, Procurement and

Stock of Foodgrains

1.13 Minimum Support Prices (MSP) announced for

major crops before the sowing season, during 2008-09,

showed significant upward revision by 8.0, 31.8, 48.2,

48.2 and 29.3 per cent, respectively, for wheat, paddy,

moong, urad and arhar. Procurement of wheat in the

marketing year (April-March) 2009-10 would be around

24 million tonnes as against 22.6 million tonnes during

the previous year. As Government has increased the

MSP to Rs.1,080 per quintal (by 8%), the procurement

is expected to be easy. Procurement of rice is expected

to be higher by 1.8 million tonnes than last year at 24.4

million tonnes.

1.14 Food security has been assigned prime

importance as reflected in buffer stock and public

distribution policies. During the year, food security

issue came to the fore once again in the wake of

diversion of food grains, especially corn to biofuel

production, stoking global food prices up and due to

threat perception of adverse effects of climate change.

While food and fuel prices eased during last quarter of

the year at the macro level, sticky retail food prices still

threaten weaker sections, including small and marginal

farmers, who are net buyers of food.

E. Agriculture and Rural Economy

a. Rainfall Situation

1.15 In spite of ‘near normal’ precipitation during

southwest monsoon season 2008, erratic temporal as

Table 1.5: Trends in Exports and Imports

(US$ billion)

Year Total Exports Share of Agri. Total Imports Share of Food & Allied

in Total Exports (%) Products in Total

Imports (%)

2003-04 63.84 (21.1) 11.8 78.15 (27.3) 4.7

2004-05 83.54 (30.8) 10.2 111.52 (42.7) 3.5

2005-06 103.10 (23.4) 9.91 149.15 (33.8) 2.5

2006-07 126.28 (22.6) 10.04 185.08 (24.5) 2.9

2007-08R 162.99 (29.1) 11.3 251.57 (35.5) 3.1

2008-09P 167.02 (3.4) 10.5 * 284.30 (14.3) —

R : Revised. P : Provisional * : Pertains to April-December

Figures in the parentheses refer to percentage change over the previous year.

Source: 1. DGCI &S, Kolkata. 2. Ministry of Commerce and Industry 3. Economic Survey 2007-08 4. RBI Bulletin, May 2009.

Paddy field

Ch-Eng-1.p65 7/15/2009, 10:42 AM19

20

well as spatial distribution of rainfall has impacted

the farmer community to some extent. While the

central and south peninsular India witnessed scanty

rains and drought like situation, regions like Bihar and

eastern Uttar Pradesh experienced massive floods

during the season. Insufficient showers in peak-sowing

month, i.e., July, fall in water storage levels in the

major reservoirs and inadequate supply of fertilisers

slowed down the pace of sowing operations. The

North-East monsoon rainfall was subdued to make

the cumulative rainfall about 31 per cent below

normal (Table 1.6).

1.16 The cumulative rainfall recorded during the

entire southwest monsoon season (June-September)

2008 was 2 per cent lower than the normal Long

Period Average (LPA) rainfall. Though the season

started 5 days in advance it was marred by two

prominent dry spells, one in July and another in

September 2008 causing deficiency in some parts of

the country.

1.17 In terms of spatial distribution, 30 out of 36

meteorological sub-divisions received normal rainfall.

Only 2 (Punjab and Orissa) sub-divisions recorded

excess rainfall and 4 (Nagaland, Manipur, Mizoram &

Tripura, West Madhya Pradesh, Vidharbha and

Kerala) sub-divisions witnessed deficient rainfall (Table

1.6). Total live water storage, as on 26 March 2009,

was 26 per cent of the FRL compared to 33 per cent

last year.

b. Crop Acreage

1.18 The crop coverage during kharif 2008 at 101.5

million ha showed a decline of 2.4 million ha, due to

decline in area under pulses and other cereals even as

area under rice and oilseeds increased (Table 1.7). In

spite of shortfall in North-East monsoon, area sown

under rabi crops increased by 1.8 million ha. While

area under crops, except rice and oilseeds, declined

during kharif season, it generally improved during the

rabi season. This trend has reversed the pattern

observed during 2007-08.

c. Agricultural Production

i. Foodgrains and Non-Foodgrains

1.19 Overall foodgrains production during 2008-09

is estimated at 229.9 million tonnes as against

the target of 233.0 million tonnes and the previous

year’s production of 230.8 million tonnes. During

the year, production of all crops, except rice, is

lower compared to last year; the reduction being

larger at 16.9 per cent in case of sugarcane

(Table 1.8).

Table 1.6: Trends in the Rainfall and Water Storage

Particulars South - West Monsoon North - East Monsoon

2006 2007 2008 2006 2007 2008

A. Cumulative rainfall

(% variation from normal) -1 5 -2.0 -21 -32 -31

B. Number of Sub-divisions with

• Normal 20 17 30 6 7 4

• Excess 6 13 2 3 2 2

• Deficient/Scanty/No Rain 10 6 4 27 27 30

C. Reservoir status (% of FRL)* 87 79 76 @ 33 33 26 #

Normal : ± 19 % ; Excess : + 20% or more; Deficient : -20 to - 59%; Scanty : - 60 % or less & No Rain : - 100%

* : Full Reservoir Level in 81 major reservoirs (accounting for 63% of total reservoir capacity in the country) as at the end of season.

@: As on 30 Sept 08 #: As on 26 March 2009 Source: Indian Meteorological Department

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21

ii. Plantation Crops

1.20 Tea production in the country is expected to

rise to 9.81 lakh tonnes during 2008-09. With

production shortfall in Kenya, the increase in

production helped to increase exports (Table 1.9).

Exports are likely to pick up in 2009 also as tea

production in Kenya is expected to remain low. For

funding re-plantation and rejuvenation activities aimed

at improving productivity, GoI has set up Special

Purpose Funds for tea, rubber, coffee and cardamom.

These Funds will be operational till the end of

Eleventh Plan. Over time, coffee production,

consumption and exports improved. Rubber

production and consumption showed steady growth,

while exports fluctuated from year to year.

iii. Horticulture

1.21 Horticulture sector contributes a significant

proportion of GDP in agriculture. The area and

production grew in 2007-08 compared to the previous

Table 1.7: Area Sown under Major Crops

(Million ha.)

Crop Kharif (a) Rabi (b) Total (a+b)

2007 2008 2008 2009 2007-08 2008-09

Rice 37.3 38.5 0.8 4.6 38.1 43.1

Wheat - - 27.4 27.8 27.4 27.8

Other Cereals 21.1 20.0 6.5 6.9 28.5 26.9

Pulses 12.3 10.4 12.9 14.5 25.5 24.9

Oilseeds 17.5 18.3 8.5 10 26.2 28.3

Cotton 9.2 9.1 - - 9.3 9.1

Sugarcane 5.3 4.4 - - 5.1 4.4

All Crops 103.9 101.5 62.0 63.8 160.2 165.3

Source : Ministry of Agriculture, GoI - : Nil

Table 1.8: Production of Major Crops

(Million tonnes)

Crop 2004-05 2005-06 2006-07 2007-08 2008-09

Target Achievement$

Rice 83.1 91.8 93.4 96.7 97.0 99.4

Wheat 68.6 69.4 75.8 78.6 78.5 77.6

Coarse Cereals 33.5 34.1 33.9 40.8 42.0 38.7

Pulses 13.1 13.4 14.2 14.8 15.5 14.2

Foodgrains 198.4 208.6 217.3 230.8 233.0 229.9

Kharif 103.3 109.9 110.6 121.0 121.5 118.8

Rabi 95.1 98.7 106.7 109.8 111.5 111.1

Oilseeds 24.4 28.0 24.3 29.8 31.8 28.1

Sugarcane 237.1 281.2 355.5 348.2 340.0 289.2

Cotton@ 16.4 18.5 22.6 25.9 26.0 23.3

Jute & Mesta# 10.3 10.8 11.3 11.2 11.0 10.3

$ : Third advance estimates @ : million bales of 170 kg each # : million bales of 180 kg each Source : Ministry of Agriculture, GoI

Ch-Eng-1.p65 7/15/2009, 10:42 AM21

22

year and reached a level of 20.1 Mha and 207 MT,

respectively (Table 1.10). The growth saga continued

in 2008-09 and GDP from horticuture recorded a

6 per cent growth. Under the National Horticulture

Mission (NHM) launched in 2005, during 2005-06

and 2006-07, a sum of Rs.1,575.30 crore was

released. In 2008-09, an amount of Rs.1,010.49 crore

was released further while the expenditure reported

has been Rs.1,148.50 crore.

d. Agriculture and Allied Sector

i. Livestock and Poultry

1.22 As per the Livestock Census, 2003, the

livestock and poultry population in the country is

485 million and 489 million respectively. The

contribution of the sector to agriculture and total

GDP during 2006-07 was 31.7% and 5.26%,

respectively. The value of output from the livestock

sector at current prices was about Rs.2,10,629 crore

during 2006-07.

ii. Fisheries

1.23 Fisheries sector accounted as a livelihood

option for over 14 million persons during 2005-06.

Total fish production in the country during 2007-08,

increased by 4.4 per cent and reached 7.1 million

tonnes (2.9 million tonnes marine and 4.2 million

tonnes inland). Export earning from the sector was also

on the increase with the value of marine products

export amounting to Rs.7,620 crore during 2007-08.

e. Agro and Food Processing Sector

1.24 Food processing sector is a promising sector

in the country due to changing consumer

Table 1.9: Production and Consumption of Major Plantation Crops

(lakh tonnes)

Year Tea Coffee Rubber

Production Consumption Exports Production Consumption Exports Production Consumption Exports

2003-04 8.79 7.14 1.83 2.71 0.70 2.33 7.12 7.20 0.76

2004-05 9.07 7.35 2.06 2.76 0.75 2.12 7.50 7.55 0.46

2005-06 9.49 7.57 1.97 2.74 0.80 2.15 8.03 8.01 0.74

2006-07 9.73 7.71 2.18 2.88 0.85 2.49 8.53 8.20 0.57

2007-08 89.45 7.86 1.85 2.62 0.90 2.19 8.25 8.61 0.6

2008-09P 9.81 8.02 1.84 2.77 0.94 2.04 8.64 8.65 0.45

P : Provisional Source: Ministry of Commerce and Industry, GoI. Coffe Board, Tea Board and Rubber Board.

Table 1.10: Area and Production of Major Horticultural Crops

(Area in million ha; Production in million tonnes)

Year Area Production

Total Total

Fruits Vege-tables Flowers Horticulture Fruits Vege-tables Flowers Horticulture

2002-03 4.8 5.9 0.1 16.4 49.2 84.8 0.2 152.0

2003-04 5.1 6.7 0.2 20.6 49.8 101.4 0.6 165.5

2004-05 5.1 6.7 0.1 17.8 50.9 101.2 0.7 167.0

2005-06 5.3 7.1 0.1 18.7 55.4 110.1 0.7 181.8

2006-07 5.6 7.6 0.1 19.4 59.6 115.0 0.9* 191.8

2007-08 P 5.8 7.8 0.2 20.1 63.5 125.9 0.9* 207.0

P: Provisional *: Excluding 37158 lakh and 43421 lakh cut flowers in 2006-07 and 2007-08, respectively.

Source: 1. National Horticulture Board. 2. Horticulture Division., Dept of Agriculture & Co-operation, GoI

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preferences and growth of organised agri-food retailing

sector. The Eleventh Plan, targets to utilise over

20 per cent of agricultural products for processing/

value addition. The Food Industry, presently

employing 1.6 million workers directly, is projected to

grow to 37 million workers (direct and indirect job

workers) by 2025.

f. Agricultural Inputs

i. Seeds

1.25 The share of private sector in production and

distribution of seeds in the country was 46 per cent

of the seeds sold commercially. Breeder seed

production by National Agricultural Research System,

reached 0.92 lakh quintals during 2007-08 registering

a 24.6 per cent growth over previous year. Certified/

quality seed distribution during 2007-08 at 190 lakh

quintals was 15.5 per cent higher than the previous

year.

ii. Fertilizers

1.26 During 2007-08, fertilizer consumption (nutrient

terms) increased at 4.2 per cent to reach 225.7 lakh

tonnes and 117.1 Kg/ha, respectively. Current pricing

mechanism coupled with the unscientific use of

chemical fertilizers has resulted in nutrient imbalance

with excessive use of urea and a bias against

micronutrients. As against the desirable proportion of

4:2:1 of NPK, the average use is 5.5:2.1:1, thus,

adversely affecting soil profile, micronutrient use and

crop productivity.

iii. Irrigation

1.27 Total irrigation potential created under all types

of irrigation structures was 102.8 million ha upto the

end of Tenth Plan. The utilisation was to the extent

of 85 per cent, leaving a gap of 15 per cent. There

have been several Central Sector schemes launched in

recent years to create irrigation potential with social

responsibilty like Rainwater Harvesting Scheme for SC/

ST farmers and Artificial Groundwater Recharge

through Dugwells. The rainwater harvesting scheme,

implemented in all States and Union Territories during

2004-05 to 2006-07, installed 18,016 water harvesting

structures with a total subsidy utilization of Rs.24.04

crore. This is expected to benefit around 8807 ha. of

land of SC/ST farmers.

1.28 The scheme for artificial recharge seeks to

benefit the groundwater stressed areas in the country

that account for 28 per cent of the total assessment

units. Seven states, viz., Andhra Pradesh, Gujarat,

Karnataka, Madhya Pradesh, Maharashtra, Rajasthan

and Tamil Nadu account for 75 per cent of such

problem units. GoI is implementing a large scale

Groundwater recharge programme through Dug wells

in these States through a subsidy based scheme,

viz., Scheme on Artificial Recharge of Ground water

through Dugwells. Ministry of Water Resources is

the Nodal Ministry at the Central Government level

and the Fund is routed through NABARD.Rubber sap collection

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1.29 The programme is being implemented in 1180

Blocks/Talukas of 146 districts in these seven States.

The phasing is proposed over a period of 3 years,

i.e., 2007-2010. An estimated 44.5 lakh dugwells are

envisaged to be fitted with recharge structures under

the scheme. Total outlay of the programme is

Rs.1,798.71 crore, of which Rs.1,536.75 crore has

been released to NABARD towards subsidy, capacity

building and service charges. NABARD is a member

on the State Level Steering Committe (SLSC) and

District Level Implementation and Monitoring

Committee (DLIMC).

iv. Agricultural Credit

1.30 As against the target of Rs.2,80,000 crore of

credit flow to agriculture for 2008-09, the banking

system has disbursed Rs.2,87,149 crore as on

31 March 2009, achieving nearly three per cent more

than the target. Commercial banks, co-operative banks

and RRB disbursed Rs.2,23,663 crore, Rs.36,762 crore

and Rs.26,724 crore, respectively, thus, achieving

around 115, 67 and 89 per cent of the targets,

respectively (Table 1.11 ).

1.31 During the period 2004-09, the GLC flow for

agriculture and allied activities registered a compound

annual growth rate (CAGR) of 23 per cent. During

2007-08, while GLC flow for crop loans (31%)

improved, it declined in for term loans (19%) over

2006-07. Sub sector-wise, hi-tech agriculture witnessed

the highest growth of 55 per cent in GLC flow during

2007-08 (Table 1.12)

Kisan Credit Card Scheme

1.32 The Kisan Credit Card (KCC) scheme introduced

in August 1998 has facilitated in augmenting the GLC

flow for crop loans by providing adequate, timely, cost

effective and hassle free short-term (ST) loans for

Seasonal Agricultural Operation (SAO) to farmers. The

Scheme is implemented across the country by all

public sector commercial banks, RRB and co-operative

banks. The scope of KCC was broadened by NABARD

to cater to various term credit needs under a single

window. In addition to ST credit and term loans for

Table 1.11: Agency-wise Ground level Credit Flow

(Rs. crore)

Agency 2004-05 2005-06 2006-07 2007-08 2008-09P Growth Rate (%)

2004-09# 2007-08* 2008-09*

Co-operative Banks 31,231 39,404 42,480 48,258 36,762 4 14 -24

RRBs 12,404 15,223 20,435 25,312 26,724 21 24 6

Commercial Banks 81,481 1,25,477 166,485 181,088 2,23,663 29 9 23

Other agencies 193 382 NA NA NA - -

Total 1,25,309 1,80,486 2,29,400 2,54,658 2,87,149 23 11 13

#: Compound Annual Growth Rate P: Provisional NA: Not Available

*: Percentage change over previous year. Source: NABARD

Oyster mushroom cultivation

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agriculture and allied activities, a certain component of

loan through KCC also covers consumption needs.

1.33 During 2008-09, 67.95 lakh KCC were issued by

banks with sanction of credit limit of

Rs.38,245 crore. Of the total cards issued during the

year 40.37 lakh KCC were issued by commercial

banks, 13.44 lakh KCC by co-operative banks and

14.14 lakh KCC by RRB. Since inception of the

scheme, 828.70 lakh cards were issued till end-March

2009 by the banking system. Co-operative banks

accounted for the largest share (44%), followed by

commercial banks (42%) and RRB (14%) (Table 1.13).

1.34 State-wise analysis of KCC issued as at end-

March 2009, revealed that Uttar Pradesh accounted for

18 percent of the total cards issued followed by

Andhra Pradesh (17%), Maharashtra (10%), Tamil

Nadu (7%), and Karnataka, Madhya Pradesh, Orissa

and Rajasthan (6% each).

1.35 Keeping in view the Government’s emphasis on

increasing credit flow to agriculture sector, NABARD

advised banks to identify and cover all farmers

including defaulters, oral lessees, tenant farmers, share-

croppers, etc., so that all farmers are covered under

the scheme by 31 March 2009. Further, banks were

advised to extend crop loans only through KCC and

Table 1.12: Sub-sector-wise Ground Level Credit Flow for Agriculture and Allied Activities

(Rs. crore)

Sr. Sector/Sub- 2004-05 2005-06 2006-07 2007-08 Growth Rate (%)

No. Sector 2004-08^ 2007-08*

I Crop Loan 76,062 1,05,350 1,38,455 181,393 34 31

(ST-Production Credit)

II Term Loans 49,247 75,136 90,945 73,265 14 -19

(MT & LT Investment Credit)

i. Minor Irrigation 4,186 8,663 8,566 2,840 -12 -67

ii. Land Development 840 1,749 2,285 2,553 45 12

iii. Farm Mechanisation 4,555 9,695 10,113 8,303 22 -18

iv. Plantation & Horticulture 1,720 4,481 5,266 5,910 51 12

v. Animal Husbandry# 3,097 7,341 8,045 9,034 43 12

vi. Fisheries 1,301 1,019 1,424 1,248 -1 -12

vii. Hi-tech agriculture 6,648 9,737 21,498 33,325 71 55

viii. Others$ 26,900 32,451 33,748 10,052 -28 -70

Total (I+II) 1,25,309 1,80,486 2,29,400 2, 54,658 27 11

^ : Compound Annual Growth Rate * : Percentage change over previous year.

# : Animal Husbandry includes Dairy Development, Poultry Farming and Sheep/Goat/ Piggery

$ : ‘Others’ include storage/market yards, forestry/waste land development, RIDF, bullock and bullock carts, bio-gas and credit flow

through private sector commercial banks.

Table 1.13: Agency-wise, Year-wise Kisan Credit Cards Issued

(lakh)

Year Co-operative RRB Commercial Total

Bank Banks

2004-05 35.56 17.29 43.95 96.80

2005-06 25.98 12.49 41.65 80.12

2006-07 22.97 14.06 48.08 85.11

2007-08 20.91 17.73 46.06 84.70

2008-09 13.44 14.14 40.37* 67.95

Cumulative 361.45 114.71 352.54 828.70

*: Upto 31 December 2008

Ch-Eng-1.p65 7/15/2009, 10:42 AM25

26

renew them in time to ensure ‘quality in operations’.

Banks were also advised to ensure coverage of

all KCC-holders under Personal Accident Insurance

Scheme (PAIS).

Agricultural Debt Waiver and Debt Relief

Scheme

1.36 The Union Budget 2008-09 had announced

Agricultural Debt Waiver and Debt Relief Scheme,

2008 to ameliorate the indebtedness of farmers and

difficulties faced by farming communities, especially

small and marginal farmers. NABARD implemented

the Scheme as nodal agency for co-operative banks

and RRB. About 193 lakh farmer-borrowers of co-

operative banks and RRB are estimated to have

benefitted under the Scheme. The proportion of small/

marginal farmers benefitting is 83 per cent.

F. Capital Formation

1.37 Capital formation is very crucial in determining

the production capacity in the future. Hence, there is

a need to step up capital formation in agriculture to be

able to reach the targetted growth of 4 per cent. Gross

capital formation (GCF) in agriculture increased from

Rs.43,473 crore in 1999-2000 to Rs.67,864 crore in

2007-08. GCF as percentage of GDP in agriculture

improved from 10.6 to 12.3 per cent during this period

(Table 1.14). The past trends showed decline in public

sector formation, which in turn crowded out private

sector investment, the apparent revival in recent years,

notwithstanding.

G. Agricultural Insurance

1.38 The National Agricultural Insurance Scheme

(NAIS) continued to provide insurance coverage against

crop failure due to natural calamities, pests and

diseases. Since inception (1999-2000) of the Scheme,

about 11.55 crore farmers have been covered. During

this period, claims to the tune of Rs.11,607 crore have

been settled benefiting a total of 302 lakh farmers

(end-31 March 2008). The weather based crop

insurance scheme (WBCIS) to protect farmers against

adverse conditions of weather parameters like rainfall,

temperature, frost, humidity, etc., was first

implemented during kharif 2007 in Karnataka and then

extended to 12 states during rabi 2007-08. The scheme

was continued during 2008-09. The WBCIS has

covered about 6.71 lakh farmers. The total claims

under the scheme for kharif 2007 and rabi 2007-08

amounted to Rs.106 crore. Insurance cover is now also

available to farmers growing horticultural crops.

H. Land Reforms and Land Records

1.39 Land reforms have formed the core of the

institutional reforms in agriculture. Of late, entry of

corporates in agriculture, forces of globalisation and

liberalisation, etc., have necessitated a rethink on land

reforms. At the same time, inclusive growth can be

ensured only by providing the poor access to land,

credit, technology, markets and other productive assets.

Realising the importance of land reforms to achieve

this, GOI appointed the “Committee on State Agrarian

Relations and the Unfinished Task in Land Reforms”

under the chairmanship of the Union Minister for Rural

Table 1.14: Gross Capital Formation in Agriculture

(At 1999-2000 prices)

(Rs. crore)

Year GCF Ratio of GCF in Agriculture to (%)

in Agri GDCF Agri. GDP Total GDP

1999-00 43,473 8.6 10.6 2.2

2000-01 39,027 8.0 9.6 1.9

2001-02 48,215 10.2 11.1 2.2

2002-03 46,823 8.4 11.8 2.1

2003-04 44,833 6.7 10.2 1.9

2004-05 49,198 6.2 11.1 2.1

2005-06 56,459 6.0 12.1 2.2

2006-07P 62,663 5.9 12.9 2.2

2007-08Q 67,864 5.5 12.3 2.2

P : Provisional. Q : Quick Estimate

Source : Central Statistical Organisation, GoI

Ch-Eng-1.p65 7/15/2009, 10:42 AM26

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Development in 2008. The broad terms of reference

relate to land ceilings, their implementation, tenancy

rights, besides suggesting better access of women to

land and productive assets.

1.40 Non-availability of proper land records has

always been a hindrance to land reforms and,

particularly, to development through credit. A

sponsored scheme on computerisation of land records

was started in 1988-89 with 100% financial assistance

as a pilot project to address this problem. The Scheme

is being implemented since 1994-95 in collaboration

with the National Informatics Centre (NIC). At present,

the scheme is being implemented in 544 districts of the

country. Of the 5261 tehsils where work is being

implemented, data entry was completed in 3537 tehsils

(67.2%) and computerised copy of Record of Rights

(RoR) are available in 2923 tehsils (55.6%).

I. Climate Change

1.41 Global warming due to large-scale emmission of

Green House Gases (GHG) raises several concerns.

Climate change being one of them has ocupied the

centre stage of academic and policy discussion round

the world. Government of India launched the National

Action Plan on Climate Change during June 2008 to

mitigate the impact of climate change on livelihoods of

people, sustainability and inter-generational equity

issues in sharing natural resources. As part of the

national action plan, GoI constituted National Solar

Mission, National Mission for Enhanced Energy

Efficiency, National Mission on Sustainable Habitat,

National Water Mission, National Mission for

Sustaining the Himalayan Ecosystem, National Mission

for a Green India, National Mission for Sustainable

Agriculture and National Mission on Strategic

Knowledge for Climate Change.

1.42 Sustainability has been a major issue in

agricultural sector. GoI launched a National Mission for

Agriculture as part of the effort to address climate

change. It has suggested wide ranging action points

(Box 1.1).

J. Outlook for 2009-10

1.43 The Annual Monetary Policy Statement for

2009-10 by RBI has many implications for rural

credit. Among others, introduction of CRAR norm for

RRB in a phased manner, assistance to RRB for

adoption of ICT solutions for financial inclusion,

technology upgradation of RRB, liberalised branch

licensing, reckoning shortfall under weaker sections sub-

target (10%) for allocating amounts to RIDF,

continuation of interest subvention scheme, etc., will

have implications for RFI and rural credit. The plan

of action will be finalised by the RBI in consultation

with NABARD.

1.44 The outlook for the coming financial year is of

interest as the impact of global melt down is expected

to roll over. While India is said to be less impacted

compared to other parts of the world, the truth is that

no country can escape the downturn as amply

demonstrated by the decline in industrial output. The

year ahead is likely to have a lower growth of

GDP inspite of favourable rainfall expectations.

Arrangement may have to be made with certain degree

of preparedness to provide a safety net to already

distressed farmers. Also, a number of initiatives may

have to be planned for the agriculture and other rural

sectors for building long term capabilities while ensuring

sustainability. Operating margins may have to be

enhanced in favour of all farmers, especially the small

and marginal farmers, who are more vulnerable to

market forces.

Ch-Eng-1.p65 7/15/2009, 10:42 AM27

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Agriculture is vital to India’s economy and the livelihoods of its

people. The National Mission for Sustainable Agriculture, forming

part of the GOI’s National Action Plan on Climate Change,

suggested a multi-pronged strategy to make it more resilient to

climate change. The Mission seeks to identify and develop new

varieties of crops, especially thermal resistant crops, and

alternative cropping patterns capable of withstanding extremes of

weather, long dry spells, flooding and variable moisture

availability. Agriculture needs to progressively adapt to

anticipated climate change. It needs to be supported by the

convergence and integration of traditional knowledge and

practice systems, information technology, geospatial technologies

and biotechnology. The focus would be on improving

productivity of rainfed agriculture. The proposed National

Mission will focus on four areas crucial to agriculture in adapting

to climate change, namely dryland agriculture, risk management,

access to information and use of biotechnology.

Priority action on dryland agriculture: (i) development of

drought and pest-resistant crop varieties, (ii) improving methods

to conserve soil and water, (iii) training farming community,

stake holders for agro-climatic information sharing and

dissemination and (iv) financial support to enable farmers to

invest in and adopt relevant technologies to overcome climatic

related stresses.

Risk Management: (i) Strengthening of current agricultural

and weather insurance mechanisms, (ii) development and

validation for weather derivative models, (iii) creation of web-

enabled, regional language based services for facilitation of

Box 1.1

National Mission for Sustainable Agriculture

weather based insurance, (iv) development of GIS and remote-

sensing methodologies for detailed soil resource mapping and

land use planning at the level of a watershed or a river basin, (v)

mapping vulnerable eco-regions and pest and disease hotspots

and (vi) developing and implementing region-specific contingency

plans based on vulnerability and risk scenarios.

Access to Information: (i) Development of regional databases

of soil, weather, genotypes, land-sue patterns and water

resources, (ii) monitoring of glacier and ice-mass, impacts on

water resources, soil erosion and associated impacts on

agricultural production in mountainous regions, (iii) providing

information on off-season crops, aromatic and medicinal plants,

greenhouse crops, pasture development, agro forestry, livestock

and agro processing, (iv) collation and dissemination of block-

level data on agro-climatic variables, land-uws and soci-

economic features and preparation of state-level agro-climatic

atlases.

Use of Biotechnology: (i) Use of genetic engineering to

convert C-3 crops to the more carbon responsive C-4 crops to

achieve greater photosynthetic efficiency for obtaining increased

productivity at higher levels of carbondioxide in the atmosphere

or to sustain thermal stresses, (ii) development of crops with

better water and nitrogen use efficiency which may result in

reduced emissions of green house gases or greater tolerance to

drought or submergence or salinity, (iiii) development of

nutritional strategies for managing heat stress in dairy animals to

prevent nutrient deficiencies leading to low milk yield and

productivity.

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Development InitiativesII

A. Watershed Development

2.2 The Watershed Development Fund (WDF) was

created with a corpus of Rs.200 crore during 1999-2000 to

replicate watershed development models through

participatory approach. The corpus was augmented during

the year through interest accrued on unutilised portion of

the Fund (Rs.33.83 crore) and RIDF differential interest

(Rs.527.52 crore) taking the total amount to

Rs.1,125.21 crore as on 31 March 2009. During

2008-09, 38 watershed projects were sanctioned, taking

the cumulative number of projects to 454 spread over 94

districts in 14 states. With a total commitment (loan and

grant) of Rs.257.20 crore under these projects, an area

of 4.54 lakh ha. is expected to be covered. The projects

are implemented in two phases, viz., Capacity Building

Phase (CBP) and Full Implementation Phase (FIP).

During the year, 8 projects graduated to FIP, taking the

total of such projects to 169.

2.3 Under the Prime Minister’s Relief Package for 31

distress districts in four States, 1.90 lakh ha. has been

taken up for implementation during the year, taking the

cumulative area to 5.88 lakh ha. with total commitment

of Rs.706 crore. These watersheds are expected to

significantly mitigate farmers’ distress. While projects are

entirely grant based in distressed districts, combination

of grant and loan is provided in non-distress districts.

During the year, Rs.49.83 crore and Rs.8.10 crore were

disbursed as grants and loans taking the cumulative

disbursements to Rs.107.83 and Rs.15.10 crore,

respectively.

2.4 The participatory watershed development

programme being implemented by NABARD under the

Special Plan for Bihar component of Rashtriya Sam

Vikas Yojana (RSVY), aims to develop 80,000 ha. of

wasteland in Aurangabad, Banka, Bhabua, Gaya,

Jamuai, Munger, Nawada and Rohtas districts of Bihar

with an allocation of Rs.60 crore. During

2008-09, 18 watershed projects were sanctioned

involving financial commitment of Rs.21.60 crore, thus,

taking the cumulative number of watershed projects to

77 (covering 80,000 ha). During the year, 13 projects

graduated to FIP taking the total to 15.

NABARD continued to support various development and

innovative programmes/ initiatives related to farm and

non-farm sectors, financial inclusion, Micro-Finance

Institutions (MFI), Self-Help Groups (SHG), etc., in

addition to the Bank’s on-going activities, viz.,

watershed development, village development, farmers’

club programme, etc. This Chapter discusses the various

initiatives and programmes of the Bank, efforts made

towards capacity building in the client institutions,

research and development activities funded during the

year. An account of the various developmental

programmes of GoI and State Governments are given.

Farm Sector

DRIP Irrigation in Strawberry Garden.

Ch-Eng-2.p65 7/15/2009, 10:47 AM29

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A sum of Rs.3.61 crore was disbursed during the year

and the cumulative disbursement stood at

Rs.5.62 crore as on 31 March 2009.

B. Village Development Programme

2.5 Introduced in 2007, the Village Development

Programme (VDP) envisages developing one village in

each DDM district and five villages in each of the PPID

blocks. A Village Development Committee comprising

mainly of progressive villagers will take care of plan

preparation, implementation, monitoring, etc. As on 31

March 2009, the programme is being implemented in

916 villages spread over 421 districts across 25 States.

C. Integrated Development of

Backward Blocks

2.6 The Pilot Project for Integrated Development

(PPID) was launched in 2003 with the objective of

bringing about integrated development of backward

blocks through credit and convergence of development

programmes of various agencies. The programme is

implemented primarily by RO through DDM.

2.7 The project was expanded over the years to cover

139 blocks across 16 States. Based on the feed back

received from RO about the identical nature of

interventions under PPID and VDP, it was decided that

the duration of PPID would be restricted to three years

only, except wherever it was felt necessary to merge

them with VDP. Following this, PPID has been closed

down in 29 blocks where it had completed three years

and merged with VDP in 70 blocks. As on 31 March

2009, PPID was being implemented in 40 blocks across

6 states.

D. Capacity Building for Adoption of

Technology

2.8 NABARD has been implementing the ‘Scheme

for Capacity Building for Adoption of Technology’

(CAT) through exposure visits and training to facilitate

farmers to adopt new/innovative methods of farming.

Farmers, preferably marginal and small, are taken on

exposure-cum-training visits to innovative projects.

Financial support is extended under the Farmers’

Technology Transfer Fund (FTTF). During 2008-09,

116 exposure visits involving 3,048 farmers were

arranged in collaboration with select research

institutes, KVK, and Agriculture Universities on bio-

globules, vermi-culture, bio-manures, organic farming,

poly-house technology, medicinal and aromatic plant

cultivation, etc.

E. Tribal Development

2.9 The Tribal Development Fund (TDF) was

created by NABARD in 2004 with a corpus of Rs.50

crore to support integrated tribal development projects

with wadi as the core component. As on 31 March

2009, balance outstanding in the Fund was Rs.574.98

crore after marking out disbursement (Rs.28.05 crore)

during 2008-09. Assistance under the Fund is

available for integrated tribal development programme

and the projects are expected to ensure sustainable

livelihood opportunities for tribal families, increased

agriculture/horticulture productivity and ecological

sustainability. During the year, policy changes were

effected wherein assistance was extended to socio-

economic weaker non-tribal families in the project

area as well, subject to their constituting maximum of

10 per cent of total participating families. Sustainable

livelihood options other than wadi, routing the

assistance directly to the people’s organisations (being

piloted) and stipulating an entry point activity like

shramadan, were also attempted. During 2008-09,

grant of Rs.202.87 crore was sanctioned for 74

projects benefiting 61,924 tribal families in Andhra

Pradesh, Assam, Bihar, Chhattisgarh, Gujarat,

Jharkhand, Karnataka, Madhya Pradesh,

Maharashtra, Nagaland, Orissa, Rajasthan, Uttar

Pradesh and West Bengal. The cumulative sanction

was Rs.307.39 crore covering 93,217 families in 19

states and one UT.

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F. Farm Innovation and Promotion

Fund

2.10 The Farm Innovation and Promotion Fund (FIPF)

with a corpus of Rs.5 crore was set up in NABARD in

2005 to promote innovative and feasible concepts/

projects in agriculture and allied activities, development

of marketable prototypes, technology patenting,

extension support, marketing, etc. During 2008-09, 14

proposals were sanctioned in 6 States involving financial

assistance of Rs.180.97 lakh (Rs.99.33 lakh was grant

and Rs.81.64 lakh as soft loan) covering areas like

village farm development, rainfed rabi cropping, efficent

management of carbon and plant nutrients under dry

land agriculture, etc. Cumulatively, as on 31 March

2009, 61 projects were sanctioned in 18 States

involving financial support of Rs.462.16 lakh, comprising

grant and soft loan assistance of Rs.323.79 lakh and

Rs.138.37 lakh, respectively.

2.11 Of the 61 projects sanctioned, 16 projects have

been successfully completed. Disbursement for the

completed projects amounted to Rs.39.87 lakh

(Rs.34.68 lakh as grant and Rs.5.19 lakh as soft loan).

Of the completed projects, four were in Maharashtra,

three each in Jharkhand and Uttarakhand, two in

Chhattisgarh and one each in Delhi, Gujarat, Meghalaya

and West Bengal.

G. Farmers’ Technology Transfer

Fund

2.12 The ‘Farmers’ Technology Transfer Fund’ (FTTF)

was set up and operationalised by NABARD with a

corpus of Rs.25 crore from 1 April 2008 with the

objective of promoting transfer of technology for

enhancing production and productivity in agriculture and

farm related activities. Operational guidelines on FTTF

were issued to major commercial banks, co-operative

banks and RRB in June 2008. These interventions are

expected to result in perceptible impact at the ground

level. A Project Advisory Committee has been

constituted at HO level to recommend the proposals

received under FTTF.

2.13 During 2008-09, 12 proposals were sanctioned

in 6 states involving financial assistance of Rs.233.31

lakh (Rs.161.31 lakh as grant and Rs.72 lakh as soft

loan) for implementation of technology transfer and

capacity building programmes in areas like value

chain of Vettiver Oil Production; turmeric processing

involving National Research Development Corporation

(NRDC) and Mizorganic as a Special Purpose Vehicle

(SPV) by Producer Group Company of farmers in

Mizoram;establishment of Outreach Centre by Central

Agricultural Research Institute (CARI) at Diglipur for

North & Middle Andaman District, etc. In addition, 22

Farmers’ Training and Rural Development Centres were

sanctioned assistance of Rs.80.20 lakh during the year.

2.14 Further, to ensure specific strategies for Bihar,

Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan,

Orissa and Uttar Pradesh, the respective ROs were

advised to identify appropriate projects for funding

support under FTTF highlighting, (i) identification of one

compact block in each state, (ii) synergy with PPID/VDP

programmes, (iii) centre staging of Farmers’ Clubs under

the programme and (iv) prioritisation of technological

interventions to 3 or 4 areas like soil and water

conservation, improved productivity measures, organic

farming, System of Rice Intensification (SRI) technique,

energy solar technology, production of hybrid seed

varieties, etc.

Tomato cultivation.

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H. Farmers’ Club Program

2.15 The Farmers’ Club (FC) programme aims to

organise farmers around a common agenda to facilitate

access to credit, technology, markets and extension

services. During the year, NABARD reviewed its policy

for supporting FCs through various agencies. It was

decided to extend uniform support of Rs.10,000 for

three years to commercial banks, RRBs, co-operative

banks and grassroot level organisations (NGOs, PRIs,

KVKs, Post Offices, etc.) for promoting and nurturing of

FCs. The promoting agency will take steps to make the

clubs self-sustaining over a period of 3-5 years, when

funding support by institutional agencies will be

withdrawn. The sponsoring banks/agencies have to

provide a consent letter for maintaining the clubs beyond

the agreed period of 3 years of NABARD support. The

requirements of clubs have been segregated into ‘routine’

and ‘non-routine’ activities, and the latter shall be

supported on merit. The revised policy emphasises on

formation of federations of FCs/producers’ groups/

companies at district level with a view to promoting

increased access to credit, productivity and income

through collective efforts.

2.16 During the year 9,989 clubs were launched,

taking the total number of clubs to 38,215 covering

87,724 villages in 581 districts as on 31 March 2009.

Agency-wise, RRBs promoted maximum number of

clubs (16,925), followed by commercial banks (10,058),

co-operative banks (7,230) and other agencies (4,002).

The region-wise distribution of clubs indicates, that the

southern region has the major share (28%), followed by

central (27%) eastern (17%), western (14%) and the

northern (11%) regions while NER accounts for only 3

per cent.

I. Commodity Futures Trading

2.17 In order to enable the farming community to reap

the benefits of commodity futures trading, NABARD in

collaboration with the Forward Market Commission

(FMC) has undertaken the responsibility of organising

exposure workshops for skill upgradation of farmers to

ensure their participation in the market. During 2008-09,

the Bank along with FMC organised eight such

programmes.

J. Government Projects

2.18 NABARD also continued to discharge the

functions of implementing/project coordinating agency

for various area specific projects of GoI.

i. Kutch Drought Proofing Project

2.19 NABARD has been implementing the Kutch

Drought Proofing Project since 2005 through community

based organisations and NGOs. Till date, of the ten on-

going projects, implementation in the case of six projects

is complete. During 2008-09, Rs.4.43 lakh was

disbursed. As on 31 March 2009, NABARD received

Rs.3.54 crore from GoI of which Rs.2.90 crore was

disbursed.

ii. Cattle Development Projects

2.20 The Projects are implemented by BAIF, Pune,

in 13 districts of Bihar and 17 districts of Uttar

Pradesh since 2004-05. The duration of both projects,

which expired in February 2009, has been extended

upto 30 June 2010 by GoI without any additional

financial assistance. NABARD is the co-ordinating

agency and facilitator for channelising funds, ensuring

its utilisation, project supervision and monitoring. Out

of Rs.13.61 crore allocated to each, an amount of

Rs.10.89 crore each has been released by GoI under

the Projects as at end-March 2009. During 2008-09,

Rs.161.47 lakh and Rs.142.33 lakh were released for

Uttar Pradesh and Bihar taking the cumulative

disbursement to Rs.887.97 lakh and Rs.845.23 lakh,

respectively, as on 31 March 2009.

iii. Special Project on Livelihood Based

Development

2.21 Sanctioned under SGSY by GoI in Sultanpur

and Rae Bareli districts of Uttar Pradesh the project is

under implementation since 2006-07. The project aims

to cover 11,500 BPL families in each district at an

approved cost of Rs.14.97 crore for Sultanpur and

Rs.14.90 crore for Rae Bareli. NABARD is the project

holder on behalf of MoRD while BAIF and Dr. Reddy

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33

Foundation (DRF) are implementing it. As on

31 March 2009, of the grant of Rs.5.16 crore and

Rs.5.13 crore received from GoI for Sultanpur and Rae

Bareli districts, disbursements of Rs.4.85 crore and

Rs.4.37 crore, respectively, were made.

iv. Dairy and Poultry Venture Capital Fund

2.22 The programme is under implementation since

2005-06. Assistance is extended as interest free loan

upto 50 per cent of the outlay for identified components

under dairy and poultry sectors. NABARD is the nodal

agency for operationalising the scheme and

administering the Fund. The cumulative amount

received from GoI was Rs.112.99 crore. During 2008-09,

an amount of Rs.43.59 crore was sanctioned for 4,840

units (Rs.39.71 crore for 4,789 dairy and Rs.3.88 crore

for 51 poultry). The cumulative sanctions stood at

Rs.109.32 crore for 10,848 units (Rs.99.76 crore for

10,656 dairy and Rs.9.56 crore for 192 poultry) as on

31 March 2009.

L. Externally Aided Projects

2.23 NABARD received Rs.37.25 crore and disbursed

an amount of Rs.32.01 crore as grant assistance during

the year under the KfW supported externally aided

projects, which are in various stages of implementation

(Table 2.1)

a. On-going Projects

2.24 The KFW-NABARD-V-Adivasi Development

Programme in Gujarat with an outlay of

Table 2.1: Support Extended under KfW-NABARD Externally Aided Projects

(Rs. lakh)

Sr. Name of the Project Effective Closing External Disbursements made Amount received by

No. From Date Assistance by NABARD NABARD

(• million) During Cumm. upto During Cumm. upto

2008-09 31.03.2009 2008-09 31.03.2009

1. KfW-NABARD

i. V-Adivasi Development 23 Dec 1994 30 Dec 2010 13.29 287.67 5,797.64 509.08 6,065.27

Programme in Gujarat (+ 1.5 Suppl. Grant)

ii. IX-Adivasi Development 2 June 2000 30 Dec 2010 14.32 623.98 4,664.58 647.96 4,669.08

Programme in Maharashtra

iii. Indo-German Watershed 15 July 2002 31 Dec 2011 8.69 365.16 667.13 342.22 691.52

Development Programme in

Andhra Pradesh

iv. Indo-German Watershed 27 Aug 2005 30 Dec 2009 19.94 1,438.03 2,468.62 1,777.16 2,645.25

Development Programme in

Maharashtra (Phase III)

v. Indo-German Watershed 7 Feb 2006 31 Dec 2012 9.20 123.18 180.48 100.80 230.34

Development Programme

in Gujarat

vi. Indo-German Watershed 7 Dec 2006 30 Dec 2014 11.00 73.92 123.43 70.40 160.62

Development Programme

in Rajasthan

vii. Adivasi Development 28 March 2006 31 Dec 2014 7.00 - - - -

Programme in

Gujarat (Phase II)

viii. KfW-Sewa Bank Project 28 June 2002 31 Dec 2009 4.09 292.95 392.95 296.40 396.92

2. NABARD- X- Credit Line

i. Grant 20 Oct 2006 31 Dec 2008 1.20 - - - -

ii. Loans 20 Oct 2006 31 Dec 2008 40.00 - 22,165.88 - 22,165.88

Ch-Eng-2.p65 7/15/2009, 10:47 AM33

34

Rs.62.89 crore has been under implementation since

1994-95 in Valsad and Dangs districts through BAIF

Development Research Foundation, Pune. The in-built

credit programme is being implemented through Gram

Vikas Mandals (GVM) since 1998-99. As on

31 March 2009, a total of 488 SHGs formed in 130

project villages achieved cumulative savings and

disbursements of Rs.39.51 lakh and Rs.55.57 lakh,

respectively. Eleven tribal co-operatives were also

registered to facilitate self-sufficiency in processing and

programme management. These co-operatives collected

288 tonnes of raw cashew (205 tonnes were processed)

and processed 4.30 tonnes of karvanda and 24.90

tonnes of mango for making pickles through GVMs. As

on 31 March 2009, the loan disbursed and overall

recovery was to the tune of Rs.5.13 crore and Rs.4.24

crore, respectivey. KfW has also sanctioned Phase II

(2006-2014) of the programme involving grant

assistance of • 7 million (approx. Rs.42.47 crore) to

cover 4,700 families from these districts, of which

2,159 families were identified and 864 ha. of wadi

established as at end-September 2008. A total of 102

wadi tukadis (SHGs formed by group of 8-10 wadi

owners) have been formed and savings worth

Rs.55,088 mobilised.

2.25 Under the KfW-NABARD-IX-Adivasi Development

Programme in Maharashtra, the successful wadi model of

Gujarat is being replicated in Nasik and Thane districts

through Maharashtra Institute of Technology Transfer for

Rural Areas (MITTRA), Nasik. The programme with a

project period of 10 years (2000-2010) aims to support

13,000 tribal families by developing wadis on their

marginally productive lands. The total families covered

by the project are 13,848 from 258 villages and wadi

area of 4,977.12 ha. (as against the target of 4,048.58

ha.) About 1,530 tribal participant families have taken

up vegetable cultivation on 98.8 ha. of land. As at end-

March 2009, 872 wadi tukadis were formed and all had

bank accounts with total savings worth Rs.50.15 lakh

and internal lending of Rs.22.97 lakh. As on

31 March 2009, an area of 278.54 ha. was brought

under block plantation and 4,917 ha. under soil

conservation work. Under the water resources

development activities, construction of 2,230 temporary

check dams, 31 permanent dams, 3,149 jalkunds,

development of 1,049 spring sites and deepening/

desilting of 99 old wells were completed as at end-March

2009.

2.26 The Indo-German Watershed Development

Programme (IGWDP) in Maharashtra, introduced in

early nineties is an integrated programme for

regeneration of natural resources, implemented by

Village Watershed Committees (VWCs) in association

with NGOs. The programme has successfully

completed two phases ( Phase I : 1990 - 2000 and

Phase II: 2001 – 2007) and has covered 95

watersheds aggregating 1.13 lakh ha. spread across

25 districts. Under Phase III of the programme, which

commenced in January 2005, with an additional

commitment of • 19.94 million (approx. Rs.110 crore),

109 projects were sanctioned. Of these, 41 projects

are under CBP, 28 under feasibility report/interim

phase (FR/IP), 30 under FIP, 9 projects completed

and 1 project discontinued.

2.27 KfW, Germany committed grant assistance of

• 8.69 million (approx. Rs.48.66 crore) under Indo-

German Watershed Development Programme in Andhra

Pradesh for rehabilitation of watersheds in four districts

(Adilabad, Karimnagar, Medak and Warangal). A

Programme Support Unit (PSU) has been set up in

Andhra Pradesh RO for overseeing implementation of

the project. A total of 38 projects are being implemented

of which, 8 are under FIP, 3 under FR/IP, 27 under

CBP. KfW has approved an additional amount of • 2

million (approx Rs.11 crore) for Complementary

Measures Programme for capacity building of

stakeholders.

2.28 The Indo-German Watershed Development

Programme in Gujarat envisages rehabilitation of

watersheds in four districts (Dahod, Panchmahals,

Sabarkantha and Vadodara) with a commitment of

• 9.2 million (approx. Rs.51.52 crore) for the purpose. A

total of 35 projects are in various stages of

implementation under the programme. Treatment

measures under CBP are in progress in 21 projects, 4 are

under FR/IP and 10 under pre-CBP. A Programme

Management Unit (PMU), headed by a senior NABARD

Ch-Eng-2.p65 7/15/2009, 10:47 AM34

35

official and assisted by subject matter specialists/

consultants has been set up in Dahod to oversee the

implementation.

2.29 KfW, Germany had committed grant assistance

of • 11 million (approx. Rs.61.60 crore) under the Indo-

German Watershed Development Programme in

Rajasthan for watershed development in five districts

(Banswara, Chittorgarh, Dungarpur, Pratapgarh and

Udaipur). In all, 21 projects are being implemented

under the programme, of which, 13 are under CBP and

8 under pre-CBP. A PMU, headed by a NABARD

official, has been set up in Udaipur. The specialists/

consultants of Dahod PMU assist the Udaipur PMU and

also co-orindate the operational aspects related to

project implementation.

b. Umbrella Programme on Natural

Resource Management

2.30 The Umbrella Programme on Natural Resource

Management (UPNRM) is the new loan-cum-grant

based programme being piloted by NABARD from

2007-08 under Indo-German collaboration. It

envisages a shift from (i) project-based to programme-

based funding and (ii) grant-based to loan-based

funding in the NRM sector. Pending execution of the

project and financial agreement for financial and

technical collaboration, the projects are being

supported by utilising funds currently available under

various Indo-German projects. The bilateral dialogues

were carried forward during the year. While the

implementation agreement on technical co-operation

through GTZ has already been executed, the project

agreement and separate agreement for financial

co-operation are in the final stage of execution.

During the year, four community managed NRM

based livelihood projects were sanctioned in Bihar,

Gujarat, Maharashtra and Tamil Nadu involving

assistance of Rs.521.40 lakh (Rs.485.70 lakh as

loan and Rs.35.70 lakh as grant). Cumulatively,

financial assistance of Rs.557.39 lakh (Rs.516.34 lakh

as loan and Rs.41.05 lakh as grant) were sanctioned

for six projects in Bihar, Gujarat, Maharshtra, Orissa

and Tamil Nadu, as on 31 March 2009, to be

implemented by NGO and Producers’ Companies.

During the year, Rs.259.99 lakh (Rs.250.49 lakh as

loan and Rs.9.50 lakh as grant) was disbursed, taking

the cumulative disbursement to Rs.278.99 lakh

(Rs.265.64 lakh as loan and Rs.13.35 lakh as grant) as

at end-March 2009.

2.31 During the year, loan product development

exercise with technical assistance from GTZ was also

completed wherein various prototypes of loan products

were developed to facilitate marketing of UPNRM to

potential channel partners. In addition, marketing

efforts through workshops, meetings, publishing

marketing flyers and one-to-one contact among NGO,

corporates, State Governments and MFI were taken

up. During the year, NABARD in collaboration with

GTZ-New Delhi conducted sensitisation and training

programme for its staff, bankers and NGO on climate

change and Clean Development Mechanism (CDM).

2.32 NABARD is in the process of establishing a Bio-

Carbon Fund (BCF) in close collaboration with GTZ

for taking up green projects for climate change

mitigation and adaptations. A feasibility study on

setting-up BCF was assigned to Zenith Energy and

First Climate with financial support from GTZ under

UPNRM. The first phase of the study has already

been completed wherein the feasiblity of the BCF has

been established. The study report recommended that

the Fund should cater to Land Use, Land Use

Change and Forestry (LULUCF), agriculture,

agribusiness and rural infrastructure sectors under

CDM as well as voluntary carbon credits market.Organic cultivation of Jowar.

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A. NABARD-SDC Rural Innovation

Fund

2.33 Innovative, risk mitigating experiments in farm,

non-farm and micro-Finance sectors as also projects

with potential to generate employment opportunities in

rural areas are supported through the Rural

Innovation Fund (RIF). During 2008-09, 65 innovative

projects were sanctioned taking the cumulative

number of projects sanctioned to 97, spread across

22 states. An amount of Rs.12.48 crore (including

supplementary assistance to projects sanctioned

earlier) was sanctioned during the year, taking the

cumulative sanctions made till end-March 2009 to

Rs.20.67 crore (up from Rs.8.19 crore as on 31

March 2008).

2.34 As on 31 March 2009, 29 projects were in

advanced stages of implementation. The projects

supported involve both product and process

innovations. During the year, two projects were jointly

funded by NABARD and Department of Science and

Technology (DST) for (i) developing IT based advisory

services to farmers in Maharashtra and (ii) utilisation

of dry pine needles for use as cooler pads and for

production of lignin (an import substitute) having

industrial uses. Some of the other projects sanctioned

include setting-up of (a) Skill Training and Placement

Cell for rural migrant labour in south Rajasthan, (b)

ready-to-eat fruit slices unit using Defence Food

Resource Laboratory technology in Kerala and (c)

developing the dying art of Manjusha in Bihar. An

additional commitment of Rs.5 crore was also made

to Aavishkaar Micro Venture Capital Fund during the

year, taking the total commitment to Aavishkaar to

Rs.10 crore. The total commitment under RIF, as on

31 March 2009, stood at Rs.60 crore. Further, as at

end-March 2009, equity investments in 20 projects

amounting to Rs.8 crore from the Fund have already

been committed.

2.35 Under Component III of RIF (Action Research), an

amount of Rs.3.72 lakh was sanctioned to Centurion

School of Rural Enterprise Management (CSREM) for

conducting a diagnostic study on collection and

marketing of minor forest produce by tribals in Andhra

Pradesh. For capacity building of staff engaged in RIF

work, a regional workshop on identification and funding

of innovative projects was organised at Puri. Three

publications - Understanding Innovations, Outcome-

based Monitoring and Brochure on RIF (bilingual) were

also brought out.

2.36 A Mid-Term Review Team headed by

Dr. T. Haque was constituted to review the

performance of RIF and suggest mid-course

corrections, if any. The Steering Committee on RIF

based on the Team’s report decided that (i) for

scrutiny of funding proposals, commercialisation and

innovation shall be viewed as complementary features,

(ii) 80 per cent of RIF budget to be dedicated for

funding innovative projects, and (iii) RO staff and

DDM to be sensitised for scouting large number of

innovative projects.

B. District Rural Industries Project

2.37 The District Rural Industries Project (DRIP),

introduced as a pilot project during 1993-94, had

covered 106 districts by end-March 2007. On its

successful implementation, the project was phased out

in 43 districts during 2006-2009. NABARD will continue

to extend promotional support in these districts for

developmental interventions.

2.38 During 2008-09, GLC flow in 63 districts covered

under various phases reached Rs.1,378.17 crore and

refinance availed was Rs.132.65 crore. A total of

1.05 lakh units were set up generating employment for

1.98 lakh persons. Since inception of the project, GLC

flow aggregated Rs.23,619.12 crore, facilitating

establishment of 19.04 lakh units and generating

employment opportunities for 43.06 lakh persons. The

cumulative refinance availed amounted to Rs.3,647.35

crore, as on 31 March 2009.

Rural Non-Farm Sector

Ch-Eng-2.p65 7/15/2009, 10:47 AM36

37

C. Strengthening of Rural Haats

2.39 The ‘Scheme for Strengthening of Rural

Haats’, introduced in 1999 in DRIP districts, was

extended to all districts, village bazaar boards, SHG,

NGO and to PRI/PACS during the year. The ceiling

under the scheme was increased from Rs.3 lakh to

Rs.5 lakh and coverage extended to include

permanent structure/s as per local requirements.

During 2008-09, grant support of Rs.185.90 lakh was

sanctioned to 46 haats, 10 each in Andhra Pradesh

and Manipur, 5 in Tamil Nadu, 4 in Uttar Pradesh,

3 each in Bihar, Maharashtra and Orissa, 2 in

Nagaland and 1 each in Arunachal Pradesh, Assam,

Meghalaya, Mizoram, Rajasthan and West Bengal.

Cumulative grant assistance of Rs.330.81 lakh has

been sanctioned for strengthening infrastructure in

101 rural haats across 22 States.

D. Cluster Development

2.40 Recognising the potential of cluster approach in

promoting rural industrialisation, raising income levels

and living standards of artisans through various planned

interventions, NABARD has been actively involved in

development of 56 clusters under the National

Programme on Rural Industrialisation (NPRI). Beginning

2005-06, NABARD decided to develop 55 clusters (50

participatory clusters partnering with other agencies and

5 intensively on its own) within a period of 3-5 years.

Under the partnership mode, grant support of upto

Rs.15 lakh/cluster over 3 years is made available, while

under the intensive mode, grant not exceeding Rs.1

crore/cluster for a maximum of 5 years is provided. The

broad sectors identified for development on priority basis

under the programme are agriculture and allied

activities, food processing, rural SME, handicrafts and

handlooms, etc.

2.41 NABARD extended the cluster approach for

developing agri/rural tourism, especially home-based

rural tourism and agri-tourism in association with State

Tourism Department/Tourism Corporations, private

tourist operators and rural community. As on 31 March

2009, 101 clusters (90 participatory, 6 intensive, 3 rural/

agri tourism, 1 NPRI and 1 rural toursim-cum-

handicrafts) across 81 districts in 25 States have been

approved. During 2008-09, 37 participatory, 1 intensive

and 1 eco-tourism clusters were sanctioned involving

grant of Rs.310.92 lakh.

2.42 In accordance with GoI’s special emphasis on

developing the handloom sector, NABARD decided to

develop 50 handloom weavers’ clusters in partnership

with other developmental agencies. As on

31 March 2009, 59 handloom clusters (22 in Jharkhand;

8 each in Assam and Maharashtra; 4 in West Bengal; 2

each in Karnataka, Orissa, Rajasthan, Uttarakhand and

Uttar Pradesh; and 1 each in Bihar, Chhattisgarh,

Manipur, Meghalaya, Mizoram, Punjab and Tamil

Nadu) were approved.

2.43 With view to ensuring smooth implementation

and monitoring of the cluster development initiative,

capacity building programmes were organised through

Entrepreneurship Development Institute of India, IIBM,

BIRD and RTC-Mangalore for imparting training on

various aspects of cluster development, viz., conducting

diagnostic studies, preparing action plan and monitoring

methodology. The participants were officials from banks,

government departments, NGO/VA and NABARD.

During 2008-09, 8 on-location cluster workshops wereRural Mart supported by NABARD.

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conducted, taking the total number of such programmes

to 17.

E. Rural Entrepreneurship Development

and Skill Development Programme

2.44 NABARD, since early nineties, has been

supporting both Rural Entrepreneurship Development

Programme (REDP) and Skill Development Programme

(SDP) as a proven tool for generating self-employment

opportunities in rural areas. During the year 2,083

REDP/SDP involving a total amount of Rs.1,303.60 lakh

were sanctioned, benefiting 50,264 rural youth.

Cumulatively 11,905 REDP/SDP involving grant support

of Rs.6,039.54 lakh covering 3 lakh persons were

supported as on 31 March 2009. Besides, an amount of

Rs.88.03 lakh was sanctioned to RUDSETI for capital

expenditure.

F. Women Empowerment Programme

2.45 The scheme for supporting Women Development

Cells (WDC) in RRB and co-operative banks, in

operation since 1995-96, was modified and made

performance linked with effect from 1 April 2007. During

2008-09, 33 WDC were set up in 19 RRB, 12 DCCB

and 2 SCARDB. As on 31 March 2009, 102 WDC in 56

RRB, 43 DCCB and 3 SCARDB were sanctioned under

the modified scheme.

2.46 Under schemes for Marketing of Non-Farm

Products of Rural Women (MAHIMA) and Assistance to

Rural Women in Non-Farm Development (ARWIND),

grant support of Rs.6.02 lakh and Rs.6.82 lakh,

respectively, was released till 31 March 2009.

G. Marketing / Other Initiatives

2.47 During 2008-09, 213 marketing events/

exhibitions were supported with grant assistance of

Rs.111.06 lakh. The Bank also co-sponsored SARAS

Mahalaxmi Fair-2008 at Mumbai wherein 95 artisans

from 25 States participated in the 12 day-long

exhibition. These events helped the artisans to realise

sales of over Rs.11 crore.

2.48 The scheme for setting-up of rural marts was

piloted by NABARD in 2005 and extended to all States in

2007, to enable rural artisans/craftmen realise optimum

prices and to establish marketing linkages. During 2008-

09, 73 rural marts in 12 States were sanctioned with

grant assistance of Rs.72.99 lakh. Cumulative grant

support of Rs.198.61 lakh has been provided to 202 rural

marts across 17 States.

2.49 The provision of ‘Product Gallery’ in Post Offices

for displaying SHG products, initially introduced in

Meghalaya, was extended to all States. During the year,

two such units were sanctioned in Tiruvarur and

Sivaganga districts of Tamil Nadu.

H. Swarojgar Credit Card Scheme

2.50 The Swarojgar Credit Card (SCC) Scheme was

introduced in 2003 for facilitating hassle-free availability of

credit for meeting investment and working capital

requirements of small/micro-entreprenerus. During the year,

1.50 lakh cards with credit limit of Rs.627.98 crore were

issued. As on 31 March 2009, 9.84 lakh SCC involving an

aggregate credit limit of Rs.4,007.33 crore were issued by

various banks.

I. Training and Sensitisation

Programme

2.51 NABARD continued to provide financial support

to institutions like BIRD - Lucknow, RTCs at Mangalore

and Bolpur, NIRB-Bangalore, MDMI-Shillong and IIBM-

Guwahati for imparting training to participants in

various subjects in rural credit. During the year,

NABARD released Rs.19.46 lakh towards its share

(15%) of recurring expenditure of IIBM, Guwahati. The

Bank also released Rs.5.82 lakh to NIRB, Bangalore for

conducting 25 programmes and Rs.3.40 crore (including

grant of Rs.1.24 crore) to BIRD, Lucknow for supporting

activities of the Centre for Micro-Finance Research.

Further, 45 training programmes covering 1,050 officers

of client banks, involving expenditure of Rs.118.37 lakh,

were conducted during the year.

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2.52 The Committee on Financial Inclusion, headed

by Dr. C. Rangarajan, was set up by GoI to look into

the issues involved and suggest measures for bringing

the excluded population into the ambit of the financial

system. Measures suggested by the Committee are

expected to provide access to comprehensive financial

services to at least 50 per cent (55.8 million) of the

excluded rural households by 2012 and the remaining by

2015. The Committee broadly defines financial inclusion

as the process of ensuring access to financial services

and timely/adequate credit, wherever needed at an

affordable cost to the weaker sections and low income

groups.

2.53 Based on the Committee’s recommendations,

GoI entrusted NABARD with setting-up of two funds,

viz., Financial Inclusion Fund (FIF) and Financial

Inclusion Technology Fund (FITF). The FIF aims to

support developmental and promotional activities to

secure greater financial inclusion particularly among

weaker sections / low income groups and in backward

regions/hitherto unbanked areas. The FITF will focus on

enhancing investment in Information and

Communication Technology (ICT) aimed at promoting

financial inclusion, stimulate transfer of research and

technology, increase technology absorption capacity of

financial service providers/users and encourage an

environment of innovation and co-operation among

stakeholders. Both Funds have been set up with corpus

of Rs.500 crore each (Table 2.2). During the year, four

and five projects were sanctioned under FIF and FITF,

respectively (Box 2.1).

Table 2.2: Funding Sources for FIF and FITF

(As on 31 March 2009)

(Rs. crore)

Particulars Contribution Initial Corpus

(%) Received

FIF FITF FIF FITF

GoI 40 40 10 10

RBI 40 40 -* -*

NABARD 20 20 5 5

Total 100 100 15 15

*: Matching contribution of 40% to be received with disbursements.

Projects under FIF

• Trainers’ training programme on financial literacy in

Kolkata.

• Pilot project to establish farmers’ service, village

knowledge, mobile credit counselling centres, promote

financial literacy and farmer education through mass

media in South Malabar district of Kerala through South

Malabar Gramin Bank.

• Pilot project for capacity building of 25 FC of West

Tripura, South Tripura and North Tripura districts to

function as business facilitators, generating new accounts

and business for Tripura Gramin Bank.

• R&D project for ICT solution in 15 select RRB with

support from World Bank and Technology provider.

Projects under FITF

• Smart card based pilot project in Tirunelveli district of

Tamil Nadu, covering 500 SHG (6,000 customers) to

help Pandyan Grama Bank and NGO in registering,

lending and micro-financing SHG.

• Project on smart cards in Medak, Mahbubnagar and

Warangal districts of Andhra Pradesh to facilitate

payments to the beneficiaries of NREGS and Social

Security Pensioners, opening of ‘No Frill Accounts’ of

other rural households by Andhra Pradesh Grameen

Vikas Bank (APGVB). Services are being extended

through Business Correspondent Model with the help of a

biometric card and mobile device. This will cover 13 lakh

beneficiaries in 1,115 villages.

• Pilot project to establish Financial Inclusion Hubs aiming

a ‘e-branch’ facility offering multiple financial products &

services in 10 PACS in Andhra Pradesh.

• Pilot for installing four ATMs, one in each district of

Tripura by the Tripura Gramin Bank for technology

upgradation to reach out to the excluded population.

• Impact study of 100% achievement under Financial

Inclusion in Kanyakumari district.

Box 2.1

Financial Inclusion: Projects sanctioned during 2008-09

Financial Inclusion

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40

2.54 Two Advisory Boards, one for each Fund, was

constituted by GoI for guiding and tendering policy

advice on various aspects. A Sub-Committee of

Advisory Board for FITF has also been constituted to

look into the ICT based interventions for extending the

financial services. Each of the Advisory Boards met

thrice during the year and based on their directives,

following actions were initiated.

• State level seminars and district level workshops for

sensitising the various stakeholders were conducted

by NABARD and other organisations.

• NABARD designed and conducted a five-day

training module for capacity building of its field level

officers.

• ‘A Handbook on Financial Inclusion’ was prepared

and distributed to various stakeholders.

• RBI appointed a Special Working Group on

deepening of financial inclusion in Goa under the

Chairmanship of OIC, NABARD RO, Goa. The

report has since been submitted.

micro-Finance*

2.55 SHG-Bank Linkage Programme, since its pilot in

1992, has emerged as the leading micro-Finance (mF)

programme in the country. It is recognised as an

effective tool for extending access to formal financial

services to the unbanked rural poor. Encouraged by the

success, the programme has been adopted by State

Governments as a major poverty alleviation strategy. It

has also led to the emergence of Micro-Finance

Institutions (MFI) as a bridge between the banking sector

and the rural poor.

2.56 During the year 10,81,474 SHG were credit

linked with banks and bank loan of Rs.11,131.74 crore

(including repeat loans) disbursed taking the number of

SHG credit linked to Rs.47,07,415 SHG as on

31 March 2009. As on 31 March 2008, 50.09 lakh SHG

maintained savings bank accounts and had savings

worth Rs.3,785.39 crore. The programme has covered

more than 7 crore poor households, making it the largest

mF programme in the world. The overall progress of the

mF programme is given in Table 2.3.

Table 2.3: Progress of the Micro-Finance Programme

(As on 31 March)

(Rs. crore)

Particulars Self-Help Groups* Micro-Finance Institutions#

2007 2008 2007 2008

No. Amount No. Amount No. Amount No. Amount

Loans disbursed@ 11,05,749 6,570.39 12,27,770 8,849.26 334 1,151.56 518 1,970.15

(1,88,962) (1,411.02) (2,46,649) (1,857.74)

Loans outstanding 28,94,505 12,366.49 36,25,941 16,999.90 550 1,584.48 1,109 2,748.84

(6,87,312) (3,273.04) (9,16,978) (4,816.87)

Savings accounts 41,60,584 3,512.71 50,09,794 3,785.39 - - - -

with banks (9,56,317) (757.50) (12,03,070) (809.51)

* : Figures in parentheses indicate the share of SHG covered under SGSY. @ : During the year

# : Actual number of MFI provided with bank loans would be lower as several MFI have availed loans from more than one bank.

Arecanut leaf plate making.

* Due to change in data and MIS, the reporting is for the position as on 31 March 2008.

Ch-Eng-2.p65 7/15/2009, 10:47 AM40

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Table 2.4: Grant Assistance Extended to various Partners

in SHG-Bank Linkage Programme

(Rs. lakh)

Agency Sanctions during the Year Cumulative Sanctions

No. Amount No. of SHG No. Amount No. of SHG

Co-operative Banks 12 136.92 9,465 95 563.13 53,875

RRB 2 20.70 800 113 389.30 44,590

NGO 311 1,564.29 46,504 2,318 6,405.71 2,91,780

Farmers’ Clubs - - - - 61.06 14,544

IRV 6 46.62 2,590 66 529.76 31,233

Total 331 1,768.53 59,359 2,592 7,887.96 4,36,022

A. Support to Partner Agencies

2.57 NABARD continued to extend grant to support

NGO, RRB, DCCB, FC and Individual Rural Volunteers

(IRV) for promoting and nurturing quality SHGs. Efforts

continued towards roping in new Self-Help Promoting

Institutions (SHPIs) and supporting the existing ones.

During 2008-09, grant assistance of Rs.1,768.53 lakh

was sanctioned to various agencies for promoting

59,359 groups, taking the cumulative assistance

sanctioned to Rs.7,887.90 lakh for 4.36 lakh groups

(Table 2.4/Chart 2.1). As on 31 March 2009, 2.06 lakh

SHG have been credit linked to banks and Rs.3,275.62

lakh released.

B. Capacity Building of Partner Agencies

2.58 Capacity building of stakeholders is crucial for up

scaling the SHG movement and maintaining quality and

sustainability of SHGs. With this in view, an expenditure

of Rs.18.73 crore was incurred during 2008-09 on

various promotional activities as against Rs.13.32 crore

in the previous year. Further, three zonal workshops for

the Bank’s staff were conducted at Hyderabad,

Lucknow and Patna.

2.59 During the year, NABARD supported conduct

of:

• 3,122 awareness creation and capacity building

programmes for SHG members in association with

identified resource NGOs, covering 1,41,984 SHG

members to inculcate skills for managing thrift and

credit;

• 324 awareness-cum-refresher programmes for CEOs

and field staff of NGOs, covering 18,594

participants;

• 591 training programmes for officers of commercial

banks, co-operative banks and RRBs covering

24,018 participants;

• Four Trainers Training programmes covering 90

participants;

• 25 exposure visits to banks and institutions

pioneering in MF initiatives for 630 bank/NGO

officials;

• 193 field visits to nearby SHGs for 4,507 Block

Level Bankers’ Committee Members;

• 54 programme for the elected Members of PRIs

covering 2,014 participants to create awareness

among them about the mF initiatives;

• a training-cum-exposure visit for new DDMs/ DDOs

and an exposure programme on mF and SHGs for

senior IAS officers through Lal Bahadur Shastri

National Academy of Administration, Mussoorie;

• 45 sensitisation programmes for government

officials covering 1,610 participants; and

• 839 other programmes covering 41,542

participants.

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C. Documentation and Dissemination

2.60 During the year, 175 meets/seminars on mF were

organised with financial support of Rs.21.29 lakh for

dissemination of the programme. The SHG programme

has had far-reaching impact on the lives of its poor

clientele. In order to assess in detail the socio-economic-

political impact as well as the challenges, issues and

bottlenecks facing the programme in enhancing credit

flow to the poor, six state specific study proposals on

‘Quality and Sustainability of SHGs’ were sanctioned

during the year to independent agencies in Karnataka,

Kerala, Maharashtra, Rajasthan, Tamil Nadu, and West

Bengal.

D. Scaling-up of Micro-Finance

Programme: Special Initiatives

a. Rajiv Gandhi Mahila Vikas

Pariyojana in Uttar Pradesh

2.61 The Rajiv Gandhi Mahila Vikas Pariyojana

(RGMVP) is a special initiative of the Rajiv Gandhi

Charitable Trust (RGCT) for promotion, credit linkage

and formation of SHG federations in select districts of

Uttar Pradesh. The project aims to replicate the SHG

institutional model implemented under UNDP-South

Asian Poverty Alleviation Programme (SAPAP) in

Andhra Pradesh in collaboration with Society for

Elimination of Rural Poverty (SERP), Government of

Andhra Pradesh.

2.62 The project envisages promoting and credit

linking 22,000 SHGs, 1,100 Cluster Level

Associations (CLA) and 44 Block Level Associations

(BLA) in collaboration with participating banks and

implementing NGO. With an implementation period

of eight years (2007-2014), the project will cover 15

and 29 blocks in Phase I and II, respectively, in

Sultanpur, Raebareli, Barabanki, Pratapgarh,

Lucknow, Unnao, Fatehpur, Jhansi, Lalitpur,

Bahraich, Shravasti and Banda districts.

2.63 The project is being designed by NABARD and

RGCT with technical assistance from SERP. The

strategy involves using Professional and Trained

Resource Persons (PRP) from Andhra Pradesh to

provide continuous handholding, training, extending

support to SHGs and their federations at cluster and

block levels. Demonstration effect of the external

Community Resource Persons (CRP) on the rural

population of Uttar Pradesh is an important part of

the project. External CRP are SHG members from

Andhra Pradesh, who have come out of poverty and

are willing to share their experiences with rural women

in Uttar Pradesh and mobilise them into SHG. Till

date 7,808 SHGs were promoted under RGMVP in

Sultanpur, Raebareli and Barabanki districts, of which

3,972 SHGs were credit linked as at end-March

2009. In addition, 273 village level and 14 block

level federations were formed. Phase II of the project

was launched on 1 January 2009 and 8,467 SHGs

were promoted, of which 3,378 SHGs were credit

linked.

b. micro-Finance Vision 2011

2.64 During 2008-09, an amount of Rs.39.15 lakh

was sanctioned by NABARD for implementing the

project ‘micro-Finance Vision 2011’ by Government of

Arunachal Pradesh. Further, an amount of

Rs.33.66 lakh was sanctioned to the Essomi

Foundation Trust for setting-up a Resource Centre at

Itanagar for providing policy, operational inputs,

capacity building support and marketing linkages

among the groups.

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c. State Support Project on SHG

2.65 The ‘State Support Project on SHGs’ designed by

the Government of Tripura and supported by NABARD

was launched in December 2008. The project aims to

credit link 11,500 existing SHG, forming and credit

linking 35,000 new SHG and promoting livelihood

activities among its 3 lakh members upto 31 March

2012. NABARD is to provide technical and capacity

building support, besides helping in designing systems

and procedures for smooth implementation of the

project.

E. Micro-Enterprise Promotion by SHGs

a. Support to activity based groups

2.66 During 2008-09, NABARD introduced a

product/scheme for supporting small-scale Activity-

Based Groups (ABG) in which capacity building,

production/investment credit and market related

support would be extended. The scheme will focus on

forming and nurturing groups engaged in similar

economic activities such as farmers, handloom

weavers, craftsmen, fishermen, etc., to improve

efficiency of their production and realise better terms

from the market through economies of aggregation

and scale. The scheme draws upon NABARD’s

existing modes of support and has both grant and

loan components. While grant support would cover

expenditure on group formation and training,

extension services, establishing market linkages, etc.,

bank loans would cover investment activities and

working capital needs of the groups. Banks shall be

eligible to draw refinance for the loans provided to

ABG on the same terms as applicable for SHG

financing. In select cases, NABARD may also provide

loans directly to registered groups or through the

agencies promoting groups to establish few initial

projects where none exist.

b. Micro-Enterprise Development

Programme

2.67 NABARD had launched the Micro-Enterprise

Development Programme (MEDP) during 2005-06 for

skill upgradation, development of sustainable livelihoods

and venturing into micro-enterprises by matured SHG

members. During the year, 564 MEDP were conducted

covering 14,030 SHG members on location-specific

farm, non-farm and service sector activities, viz., bee-

keeping, soybean cultivation, organic farming,

horticulture, floriculture, tailoring, etc. Cumulatively

1,313 MEDP had been conducted covering 33,205

participants as at end-March 2009.

c. Pilot Project for Promotion of Micro-

Enterprises

2.68 Launched in 2005-06, the pilot project for

promotion of micro-enterprises among members of

matured SHG is based on the 3M approach

(micro-credit, micro-market, micro-planning). It is

being implemented by 14 NGO acting as ‘Micro-

Enterprise Promotion Agency’ (MEPA) in nine

districts, viz., Ajmer (Rajasthan), Chandrapur

(Maharashtra), Kangra (Himachal Pradesh), Madurai

(Tamil Nadu), Mysore (Karnataka), Panchmahals

(Gujarat), North 24 Parganas (West Bengal), Puri

(Orissa) and Raebareli (Uttar Pradesh). Under the

project 11,000 SHG members have been identified to

take up micro-enterprise through credit support.

Cumulatively 6,107 micro-enterprises were established

involving credit support of Rs.535.44 lakh, as on 31

March 2009.Farmers’ Club Meeting in progress.

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F. Support to Micro-Finance

Institutions

2.69 Recognising the role of MFI in supplementing the

efforts of the formal banking network in providing credit

support to unreached clients for inclusive growth,

NABARD supports them through grant and loan based

assistance from the Micro-Finance Development and

Equity Fund (MFDEF).

2.70 The MFDEF, with a corpus of Rs.200 crore

(Rs.160 crore contributed by different partners till

date) and maintained by NABARD, is used for

promoting mF through scaling-up the SHG-bank

linkage programme, extending Revolving Fund

Assistance (RFA) and capital support to MFIs and

supporting various promotional initiatives/activities.

During the year, a sum of Rs.34.66 crore was utilised

from the Fund towards mF related activities. The

Advisory Board of MFDEF, comprising of

representatives from RBI, commercial banks,

professionals with domain knowledge and NABARD,

provides guidance in formulation and refinement of

policy initiatives.

a. Revolving Fund Assistance

2.71 NABARD has been selectively supporting MFI

for on-lending to the unreached poor as also

experimenting with various mF models to innovate

alternative, sustainable and replicable credit delivery

systems. During the year, RFA amounting to Rs.6.35

crore was sanctioned to four agencies taking the

cumulative credit sanctioned to Rs.42.73 crore and

covering 37 agencies.

b. Support for rating of MFIs

2.72 NABARD has been providing grant assistance

to commercial banks and RRB to enable them to

avail the services of acredited rating agencies (CRISIL,

M-CRIL, ICRA, CARE and Planet Finance) for rating

of MFI. Under the scheme, NABARD meets the cost

of rating to the full extent of professional fees, subject

to a maximum of Rs.1 lakh. The assistance is

available for the first rating of MFI with loan

outstanding exceeding Rs.50 lakh but less than Rs.500

lakh. During the year, rating support amounting to

Rs.3.40 lakh was extended to banks in respect of four

agencies.

2.73 During 2008-09, the Bank introduced a new

scheme to provide grant assistance directly to MFI for

availing the services of credit rating agencies for their

rating. The scheme is operational across the country for

one year (Box 2.2).

c. Capital/ Equity Support

2.74 The scheme seeks to enable MFI to leverage

capital/equity for accessing commercial and other

funds from banks for providing financial services at

an affordable cost to the poor, and achieve

sustainability in credit operations over 3 to 5 years.

During 2008-09, capital/equity support amounting to

Rs.11.75 crore was sanctioned to 13 agencies taking

the cumulative support to Rs.21 crore covering 24

agencies as on 31 March 2009. NABARD also

Box 2.2

Rating Support to MFI: Salient Features

• The scheme is operational through out the country for a

period of one year.

• MFI (i) with a minimum loan outstanding of Rs.50 lakh,

(ii) seeking capital/equity support and/or RFA from

MFDEF and (iii) not possessing a current rating/grading

report from any of the approved credit rating agencies,

are eligible for support.

• MFI not eligible for rating under the present scheme if

rated earlier under ‘scheme for financial assistance to

banks for rating of MFI’.

• Grant assistance for rating/grading available only once

for any MFI.

• NABARD will reimburse 100% of the total professional

fees paid by the MFI subject to a ceiling of Rs.3 lakh.

• Any other incidental expenses will not be supported.

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introduced a new scheme for capital support to

start-up MFI with potential to scale-up their activities

but lacking in capital, infrastructural facilities and

managerial skills. Micro-Finance Organisations (MFO)

and MFI-NBFC, identified as ‘start-ups’ on the basis

of area of operation, client outreach, lending model,

borrowing history, etc., are eligible for support under

the scheme (Box 2.3).

d. Support to SHG Federations

2.75 Recognising the emerging role of the SHG

Federations in nurturing of SHG, enhancing the

bargaining powers of group members and livelihood

promotion, NABARD introduced a flexible scheme to

support such federations on a model neutral basis during

2007-08. The broad norms identified for supporting

SHG federations stipulate that the federations should be

need based, member owned/driven, democratically

managed with members at liberty to join/ become

self-managed over three years, etc. Support to the

Federation is extended by way of grant for training,

capacity building, exposure visits of SHG members, etc.,

and also under all existing promotional schemes of

NABARD. During the year, grant of Rs.11.54 lakh was

sanctioned to one Federation taking the cumulative

grant assistance to Rs.22.02 lakh to 3 Federations as at

end-March 2009.

G. Other Developments

2.76 The North-Eastern Council (NEC), under the

Ministry of Development of North Eastern Region

(DONER), Shillong parked a fund of Rs.80 lakh with

NABARD during the year (Rs.60 lakh released upto

31 March 2009). Miscellaneous training interventions

involving government/bank officials, NGO, SHG from

States in the NER and Sikkim shall be facilitated under

the fund. Accordingly, an Advisory Group was

constituted to guide and review the progress under the

Fund. As on 31 March 2009, an amount of Rs.72.35

lakh was utilised from the Fund.

2.77 The National Council of Applied Economic

Research (NCAER) conducted a study on ‘Impact and

Sustainability of SHG-Bank Linkage Programme’ under

NABARD-GTZ Rural Finance Programme to assess the

socio-economic conditions of members and their

households in pre and post SHG scenario. The study

coverd six States, viz., Andhra Pradesh, Assam,

Karnataka, Maharashtra, Orissa and Uttar Pradesh.

The study findings reveal that the SHG-bank linkage

programme has (i) significantly improved access

to financial services of the rural poor,

(ii) positively impacted socio-economic conditions thus

reducing poverty of members and their households, (iii)

empowered women members substantially and

(iv) contributed to increased confidence and positive

behavioral changes in the post-SHG period.

2.78 In addition to the study, other activities

undertaken under the NABARD-GTZ Rural Finance

Programme which ended on 31 December 2008 were :

• Training modules developed and circulated to the

leading mF training institutions to sensitise bank

branch managers and SHG members for monitoring

groups through early warning system so that the

risks in lending can be minimised.

• ‘High Level Policy Conference on micro-Finance in

India’ was conducted with the support of GTZ with

the active participation of mF practitioners from

Box 2.3

Capital Support to Start-Up MFI: Salient Feature

• Financial support as unsecured sub-ordinate debt,

which shall be sub-ordinated to the claims of all other

creditors.

• Quantum of support will be commensurate with the

business plan of the MFO/ MFI-NBFC but not exceeding

Rs.50 lakh.

• Interest rate fixed at 3.5 per cent for MFO and the

prevailing bank rate for MFI-NBFC.

• Repayment in 7 years including moratorium of 2 years.

• No option of pre-payment.

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India and abroad to share their best practices,

experiences in mF.

• A desk study on ‘Comparative Assessment on SHG

portfolio vis-à-vis other portfolio of banks’ was

taken up. Data from various banks were compiled

to analyse the SHG loan portfolio as compared to

other loan portfolio of the banks.

• The study ‘Portfolio Quality Study on NPA of

Banks in Tamil Nadu’ analysed NPA levels of bank

loan to SHG and suggested that measures be taken

to mitigate overdue loans of SHG.

• The study on ‘Transaction cost of banks and MFI

in delivering small loans’ was undertaken to assess

the transaction cost of commercial banks, RRB,

co-operative banks and MFI in purveying mF

through SHG or other types of groups.

2.79 The NABARD-KfW programme titled ‘Financial

Cooperation with India-Capitalization Program SEWA

Bank’ under implementation in Gujarat, aims at

sustainably improving access of poor women to

micro-credit, both in rural and urban areas. KfW has

released a grant assistance of Rs.2.93 crore to SEWA

Bank during 2008-09, taking the cumulative release to

Rs.3.93 crore.

Research and Development Activities

2.80 The Research and Development (R&D) Fund

was set up in 1982-83 in the Bank to extend

financial support to select agencies for promoting

applied research projects/studies, training and skill

upgradation of personnel of client institutions and

dissemination of research findings. The corpus of the

Fund is Rs.50 crore.

A. Utiliszon of the Fund

2.81 During the year, an amount of Rs.876.11 lakh

was utilised from the Fund for supporting activities like

research projects/studies (Rs.81.09 lakh), training/

summer placement (Rs.737.83 lakh), seminars (Rs.48.73

lakh) and other activities (Rs.8.46 lakh). As on 31

March 2009, the cumulative disbursement under R&D

Fund stood at Rs.108.68 crore.

B. Research Projects

2.82 During the year, 12 research projects/studies

were sanctioned involving grant assistance of

Rs.87.01 lakh. Further, 10 projects/studies sanctioned

earlier were completed during the year.

2.83 The study on ‘Corporate Initiatives in Rural

and Agricultural Transformation’ examined some of

the critical areas, viz., education, science/technology,

contract farming, etc., where the corporate sector

could participate. The study recommended that (a) IT

and engineering industries facing acute shortage of

skilled human capital should support educational

institutions in rural areas to augment supply of

trained human capital, (b) corporates in retail, food

processing, light engineering, agri-business may

diversify their activities by forming producer companies

in rural areas which may be suitably incentivised by

the government, (c) co-operative and commercial

(public and private) banks may spend a per cent of

their profit on social development projects, and (d)

Bio-gas Plant.

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the Insurance Regulatory Development Authority

(IRDA) can implement similar scheme for insurance

providers.

2.84 The project, ‘NABARD Resource Centre for

Precision Farming for Poverty Alleviation’ was

implemented in Kendrapara, Orissa by

M. S. Swaminathan Research Foundation, Chennai.

With a view to bringing about sustainable

development, the project had undertaken interventions

related to integrated intensive farming system (IIFS),

backyard kitchen garden, SRI, village knowledge

center, income generating activities for SHG/FC

through participation of all stakeholders (government/

bank officials, NGO, SHG farmers, etc.) and

imparting training on ‘precision farming’. The project

had (a) trained 590 farmers on modern crop

cultivation enabling them to act as resource persons;

(b) conducted a training-cum-interactive meet for 520

participants from various government departments,

banks and research institutes; (c) provided quality

seeds to 372 households for backyard cultivation, (d)

periodic field training on nursery-management,

integrated nutrient and pest management, seed

production and post harvest preservation; (e) credit

linked and engaged 598 members of 41 SHG

functioning in the project site in different income

generating activities; (f) trained farmers (through SHG

participation), bank and government officials in

intensive farming system and precision farming

practices; (g) experimented with SRI in certain pockets

in the project site; and (h) introduced sunflower

cultivation, which resulted in increasing the per acre

yield by 16 per cent.

C. Seminars, Conferences and

Workshops

2.85 During the year, grant assistance of

Rs.77.60 lakh was sanctioned to various universities,

research institutes and other agencies spread across

the country for organising 103 seminars, conferences,

symposia and workshops covering subjects/areas

related to agriculture and rural development including

farm business economics, agri-extension, agri-

marketing, rural infrastructure, commodities futures,

micro-credit, seminar on NREGA, bio-technology,

fisheries, plantation and horticulture, etc. The grant

support extended enabled the organisers of such

programmes to document the proceedings and publish

background papers, thus facilitating wider

dissemination of the recommendations/action points as

also to initiate suitable policy interventions by

concerned agencies.

D. Occasional Papers

2.86 Publication of occasional papers was another

channel to seek increased dissemination of research

findings on policy issues in the realm of rural and

agricultural development. As on 31 March 2009, the

Bank has published 49 occasional papers with a

cumulative disbursement of Rs.13.43 lakh. During the

year, two occasional papers on ‘Hi-Tech Floriculture in

Karnataka’ and ‘Financial Inclusion – An overview’ were

brought out.

E. Training Activities

2.87 Apart from extending grant assistance for various

R&D activities, an amount of Rs.727.35 lakh was

utilised from the Fund during the year for capacity

building of the staff of RFI in the NER.

F. Summer Placement Scheme

2.88 Under the scheme, in implementation since 2005-

06, students are assigned tasks/projects of relevance to

the Bank with a view to generating new product and

ideas that could be introduced. During 2008-09,

assignments/reports on agriculture/rural development,

allied sector, agri-business and social development were

received from 34 students from 14 RO involving

expenditure of Rs.10.48 lakh.

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48

2.89 The Training Establishments (TE) of NABARD-

RTC at Bolpur, Mangalore and BIRD, Lucknow focus

on improving the effectiveness of the RFI through

training and also supplement the efforts of other training

institutions by providing technical and financial support.

During 2008-09, 434 training programmes were

conducted by RTC and BIRD covering 10,949

participants (Table 2.5). The Centre for Micro-Finance

Research (CMR) was formally set up in BIRD on

1 January 2008 to provide focused attention on mF

related issues. Further, CMR-BIRD, Lucknow in

association with Institute for Financial Management &

Research (IFMR)-Chennai, Chandragupta Institute of

Management (CIM)-Patna, Institute of Development (IDS)-

Jaipur, established sub-centres in addition to the one already

established at IIBM, Guwahati. NABARD sanctioned

grant assistance of Rs.3.75 crore out of MFDEF and

released Rs.120.15 lakh during 2008-09 for activities of

CMR and its sub-centres. A total of 11 studies on mF

have been programmed for the main centre and sub-

centres.

A. Programme Diversification

2.90 Keeping in mind the shift in business strategies of

its clients, findings of specific studies conducted and

feedback received from the trainees/institutional clients,

TE constantly endeavour to update their programmes

and design new ones in consultation with the client

banks. During the year, programme/s for nominee

Directors of RRB on fisheries, business opportunities for

RRB in the emerging environment, forex business for RRs

in association with FEDAI were conducted. Further,

induction training programme for the newly recruited

officers of Cauvery Kalpatharu Gramin Bank,

revitalisation of co-operatives: programme for inspecting

officers of co-operative banks, asset-liability, etc., were

also conducted during the year. The seminar on ‘Agri

Produce Enrichment’ at RTC, Mangalore organised by

NABARD in October 2008 was attended by 37 delegates

from the banking sector and 16 papers presented.

2.91 BIRD celebrated its Silver Jubilee on

19 September 2008 and a commemorative postal cover

was released on the occasion. During 2008-09, BIRD

conducted specially designed training programmes for the

newly reconstituted RRB, introduced new programmes on

core banking solutions for Chairmen and General

Managers of RRB, CRAR norms, prevention of frauds/

leakages and winning trust.

2.92 NABARD continued to subsidise the participation

fees of personnel from client institutions. National

Institute of Rural Banking (NIRB), Bangalore was

released Rs.5.82 lakh for conducting 25 training

programmes covering 273 bank officials during the year.

Under the Scheme of Financial Assistance for Training

of Co-operative Bank personnel (SOFTCOB), the Bank

provides technical and financial support to 10 Junior

Level Training Centres (JLTC), 11 Agricultural Co-

operative Staff Training Institutes (ACSTI) and 3

Integrated Training Institutes (ITI) set up by SCARDB

and SCB, respectively, to enable them to improve their

Table 2.5: Personnel Training of RFI

(Number)

Training Programmes Conducted Personnel of RFIs Training

Establishment 2006-07 2007-08 2008-09 2006-07 2007-08 2008-09

BIRD, Lucknow 207 192 257 4,969 4,311 6,616

RTC, Mangalore 86 103 91 1,946 2,399 2,065

RTC, Bolpur 60 73 86 1,207 1,778 2,268

Total 353 368 434 8,122 8,488 10,949

Training of Personnel of RFI

Ch-Eng-2.p65 7/15/2009, 10:47 AM48

49

training system. During 2008-09, Rs.330.74 lakh was

disbursed to JLTC, ACSTI and ITIs out of the Co-

operative Development Fund (CDF) for conducting 303

programmes (6,146 trainees) as against Rs.278.29 lakh

disbursed during 2007-08 for conducting 330

programmes (5,544 trainees).

2.93 The Working Group constituted by NABARD

under the Chairmanship of Shri Amaresh Kumar,

Executive Director on capacity building requirements of

RRB personnel has since submitted its report to the

Department of Economic Affairs, Ministry of Finance,

GoI, and NABARD. Measures are being taken to

implement the recommendation through all TE of

NABARD and training institutes of sponsored banks. In

order to address the medium and long-term training

requirements of the co-operative credit structure (CCS)

after implementation of the revival package, the need for

a national level single Training Certification Centre to

ensure overall quality and efficiency was felt.

Accordingly, under the on-going GTZ-NABARD

technical co-operation, BIRD was identified for setting-

up a ‘National Training Certification Centre for CCS’.

The proposal was approved by the Governing Council,

BIRD and accordingly a Certification Cell with two

officers was set up during the year. The Cell is proposed

to be called as Centre for Professional Excellence in

Co-operatives (C-PEC).

2.94 The initial key activities related to training

certification system to be implemented are:

• Prepare an operational plan for establishing

Training Certification System.

• Collect information and review existing

experiences in the establishment of Training

Certification System through visits and

discussions with national and international

training certification organisations, viz., IGNOU,

AICTE, CERTIF-Indonesia, etc.

• Conduct regional workshops with participation of

major stakeholders (national and state) to

generate ownership and commitment for required

support.

• Determine functions and responsibilities of the

certification unit, internal institutional set up,

staffing, organisational procedures, linkages, etc.,

identify needs/initiate activities for HRD, review

financing/source of funding for the certification unit

and system.

• Carry out an existing inventory/situation analysis on

training institutes/training environment, relevant

framework conditions and training capacities

(institutional/non-institutional) related to the CCS

in select States

• Review quality standards/benchmarks applicable

for different components of the certification

system.

• Carry out training need assessment for secretaries

and members of Boards of PACS, develop basic

competence and skills, initiate design of

standardised basic competency training programme

for new entrants as Secretary at PACS level

Ch-Eng-2.p65 7/15/2009, 10:47 AM49

50

Business OperationsIII

NABARD through its refinance operations and financial

support schemes, including RIDF, has been facilitating

augmented credit flow for production and investment

purposes in the rural and agriculture sectors. The Bank

continued its efforts to boost credit flow in the

northeastern and hilly regions, the hitherto unreached

areas, by providing additional relaxations and

incentives to the banking sector. The Bank introduced

special liquidity support scheme/s, to enable

co-operative banks meet their commitments in the

wake of the Agriculture Debt Waiver and Debt Relief

Scheme.

3.2 Nabcons has established itself as a committed

and professional consultancy service provider by

leveraging on the core competence and multi-

disciplinary expertise of its parent organisation,

NABARD.

3.3 The total financial support by NABARD during

2008-09 stood at Rs.50,577 crore, registering a

growth of 30 per cent over 2007-08 and CAGR

of 23 per cent during the period 2004-2009

(Chart 3.1).

A. Short-Term Refinance

a. State Co-operative Agriculture and

Rural Development Banks

3.4 The scheme of extending short-term (ST)

refinance to State Co-operative Agriculture and Rural

Development Banks (SCARDB) for Seasonal

Agricultural Operations (SAO) was continued during

2008-09 also. During the year, refinance of Rs.64.32

crore was extended to Kerala (Rs.45.52 crore) and

Rajasthan (Rs.18.80 crore) SCARDB, at 4.5 per cent

for lending to the ultimate borrowers at 7 per cent.

b. State Co-operative Banks

i. Support for Seasonal Agricultural Operations

3.5 The quantum of refinance assistance for ST-

SAO to co-operative banks was linked to net NPA

level for profit-making State Co-operative Banks

(SCB) with no accumulated losses while it continued

to be linked to gross NPA level for other banks.

Consolidated ST-SAO limits were sanctioned to

eligible SCB to the extent of 75 per cent of crop

loan disbursed during kharif 2008 (taking into account

the acute liquidity problem faced by banks with the

operationalisation of ADWDR Scheme) and between

25 and 35 per cent of crop loans to be issued during

rabi 2008-09, depending on their gross/net NPA levels.

The gross/net NPA norms for availing refinance by

co-operative banks and quantum of refinance were

relaxed with a view to boosting credit flow in NER,

Jammu & Kashmir, Sikkim and Andaman & Nicobar

Islands. Relaxations were also granted to co-operative

banks not complying with Section 11(1) of B. R. Act,

1949 (AACS), in States that accepted/executed

Production Credit

Ch-Eng-3.p65 7/14/2009, 3:03 PM50

51

MoU to implement the Vaidyanathan Committee

recommendations relating to short-term co-operative

credit structure. The minimum coverage of small and

marginal farmers (SF/MF) continued to be at 30 per

cent.

3.6 During 2008-09 (April-March), ST-SAO credit

limits were sanctioned to 20 SCB aggregating

Rs.15,448 crore against Rs.14,826 crore sanctioned

during 2007-08. The credit limits included

Rs.1,281.20 crore for the Oilseeds Production

Programme (OPP), Rs.134.56 crore for National

Pulses Development Programme (NPDP) and

Rs.441.20 crore for credit requirements of tribals

under the Development of Tribal Population (DTP).

It also included ST-SAO limit of Rs.115.88 crore

sanctioned against pledge of government securities

(July-June) against which the drawal was Rs.35 crore

upto 31 March 2009. The SCB reached a

maximum outstanding of Rs.13,934.71 crore during

2008-09 constituting 90 per cent utilisation during

the year.

3.7 While the SCB in northern (Haryana, Himachal

Pradesh, Punjab and Rajasthan) and southern regions

(Andhra Pradesh, Karnataka, Kerala, Puducherry and

Tamil Nadu) accounted for 40 and 23 per cent,

respectively, of aggregate credit limits sanctioned,

those in the central (Chhattisgarh, Madhya Pradesh,

Uttarakhand and Uttar Pradesh), western (Gujarat

and Maharashtra) and eastern (Bihar, Orissa and

West Bengal) regions accounted for 18, 12 and 7 per

cent, respectively. Refinance availed by the co-

operative banks in NER (< 1%) continued to be low

despite relaxations. During the year, Meghalaya and

Sikkim SCB were sanctioned credit limit aggregating

Rs.2.50 crore while the utilisation was Rs.2.44 crore.

3.8 Consolidated ST (Others) limit was sanctioned

to SCB on behalf of eligible DCCB for financing ST-

agriculture/ allied activities/ marketing of crops/

pisciculture/ industrial co-operative societies (other

than weavers)/ labour contract and forest labour

co-operative societies (including collection of minor

forest produce)/ rural artisans (including weaver

members of PACS/LAMPS/FSS)/ procurement and

distribution of agricultural inputs. The assessment

norms hitherto followed for different purposes

continued mutatis mutandis. During 2008-09,

Rs.175.96 crore was sanctioned against which

Rs.64 crore was utilised under this line of credit.

Punjab SCB had availed maximum amount of

Rs.63.82 crore for agriculture, allied and marketing

activities

ii. Support to Weavers

3.9 The eligibility norm for sanction of working

capital credit limits to SCB/DCCB for financing

production/marketing activities of Primary Weavers’

Co-operative Societies (PWCS), procurement and

marketing operations and trading-in-yarn by regional/

apex weavers’ co-operative societies were linked to

gross/net NPAs depending on the financial position of

the SCB. Relaxations continued to be granted to

PWCS in NER, Sikkim, Jammu & Kashmir and

Andaman & Nicobar Islands.

3.10 During 2008-09, ST (Weavers’) credit limits

aggregating Rs.265.63 crore were sanctioned to

five SCB (Andhra Pradesh, Orissa, Puducherry,

Tamil Nadu and West Bengal) for financing

production/procurement/marketing activities as against

Rs.332.13 crore during 2007-08. The maximum

outstanding reached during the year was Rs.166.66

crore as against Rs.184.78 crore during the previous

year.

3.11 The High Level Committee appointed by GoI,

under the Chairmanship of Managing Director,

NABARD to suggest measures for revival of

Handloom Sector had proposed a financial package

of Rs.2,600 crore for revival and revitalisation of the

apex and primary level co-operative societies. The

Package is under consideration of GoI. NABARD has

introduced a scheme for financing weavers outside the

co-operative fold by forming Handloom Weavers’

Groups (HWG) and financing of Master Weavers.

Ch-Eng-3.p65 7/14/2009, 3:03 PM51

52

Cumulatively 2,968 HWG were formed in ten States,

viz., Andhra Pradesh (1,023), Orissa (1,366), Assam

(272), Madhya Pradesh (103), West Bengal (88),

Bihar (82) and other states (34), and 1,781 HWG

were credit linked.

b. Regional Rural Banks

3.12 During the year, quantum of refinance to RRB

was linked to net NPA. Based on net NPA levels

ranging between <10 and >15 per cent, refinance

was sanctioned at 15, 10 and 7.5 per cent,

respectively, of the expected credit flow for crop loans

during 2008-09. NPA norms were relaxed to increase

credit flow in NER and Jammu & Kashmir and

enhanced quantum of refinance was provided to RRB

in these regions. RRB were advised to increase lending

to tenant farmers and oral lessees through JLG or

otherwise.

3.13 During 2008-09, 72 RRB were sanctioned

limits of Rs.3,546.81 crore under ST-SAO against

Rs.2,940.18 crore sanctioned to 75 RRB during

2007-08. The reduction in the number of RRB

sanctioned limits was due to amalgamation of the

banks. These limits included Rs.271.37 crore for

OPP, Rs.77.45 crore for DTP and Rs.1.35 crore

for NPDP. Uttar Pradesh, with a sanction of

Rs.738.35 crore had the largest share of credit

limits sanctioned, followed by Andhra Pradesh

(Rs.614.40 crore), Karnataka (Rs.389.85 crore),

Rajasthan (Rs.385.56 crore) and Kerala

(Rs.335.10 crore). The maximum outstandings stood

at Rs.2,868.56 crore, constituting 81 per cent of

sanctions during 2008-09. Further, one RRB each in

Arunachal Pradesh, Assam and Meghalaya were

sanctioned Rs.12.25 crore against which utilisation

was Rs.11.36 crore (93%).

3.14 Consolidated credit limits were sanctioned to

RRB for financing ST(Others) purposes upto 60 per

cent of their realistic lending programme for eligible

purposes. RRB with net NPA upto 10 per cent were

eligible for refinance. The aggregate credit limit

sanctioned for ST (Others) to RRB during 2008-09

was Rs.190.80 crore, as against Rs.151.42 crore

during 2007-08. The maximum utilisation during

2008-09 was Rs.178.30 crore, constituting 93 per cent

of the limit sanctioned.

B. Long-Term Loans to State

Governments

3.15 NABARD continued to support State

Governments under Section 27 of the NABARD Act,

1981, for contributing to the share capital of

co-operative credit institutions. The policy was

reviewed and it was decided to provide loans to State

Governments on reimbursement basis instead of

upfront loans as hitherto, with certain modifications in

the eligibility criteria. During 2008-09, profit earning

SCB/DCCB with no accumulated losses or with net

NPA not exceeding 10 per cent, as on 31 March

2007 or 2008 (whichever was lower), were considered

eligible for assistance. Similarly, SCB/DCCB earning

profits during 2006-07 but with accumulated losses

and SCB/DCCB incurring losses during 2006-07 with

or without accumulated losses, with gross NPA not

exceeding 15 per cent, as on 31 March 2007 or 2008

(whichever was lower), were considered eligible for

assistance. No loan was sanctioned to State

Governments during 2008-09. An aggregate amount

of Rs.17.73 crore was drawn during 2008-09 by State

Governments of Haryana, Kerala and Orissa against

sanctions of 2007-08.Handloom weaving

Ch-Eng-3.p65 7/14/2009, 3:03 PM52

53

C. Other Initiatives

a. NABARD - GTZ Rural Finance

Programme

3.16 The Gramin Tatkal Scheme (GTS) formulated in

co-ordination with GTZ, working on ‘family as a unit’

concept, to provide financial assistance for multiple

activities of rural families, is being implemented since

2006-07 on a pilot basis in eight States. The

implementing banks have covered 7,127 families

involving loan amount of Rs.40.17 crore.

The implementation and impact of the scheme are

under review, following closure of the pilot project on

31 December 2008.

b. Agricultural Debt Waiver and Debt

Relief Scheme, 2008

3.17 The Union Budget 2008-09 had announced the

Agricultural Debt Waiver and Debt Relief (ADWDR)

Scheme, 2008, to address the indebtedness of farmers

and difficulties of the farming community, especially

(SF/MF. The Scheme covered all direct agricultural

loans disbursed to farmers between 31 March 1997

and 2007 by scheduled commercial banks, RRB

and co-operative credit institutions, which were

overdue as on 31 December 2007 and remained

unpaid till 29 February 2008 (Box 3.1). The Scheme

also covered loans disbursed before 31 March 1997

but rescheduled/restructured through GoI’s special

package/s on account of natural calamity. It is

expected that the Scheme would benefit 192.59 lakh

farmers (SF & MF - 160.77 lakh and other

farmers - 31.82 lakh) who had availed loans

amounting Rs.35,368.31 crore from co-operative

banks and RRB, of which, GoI would reimburse

Rs.30,999.14 crore.

3.18 NABARD as the nodal agency implemented the

scheme for co-operative banks and RRB. As against

the claims of Rs.29,724 crore received from SCB,

SCARDB and RRB, an amount of Rs.16,615 crore

was disbursed to banks as at end-March 2009.

• The Scheme defines a farmer cultivating (as owner/tenant

farmer/share cropper) agricultural land (i) upto 1 ha.

(2.5 acres) as marginal farmer, (ii) between 1-2 ha.

(2.5-5 acres) as small farmer and more than 2 ha.

(> 5 acres) as other farmer.

• The Scheme shall be applicable to all direct agricultural loans

extended to SF/MF and other farmers by Scheduled

Commercial Banks, RRB, co-operative credit institutions

(including urban co-operative banks) and Local Area

Banks (LAB) that were, (i) disbursed between 31 March 1997

and 2007, which were overdue on 31 December 2007

and remained unpaid till 29 February 2008; and

(ii) loans disbursed before 31 March 1997, which were

restructured/rescheduled by banks in 2004 and 2006 through

special packages of GoI, and in the normal course upto

31 March 2007, as per RBI guidelines on account of natural

calamity, whether overdue or not.

• A farmer availing investment credit for allied activities, where

the principal loan amount is < Rs.50,000, would be classified

as ‘SF/MF’ and where the principal amount is > Rs.50,000,

as ‘other farmer’.

• In the case of SF/MF, the entire ‘eligible amount’ shall be waived.

Box 3.1

Agricultural Debt Waiver and Debt Relief Scheme, 2008: Salient Features

• In the case of ‘other farmers’, a one-time settlement (OTS)

would be extended wherein a rebate of 25% of the eligible

amount would be given subject to the farmer repaying the

balance 75%.

• In the case of revenue districts covering DPAP, DDP areas

and PM’s special relief package, the ‘other farmers’ will be

given rebate of 25% of the eligible amount or Rs.20,000

whichever is higher subject to the farmer repaying the balance

amount. If ‘eligible amount’ is <Rs.20,000, debt relief will be

limited to the eligible amount.

• Implementation of the Scheme shall be completed by 30 June

2008.

• NABARD shall act as the nodal agency for RRB and

co-operative credit institutions, while RBI shall be the nodal

agency for Scheduled Commercial Banks, urban co-operative

banks and LAB.

• At the national level, the implementation of the Scheme is

monitored by a National Level Monitoring Committee headed

by Secretary, Department of Financial Services, Ministry of

Finance, GoI. Chairman, NABARD is a Member of the

Committee.

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54

The share of SCB, SCARDB and RRB was

Rs.10,507 crore, Rs.2,246 crore and Rs.3,862 crore,

respectively.

c. Liquidity Support to SCB and RRB

3.19 In order to enable co-operative banks and RRB

to tide over the temporary liquidity problem due to

implementation of the ADWDR Scheme, NABARD

provided liquidity support of Rs.1,551.15 crore and

Rs.302.43 crore to SCB and RRB, respectively, at

9 per cent p.a. during kharif 2008. Similar liquidity

support scheme was also made available for rabi 2008-

09 to SCB and RRB at 4.5 and 5.5 per cent,

respectively, with subvention from GoI. During rabi

2008-09 as against sanction of Rs.2,992.65 crore,

utilisation by banks was of Rs.2,415.23 crore.

d. Interest Subvention to Farmers

3.20 The Union Budget 2008-09 announced the

continuance of interest subvention during 2008-09, to

enable banks to provide crop loans upto Rs.3 lakh to

farmers at 7 per cent p.a. The operationalisation of the

scheme envisaged suitable interest subvention to

NABARD and 3 per cent interest subvention on

involvement of own funds by co-operative banks/RRB.

As at end-March 2009, of the aggregate sum of

Rs.3,109.36 crore received from GoI for 2006-07

(Rs.1,331.36 crore) and 2007-08 (Rs.1,778 crore)

towards interest subvention, aggregate utilisation

stood at Rs.2,538.97 crore (Rs.1,284.56 crore during

2006-07 and Rs.1,254.41 crore during 2007-08).

Interest subvention payable to NABARD, co-operative

banks and RRB for 2008-09 has been estimated at

Rs.2,565 crore.

e. Package for Sugar Industry

3.21 NABARD is the nodal agency in respect of

co-operative banks for implementing the GoI ‘package

for restructuring of term loans of co-operative sugar

mills’. As against Rs.138.54 crore received from GoI

under the package, interest subvention of Rs.116.18

crore was released to co-operative banks in respect of

75 co-operative sugar mills. NABARD is also the

designated nodal agency for routing interest subvention

claims of co-operative banks under ‘the scheme for

providing financial assistance to sugar undertakings–

2007’.

D. Interest Rates on Refinance

Assistance

3.22 The rates of interest on ST/MT refinance to

co-operative banks, RRB and scheduled commercial

banks and long-term (LT) loans to State Governments

for contribution to share capital of co-operative

credit institutions during 2008-09 are indicated in

Table 3.1.

Table 3.1: Rates of Interest

(Per cent)

Sr. Purpose Agency Interest Rate

No.

1. SAO SCB/RRB 3.5/4.5

2. Pledge of securities SCB 9.5

3. ST (Others- other than weavers’) SCB 9.0

4. ST (Weavers’- Apex/Regional WCS) SCB 8.75

5. ST (Weavers’)- Financing of PWCS Scheduled

Commercial Banks 9.5

6. Working capital requirements of SHDC and SCB & Scheduled

SHnDC# Commercial Banks 9.5

7. ST-OSAO loans RRB 9.0

8. MT (Conversion) loan SCB^ 5.5*-5.75**

RRB^^ 5.75*-6.0**

9. LT loans to State Governments State Governments 9.5

* : NPA < 20% ** : NPA > 20 % # : Last year’s policy continues. ^ : Net/gross NPA depending on eligibility. ^^ : Net NPA

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55

3.23 NABARD extended refinance for crop loans to

co-operatives banks and RRB at 3.5 and 4.5 per cent

p.a., respectively, with interest subvention from GoI. The

refinance was made available to those SCB and RRB,

which including their involvement of owned funds,

extended crop loans at 7 per cent p.a. to farmers.

Investment Credit

A. Rescheduling Principal Amount

Repayment

3.24 Consequent to the announcement of ADWDR

Scheme, 2008, by GoI, NABARD agreed to reschedule

instalments of principal amount from SCARDB falling

due during June-December 2008 to 31 January 2009

or any other earlier date as preferred by the SCARDB,

subject to certain conditionalities. During the year,

NABARD received proposals for rescheduling principal

amount from Andhra Pradesh, Chhattisgarh, Himachal

Pradesh, Orissa, Punjab, Haryana, Rajasthan and

Uttar Pradesh SCARDB and rescheduled an amount of

Rs.1,061 crore.

B. Interim Finance to SCARDB

3.25 In order to address the liquidity crunch faced by

SCARDB after the announcement of ADWDR Scheme,

2008, NABARD decided to extend interim finance to

them, on a case-to-case basis even if they had

defaulted to NABARD either in interest payment or

principal repayment or both. The facility was, however,

available subject to the condition that (i) the total

principal and interest amount due to NABARD during

June-December 2008 plus the liquidity support by way

of interim finance is fully covered by the amount

receivable under the ADWDR scheme, and

(ii) the outstanding dues (principal + interest + interim

finance) payable to NABARD to be covered by State

Government guarantee. During the year,

Rs.70 crore was sanctioned to Madhya Pradesh

SCARDB under the scheme.

C. Eligibility Criteria for drawal of

Refinance

3.26 During 2008-09, the policy for drawing

refinance was relaxed considerably. While the

restrictions on ceilings prescribed for total financial

outlay (TFO) and refinance amount under Automatic

Refinance Facility (ARF) for commercial banks, RRB,

SCB and PUCB was completely removed, the ceiling

on TFO for SCARDB was raised to

Rs.50 lakh. Cent per cent refinance was made

available for thrust areas and for all purposes in hilly

States (Himachal Pradesh, Jammu & Kashmir and

Uttarakhand), NER & Sikkim and Andaman &

Nicobar Islands. Refinance was extended to Section

11 non-compliant SCB/DCCB in States that have

executed MoU for implementing the recommendations

of the Task Force on Revival of STCCS. The

relaxations in eligibility criteria in respect of recovery,

gross/net NPA that were hitherto available only to

States in NER were extended to Jammu & Kashmir,

Himachal Pradesh and Uttarakhand. SCB, SCARDB

and RRB continued to be classified under A/B/C/D

categories based on their gross/net NPA, recovery

position, net worth and profitability. However, (i) SCB

with gross NPA > 20 per cent, (ii) SCARDB with

recovery < 30 per cent, (iii) commercial banks/PUCB/

ADFC/NEDFi with net NPA > 3 per cent, and (iv)

RRB, with deposit erosion > 30 per cent were

considered ineligible for availing refinance during

the year.

D. Security Norms

3.27 Release of refinance to SCARDB/SCB, eligible

Section 11 non-compliant SCB/DCCB and non-

scheduled SCB (for farm sector) was only against

government guarantee. This requirement was waived

for category ‘A’ and profit making SCB/DCCB. In the

event of government guarantee not forthcoming,

alternative security like pledge of government securities

or fixed deposit receipts issued by scheduled banks

was considered on a case-by-case basis. Commercial

Ch-Eng-3.p65 7/14/2009, 3:03 PM55

56

banks, RRB, PUCB and NBFC continued to

be exempted from furnishing security/government

guarantee for availing refinance.

E. Interest Rates on Refinance

3.28 Owing to the changing money market

conditions and consequent impact on the cost of

incremental market borrowings of NABARD, the

interest rates were revised six times during 2008-09.

The interest rates, last revision being in February

2009, stood at 9 and 8.5 per cent for commercial

banks and RRB/co-operative banks/other agencies,

respectively. The interest rate on interim finance

provided to SCARDB was enhanced from 9.5 to 9.75

per cent p.a. with effect from 22 September 2008.

The interest rates in NER, Sikkim, Andaman &

Nicobar Islands, Himachal Pradesh, Jammu &

Kashmir and Uttarakhand were kept in the lowest

interest slab throughout the year.

F. Refinance Support

3.29 The total refinance disbursement during

2008-09 amounted to Rs.10,535.29 (including

Rs.64.32 crore under ST-SAO for SCARDB) as

compared to the disbursement of Rs.9,046.27 crore

(including Rs.65.05 crore under ST-SAO) during the

previous year.

a. Agency-wise Disbursements

3.30 Commercial banks, with a share of 56 per cent

of the total refinance disbursed during the year

continued to be the single largest group availing

refinance (Table 3.2/Chart3.2). The share of all other

agencies in total refinance disbursed showed a

declining trend in absolute and percentage terms,

though SCARDB showed an improvement in absolute

terms.

b. Spatial Distribution of Refinance

3.31 Refinance disbursement across regions varied

widely with the highest disbursement in southern region

followed by northern, central, eastern, western and

northeastern regions (NER) (Table 3.3/Chart 3.3). In

absolute terms, however, both central and eastern

regions witnessed a decrease while the southern and

northern regions registered a significant increase.

Table 3.2: Agency-wise Refinance Disbursement

(Rs. crore)

Agency 2006-07 2007-08 2008-09

SCARDB 1,742.72 1,950.58 1,986.54

SCB 1,130.67 826.55 801.51

Commercial Banks 4,568.82 3,951.73 5,867.19

RRB 1,352.81 2,313.99 1,879.04

PUCB/ADFC - 3.42 1.01

Total 8,795.02 9,046.27* 10,535.29*

*: Including ST-SAO refinance to SCARDB.

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57

3.32 Disaggregation of refinance disbursements by

agencies and states indicated that while 77 per cent of

the disbursement to RRB was accounted for by Andhra

Pradesh, Karnataka, Haryana, Uttar Pradesh, Orissa

and Tamil Nadu, around 70 per cent of the refinance

disbursed to the SCB was in Andhra Pradesh,

Himachal Pradesh, Orissa, Uttar Pradesh and West

Bengal. Of the refinance disbursed to SCARDB, 68 per

cent was absorbed in Haryana, Punjab, Kerala and

Uttar Pradesh. The trends once again reflect the

varying absorptive capacity of different category of

banks in different states.

c. Sector-wise disbursements

3.33 Of the total refinance disbursement of

Rs.10,535.29 crore during 2008-09, NFS and SHG

activities with 26 and 25 per cent, respectively,

accounted for the major share, followed by farm

mechanisation (14.4%). Of the other activities, land

development (9%) and minor irrigation improved their

shares (5.2%) over the previous years (Table 3.4).

i. Farm Sector

3.34 The scheme for ‘Financing Purchase of Land for

Agricultural Purposes’ under implementation since

August 2001, aimed to provide credit facility to SF/MF,

share croppers/tenant farmers for purchase of

agricultural land. During 2008-09, bank loan of

Rs.19.60 crore was extended covering 607 borrowers in

eight states (Haryana, Karnataka, Kerala, Madhya

Pradesh, Punjab, Rajasthan, Tamil Nadu and West

Bengal) and refinance of Rs.16.83 crore covering 548

borrowers. During 2008-09, 25 per cent of the

refinance was against loans disbursed to small farmers

(Table 3.5).

ii. Non-Farm Sector

3.35 During the year, refinance disbursed under NFS

stood at Rs.2,706.79 crore, of which Rs.268.47 crore

Table 3.3: Region-wise Refinance Disbursement

(Rs. crore)

Region 2006-07 2007-08 2008-09

Central 1,695.62 1,810.40 1,526.02

Eastern 1,102.83 1,134.73 1,102.99

Northern 2,111.10 1,957.78 2,636.45

North-Eastern 167.87 178.57 174.18

Southern 2,710.62 3,252.53 4,298.91

Western 1,006.98 712.26 796.74

Total 8,795.02 9,046.27* 10,535.29*

* : Including ST-SAO refinance to SCARDB.

Central : Madhya Pradesh, Chhattisgarh, Uttar Pradesh and

Uttarakhand.

Eastern : Bihar, Jharkhand, Orissa, West Bengal and A&N Islands.

Northern : Haryana, Himachal Pradesh, Punjab, Rajasthan, J&K,

Delhi and Chandigarh.

NER : Assam, Arunachal Pradesh, Manipur, Meghalaya,

Mizoram, Nagaland, Sikkim and Tripura.

Southern: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu,

Pondicherry and Lakshadweep Islands.

Western : Gujarat, Goa, Maharashtra, DN Haveli and Daman & Diu.

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58

was towards rural housing (10%). Agency-wise,

commercial banks accounted for 57 per cent, followed

by co-operative banks (33%) and RRB (10%). As on

31 March 2009, the cumulative refinance support

under NFS stood at Rs.24,061.51 crore.

iii. micro-Finance

3.36 During 2008-09, NABARD extended refinance of

Rs.2,620 crore under the SHG-bank linkage

programme, registering an increase of 62 per cent over

the previous year. The savings kept as deposits and

loans outstanding position of SHG, as on

31 March 2008, revealed that both the number of

savings accounts and amount of savings mobilised

improved by 20 and 8 per cent, respectively. Similarly,

the number of loan accounts and amount of loan

outstanding registered a growth of 25 and 37 per cent,

respectively (Table 3.6). However, while savings per

Table 3.4: Sector-wise Disbursement of Refinance

(Rs. crore)

Sector 2006-07 2007-08 2008-09

MI 670.97(7.6) 403.68(4.5) 545.85(5.2)

LD 651.30(7.4) 462.14(5.1) 949.94(9.0)

FM 1,857.51(21.1) 1,747.65(19.3) 1,514.03(14.4)

P&H 313.73(3.6) 341.82(3.8) 374.54(3.6)

DD 504.02(5.7) 605.87(6.7) 489.41(4.6)

PF/SGP/

AH-Others 206.66(2.4) 216.29(2.4) 298.70(2.8)

Fisheries 38.30(0.4) 25.45(0.3) 77.15(0.7)

Forestry 8.38(0.1) 6.39(0.1) 6.56(0.1)

S & M Yard 35.61(0.4) 136.28(1.5) 141.01(1.3)

SGSY 355.06(4.0) 258.58(2.8) 201.12(1.9)

NFS 2,265.16(25.8) 2,747.95(30.4) 2,706.79(25.7)

SC/ST-AP 28.32(0.3) 20.52(0.2) 28.94(0.3)

SHG 1,292.86(14.7) 1,615.50(17.8) 2,620.03(24.9)

Others 567.14(6.4) 458.15(5.1) 581.22(5.5)

Total 8,795.02 9,046.27* 10,535.29*

(100.0) (100.0) (100.0)

* : Including ST-SAO refinance to SCARDB.

MI : Minor Irrigation. LD : Land Development.

FM : Farm Mechanisation. PF : PoultryFarming.

DD : Dairy Development. SGP : Sheep, Goat and Piggery.

AH : Animal Husbandry. P & H : Plantation and Horticulture.

S&M Yard : Storage and Market Yards

Figures in parentheses indicate percentage to total.

Table 3.5: Refinance disbursed to Small Farmers

vis-à-vis Total Disbursements

(Rs. crore)

Purpose Total Disbursement Assistance to

Disbursement to SF SF (% to total

disbursement)

MI and LD 1,495.79 575.83 38

Diversified Purposes* 7,377.91 1,640.21 22

Total 8,873.70 2,216.04 25

* : Excludes refinance for farm mechanisation, storage and market

yards, forestry, etc.

Table 3.6: Agency-wise Savings and Loans Outstanding to SHGs

(As on 31 March)

(Rs. crore)

Agency 2007 2008

No. Amount No. Amount

a. Savings

Commercial Banks 22,93,771(55) 1,892.42(54) 28,10,750(56) 2,077.73 (55)

RRBs 11,83,065(28) 1,158.29(33) 13,86,838(28) 1,166.49 (31)

Co-operative Banks 6,83,748(16) 462.00(13) 8,12,206(16) 541.17 (14)

Total 41,60,584(100) 3,512.71(100) 50,09,794(100) 3,785.39 (100)

Savings per SHG (Rs.) 8,469 7,556

b. Loans Outstanding

Commercial Banks 18,93,016(65) 8,760.38(71) 23,78,847(66) 11,475.47(68)

RRBs 7,29,255(25) 2,801.76(22) 8,75,716(24) 4,421.04(26)

Co-operative Banks 2,72,234(9) 804.35(06) 3,71,378(10) 1,103.39(06)

Total 28,94,505(100) 12,366.49(100) 36,25,941(100) 16,999.90(100)

Loan o/s per SHG (Rs.) 42,724 46,884


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59

SHG declined by 11 per cent, loans outstanding per

SHG increased by 10 per cent.

3.37 The recovery position of banks with respect to

their SHG portfolios revealed that, as on

31 March 2008, of the 329 reporting banks, 223

banks (68%) reported recovery > 80 per cent.

Agency-wise, 24 (out of 33), commercial banks 47 (out

of 70) RRB and 152 (out of 226) co-operative banks

reported recovery > 80 per cent (Chart 3.4).

3.38 MFI are increasingly providing financial services

to the poor by raising funds from banks and their own

resources for on-lending to SHG. MFI in India operate

as NGO-MFI, non-profit Section 25 NBFC-MFI,

co-operative MFI and for-profit NBFC-MFI. During

2007-08, 518 MFI were financed by banks to the tune

of Rs.1,970.15 crore, thus, registering a growth of 55

and 71 per cent in respect of number of MFI and

amount disbursed, respectively. Total loans outstanding

increased to Rs.2,748.84 crore as on 31 March 2008,

registering a growth of 73 per cent over 2006-07

(Table 3.7).

G. Co-financing

3.39 During 2008-09, 12 new projects were

sanctioned with TFO of Rs.94.96 crore, bank loan of

Rs.64.56 crore and NABARD share of Rs.31.55 crore.

Of these, 10 projects have been sanctioned in

association with RRB and 2 with commercial banks

covering activities such as button mushroom/herb

cultivation, Individual Quick Freeze (IQF), agri

infrastructure, modern rice mill, etc. Since 2003,

40 projects involving TFO of Rs.736.11 crore, bank

loan of Rs.486.28 crore and NABARD share of

Rs.214.11 crore have been sanctioned as on

31 March 2009. An amount of Rs.36.95 crore was

disbursed during the year, registering an increase of

35 per cent over 2007-08. As at end-March 2009,

the cumulative disbursement under the co-financing

arrangement stood at Rs.109.76 crore.

Table 3.7: Progress under MFI-Bank Linkage Programme

(As on 31 March)

(Rs. crore)

Agency Bank Loan Disbursed Loans Outstanding

2006-07 2007-08P 2007 2008P

MFI Amount MFI Amount MFI Amount MFI Amount

(No.) (No.) (No.) (No.)

Commercial Banks 327 1,151.34 497 1,968.60 541 1,584.27 1,072 2,745.24

RRB 7 0.22 8 1.51 8 0.20 24 3.58

Co-operative Banks - - 13 0.04 1 0.01 13 0.02

Total 334 1,151.56 518 1,970.15 550 1,584.48 1,109 2,748.84

The actual number of MFIs would be less as some MFIs have availed loans from more than one bank. P : Data provisional.

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60

H. Capital Investment Subsidy

Schemes

3.40 Since 2000-01, NABARD as the nodal agency,

continued to oversee implementation of the various

Capital Investment Subsidy (CIS) schemes of GoI

through administering subsidy and monitoring the

progress with bankers and GoI. During 2008-09, four

CIS schemes, viz., (i) construction of cold storages,

onion godowns and rural godowns, (ii) development/

strengthening of agriculture marketing infrastructure,

grading and standardization, (iii) establishing

Agri-Clinic and Agri-Business Centres (ACABC) by

agriculture graduates and (iv) supporting bankable

projects for commercial production of organic inputs

like bio-fertilizer, vermiculture hatchery and composting

units of fruit and vegetable wastes, etc., under

National Project on Organic Farming (NPOF) were

implemented.

a. Cold Storages, Onion Godowns and

Rural Godowns

3.41 During the year, 94 and 3,013 projects were

sanctioned under cold storages/onion godowns

(Box 3.2) and rural godowns with TFO of Rs.239.44

crore and Rs.526.09 crore, bank loan of Rs.150.75

crore and Rs.349.90 crore and subsidy of Rs.37 crore

and Rs.59.17 crore, respectively. As at end-March

2009, cumulative TFO of Rs.2,770.78 crore and

Rs.3,516.65 crore, bank loan of Rs.1,556.90 crore

and Rs.2,307.26 crore and subsidy of Rs.413.32 crore

and Rs.513.52 crore for 1,791 (1,578 cold storages

and 213 onion godowns) and 16,593 projects were

sanctioned under cold storage/onion godown and rural

godown, respectively. The cumulative capacity created

under cold storage/onion godown and rural godown

as on 31 March 2009, stood at 73.54 lakh tonnes

(73.19 lakh tonnes of cold storage/0.35 lakh tonnes

of onion godown) and 208.24 lakh tonnes,

respectively.

b. Agricultural Marketing Infrastructure,

Grading and Standardisation

3.42 The scheme in operation, since 2004, aims at

establishing/ strengthening of infrastructure for

marketing, grading, standardisation, quality certification

of agricultural produce and creation of marketing

infrastructure in agriculture and allied sectors. During

2008-09, projects involving Tuna long liners, fishing

boats and fishing nets as functional infrastructure were

also made eligible for subsidy under the Scheme. It

could be implemented in only such States that

amended the APMC Act to allow private participation.

Box 3.2

Cold Chain Infrastructure for Apples in

Himachal Pradesh

M/s. Adani Agri Fresh Ltd. established three controlled

atmosphere (CA) cold storage units with a capacity of

6,000 MT each and infrastructure for grading, sorting,

mechanised handling, packing and marketing of fresh apples.

The units with TFO, bank loan and NABARD refinance of

Rs.173.39 crore, Rs.105.99 crore and Rs.95.39 crore,

respectively, are set up in Rewali, Sainj and Rohru districts

of Himachal Pradesh. The CA technology used in these units

increases the shelf life of apples from 3 months in

conventional cold storages to 10 months. The apple growers

are, thus, able to realise 20% higher prices at Rs.25-28/kg.

The improved infrastructure facilities of CA storages have

helped to reduce tiers of intermediaries enabling a win-win

situation for growers and promoters.

Fly Ash Brick making Cluster at Yembodi

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As on 31 March 2009, 20 states and 5 UTs had

amended the APMC Act and were eligible to receive

subsidy assistance for projects under the Scheme.

3.43 During the year, 564 projects were sanctioned

involving TFO and bank loan of Rs.545.94 crore

and Rs.366.89 crore, respectively, while subsidy of

Rs.61.43 crore was disbursed. Cumulatively

3,265 projects involving TFO and bank loan of

Rs.1,295.66 crore and Rs.863.59 crore, respectively,

were sanctioned and subsidy of Rs.141 crore

released.

c. Establishing ACABC

3.44 The scheme, aimed at providing fee based

extension services to farmers, was announced by MoA,

GoI for implementation during 2006-07 and continued

during 2008-09. During the year, subsidy amounting to

Rs.1.60 crore was disbursed to 147 ACABC projects.

Cumulatively, 204 projects were sanctioned with a total

subsidy release of Rs.2.29 crore.

d. National Project on Organic

Farming

3.45 The subsidy based NPOF in operation since

2005 was extended during 2008-09. An amount of

Rs.40.25 crore was earmarked as subsidy for the

purpose. Both NABARD and National Co-operative

Development Corporation (NCDC) are the

implementing agencies. Since inception, 416 units

(378 vermi-hatchery, 29 bio-fertilizer and 9 fruit &

vegetable waste compost) have been sanctioned with

subsidy of Rs.11.94 crore, as on 31 March 2009. Of

the Rs.11.32 crore received from GoI, subsidy of

Rs.7.90 crore has been released.

I. Investment and Scheme Specific

Studies

3.46 During 2008-09, 37 investment and 5 scheme

specific studies were conducted in association with

financing banks and nodal departments of the State

Government. The studies covered investments under

farm and non-farm sector, micro-credit, government

sponsored schemes and rural housing for identifying

factors affecting smooth implementation of

investments/schemes and to ensure prompt corrective

measures. A compilation of the major findings

and recommendations of 28 investment specific

studies conducted by 20 ROs in 2007-08 has been

brought out in the form of a booklet for dissemination

among client institutions.

J. Physical Achievements

3.47 The refinance disbursement supporting varied

economic activities under various types of investments

during the year are presented in Table 3.8. Under

minor irrigation (MI) 13,000 tubewells with pumpsets

and 16,000 pumpsets on existing wells were financed.

Tractor financing continued to be the major item of

investment under FM with 43,000 units financed

during the year. During 2008-09, land area of 99,000

ha. was developed. Under the animal husbandry

sector, dairy farming and sheep/goat rearing showed

an increase of 1.77 lakh and 3.08 lakh animals,

respectively. The poultry sector showed good

growth with 73 lakh birds being financed during

2008-09.

K. Credit Planning

a. Potential Linked Credit Plans

3.48 NABARD, adopting a consultative approach,

continued to prepare district-wise Potential Linked

Credit Plans (PLP), to guide banks in the preparation

of their Annual Credit Plans. A review of the PLP

exercise was initiated during the year and revised

guidelines issued to improve the quality and content of

the document. To make the PLP documents

contemporary, a new chapter ‘Financial Inclusion’ was

included. The general and technical scrutiny of select

PLP was also undertaken to enhance and fine-tune

the contents.

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Table 3.8: Units Financed and Completed

Sr. Investments Units Units Financed Units Completed

No. (upto 31 March) (upto 31 March)

2008 2009 2008 2009

1. Minor Irrigation

i. Tubewells with pumpsets @ ‘000 1,599 1,612 1,582 1,594

ii. Dugwells with pumpsets * ‘000 2,076 2,094 2,063 2,081

iii. Dugwells with conventional lift ‘000 1,707 1,724 1,706 1,723

iv. Pumpsets on existing wells ‘000 2,451 2,467 2,422 2,436

v. Others ** ‘000 1,837 1,886 1,805 1,849

2. Land Development*** ‘000 ha. 3,252 3,351 3,190 3,285

3. Farm Mechanisation

i. Tractors ‘000 1,384 1,427 1,350 1,391

ii. Power tillers ‘000 162 164 159 160

iii. Other farm equipments ‘000 719 741 711 733

4. Plantation & Horticulture ‘000 ha. 2,261 2,323 2,215 2,273

5. Forestry lakh ETPs 2,348 3,216 2,332 2,657

6. Storage ‘000 tonnes 18,635 18,636 18,448 18,449

7. Market Yards No. 3,013 3,080 2,987 3,047

8. Dairy Development ‘000 animals 15,843 16,020 15,626 15,789

9. Sheep/ Goat Rearing ‘000 animals 38,161 38,469 37,725 38,010

10. Piggery 000 animals 1,692 1,702 1,685 1,693

11. Poultry lakh birds 1,819 1,892 1,797 1,860

12. Fishery

i. Mechanised Boats No. 22,679 22,765 22,036 22,082

ii. Other Boats No. 73,681 75,019 73,000 73,799

iii. Brackish Water Aquaculture ha. 5,362 5,371 5,301 5,308

iv. Fresh Water Aquaculture ‘000 ha. 414 417 409 412

13. Non-Farm Sector ‘000 8,032 8,268 7,892 8,088

14. Miscellaneous$ ‘000 14,786 15,330 14,486 14,671

@ : Includes borewells with pumpsets. * : Includes dug-cum-borewells with pumpsets. ETP : Entire Trans-Planting.

** : Includes dugwells/ dugwells-cum-borewells, deep tubewells with pumpsets, deepening/ renovation of wells, sprinkler, pipeline, storage/water

harvesting tank, lift irrigation, drip, pump house, shallow tubewells/million shallow tubewell programme, etc.

***: Includes soil conservation, saline/ alkaline soil, channels/ lining/ under grouW2nd pipeline, wasteland and farm development.

$ : Includes bullock pairs, bullock carts, camels, camel carts, SHGs, other activities under AH, Kisan bikes, sericulture, ACABCs, soil/water testing,

compost/ manure plants, gobar gas plants, vermiculture, SRTO, contract farming,AEZs, SC/ST Action Plan, bee- keeping, etc.

Note : While estimating the completed units, appropriate adjustments have been made for units financed upto March 2009, but not likely to have been

completed. It is possible that some of the units have turned out to be infructuous or remained incomplete beyond their normal gestation period.

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b. State Focus Paper

3.49 The district-wise/sector-wise potentials projected

in the PLP are aggregated into the State Focus Paper

(SFP) presenting a comprehensive picture of potentials

available in the State for development of various

sectors of the rural economy. The SFP highlights the

critical infrastructure gaps and linkage support required

from various line departments to facilitate credit flow

as estimated in the SFP. The SFP are presented to

bankers and State Governments at the state level

Credit Seminars to facilitate necessary budgetary

support for bridging the gaps and enable banks to

augment credit flow.

c. Integrated District Plans

3.50 The Ministry of Panchayati Raj and Planning

Commission, GoI introduced preparation of Integrated

Development Plans (IDP) for the 250 poorer districts

under the Backward Regions Grants Fund (BRGF).

It aims at embedding the participative planning process

and providing funds to local governments for filling

gaps based on the local needs under the flagship

programmes. NABARD was associated with the

Technical Support Group of Planning Commission for

preparing the Manual of Guidelines for preparing IDP.

The Planning Commission and NABARD conducted

regional workshops to orient various state and district

level officials in preparing IDP. The Bank is also

involved as a Technical Support Institution (TSI) in

preparation of plans in 17 districts covering 5 states,

viz., Andhra Pradesh, Jharkhand, Maharashtra, Tripura

and Uttar Pradesh. The plans are under various stages

of finalisation and approval.

L. Special Package for NER

3.51 NABARD continued its policy of facilitating

larger flow of credit to NER and Sikkim by granting

relaxations to commercial banks, co-operative banks

and RRB operating in the region. The initiatives,

which were operational during 2008-09, are given

below.

i. To enable SCB and RRB avail refinance for

ST-SAO purposes, NABARD relaxed its NPA

norms by 5 percentage points. An additional

5 to 15 percentage points relaxation for assessing

eligible quantum limits was extended to both SCB

and RRB.

ii. The NPA criteria for drawal of refinance under

investment credit was relaxed by 5 and 3

percentage points for co-operative banks and RRB,

respectively. Refinance to the extent of cent per

cent bank loan was provided. The rate of interest

on refinance for commercial banks in NER and

Sikkim was fixed at 50 basis points lower than in

other parts of the country (9%). In the case of co-

operative banks and RRB, the interest rate on

refinance continued to be 8.5 per cent as in other

parts of the country.

iii. Interest rate on refinance to commercial banks

and RRB on loans to MFI for on-lending to

clients/SHG was 3 percentage points less than that

charged by banks, subject to a minimum of 8.5

per cent as against 9 per cent in other states.

iv. To facilitate creation of infrastructure facilities

under RIDF, NABARD extended 90 per cent of

the eligible project cost for roads and social sector

projects as against 80 and 85 per cent,

respectively, in rest of the country. Mobilisation

advance was also extended at 30 per cent of the

RIDF loan. The loan is phased over a period of

five years for major/medium irrigation projects

(loan > Rs.50 crore) and for four years for other

projects compared to three years given to other

states.

Exhibition of products made by SHG members

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3.52 The Government instituted the Rural

Infrastructure Development Fund (RIDF) with NABARD

during 1995-96, with an initial corpus of Rs.2,000

crore by way of deposits from commercial banks to the

extent of their respective shortfalls in agriculture lending

under priority sector. The Fund has since been

continued with annual allocation being announced in

the Union Budget. The Union Budget 2008-09

announced the XIV Tranche of Rs.14,000 crore, raising

the aggregate allocation to Rs.86,000 crore. During

2008-09, Rs.4,000 crore was also allocated under a

separate window for funding rural roads component of

Bharat Nirman Programme, introduced during 2006-

07, raising the allocation to Rs.12,000 crore. As on 31

March 2009, the cumulative allocation under both

components of the fund stood at Rs.98,000 crore.

A. Eligible Projects

3.53 The GoI has approved a broad range of 31

sectors/activities for financing under RIDF XIV. These

include projects relating to rural roads and bridges,

minor/medium/major/community irrigation, mini/hydel/

non-conventional power projects, drinking water, soil

conservation, watershed development, reclamation,

drainage, flood protection, forest development, joint

forest management, marketing infrastructure,

infrastructure for rural industries/animal husbandry/

fisheries, infrastructure for rural education and public

health institutions, etc.

B. Terms and Conditions

3.54 The lending rate on loans continued to be 0.5

per cent above the Bank Rate prevailing at the time of

sanction of loan (6.5%). Loans are secured by means

of irrevocable letters of authority (mandate) executed

by State Governments registered with RBI and Time

Promissory Notes. Each drawal under sanctioned

projects is considered as a separate loan repayable in

five equal instalments over seven years, including

moratorium of two years. Further, states are sanctioned

loans within the ceiling of normative allocation (based

on its terrain, rural population, CD ratio, rural

infrastructure index and performance under RIDF) of

the RIDF corpus at the beginning of the financial year.

Funds are provided to state governments on

reimbursement basis. As the on-going projects under

RIDF are spread over several tranches, the pace of

actual drawal of funds depends upon implementation

at the field level. States are also governed by

Article 293 (3) of the Constitution, which determines

their borrowing powers from Central Financial

Institutions during the year.

3.55 The phasing of projects was as per the

requirements of the state and ranged from 3 to 4 years

with an extra year for projects to hilly states.

The maximum phasing period in the case of

medium/ major irrigation and other stand-alone projects

involving loan of Rs.50 crore and above, was

five years.

C. Operations

a. Sanctions and Disbursements

3.56 During the year 85,527 projects involving a

loan amount of Rs.14,719.42 crore were sanctioned

under RIDF XIV, thereby increasing the cumulative

number of projects to 3,65,003 and amount

sanctioned to Rs.88,359.09 crore. Of the total

amount sanctioned during the year, rural roads and

bridge projects accounted for 46 per cent, irrigation

Loans under Rural Infrastructure Development Fund

Barrage built under RIDF, Jharkhand

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65

Table 3.9: Sector-wise Projects and Amount Sanctioned


(Rs. crore)

Purpose RIDF XIV Share RIDF I to XIII Share

(2008-09) (%) (Total) (%)

Irrigation

No. 67,105 78.5 1,31,934 47.2

Amount 4,145.11 28.2 25,020.85 34.0

Rural Bridge

No. 986 1.10 11,360 4.1

Amount 2,129.33 14.4 7,018.47 9.5

Rural Roads

No. 6,991 8.2 61,321 21.9

Amount 4,616.38 31.4 24,548.93 33.3

Social sector*

No. 8,095 9.5 50,406 18.0

Amount 2,667.48 18.1 8,383.57 11.4

Power sector**

No. 12 0.01 729 0.3

Amount 231.74 1.6 1,613.05 2.2

Others***

No. 2,338 2.7 23,726 8.5

Amount 929.38 6.3 7,054.80 9.6

Total

No. 85,527 100.0 2,79,476 100.0

Amount 14,719.42 100.0 73,639.67 100.0

* : Includes projects relating to Rural Drinking Water Supply, Primary/

Secondary Schools, Public Health Institution, Pay & Use Toilets

and Anganwadi Centres.

**: Power includes projects relating to System Improvement in Power

Sector and Mini/Small Hydel projects.

***: Includes soil conservation, watershed development, rain water

harvesting, flood protection, CADA, drainage, cold storages,

fishing harbour/jetties,, riverine fisheries, animal husbandry, forest

development, inland waterways, rubber plantations, seed/agri./

horti. farms, citizen information centres, food park, rural libraries,

rural market/ yard/ godown, meat processing, rural knowledge

centres, rural industrial estates/centre, etc.

projects 28 per cent, social sector projects 18 per

cent, power sector projects 2 per cent and others 6

per cent (Chart 3.5/Table 3.9). The cumulative

position of sector-wise sanctions and disbursements is

given in Table 3.10. An amount of Rs.7,500 crore

was disbursed during 2008-09 to the National Rural

Roads Development Agency (NRRDA), taking the

total disbursements to Rs.12,000 crore (Rs.4,000 crore

each under RIDF XII, XIII & XIV) equalling the

aggregate sanctioned amount under the Bharat

Nirman Component.

3.57 The period of implementation of projects

sanctioned under RIDF VIII and IX was closed as at

end-September and December 2008, respectively. At

present, the projects under implementation pertain to

those sanctioned under RIDF X to XIV.

3.58 During the year, disbursements worth

Rs.10,458.64 crore were effected. As per the phasing

of projects under various tranches (RIDF I to XIV), the

total amount sanctioned was Rs.73,733.64 crore

against which disbursements aggregated

Rs.56,052.20 crore (Table 3.11). The amount of loan

sanctioned and disbursed to States in the NER

aggregated Rs.946.56 crore and Rs.486.36 crore,

respectively, during 2008-09. The state-wise analysis of

ratio of disbursements to sanctions as per approved

phasing under tranches VIII to XIV revealed that

Nagaland topped with 112 per cent, followed by

Uttarakhand (100%), Sikkim and Mizoram (94% each),

Tamil Nadu (81%), Punjab (80%), Haryana (79%),

Gujarat (77%), Madhya Pradesh (76%), Himachal

Pradesh (75%), Chhattisgarh (72%), Rajasthan and

Jammu & Kashmir (71% each) and Andhra Pradesh

(70%). Slow pace of actual utilisation of loans under

RIDF compared to sanctions was due mainly to delay

in administrative and technical approval by State

Governments, land acquisition problems, delay in

obtaining statutory clearances and tendering process,

inadequate budgetary support, lack of coordination

among implementing departments, etc.

Ch-Eng-3.p65 7/14/2009, 3:03 PM65

66

b. Deposits/Repayments

3.59 The interest payable by NABARD on the deposits

from commercial banks continued to be equal to the

prevailing Bank Rate (6%). With the receipt of

Rs.18,805.21 crore (including Rs.6,647.43 crore under

Bharat Nirman) as deposits from commercial banks

during the year, the cumulative deposits received under

Table 3.11: Cumulative Sanctions and Disbursements under different Tranches


(Rs. crore)

RIDF Tranche Corpus No. of Amount % of

Projects Sanctioned Phased Disbursed Disbursement*

Closed Tranches

I 2,000 4,168 1,906.21 1,906.21 1,760.87 92.4

II 2,500 8,193 2,636.08 2,636.08 2,397.95 91.0

III 2,500 14,345 2,732.69 2,732.69 2,453.53 89.8

IV 3,000 6,171 2,902.55 2,902.55 2,482.00 85.5

V 3,500 12,106 3,434.52 3,434.52 3,054.96 88.9

VI 4,500 43,168 4,488.51 4,488.51 4,070.85 90.7

VII 5,000 24,598 4,582.32 4,582.32 4,052.59 88.5

Total 23,000 1,12,749 22,682.88 22,682.88 20,272.75 89.4

Ongoing Tranches

VIII 5,500 20,887 5,950.19 5,950.19 5,141.75 86.4

IX 5,500 19,548 5,638.51 5,638.51 4,870.36 86.4

X 8,000 17,190 7,717.47 7,717.47 6,198.38 80.3

XI 8,000 29,875 8,300.59 8,300.59 5,727.50 69.0

XII 10,000 42,279 10,600.95 10,600.95 5,770.84 54.4

XIII 12,000 36,948 12,749.09 9,600.83 5,057.14 52.7

XIV 14,000 85,527 14,719.42 3,242.22 3,013.48 92.9

Total 63,000 2,52,254 65,676.22 51,050.76 35,779.45 70.1

Grand Total 86,000 3,65,003 88,359.10 73,733.64 56,052.20 76.0

*: With phased amount.

RIDF stood at Rs.66,329.42 crore (Chart 3.6). An

amount of Rs.2,998.33 crore was received from the

State Governments towards repayment of RIDF loans

during 2008-09.

D. Employment Generation

3.60 It is expected that the projects, sanctioned under

RIDF, on implementation will facilitate expansion of

Table 3.10: Sanctions and Disbursements under various Sectors


(Rs. crore)

Sector Amount% of

Sanctioned Phased Disbursed Disbursement*

Irrigation 29,165.96 24,923.49 18,872.81 75.7

Rural Road & Bridges 38,313.11 32,299.22 25,653.20 79.4

Social Sector 11,051.05 8,347.36 6,022.31 72.1

Power 1,844.79 1,542.91 1,230.37 79.7

Others 7,984.18 6,620.66 4,273.51 64.5

Total 88,359.09 73,733.64 56,052.20 76.0

* : With respect to amount phased.

Ch-Eng-3.p65 7/14/2009, 3:03 PM66

67

the production base in rural areas and creation of

additional employment opportunities (Box 3.3).

E. Monitoring of RIDF Projects

3.61 Monitoring of RIDF projects under

implementation is imperative to ensure timely

completion and quality of assets being created. Though

the primary responsibility of monitoring of RIDF

projects vests with State Governments, NABARD also

undertakes monitoring of RIDF projects by exception.

This two-pronged monitoring approach results in better

implementation of projects, as various constraints are

identified, reviewed and sorted out at regular intervals.

The High Power Committee (HPC) at State level has

proven to be an effective mechanism for monitoring

and in ensuring speedy and timely completion of

projects. The HPC, chaired by the Chief/Finance

Secretary of the State, meets quarterly to review the

pace of project implementation.

3.62 NABARD carried out monitoring of RIDF

projects through desk review based on periodic returns

and field visits undertaken by HO/RO officers, DDM

and consultants hired by the bank. During the year

5,290 projects were monitored through field visits.

Major observations/issues were taken up with the

implementing departments as also the Finance

Department of State Governments for improving the

pace and quality of the project execution.

F. Capacity Building Support

3.63 Infrastructure deficient states also have

comparatively lower off-take of RIDF because of their

weak implementing apparatus. With a view to

overcoming this limitation, NABARD initiated capacity

building of the stakeholders by organising awareness

workshops for officials of different Line/Implementing

Departments and State Governments.

Box 3.3

Accretion to Rural Infrastructure and Employment

(lakh)

Rural Infrastructure

Additional irrigation potential 144.97 ha.

Rural road network 2.73 km.

Rural bridges 5.06 mt.

Employment Generation

Due to increased irrigation

- Recurring (jobs) 70.55

- Non-recurring (person days) 22,568

From non-irrigation projects-

- Non-recurring (person days) 42,785

Ch-Eng-3.p65 7/14/2009, 3:03 PM67

68

G. Rural Infrastructure Financing

Alternative

3.64 The gigantic gap in rural infrastructure cannot

be bridged by the state governments alone in view

of their limited resources and organisational structure.

In order to leverage private resources and its

implementing capacity, NABARD signed a

Memorandum of Agreement (MoA) with Infrastructure

Leasing & Financial Services Ltd (IL&FS). This will

be a step towards developing products and services

and in fine-tuning the design of innovative delivery

systems like Special Purpose Vehicles (SPV)

(Box 3.4).

Economic Impact of Investments

3.65 NABARD continued to conduct evaluation

studies to assess field-level performance of various

investment activities and their impact on income

accrual, employment generation and viability. During

2008-09, three ex-post evaluation studies on projects

supported under RIDF and SHG-Bank Linkage

Programme and three commodity specific studies,

examining the entire supply chain management were

completed.

a. Infrastructure Investments

3.66 The evaluation study on investments in medium

irrigation, bridge and regulator-cum-bridge projects

under RIDF in Kannur and Ernakulam districts of

Kerala revealed that the projects were viable despite

the time over-run (15-39 years) in completion

(Table 3.12). The economic rate of return (ERR) of

these investments ranged between 15 and 38 per

cent, resulting in income and employment generation.

While no change in the cropping pattern was

observed, crop production and yield under all projects

improved. The bridge project had an impact in terms

of savings in vehicle operating cost, better

accessibility, improvement in quality of life, etc.

Investment in regulator-cum-bridge project benefited

2,600 ha. of arable land by preventing entry of

saline water into the fields. The study recommended

adequate fund allocation by State Government for

better maintenance of the structures, coordination

between different implementing agencies, viz.,

Command Area Development Authority, Irrigation

Box 3.4

Public-Private Partnership for Rural Infrastructure Projects

The Memorandum of Agreement (MoA) between NABARD and

IL&FS aims at developing an integrated approach in planning

for rural infrastructure across the country, based on shared

concern and collaborative leadership structure, whose scope

would comprise setting-up both programme and project-based

institutional arrangements, for taking up projects in

commercially feasible/viable Public-Private-Partnership (PPP)

format and achieving the same through conceptualisation and

implementation of workable frameworks and processes. This

would include design, engineering, financing, procurement,

construction, improvement, operation and maintenance on

Build, Operate and Transfer (BOT) and any other appropriate

forms of PPP with defined roles for the parties, including project

development and management of public system projects

financed by NABARD, partly or wholly, under RIDF or

otherwise.

In order to implement this Agreement, NABARD and IL&FS will

identify specific programme/project areas in various States to

take forward the objectives of this Agreement.

The MoA will enable NABARD to work out self-supporting and

bankable formats for launching infrastructure projects relevant

to agriculture and rural development and provide valuable

advice to GoI and State Government agencies to leverage their

budgetary resources for these programmes.

Thattarkadavu Bridge under RIDF - XII, Kerala

Ch-Eng-3.p65 7/14/2009, 3:03 PM68

69

Department, etc. Based on the study findings,

NABARD has decided to consider commitments by

State Government/s for maintenance and repair of

projects already financed under RIDF as a parameter

for allocation of funds among States from 2009-10

onwards.

b. SHG Bank Linkage Programme:

Micro-Enterprises among SHG

members

3.67 The evaluation studies on micro-entrepreneurship

among SHG members in Gujarat and Jammu &

Kashmir revealed that with the passing of time SHG

members shifted from consumption to production loans

for setting-up income generating micro-enterprises. In

Gujarat, it was observed that the percentage of bank

loan utilised in asset creation improved from 8 in the

first linkage to 67 by the fifth linkage. The percentage

of members graduating to micro-enterprises (income

generating asset creation) activities such as dairy, flour

mill, rickshaw, grocery shop, brick kiln, mandap

decoration, etc., varied between 29 per cent in Gujarat

and 32 per cent in Jammu & Kashmir. Income

generating activities (without asset creation), viz.,

purchase of inputs for farm enterprises, mushroom

cultivation, etc., were also undertaken by 35 and 39

per cent members in Gujarat and Jammu & Kashmir,

respectively (Table 3.13). Absence of rotation in

leadership, declining membership of SHG over time,

lack of product diversification, use of low-level

technology, inadequate infrastructure, etc., were some

of the constraints identified.

c. Commodity Specific Studies

3.68 Commodity Specific Studies on groundnut,

mango and sugarcane were undertaken during the year

Table 3.12: Benefits under RIDF Investments

(Per unit)

State/ Type of Capital Net Benefited ERR* Employment

Reference Investment Cost Incremental Area (ha.) (%) Generation

Year (Rs. lakh) Income (lakh persondays)

(Rs. lakh)^ Recurring Non-recurring

Kerala/ a. Medium 16,667 612 4,334 15 2.35 6.5

2004-05 Irrigation

b. Bridge 253 36 355 17 0.09 0.51

c. Regulator- 1,056 354 2,600 38 1.22 2.11

cum- Bridge

*: Economic Rate of Return ^: With Imputed Value of Family Labour

Table 3.13: Micro-Enterprise among SHG Members

State/ No. Studied Average % of SHG Members Net Recovery

Reference Loan Size- Undertaking Income/ (%)

Year SHG Members Cumulative* Income- Micro- Unit (Rs.)

(Rs.) Generating Enterprises

Activities

Gujarat/ 20 49 74,313 35 29 13,262 93

2004-05

Jammu & 15 150 56,880 39 32 15,602 100

Kashmir/

2004-05

* : Includes the bank loan availed during fifth and second linkages in Gujarat and Jammu & Kashmir, respectively.

Ch-Eng-3.p65 7/14/2009, 3:03 PM69

70

to identify the issues relating to activities of the entire

supply chain management (Table 3.14).

i. Groundnut

3.69 Groundnut is mainly cultivated in Andhra

Pradesh, Gujarat, Karnataka, Maharashtra and

Rajasthan. Being primarily a rainfed oilseed crop, its

productivity reveals much variation across regions.

The commodity specific study on groundnut in

Gujarat, Jharkhand and Rajasthan revealed that the

net income realisation of farmers was maximum in

Rajasthan (Rs.22,470/ha.), followed by Gujarat

(Rs.13,798/ha.) and Jharkhand (Rs.4,166/ha). Lack

of technology and traditional methods of cultivation

were responsible for low net income realisation in

Jharkhand. Although the investments in processing

units was profitable, unavailability/irregular supply of

raw materials led to under-utilisation of installed

capacities in Gujarat (41%) and Rajasthan (67%).

High returns to investments (>50%) in groundnut

processing in Rajasthan were attributed to rapid

rise in oil prices vis-à-vis groundnut prices and lower

cost of investment in plant and machinery. The high

price (Rs.194/qtl) realised by processing units in the

co-operative sector vis-à-vis solvent and other

crushing units in Gujarat was due to procurement of

raw material at a lower cost and no payment of

brokerage on raw material and finished goods.

Farm gate price realised by farmers was 66 and

45 per cent of the retail price in Jharkhand and

Rajasthan, respectively. Though groundnut was

mainly exported in the form of hand picked and

selected (HPS) and value added nuts, the residual

levels of aflatoxin in groundnut consignments did not

meet the export quality specifications of the

European Union. The study suggested standardisation

of agronomic practices, extension services,

technological innovations for increasing productivity,

promotion of contract farming, formation of

co-operative processing mills, improved storage and

drying techniques to prevent aflatoxin contamination,

etc.

ii. Mango

3.70 Mango, a tropical fruit, is popular in both fresh

and processed forms. The study on mango

undertaken in Andhra Pradesh, Maharashtra and

West Bengal, some of the major mango producing

Table 3.14: Commodity Specific Studies

Commodity State/ Reference Sample Yield Cost of Net Income

Year Size* (kg/ha) Cultivation@ Farmers Processors

(Rs./ha) (Rs./ha.) (Rs./qtl)

Groundnut Gujarat/ 2005-06 60 (32) 1,958 23,926 13,798 141-194

Rajasthan/2006-07 92 (70) 2,321 21,980 22,470 63

Jharkhand/ 2006-07 56 (56) 630 15,721 4,166 $

Mango Andhra Pradesh/ 75 (42) 9,880 13,585 41,990 200-636 #

West Bengal/ 104 (20) 45,000 35,815 2,42,838 800-6,000 ^

Maharashtra/ 59 (40) 8,000 A/ 62,760A/ 1,00,536 A/ 900

2005-06 9,984 K 52,572 K 1,29,588 K

Sugarcane Karnataka/ 57 (40) 99,837 84,078 17,979/ (-)82 to 113

40,649 **

Uttar Pradesh/ 107 (90) 55,575 56,417 (-) 3,478/ 6.10 **

2005-06 866 **

Figures in parentheses indicate the number of farmers covered. A : Alphoso mango K: Kesar mango

* : Includes farmers, processors, traders, etc. @ : With imputed value of family labour.

** : For ratoon sugarcane crop. .

# : Net income of Rs.2/kg for canned pulp processing and Rs.6.36/kg for jelly making.

^: Net income of Rs.11/kg for mango pickles, Rs.8/kg for sauce, Rs.25/kg for jam, Rs.60/kg for jelly and Rs.31/litre for squash.

$ : Bulk of groundnut production marketed as shells/kernels.

Ch-Eng-3.p65 7/14/2009, 3:03 PM70

71

states, revealed that the investments in mango

orchards for different varieties were financially viable

with financial rate of return (FRR) > 50 per cent

in West Bengal, 20.8 per cent in Andhra Pradesh,

17.6 per cent (Alphonso) and 23.2 per cent (Kesar) in

Maharashtra. Net income/ha. was maximum in West

Bengal (Rs.2,42,838) due mainly to very high yield

level. Although the scope for mango processing is

immense, processing activity was limited, owing to

preference for consuming fresh fruits. Some of the

major constraints identified by the study were,

(i) prevalence of oral lease system for mango orchards

in West Bengal, which deterred FI from lending,

(ii) indiscriminate use of chemical fertilizers/pesticides

affecting the health of trees and production in the

long run and (iii) predominance of middlemen in the

supply chain resulting into low producers’ share in

consumer rupee (28.8% in Andhra Pradesh). On the

export front, though India has the potential to

become a major exporter, lack of quality control,

inadequate post-harvest infrastructure, incidence of

fruit fly/stone weevil and inadequate follow-up of

required pre-harvest practices by the producers, etc.,

led to a dismal share of exports in total production

(0.45% during 2004-05). Further, hybrid varieties like

Mallika and Amrapally posed a threat to traditional

varieties like Fazli, Aswina, Gopalbhog, etc., in West

Bengal. The study recommended rejuvenation of old

orchards and awareness creation among the farmers

regarding the agricultural practices, export processes,

loan facilities, etc. Improved post harvest

management, infrastructure support like packaging

house, cold storage, etc., ending the rumali system of

marketing (bidding under handkerchief) in

Maharashtra, organisation of farmers into co-operative

societies, organising mango exhibitions might help

farmers realise better price.

iii. Sugarcane

3.71 Although primarily a tropical crop, sugarcane

cultivation in India is concentrated in the sub-tropical

zone (Uttar Pradesh, Uttarakhand, Bihar, Punjab,

Haryana) accounting for 67 and 62 per cent of the

area and production, respectively. The tropical zone

(Maharashtra, Andhra Pradesh, Gujarat and

Karnataka) accounts for only 33 per cent of the area,

but contributes 38 per cent of the production owing

to relatively high productivity. The study on sugarcane

conducted in Karnataka and Uttar Pradesh,

representing both types of agro-climatic regions,

indicated that sugarcane cultivation, in Uttar Pradesh

was not profitable as the returns, due to use of local

varieties, especially by small farmers, were insufficient

to cover all costs, particularly family labour. However,

relatively better returns in Karnataka were due to

above normal rainfall received during the reference

year, which reduced the cost of irrigation. Similarly,

sugar processing as a solo activity did not work out

to be a viable proposition for sugar mills in Uttar

Pradesh and Karnataka. This was due to factors such

as small size of the plants, high cost of procuring

sugarcane, declining trend in free sugar prices,

controlled marketing, limited opportunities for

diversification in favour of co-generation using

bagasse, etc. With an average crushing capacity of

4,519 TCD (tonnes crushed daily) and 4,630 TCD in

Karnataka and Uttar Pradesh, the sugar mills

operated on an average for 132 and 146 days,

respectively. Stagnant productivity and variability in

area under sugarcane and increase in number of

units/capacities adversely affected the working period

of the sugar mills. Diversification in the form of

ethanol production and co-generation of power by

sugar mills can be considered for improving their

financial health. The study also recommended

upgrading sugar mills, timely payment to farmers for

supply of sugarcane, investment in R&D to increase

sugar recovery percentage, evolve disease/pest resistant

varieties, adoption of improved farm practices,

promotion of contract farming, transparency in

dealings of sugar mills, especially, with the small

farmers, etc.

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72

NABARD Consultancy Services

3.72 NABARD Consultancy Services Pvt. Ltd.

(Nabcons), a wholly owned subsidiary of NABARD, has

established itself as a professional consultancy service

provider in the sphere of agriculture, allied activities and

rural development. The clientele includes GoI, State

Governments, National Institute of Agriculture Marketing

(NIAM), commercial banks, small entrepreneurs,

Agricultural Marketing Board-Mauritius, APRACA,

SIDBI, UPDASP, etc. Nabcons has signed

Memorandum of Understanding (MoU) with a number

of banks and International Consultancy Organisations

for promotion of business and jointly bid for a number

of assignments successfully.

A. Management

3.73 The Board of Nabcons under the Chairmanship

of Dr. K.G. Karmakar, Managing Director, NABARD

comprises of eight Directors. Consequent upon the

retirement of Dr. R. Balakrishnan, ED, NABARD and

Shri S.M. Mehta, Chief Executive Officer (CEO),

Nabcons, the Board was reconstituted by inducting Shri

P.L. Behera, ED, NABARD and Shri Madan Mohan as

CEO, Nabcons. The five independent Directors remained

unchanged.

B. Developments

3.74 During 2008-09, Nabcons acquired ISO 9001:

2008 certification. In addition to executing five foreign

assignments (one each in Nepal, Laos, Cambodia,

Vietnam and Indonesia), Nabcons also arranged

international programmes for delegates from Kenya,

Sri Lanka, Bangladesh, etc., thus earning foreign

exchange worth $ 1.10 lakh. The company entered the

Mutual Fund Advisory Services in September 2008 and,

as at end-March 2009, earned a revenue of

Rs.29.47 lakh. With a view to tapping the potential for

consultancy in African nations, Nabcons is opening a

liaison office in Nairobi, Kenya. The positioning of

Nabcons in Kenya is expected to garner potential rural

development consultancies in Africa in the areas of mF,

NRM, livelihood opportunities, etc.

C. Progress

3.75 During the year, Nabcons contracted 109

assignments (as against 321 last year) involving

consultancy fees of Rs.16.66 crore registering a growth

of 89 per cent in the fee amount. Thrust was laid on

contracting high value assignments like monitoring of

infrastructure projects under Prime Minister’s Special

Package for Arunachal Pradesh, UPDASP, study for

assessment and development of financial models for

handicrafts artisans, etc. During 2008-09, the company

completed 122 assignments involving consultancy fee of

Rs.10.42 crore (Table 3.15).

3.76 Some of the new areas covered include, study of

foot and mouth disease in five States to assess the

economic loss, supply chain management, NRM

(Hinduja Foundation), study on financial inclusion

(for RBI), restructuring of Maharashtra Agricultural

Marketing Federation, review of strategy for Agriculture

Marketing Board – Mauritius, study of rural finance

policies and regulation in Cambodia and Laos, etc.

During 2008-09, the company earned an income of

Rs.11.27 crore as compared to Rs.10.19 crore during the

previous year. Profit after tax stood at Rs.4.28 crore as

compared to Rs.3.82 crore during the previous year,

registering a growth of 15 per cent.

Table 3.15: Client Profile of Nabcons


(Rs. lakh)

Client Assignments completed

Institution 2008-09 Cumulative

No. Amount No. Amount

Government of India 63 385.01 426 2,220.20

State Government 21 500.14 97 1,102.01

International

Organisations 11 49.37 55 256.79

Banks 3 18.20 34 81.61

Corporate Houses 12 62.75 110 393.85

Individuals 12 26.49 154 166.00

Total 122 1,041.96 876 4,220.66

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73

Management of Resources

Table 3.16: Sources of Funds

(As on 31 March)

(Rs. crore)

Particulars 2008 2009

Capital, Reserves & Surplus 10,603 11,586

(10.7) (9.8)

NRC (LTO) and (Stab.) Funds 15,159 15,571

(15.4) (13.2)

Deposits, Bonds & Debentures 28,806 24,366

(29.2) (20.6)

STCRC Fund - 4,622

- (3.9)

Borrowings from GoI 370 354

(0.4) (0.3)

Borrowings from Commercial Banks 2,500 500

(2.5) (0.4)

Certificate of Deposits 1,422 1,816

(1.4) (1.5)

Term Money Borrowings - 244

- (0.2)

RIDF Deposits 30,593 47,023

(31.0) (39.8)

Foreign Currency Loan 508 498

(0.5) (0.5)

Other Liabilities/Funds 8,745 11,596

(8.9) (9.8)

Total 98,706 1,18,176

(100.0) (100.0)


3.77 The financial resources of NABARD increased by

Rs.19,470 crore during 2008-09 as against an increase

of Rs.17,486 crore during 2007-08. The resources

were augmented by issue of Corporate Bonds,

Bhavishya Nirman Bonds (BNB), NABARD Rural

Bonds, RIDF Deposits, Term Deposits, Certificate of

Deposits, Commercial Paper and Term Money

Borrowings (TMB). Repayment of RIDF deposits and

redemption of Bonds amounted to Rs.2,375 crore and

Rs.9,248 crore, respectively. The funds deployed for

supporting investment credit operations (including

development of rural infrastructure) and loans to State

Governments for contributing to the share capital of

co-operative credit institutions together increased by

Rs.15,863 crore and the production and marketing credit

(including liquidity support) decreased by Rs.68 crore

during 2008-09. The details on sources and uses of

funds are furnished in Table 3.16 and 3.18, respectively.

Sources of Funds

A. Capital

3.78 The authorised capital of NABARD continued to

be Rs.5,000 crore as also the paid up capital, which

remained the same since 2001-02 at Rs.2,000 crore

(Rs.550 crore subscribed by GoI and Rs.1,450 crore by

RBI), as on 31 March 2009.

B. Deposits

3.79 Deposits from tea, coffee and rubber companies

outstanding as on 31 March 2009 aggregated

Rs.60 crore. Term deposits aggregrated Rs.421 crore.

During the year, NABARD received deposits from

commercial banks aggregating Rs.18,805 crore under

RIDF VI to XIV. Repayments of Rs.2,375 crore were

made to commercial banks under RIDF V to XI upto

31 March 2009. Deposits outstanding under various

tranches of RIDF as on 31 March 2009 were

Rs.47,023 crore as against Rs.30,593 crore as on

31 March 2008.

3.80 The Short-term Co-operative Rural Credit

(Refinance) [STCRC] Fund, with contribution by

scheduled commercial banks not achieving their priority

sector lending obligations, was set up with NABARD to

enhance its refinance operations to ST co-operative

credit institutions. NABARD received deposits from

commercial banks aggregating Rs.4,622 crore under this

Fund.

C. Borrowings

3.81 The market borrowings of NABARD as

percentage to working funds registered a significant

decline during 2008-09 (Table 3.17).


74

Table 3.17: Market Borrowings of NABARD

(As on 31 March)

(Rs. crore)

Year Total Working Outstanding Market

Funds Borrowings *

2005 60,779 22,261 (36.6)

2006 67,605 24,084 (35.6)

2007 81,220 32,146 (39.6)

2008 98,706 33,606 (34.0)

2009 1,18,176 27,779 (23.5)

* : Includes deposits (excluding RIDF deposits and STCRC Fund),

borrowings, bonds and foreign currency borrowings.

Figures in parentheses indicate percentages of outstandings market

borrowing to total working funds.

a. Bonds

3.82 Government of India has withdrawn the option

available to NABARD for raising resources through issue

of Capital Gain Bonds (CGB), Tax Free Bonds and

Priority Sector Bonds (PSB) from 1 April 2006.

Consequently, issue of Corporate Bonds, BNB and

NABARD Rural Bonds were the major sources of raising

resources during 2008-09.

i. Capital Gain Bonds

3.83 During the year, under CGB an amount of

Rs.4,086.51 crore was redeemed and the outstandings

stood at Rs.690.94 crore, with a weighted average cost

of 5.38 per cent. Investors have been given option to

reinvest the amount received on redemption of CGB as

term deposit for one year at a fixed rate of interest.

Along with this, term deposits were also offered for

institutional investors under structured deals. An amount

of Rs.421.94 crore has been raised under term deposits

during the year.

ii. Priority Sector Bonds and Corporate Bonds

3.84 During the year, PSB worth Rs.325 crore and

Corporate Bonds worth Rs.4,185 crore were redeemed.

Corporate Bonds worth Rs.1,464 crore were issued

during 2008-09. There were no outstandings under PSB,

as on 31 March 2009, while it was Rs.18,156.50 crore

under Corporate Bonds.

iii. Tax Free Bonds

3.85 Tax Free Bonds worth Rs.535.15 crore were

redeemed during the year. Thus, as on 31 March 2009,

no outstanding amount remains under these Bonds.

iv. Statutory Liquidity Ratio (SLR) Bonds

3.86 Though no SLR bonds were issued during

the year, an amount of Rs.116.23 crore was repaid.

The outstandings under SLR bonds aggregated


v. Bhavishya Nirman Bonds

3.87 During the year, BNB worth Rs.2,766.76 crore

were issued. The outstandings under BNB aggregated to

Rs.4,554.22 crore as on 31 March 2009.

vi. Certificate of Deposits

3.88 NABARD raised resources worth Rs.1,816.15

crore by way of Certificate of Deposits (CD) during

2008-09.

vii. Term Money Borrowings

3.89 In order to meet the gap in resources, NABARD

started raising resources through TMB from 1 August

2008. As on 31 March 2009, TMB raised aggregated

Rs.244.07 crore.

viii. Commercial Papers

3.90 NABARD raised resources worth Rs.180.62 crore

by way of Commercial Papers during 2008-09 with face

value of Rs.200 crore. As on 31 March 2009,

outstandings under Commercial Papers stood at

Rs.180.62 crore.

ix. Rural Bonds

3.91 During the year, Rural Bonds (with benefit

under Section 80C of IT Act) worth Rs.20.64 crore

were issued. The total outstandings under Rural Bonds,

since inception, aggregated Rs.23.98 crore as on

31 March 2009.

b. Funds from GoI

3.92 During the year, an amount of Rs.16.40 crore

was repaid on maturity to GoI against the loans drawn

earlier under various externally aided projects.


75

c. Corporate Borrowings

3.93 An amount of Rs.2,000 crore was repaid during

the year. The amount outstanding under corporate

borrowings aggregated Rs.500 crore as on

31 March 2009.

d. Borrowings in Foreign Currency

3.94 The borrowings in foreign currency from KfW,

Germany aggregated Rs.498.29 crore (• 94.04 million),

as on 31 March 2009. The foreign exchange risk on this

loan as well as interest payments have been hedged at

a cost of 1.02 per cent for 10 years.

D. Short-Term Co-operative Rural

Credit (Refinance) Fund

3.95 As per the Union Budget 2008-09 announcement,

a STCRC (Refinance) Fund has been established with

NABARD with a corpus of Rs.5,000 crore. RBI had also

allocated the above amount among the public and

private sector banks having a shortfall in achievement of

agriculture lending target of 18 per cent. As on 31 March

2009, NABARD had raised demand for deposits to the

extent of Rs.5,000 crore against which deposit of

Rs.4,622.28 crore was received from the participating

commercial banks.

E. Agricultural Debt Waiver and Debt

Relief Scheme, 2008

3.96 With a view to ensuring adequate financing of

agriculture operations by banks, RBI provided liquidity

support to NABARD to the extent of Rs.17,500 crore

on 16 October 2008, to be allocated by NABARD

amongst co-operative banks and RRB, based on the

extent of debt waiver/relief afforded by them under

the ADWDR Scheme, 2008. Drawals were made and

disbursed to co-operative banks and RRB on receipt

of claims from the banks. Subsequently, GoI released

an amount of Rs.17,500 crore to NABARD in two

tranches in December 2008. The entire amount

has been repaid to RBI, including the accrued interest

of Rs.155.79 crore. As on 31 March 2009,

Rs.16,611.01 crore has been released by NABARD,

representing 56 per cent of the claims received from

co-operative banks and RRB.

F. Restructuring of Term Loans

of Co-operative Sugar Mills –

Interest Subvention

3.97 GoI had announced a revised package on

restructuring of Term Loans of Co-operative Sugar Mills.

Under this package, GoI has agreed to provide interest

subvention upto a maximum of 3 per cent. As against

Rs.138.54 crore received from GoI towards interest

subvention, an amount of Rs.116.18 crore was

disbursed during the year.

Uses of Funds

A. Loans and Advances

a. Schematic Lending

3.98 The amount outstanding under schematic lending

including subscriptions to Special Development

Debentures to SCARDB, was Rs.33,334.81 crore as on

31 March 2009 as against Rs.32,401 crore as on

31 March 2009.

b. ST, MT and MT (Conversion) Loan

Assistance

3.99 The ST loans advanced for financing SAO to the

SCB (Rs.13,897.88 crore) and RRB (Rs.2,816.50 crore)

together with other ST loans to SCB (Rs.62.12 crore)

and RRB (Rs.119.73 crore) decreased to Rs.16,896.23

crore, as on 31 March 2009, from Rs.17,381.50 crore as

on 31 March 2008.

3.100 As on 31 March 2009, the amount outstanding

under (i) LT investment non-project loans stood at

Rs.251.92 crore, and (ii) MT (conversion) loans stood at

Rs.200.68 crore compared to Rs.118.20 crore as on 31

March 2008. The amount outstanding under the

Liquidity Support Scheme for SCB and RRB aggregated

Rs.2,590.92 crore as on 31 March 2009 as against

Rs.1,939.89 crore as on 31 March 2008.

c. Loans to State Governments

i. Project Loans under RIDF

3.101 The project loans to State Governments under

RIDF stood at Rs.45,616.21 crore as on

31 March 2009, compared to Rs.30,648.59 crore as on

31 March 2008.


76

ii. Non-Project Loans

3.102 The amount outstanding under non-project LT

loans to State Governments for contribution to the share

capital of co-operative credit institutions, amounted to

Rs.251.93 crore as on 31 March 2009, compared to


d. Other Loans

3.103 Other loans outstanding stood at Rs.47.98 crore,

as on 31 March 2009, as against Rs.27 crore as at

end-March 2008, which included outstanding amounts

of loans issued under various funds, viz., CDF, MFDEF,

WDF and TDF.

B. Investment of Surplus Funds

3.104 NABARD deployed its surplus funds in

government securities (G-sec), ST deposits with

commercial banks and other instruments such as CP,

CD, mutual funds, CBLO, etc. During the year,

NABARD liquidated its ST deposits and G-sec

investments to support its business operations. As on

31 March 2009, the total investments of the surplus

funds of the Bank in ST deposits, money market

instruments, G-sec, etc., aggregated Rs.16,194.75

crore.

C. Co-finance

3.105 The Bank has entered into agreements with

commercial banks to co-finance various projects.

The outstanding as on 31 March 2009 aggregated

Rs.94.48 crore, an increase from Rs.66 crore as on

31 March 2008.

Income and Expenditure

3.106 The total income of NABARD during the year

amounted to Rs.7,050.68 crore as against Rs.5,509.10

crore during the previous year. Out of this, a sum of

Rs.597.40 crore has been provisionally earmarked

towards payment of Income Tax and Fringe Benefit Tax

(net of deferred tax asset), and Rs.340 crore has been

contributed to Special Reserves in terms of Section

36(1)(viii) of Income Tax Act, 1961. Of the remaining

income, Rs.400 crore has been transferred to the NRC

(LTO) Fund and Rs.10 crore to the NRC (Stabilisation)

Fund under Sections 42 and 43, respectively, of the

NABARD Act, 1981.

3.107 Out of the balance income amounting to

Rs.5,703.28 crore (Rs.4,257.15 crore in the previous

year), after meeting the total expenditure of

Rs.5,063.15 crore (Rs.3,761 crore in the previous year),

the surplus amounted to Rs.640.13 crore, including

withdrawals of Rs.48.15 crore from funds against

expenditure debited to P&L account (Rs.30.31 crore

during 2007-08). The surplus has been transferred to

CDF - Rs.38.11 crore (Rs.53.07 crore in the previous

year); R&D Fund - Rs.8.61 crore (Rs.7.49 crore in the

previous year); Reserve Fund - Rs.555.53 crore

(Rs.405.11 crore in the previous year); Investment

Fluctuation Reserves - Rs.42 crore (Rs.25.78 crore in the

previous year); Financial Inclusion Fund - Rs.32.50 crore

(Rs.5 crore in the previous year); Financial Inclusion

Technology Fund - Rs.18.50 crore (Rs.5 crore in the

previous year) and Farmers’ Technology Transfer Fund -

Rs.31.61 crore (Rs.25 crore in the previous year).

Table 3.18: Uses of Funds

(As on 31 March)

(Rs. crore)

Particulars 2008 2009

Cash and Bank Balance 10,314 13,975

(10.4) (11.8)

Government Securities and

other Investments 2,582 2,995

(2.6) (2.5)

Production and Marketing Credit 17,382 16,896

(17.6) (14.3)

Conversion of Production 118 20

Credit into MT Loans (0.1) -

Liquidity Support 1,940 2,591

(2.0) (2.2)

MT & LT Project Loans 32,401 33,335

(32.8) (28.2)

LT Non-Project Loans 290 252

(0.3) (0.2)

Loans out of RIDF 30,649 45,616

(31.1) (38.6)

Co-finance Loans 66 94

(0.1) (0.1)

Other Loans 27 48

(including MT Investment Credit) - (0.1)

Fixed Assets & Other Assets 2,937 2,353

(3.0) (2.0)

Total 98,706 1,18,176

(100.0) (100.0)



77

Capacity Building of Client InstitutionsIV

Table 4.1: Performance of PACS

(As on 31 March)

(Rs. crore)

Particulars 2006 2007 2008

Numbers (lakh) 1.06 0.97 0.97

Membership (lakh) 1,252 1,258 1,298

Borrowing Members (lakh) 461 479 787

Owned Funds 9,292 11,039 11,004

Deposits 19,561 23,484 23,013

Borrowings 41,018 43,714 48,708

Loans issued* 42,920 49,613 56,447

Source: NAFSCOB *: April-March

Table 4.2: Growth of Short-Term Co-operative

Credit Structure

(As on 31 March)

(Rs. crore)

Particulars SCB DCCB

2007 2008P 2007 2008P

Number 31 31 370 370

Share Capital 1,247 1,534 5,413 5,973

Reserves 9,461 9,859 26,862 27,666

Deposits 48,559 56,324 92,352 1,07,094

Borrowings 22,256 32,577 29,912 31,114

Loans Issued* 52,924 57,455 84,823 93,162

Loans Outstanding 47,335 50,005 90,153 1,01,368

*: April-March P: Data provisional

Data for Bihar, Himachal Pradesh and Manipur SCB and DCCB in Bihar and

HP repeated for 2007-08.

The financial health and growth of rural credit

institutions continue to be areas of concern to

NABARD. Regional Rural Banks (RRB) and

Co-operative Banks continue to play a crucial role in

the dispensation of credit for agriculture and rural

development. These institutions, however, have

come under increasing pressure from competitors

like public sector commercial banks, private sector

banks, new generation banks, etc. The Bank has,

therefore, been striving towards improving the health of

these institutions through various developmental

initiatives.

Institutional Development

4.2 This section discusses the performance of co-

operative banks and RRB, various measures and

initiatives taken by NABARD during the year to

facilitate their development and improve performance.

A. Rural Co-operative Credit

Institutions:

a. Performance

4.3 Primary Agricultural Credit Societies (PACS), the

credit institutions at the grassroots level, deal directly

with individual borrowers and grant short, medium and

long-term loans. The membership of PACS improved

during the period 2007-08 and aggregated 12.98 crore,

of which borrowing members at 7.87 crore constituted

61 per cent. While membership of PACS grew by 3 per

cent during 2007-08, the number of borrowing

members increased substantially (64%). Deposits of

PACS decreased by 2 per cent while borrowings

increased by 11 per cent (as on 31 March 2008)

compared to the previous year. The loans issued

increased by 14 per cent over the previous year

(Table 4.1).

4.4 As on 31 March 2008, the deposits of

SCB and DCCB, increased by 16 per cent while

borrowings of SCB increased by 1 per cent and that of

DCCB increased by 4 per cent. Loans issued by SCB

and DCCB increased by 9 and 10 per cent,

respectively. The loans outstanding increased by 6 and

12 per cent during 2007-08 over the previous year

(Table 4.2).

Ch-Eng-4.p65 7/15/2009, 10:59 AM77

78

Table 4.3: Growth of Long-Term Co-operative Credit

Structure

(As on 31 March)

(Rs. crore)

Particulars SCARDB#@ PCARDB#

2007 2008P 2007 2008P

Number 20 20 696 697

Share Capital 792 789 922 912

Reserves 2,279 2,685 2,646 3,289

Deposits 602 695 355 350

Borrowings 16,684 16,519 12,767 12,411

Loans Issued* 2,436 2,221 1,970 1,822

Loans Outstanding 18,625 18,325 12,108 11,756

P : Data provisional * : April-March

# : Data for Bihar, HP, and TN repeated.

@ : Manipur SCARDB under orders of liquidation.

Table 4.4: Working Results of Co-operative Banks

(Rs.crore)

Agency Total In Profit In Loss

(No.) No. Amount No. Amount

SCB

2006-07 31 27 592 4 44

2007-08* 31 26 515 5 49

DCCB@

2006-07 370 271 733 98 765

2007-08* 370 261 874 108 902

SCARDB$$

2006-07 20 9 309 9 70

2007-08 20 9 147 9 48

PCARDB

2006-07 696 371 438 325 507

2007-08 697 350 434 347 618

Data for 2007-08 provisional

@ : Profitability position of Baran DCCB in Rajasthan is not available

for the year 2007 and Boudh DCCB in Orissa for 2008.

* : Data for SCB and DCCB in Bihar, Himachal Pradesh, and

Manipur repeated from 2007.

$ : Data for Boudh DCCB in Orissa is not available and

Kumbhakonam DCCB in Tamil Nadu is neither in profit nor in loss.

$$ : Data for Manipur SCARDB is not available as the SCARDB is

under orders of liquidation. For 2005-06 and 2006-07 profit/loss

data for Bihar SCARDB is not received.

Table 4.5: Accumulated Losses

(As on 31 March)

(Rs.crore)

Year SCB DCCB SCARDB* PCARDB**

2006 276 5298 924 2724

2007 389 5719 964 2891

2008# 429 6106 1354 3283

Data for 2008 Provisional.

# : Data for SCB and DCCB in Bihar, Himachal Pradesh and

Manipur repeated.

* : Data for Bihar, HP and Tamil Nadu repeated for 2007-08 and

Manipur SCARDB under orders of liquidation.

** : Data for HP and Tamil Nadu repeated for 2007-08.

4.5 In the case of LT co-operative credit structure,

their performance in terms of business operations

is a cause for concern. Borrowings by both State

Co-operative Agriculture and Rural Development Banks

(SCARDB) and Primary Co-operative Agriculture and

Rural Development Banks (PCARDB) during the year

ending 2008 decreased by 1 and 3 per cent,

respectively, over the previous year. While loans issued

by SCARDB and PCARDB decreased by 9 and 8 per

cent, respectively, loans outstanding decreased by 2

and 3 per cent, respectively, over the previous year

(Table 4.3)

b. Working Results

i. Profitability

4.6 Out of 31 SCB, 26 were in profit during 2007-08

with overall profit at Rs.515 crore. At the aggregate

level, SCB as a group earned a net profit of Rs.466

crore during 2007-08. While 261 (out of 370) DCCB

earned overall profit of Rs.874 crore, nearly one third

of the DCCB incurred losses to the extent of Rs.902

crore during 2007-08. In the case of the LT co-

operative structure, while the profits at the aggregate

level for SCARDB and PCARDB have been declining,

the losses have been on the rise in the case of loss

making units. The number of profit making and loss

making SCARDB remained static during the two year

period 2006-08 yet the number of profit making

PCARDB declined. PCARDB at the aggregate level

incurred a loss of Rs.184 crore during 2007-08 while

SCARDB generated an aggregate profit of Rs.99 crore

(Table 4.4).

4.7 The data on the aggregate amount of

accumulated losses of co-operative credit institutions,

as on 31 March 2008, show an increasing trend

(Table 4.5).

Ch-Eng-4.p65 7/15/2009, 10:59 AM78

79

Table 4.6: Region-wise Working Results of SCB

(As on 31 March)

(Rs. crore)

Region Profit/Loss NPA NPA as % to loans Recovery (%)

(+) / (-) outstanding (As on 30 June)

2006-07 2007-08 2007 2008 2007 2008 2007 2008

Central 72.44 65.12 763.47 820.01 13.85 12.50 82.54 82.94

Northern 122.57 101.33 301.86 321.99 3.07 2.92 98.16 97.75

Eastern 30.94 32.15 501.11 533.52 10.82 10.78 70.64 78.86

Western 317.34 276.11 2,565.97 2,352.33 20.48 19.75 79.06 67.54

Southern 8.42 10.10 2,154.49 1,718.23 15.51 11.85 87.91 87.69

North-Eastern -3.94 -19.39 417.10 422.61 43.34 40.40 43.02 42.56

All-India 547.77 465.42 6,704.00 6,168.69 14.16 12.34 86.00 84.35

Data for 2008 provisional.

Table 4.7: Region-wise Working Results of DCCB

(As on 31 March)

(Rs. crore)

2006-07* 2007-08 #$ NPA % Recovery (%)

Region DCCB Total NPA to Loans (As on

Profit Loss Profit Loss Outstanding 30 June)

(No.) No. Amt. No. Amt. No. Amt. No. Amt. 2007 2008 2007 2008 2007 2008

Central 104 71 121.64 33 186.00 77 179.53 27 188.37 3118.04 3481.63 30.14 28.86 61.57 46.94

Northern 73 56 118.32 16 44.01 57 121.37 16 57.95 1128.32 1357.69 6.83 7.22 82.92 65.01

Eastern 64 45 42.78 19 59.39 44 51.12 19 105.61 1241.64 1465.07 20.77 22.35 64.36 53.07

Western 49 37 167.64 12 226.54 30 182.06 19 313.08 6127.07 6940.32 21.75 22.32 60.34 44.30

Southern 80 62 282.19 18 249.03 53 339.70 27 236.60 4759.43 5496.04 16.09 16.73 77.60 64.86

All-India 370 271 732.51 98 764.97 261 873.78 108 901.61 16374.50 18740.75 18.16 18.49 71.08 55.82

Data for 2008 provisional. * : Data for 1 DCCB in Rajasthan not available for 2007.

# : Data for 1 DCCB in Orissa not available for 2008. $ : Data for DCCB in Bihar and Himachal Pradesh repeated from 2007

4.8 During 2007-08, profits of SCB declined in all

regions except the eastern (4%) and southern (20%)

regions, thus, affecting the profitability position of SCB

as a whole (Table 4.6). Losses of SCB in NER

increased substantially. While profits of 12 SCB

(Andaman & Nicobar, Andhra Pradesh, Chandigarh,

Delhi, Goa, Gujarat, Jammu & Kashmir, Meghalaya,

Orissa, Sikkim, Uttar Pradesh and West Bengal)

improved, as on 31 March 2008, ten SCB

(Chhattisgarh, Haryana, Karnataka, Madhya Pradesh,

Maharashtra, Mizoram, Punjab, Rajasthan, Tamil

Nadu and Uttarakhand) showed declining profitability

as compared to previous year. Puducherry SCB, which

was in profit in 2006-07, incurred loss during 2007-08,

whereas Kerala and Tripura SCB reduced their losses

during 2007-08. The losses of Arunachal Pradesh and

Assam SCB increased considerably.

4.9 In the case of DCCB, profits during 2007-08

increased across all regions, except in southern region

where losses declined (5%). At the aggregate level,

though the number of DCCB in profit decreased, the

amount of profit showed an increase (19%). However,

the number and amount of loss-making DCCB

recorded an increase (Table 4.7). The extent of profits

and number of profit making DCCB increased in

Haryana, Jharkhand, Madhya Pradesh, Karnataka,

Uttar Pradesh and West Bengal.

Ch-Eng-4.p65 7/15/2009, 10:59 AM79

80

Table 4.8: Region-wise Working Results of SCARDB

(As on 31 March)

(Rs. crore)

Region No. of Profit / Loss Total NPA NPA as %

Branches (+) / (-) to loans Recovery (%)

outstanding (As on 30 June)

2008 2006-07 2007-08 2007 2008 2007 2008 2007 2008

Central 349 29.68 22.38 2340.40 2708.84 40.07 47.06 33.77 69.18

Eastern 204 -2.31 -2.94 374.73 451.72 40.72 46.24 31.33 33.03

North-Eastern 38 -0.09 -0.03 16.84 18.25 57.82 58.98 61.74 70.98

Northern 85 6.24 72.27 1409.38 699.75 24.07 12.57 79.06 58.00

Southern 56 -12.88 -12.11 687.41 757.61 16.94 18.78 50.31 46.82

Western 181 218.41 -19.31 813.93 1489.25 42.36 76.01 32.55 8.33

All-India 912 239.05 -132.08 5642.69 6125.41 30.30 33.43 44.24 49.39

Data for 2008 for Bihar, Himachal Pradesh and Tamil Nadu repeated. Manipur SCARDB under liquidation.

Table 4.9: Region-wise Working Results of PCARDB

(As on 31 March)

(Rs. crore)

Region 2006-07 2007-08 Total NPAs NPA as % Recovery (%)

to loans o/s (As on

Profit Loss Profit Loss 30 June)

No. Amt. No. Amt. No. Amt. No. Amt. 2007 2008 2007 2008 2007 2008

Central 20 2.92 30 53.48 17 0.97 33 119.60 555.78 744.21 37.51 53.39 56.71 56.81

Eastern 11 2.60 59 28.52 7 1.46 63 38.42 229.28 201.18 37.52 28.48 50.60 48.66

Northern 85 31.38 59 125.98 95 133.81 50 56.88 1984.83 2159.94 34.46 40.13 57.69 41.22

Southern 252 379.14 151 116.03 230 295.57 173 133.21 1090.54 1266.55 33.00 37.60 54.11 45.84

Western 3 22.19 26 183.28 1 2.02 28 269.79 456.02 767.93 48.00 84.90 23.75 4.10

All-India 371 438.23 325 507.29 350 433.83 347 617.90 4316.45 5139.81 35.65 43.72 52.25 40.46

Data for 2008 for Orissa, Himachal Pradesh and Tamil Nadu repeated

4.10 During 2007-08, SCARDB in central and

northern regions increased its profit while those in

other regions incurred losses. Alhough the SCARDB in

the NER reduced its losses substantially (78%), at the

aggregate level, SCARDB were loss-making entities,

incurring a net loss of Rs.132 crore (Table 4.8). The

profits of the SCARDB increased in Kerala, Madhya

Pradesh, Punjab and Rajasthan while it decreased in

Gujarat and West Bengal. The losses of SCARDB

increased further in Chhattisgarh, Jammu & Kashmir,

Tripura and Uttar Pradesh. SCARDB in Assam and

Haryana turned to profit during 2007-08 while

Karnataka and Maharashtra SCARDB that were in

profit, incurred losses during 2007-08. During 2007-

08, overall profit of PCARDB declined owing to

decline in profit across all regions, with the exception

of the northern region. The number and extent of

losses of loss-incurring PCARDB increased in all

regions, except northern region (Table 4.9). The

number of profit-making PCARDB increased in

Chhattisgarh, Haryana, Kerala and Punjab, while the

number of loss-incurring PCARDB increased

substantially in Karnataka, Maharashtra, Rajasthan

and West Bengal during 2007-08.

ii. Costs and Margins

4.11 The overall returns and cost of funds, as a

percentage to working funds, for SCB as a group worked

out to 4.92 and 7.15 per cent, respectively. Thus, the

financial margin available to SCB was 2.23 per cent

(excluding miscellaneous income of 0.63%) during

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81

Table 4.10: Composition of NPA of Co-operative Banks

(As on 31 March 2008)P

(Rs.crore)

Assets

Classification SCB# DCCB# SCARDB* PCARDB**

Sub-

Standard 2,779.29 7,858.62 3,304.95 3,004.94

Doubtful 2,652.44 8,222.09 2,802.80 2,111.07

Loss Assets 736.96 2,660.04 17.66 23.80

Total NPA 6,168.69 18,740.75 6,125.41 5,139.81

Provisions required 2,654.30 6,555.69 1,395.13 909.16

Provisions made 2,997.90 7,110.79 1,417.75 944.99

P : Data provisional

* : Data for Bihar, HP and TN repeated from previous year. Manipur

SCARDB under orders of liquidation.

** : Data for Tamil Nadu and Himachal Pradesh repeated from

previous year.

# : Data for SCB/DCCB in Bihar, HP and Manipur repeated from

previous year.

2007-08. The average transaction and risk costs of SCB

during 2007-08 worked out to 1.30 and 0.69 per cent,

respectively. SCB as a group earned a net margin* of

0.87 per cent during 2007-08 compared to 0.42 per cent

during the previous year. In the case of DCCB, the

overall return (yield on assets) to working funds and cost

of funds was 7.63 and 5.28 per cent, respectively. Thus,

the gross margin available to DCCB was 2.54 per cent

(excluding miscellaneous income of 2.01%). The average

transaction and risk costs, were 1.93 and 1.33,

respectively, during 2007-08. DCCB as a group earned

net margin* of 1.30 per cent during 2007-08.

4.12 The risk cost as a percentage to working funds

for SCB ranged between 0.05 (Gujarat) and 3.21

(Goa), the average being 0.69 per cent. Similarly,

average risk cost for DCCB worked out to 1.33 per

cent, with a range of 0.14 (Andhra Pradesh) and

10.18 per cent (Jharkhand) during 2007-08.

4.13 During 2007-08, out of 18 reporting SCARDB,

half had positive net margins. Similarly in case of

PCARDB out of 12 states, in six they had positive net

margins.

iii. Non- Performing Assets (gross) and

Recovery Performance

4.14 At the aggregate level, the percentage of gross

NPA to total loans and advances outstanding

decreased to 12.34 (SCB) while it increased to 18.49

per cent in the case of DCCB as on 31 March 2008.

(Table 4.6 and 4.7). In absolute terms, NPA were

estimated at Rs.6,169 crore and Rs.18,741 crore for

SCB and DCCB as on 31 March 2008, registering an

increase of 15 and 14 per cent, respectively (Table

4.10). The percentage of NPA to total loans and

advances outstanding in the case of SCARDB and

PCARDB increased to 33.43 and 43.72 per cent (as

on 31 March 2008) from 30.30 and 35.65 per cent,

respectively (Tables 4.8 and 4.9). Total NPA of

SCARDB and PCARDB estimated at Rs.6,125 crore

and Rs.5,140 crore showed an increase of 9 and 19

per cent, respectively.

4.15 Compared to the all-India average, NPA were

lower in northern (3%), eastern (11%) and southern

(12%) regions, and higher in central (13%), western

(20%) and north-eastern (40%) regions. SCB in

Andaman & Nicobar Islands, Arunachal Pradesh,

Delhi, Nagaland, Puducherry, Rajasthan, Tripura,

West Bengal and Uttarakhand continued to exhibit

high NPA levels. NPA for DCCB was higher for all

regions except for northern (7%) and southern regions

(17%). DCCB in Haryana, Himachal Pradesh, Punjab

and Rajasthan had low NPA levels while those in

Jharkhand, Uttar Pradesh, Chhattisgarh, Madhya

Pradesh, Jammu & Kashmir, Maharashtra and

Andhra Pradesh had very high NPA levels as on

31 March 2008.

4.16 The average loan recovery of SCB and DCCB

declined to 84 and 56 per cent, respectively, as on 30

June 2008. In absolute terms, the loan recovery of

SCB increased to Rs.25,891 crore (by 13%) as on 30

June 2008 from Rs.22,987 crore as on 30 June 2007.

The loan recovery of SCB in Orissa and Goa increased

considerably to 93 and 76 per cent, respectively, as on

30 June 2008, while SCB in Assam, Jammu &

Kashmir, Gujarat, Kerala, Madhya Pradesh, Mizoram,

Tripura and Tamil Nadu marginally improved their

loan recovery performance. The recovery performance

* Includes miscellaneous income.

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82

Table 4.11: Frequency Distribution of Cooperative Banks according to Range of loan recovery percentage

(As on 30 June)

(Number)

Recovery (%) SCB DCCB SCARDB PCARDB

2007 2008@ 2007$ 2008# 2007* 2008^* 2007 2008**

<40 5 3 51 131 8 9 295 253

>40 to <60 2 6 81 86 5 2 183 137

>60 to <80 12 11 110 74 3 6 146 66

>80 12 11 97 55 3 2 72 14

Total 31 31 339 346 19 19 696 470

Table 4.12: Frequency Distribution of States/ UTs according to Level of Loan Recovery of SCBs and DCCBs

(As on 30 June 2008)

Recovery (%) SCB DCCB

Data provisional for 2008.

@ : Data of Bihar, Himachal Pradesh and Manipur SCB repeated fromprevious year.

$ : Data for DCCB in Rajasthan and one DCCB in Punjab notavailable.

# : DCCB-wise data for Bihar (22), Himachal Pradesh (2), not available.

^ : Data for Bihar, Himachal Pradesh, and Tamil Nadu SCARDB

repeated from previous year.

* : Manipur SCARDB under orders of liquidation.

** : Data for PCARDB in Tamil Nadu (180), Himachal Pradesh (1) and

Orissa (46) not available.

Arunachal Pradesh, Bihar and

Manipur

Assam, Megahlaya, Tripura,

Jammu and Kashmir, Sikkim and

Maharashtra

Chandigarh, Himachal Pradesh,

Mizoram, Nagaland, Andaman

and Nicobar, West Bengal,

Chhattisgarh, Uttar Pradesh, Goa,

Andhra Pradesh, Pondicherry

Delhi, Haryana, Punjab,

Rajasthan, Orissa, Madhya

Pradesh, Uttarakhand, Gujarat,

Karnataka, Kerala, Tamil Nadu

<40

>40 and

<60

>60

and <80

>80

Haryana (2), Jammu and Kashmir (1) Rajasthan (9), Jharkhand (7), Orissa (5),

West Bengal (3), Chhattisgarh (3), Uttar Pradesh (32), Uttarakhand (3), Gujarat (4),

Maharashtra (17), Andhra Pradesh (21), Karnataka (3), and Tamilnadu (2),

Madhya Pradesh (19)

Haryana, (13), Rajasthan (9), Jharkhand (1), Orissa (7), West Bengal (5),

Chhattisgarh (2), Uttar Pradesh (11), Uttarakhand (3), Gujarat (6), Maharashtra (6),

Andhra Pradesh (1), Karnataka (4) Kerala (2), Tamil Nadu (4), Madhya Pradesh (11),

Punjab (1)

Haryana (3), Jammu and Kashmir (2), Rajasthan (10), Orissa (5), West Bengal (7),

Chhattisgarh (1), Uttar Pradesh (5), UttaraKhand (2), Gujarat (2), Maharashtra (7),

Karnataka (5), Kerala (3), Tamil Nadu (5), Pujnab (9), Madhya Pradesh (8)

Haryana(1), Rajasthan (1), West Bengal (2), Uttar Pradesh (2), Uttarakhand (2),

Gujarat (6), Maharashtra (1), Karnataka (9), Kerala (9), Tamil Nadu (12),

Punjab (10)

Total 31* 346**

* : Data for Bihar, Himachal Pradesh and Manipur SCB repeated from previous year** : DCCB-wise data for Bihar (22) and Himachal Pradesh (2) not available.

of SCB in northern and southern regions was very high

whereas recovery in NER declined further to 42.56 per

cent.

4.17 As on 30 June 2008, out of 31 SCB, 11 each

had recovery above 80 per cent or between 60 and 80

per cent (Table 4.11). Out of 346 reporting DCCB,

217 (63%) had recovery less than 60 per cent and only

55 (16%) had high recovery levels (>80%). Many of

the DCCB in Rajasthan, Madhya Pradesh, Jharkhand,

Orissa, Maharashtra, and Andhra Pradesh, had a loan

recovery of less than 40 per cent to demand

(Table 4.12). Loan recovery performance of DCCB

improved in Jammu and Kashmir and Kerala, while it

declined in Andhra Pradesh, Chhattisgarh, Gujarat,

Haryana, Maharashtra, Orissa, Punjab, Rajasthan,

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83

Haryana (13), Punjab (26) Rajasthan (12), West Bengal (13), Chhattisgarh (3),

Maharashtra (29), Karnataka (157),

Haryana (6), Punjab (38), Rajasthan (22),West Bengal (8), Chhattisgarh (8),

Madhya Pradesh (26), Karnataka (19), Kerala (10),

Punjab (20), Rajasthan (2) West Bengal (2), Chhattisgarh (1), Madhya Pradesh

(10), Karnataka (1), Kerala (30)

Punjab (5), West Bengal (1), Madhya Pradesh (2) and Kerala (6).

Table 4.13: Frequency Distribution of States/UT according to levels of Loan Recovery of SCARDB and PCARDB


Recovery (%) SCARDB PCARDB

Chhattisgarh, Bihar, Gujarat,

Jammu & Kashmir,Maharashtra

Karnataka, Rajasthan, Tamil

Nadu and West Bengal

Himachal Pradesh, Orissa

Haryana, Madhya Pradesh,

Uttar Pradesh, Punjab Tripura,

Kerala

Assam and Puducherry

< 40

> 40 and

< 60

> 60 and

< 80

> 80

Total 19* 346**

*: Data for Manipur SCARDB not available. Data for SCARDB in Bihar, Orissa, Himachal Pradesh and Tamil Nadu repeated.

**: Data for PCARDB in Himachal Pradesh(1), Orissa (46) and Tamil Nadu (180) not available.

Tamil Nadu, Uttar Pradesh, Uttarakhand, Jharkhand

and West Bengal.

4.18 As regards SCARDB, the loan recovery in

respect of SCARDB in Assam and Uttar Pradesh

improved considerably to 88 and 71 per cent,

respectively, as on 30 June 2008. Although SCARDB

in Jammu & Kashmir, Madhya Pradesh, Puducherry

and Tripura marginally improved their loan recovery

performance, the recovery performance of West Bengal

declined significantly (33%), as on 30 June 2008. Low

recovery performance and its declining trend are a

matter of concern. Out of 19 SCARDB, 11 had

recovery less than 60 per cent and only 2 above 80 per

cent (Table 4.11). Out of 470 reporting PCARDB, 253

(54%) had recovery below 40 per cent, while 80 (17%)

had recovery above 60 per cent. Recovery was less

than 40 per cent in many PCARDB in Maharashtra

(29), Karnataka (157), Haryana (13) and West Bengal

(13), Rajasthan (12) Chhattisgarh (3) and Punjab (26)

(Table 4.13). While the recovery performance of

SCARDB improved by 5 percentage points, in case of

PCARDB it declined by 16 percentage points (as on 30

June 2008). The loan recovery performance of all

PCARDB (except Kerala) declined significantly to 23

per cent.

c. Areas of Concern

4.19 NABARD, as a matter of policy, continues to

emphasise the need for co-operative banks to be

managed by duly elected Boards of Management.

However, the phenomenon of superseding elected

Boards continued in some States. As on 31 March

2008, Boards were superseded in 11 SCB (out of

reporting 29) and 159 DCCB (out of reporting 360) in

the ST Structure, and in 8 SCARDB (out of 20) and

in 260 PCARDB (out of 697) in the LT Structure

(Table 4.14).

d. Development Action Plans /

Memorandum of Understanding

4.20 NABARD has been preparing institution specific

Development Action Plans (DAP) and executing

Memorandum of Understanding (MoU) to enable

co-operative banks and RRB function as viable and

sustainable entities since 1994-95. The process was

executed in three phases from 1994-95 to 1999-2000

(Phase I), 2000-01 to 2003-04 (Phase II) and 2004-05

to 2006-07 (Phase III). In order to make it more

focused and effective, PACS were included into the

process during Phase III. PACS were advised to

prepare viability action plans under the guidance of

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respective DCCB and enter into MoU with it. The

revised/modified Phase IV of DAP/MoU for both

ST and LT structures covers the period 2007-08 to

2011-2012.

4.21 Considering the need for a common and more

effective forum, it was decided to have a single high-

powered ‘State Level Task Force’ (SLTF) for effective

monitoring of performance of co-operative banks on

quarterly basis. This was effective from 1 April 2008.

As on 31 March 2009, 22 RO have formed SLTF

in their states. The Annual Review for 2007-08

revealed that Chhattisgarh, Karnataka, Maharashtra,

Meghalaya, Orissa and Rajasthan SCB had made

successful efforts to achieve the targets set for

2007-08. According to the data available from

13 States 28,915 PACS have signed MoU with their

respective DCCB.

e. Co-operative Development Fund

4.22 The Co-operative Development Fund (CDF) is

replenished/augmented every year through contributions

from NABARD’s surplus. The balance in the fund as

on 31 March 2009 was Rs.125 crore. Support under

the Fund is provided for various developmental

initiatives by co-operative credit institution and has

resulted in improved deposit mobilisation, MIS, human

resource availability, thus contributing to overall

efficiency of the structure. During 2008-09,

Rs.5.95 crore was sanctioned and Rs.3.81 crore

disbursed (including sanctions of previous years). As on

31 March 2009, cumulative sanctions and

disbursements were Rs.87.98 crore and Rs.77.73 crore,

respectively.

f. Organisation Development

Initiatives

4.23 Organisational Development Initiative (ODI) is

as an internally driven re-engineering process which

facilitates and achieves change in organisational

structure and culture, HRD, strategic planning, etc.,

vis-à-vis external environment to improve effectiveness

and efficiency of the organisation to fulfill its

mission. NABARD has been conducting ODI since

1994-95 to facilitate action for RRB and

co-operative banks improve their financial health.

In view of the changing environment for RRB

(amalgamation) and co-operative banks (adoption

of revival package for STCCS), the design,

methodology and objective of ODI has been

changed. This would focus on financial inclusion

and sustainable viability. For co-operative banks,

ODI were renamed ‘Business Revitalisation and

Managing Human Aspirations’ (BRAMHA). During

2008-09, 10 ODI for RRB and 5 BRAMHA for co-

operative banks were conducted.

g. Revival of Short-Term Rural Co-

operative Credit Structure

4.24 Based on the recommendations of Task Force

for Short-Term Rural Co-operative Credit Structure

(STCCS), GoI announced a Revival Package for an

estimated outlay of Rs.13,596 crore in 2006. The

package was aimed at reviving the STCCS by making

it a well-managed and vibrant channel to serve the

credit needs of rural India. It provided an integrated

package of (a) financial assistance to bring the system

to an acceptable level of health, (b) introducing legal

and institutional reforms necessary for their

democratic, self-reliant and efficient functioning, and

(c) measures to improve the quality of management.

During 2008-09, seven States (Assam, Jammu &

Kashmir, Jharkhand, Manipur, Meghalaya, Mizoram

and Sikkim) executed MoU with GoI and NABARD

to implement the package, taking the total number to

25 as at end-March 2009, covering 96 per cent of

the STCCS.

Table 4.14: Elected Boards under Supersession


Particulars SCB* DCCB* SCARDB* PCARDB*

Total Institutions (No.) 31 370 20 697

Reporting (No.) 29 360 17 642

Institutions where

Boards under

Supersession (No.) 11 159 8 260

Boards under 38 44 40 37

supersession (%)

*Data provisional

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85

i. Financial Assistance

4.25 Financial assistance was to be provided for

cleansing of balance sheets of STCCS (as on

31 March 2004). Capital infusion was to be given

to ensure minimum CRAR of 7 per cent, subject

to legal and institutional reforms. Bottom up

approach was adopted with financial assistance to

PACS first, followed by DCCB and SCB. Eligibility of

PACS was determined on their recovery position as

on 30 June 2004. Capitalisation of ineligible PACS

would take place in the next upper tier by settling

their dues to the higher tier and State Government

to decide future set-up of ineligible PACS. The

liability of funding the package is to be shared by

GoI, State Governments, and the STCCS, based on

origin of loss and existing commitments. Financial

assistance is also being provided by World Bank

(US$ 600 million), Asian Development Bank

(US$ 1 billion) and KfW Germany (• 140 million) to

GoI for funding the Package.

ii. Special Audit

4.26 The special audit of STCCS, as on 31 March

2004, was completed in 78,391 (out of 84,726) PACS

across 25 States. The special audit of DCCB was

completed in eight states and was in progress in

another two States.

iii. Monitoring the Implementation Process

4.27 Implementation of the Package is guided and

monitored by Implementing and Monitoring

Committees at the National (NIMC), State (SLIC) and

District (DLIC) levels. NIMC is headed by Secretary,

Financial Services, MoF, GoI and has members from

RBI, NABARD and participating State Governments.

So far, the NIMC has met six times. The SLIC and

DLIC have been constituted in all implementing states.

iv. Legal Reforms

4.28 The States are to amend their respective

Co-operative Societies Acts (CSA) to ensure

(i) democratic functioning of the co-operative

institutions, (ii) autonomy in financial and

administrative matters and (iii) regulatory control of

RBI on these institutions. During the year four states,

viz., Bihar, Maharashtra, Meghalaya and Tamil Nadu

passed bills to amend their CSA, taking the total

number of States that have amended CSA to 10. Out

of remaining 15 states, draft amendments proposed by

9 were vetted by NABARD, while amendments are

being drafted in remaining six states. Based on the

amendments, the Rules and Bye-laws of the societies

are being revised by the States. ‘Fit and Proper

Criteria’ have also been prescribed by RBI for election/

appointment as Directors and CEO of SCB and DCCB

and the qualifications of the present incumbents are

under review.

v. Common Accounting System and

Management Information System

4.29 The Common Accounting System (CAS) and

Management Information System (MIS) for PACS have

been formulated and are being put in place in all

PACS to standardise accounting systems and decision-

making process. Instructions for adoption of CAS/MIS

amongst PACS were issued to all implementing States

while books of accounts as per the CAS were printed

and distributed in nine states. Training on CAS/MIS

was also initiated to ensure smooth implementation of

the system. Once operationalisation of CAS/MIS and

development of capacities to maintain the new system

manually are achieved, computerisation of CAS/MIS

will be provided. Preparatory administrative work

for computerisation was taken up in eight states during

the year.

vi. HRD Initiatives

4.30 Emphasising on the training of PACS

functionaries and their Board Members, training

modules along with training material in vernacular

languages, elaborate trainers’ manual and guidelines

have been developed. A four-day training programme

for PACS’ Secretaries on ‘How to do the existing

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business better in the post reform scenario?’, with

specific thrust on resource mobilisation, loan products,

housekeeping and accounting was conducted. Further,

two training modules of two-day each on ‘CAS/MIS’

and ‘business diversification and best practices in

governance and management’ were designed for

PACS’ Secretaries. Training was also imparted on CAS

& MIS for departmental auditors and supervisors of co-

operative banks to enable them to provide hand

holding support to the PACS functionaries. A two-day

training programme for Board Members of PACS on

self-sustenance through improved governance and

management of resources and a three-day programme

for Board of Directors of SCB/DCCB on change in the

post reform scenario were organised. Training was

imparted to 227 master trainers from 16 states, who in

turn trained 1,687 district level trainers. A State Level

Nodal Agency was identified to coordinate and ensure

smooth conduct of the programmes in each State. As

on 31 March 2009, training was imparted to 63,789

PACS Secretaries from 13 States and 89,242 elected

board members of PACS from 10 States in first and

second modules, respectively. In addition, training was

provided on CAS/MIS to 47,302 PACS functionaries

(3,356 bank supervisors/departmental auditors) from

14 States.

vii. Release of Funds to PACS

4.31 During 2008-09, NABARD released

Rs.3,567.42 crore as GoI share towards recapitalisation

of eligible PACS in Andhra Pradesh, Chhattisgarh,

Gujarat, Haryana, Madhya Pradesh, Maharashtra,

Orissa, Uttar Pradesh and West Bengal. Cumulative

recapitalisation support released in these states stood at

Rs.6,166.17 crore, with GoI, State Government and

STCCS share at Rs.4,874.47 crore, Rs.474.49 crore

and Rs.817.21 crore, respectively, as on

31 March 2009. This support has enabled

33,411 PACS (40%) to be fully recapitalised.

viii. Special Package for NER

4.32 In November 2008, GoI announced a package

providing special dispensation for STCCS in NER

including Sikkim keeping in view the health of

the institutions, their present business, training

requirements, sharing pattern of losses, etc (Box 4.1).

h. Revival of Long-Term Rural

Co-operative Credit Structure

4.33 Based on recommendations of the Task Force

(Chairman: Prof. A. Vaidyanathan) on Long-Term

Co-operative Credit Structure (LTCCS), GoI has

finalised a package for revival of the LTCCS and the

same has been approved by the Union Cabinet. The

package will help credit flow for long-term investment

purposes to around 16 million members of LTCCS and

help revive SCARDB and PCARDB.

g. Other Initiatives

4.34 During the year, an All-India Conclave of

Registrars of Co-operative Societies (RCS) was

organised at BIRD to emphasise the role of the

Registrar in implementation of revival package for

STCCS. It discussed the issues emerging in the NIMC

and SLIC meetings, viz., compilation of statistics on

co-operative movement in India, audit, compliance to

NABARD inspection reports, availability of State

Government Guarantee for SCARDB, implementation

of the GoI’s interest subvention scheme, revival/reform

Box 4.1

Special Package for NER: Highlights

• State Governments enabled to contribute to equity of SCB in

excess of 25% only when required to comply with Section 11

(1) of B. R. Act, 1949 (AACS).

• PACS to act initially as agents of SCB/RRB/ commercial

banks. Training to be imparted to build their capability for

financial intermediation over a period of 4 years.

• GoI’s grant assistance for a period of 4 years for HR

initiatives, training and capacity building.

• All PACS & SCB, irrespective of recovery, eligible to receive

recapitalisation assistance contributed by GoI and State

Government in the ratio 90:10.

• Recapitalisation amount to be placed in separate account

with SCB and to be released as and when PACS attain

capacity to function as a independent institutions.

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of Primary & Apex WCS, etc. An all India meet of

CEO of SCB was held to obtain feed-back on the

major policy/operational issues and problems faced in

general and in particular with reference to ADWDR

Scheme, 2008 and to facilitate their business and

institutional development also.

4.35 The All-India Conference of Principals of RICM/

ICM was organised at BIRD, Lucknow during 2008-09

to provide a forum for coordinating the efforts of

various partners and improving the effectiveness of

training for co-operative institutions. NABARD initiated

the process of capacity building to familiarise Board

members of co-operative banks with the recent

developments in banking in general and co-operative

banking in particular as well as their roles and

responsibilities. Training/reading materials were made

available in English, Hindi and local languages. Faculty

Members of RICM/ICM/ACSTI were trained at BIRD to

handle the massive training programme. As on 31

March 2009, 196 Board members (39 DCCB and 1

SCB) were trained in 12 programmes. The Bank also

organised 13 exposure visits for 805 staff/Committee

Members of PACS to 19 good working PACS that

were able to achieve a turnaround in their business and

recovery performance on their own.

h. Human Resource Policy for

Co-operative Banks

4.36 A Working Group on Human Resource Policy

for co-operative banks (Chairman: Shri S.K. Mitra, ED,

NABARD) was constituted to study the norms of

recruitment/ promotion/training/computerization level in

co-operative banks and suggest a rationalised policy.

During the year, two meetings of the Working Group

were held.

B. Regional Rural Banks

a. Restructuring Initiatives

4.37 The process of revitalizing the RRB has been

on-going since 2005 to help them reaffirm their

objective of being rural commercial and professionally

managed banks. Owing to their uniqueness, the

Committee on Financial Inclusion recognized and

recommended RRB as most suited for achieving cent

per cent financial inclusion. NABARD too has been

working towards developing RRB as a strong credit

delivery channel and effective tool for financial

inclusion.

i. Amalgamation

4.38 As per GoI directives, the process of sponsor

bank-wise amalgamation of RRB (started in 2005)

continued and three newly amalgamated RRB were

formed during the year. As on 31 March 2009, the

total number of RRB stood at 86 (45 amalgamated

and 41 stand alone, including the new RRB set up in

Puducherry during 2007-08).

ii. Recapitalisation Support

4.39 The Union Budget 2007-08 had announced

recapitalisation support to 27 RRB (11 amalgamated

and 16 stand alone) having negative net worth

(as on 31 March 2007). By end-March 2008,

recapitalisation support of Rs.1,795.97 crore was to

be contributed by GoI, sponsor banks and State

Governments in the ratio of 50:35:15. As on 31

March 2009, 26 RRB have been fully recapitalised

and one RRB has been partly recapitalised with total

funding support of Rs.1,783.41 crore. Till date, GoI

released its entire share of recapitalisation support

amounting to Rs.897.98 crore to 27 RRB, while

sponsor banks and State Governments have released

Rs.619.80 crore and Rs.265.63 crore, respectively, to

26 RRB.

iii. Branch Expansion Programme

4.40 In accordance with the announcement in the

Union Budget 2007-08, RRB had opened 474 branches

during 2008-09 against the target of 758 branches,

taking the cumulative number to 715 (as on 31 March

2009). Against 758 licenses issued by RBI, 43 licenses

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88

were pending with RRB for opening of branches. In

view of RRB requesting relaxation in branch licensing

norms, RBI has allowed RRB greater flexibility in

opening new branches, so long as they show improved

profits and financial health. Further, to be eligible for

opening new branch/es, RRB should (i) not have

defaulted in maintenance of SLR and CRR during the

last two years, and (ii) be making operational profits,

show improvement in net worth and its net NPA

should not exceed 8 per cent.

iv. Review of Performance

4.41 In continuation of the mechanism for review of

performance of RRB by GoI, introduced during 2007-

08, two review meetings were held, one on 27 August

2008 under the Chairmanship of Hon’ble Union

Finance Minister and the other on 16 January 2009

under the Chairmanship of the Union Finance

Secretary.

v. Village Adoption and Debt Swap

4.42 RRB were asked to adopt at least one village

per branch for financing indebted farmers to swap the

debt taken from moneylenders. RRB had adopted

17,490 and 20,981 villages as at end-March 2008 and

2009, respectively, of which 7,811 villages have been

freed from debt to moneylenders.

vi. Financial Inclusion

4.43 The Government envisages RRB as a strong

intermediary for financial inclusion in rural areas. As

per RBI guidelines, RRB have started financing under

General Credit Card (GCC) and opening ‘No Frills’

deposit accounts. Total number of accounts (deposits

and loans) stood at 834.85 lakh and 929.22 lakh as

on 31 March 2007 and 2008, respectively

(Table 4.17).

vii. ICT solution for Financial Inclusion

4.44 The Committee on Financial Inclusion had

identified 256 districts as most excluded districts in the

country. The Committee had recommended, RRB

taking-up 10 pilot projects with ICT solutions.

Accordingly, 15 RRB were identified from 14 States for

an R & D project on Financial Inclusion with ICT

based solutions through use of smart cards, POS

devices and mobile technology in different regions and

client groups in the country. The project, a PPP model,

is funded by World Bank, with back ended incentive

provided by NABARD under its Financial Inclusion

Fund (FIF).

b. Financial Performance

4.45 Following the amalgamation of RRB (2005-06

onwards), their number was reduced from 196

(2004-05) to 91 with a network of 14,761 branches

covering 591 notified districts in 26 States and 1 UT

(Puducherry) as on 31 March 2008. As at end-March

2009, the number of RRB stood at 86 with a network

of 15,235 branches. Over a period of four years

(2005-09), aggregate reserves of RRB increased

significantly (33%), while their deposits and investments

increased by 15 and 5.4 per cent, respectively. The

Table 4.17: Status of Financial Inclusion

(As on 31 March)

(Lakh)

Year Deposit Accounts Loan Accounts

Total No Frills Total GCC SHG KCC Tenant SSI/ artisans/SCC &

retail trades.

2007 669.88 34.54 164.97 1.083 6.52 82.84 1.08 35.74

2008 758.02 81.17 171.20 2.35 7.20 93.14 1.03 33.53

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Table 4.18: Indicators of Performance

(As on 31 March)

(Rs. crore)

Particulars 2007 2008 2009P

No. of RRB 96* 91* 86*

Branch Network (No.) 14,520 14,761 15,235

Share Capital 196.00 197.00 197.00

Share Capital

Deposit 2,188.43 2,832.53 3,971.84

Reserves 4,901.54 5,703.06 6 150.00E

Deposits 83,143.55 99,093.46 1,14,317.45

Borrowings 9,775.80 11,494.00 12,250.00E

Investments 45,666.14 48,559.54 51,159.00E

Loans & Advances

(Outstanding) 48,492.59 58,984.27 6,5840.78

Loans Issued@ 33,043.49 38,581.97 38,581.00E

RRB earning

Profit (No.) 81 82 81

Amount of

Profit (A)$ 926.40 1,383.69 1,745.84

RRB incurring

Losses (No.) 15 8 5

Amount of Losses (B) 301.25 55.58 33.85

Net Profit (A – B)$ 625.15 1,328.11 1,711.99

Accumulated Losses 2,759.49 2 624.22 2,574.00E

RRB with

accumulated losses (No.) 39 36 35

Recovery (%) ** 79.80 80.81 77.76

NPA to loans

outstanding (%) 6.55 6.05 5.58

Net worth 4,526.48 6,107.37 6,750.00E

* : After amalgamation. $ : Before Tax @ : During the year

** : As on 30 June P : Provisional E : Estimated

borrowings also increased by 6.6 per cent. The loans

and advances outstanding as on 31 March 2009

increased by 12 per cent over the previous year

(Table 4.18).

4.46 During 2008-09, 81 RRB improved their

performance and reported gross profit of Rs.1,745.84

crore, an increase of 26 per cent over 2007-08. The

remaining 5 RRB despite continuing as loss-making

entities reduced their losses by 39 per cent to

Rs.33.85 crore. The net profit posted by RRB, as a

group, increased by 29 per cent during 2008-09.

During 2007-08, out of 91 RRB, 54 attained

sustainable viability and 28 current viability, showing

improvement by way of increase in profits, reduction

in losses or by transcending from loss to profit. The

aggregate reserves of the 54 RRB that had wiped off

their accumulated losses increased to Rs.6,150 crore

as at end-March 2009. The net worth of RRB as a

whole had also increased by 10 per cent to Rs.6,750

crore as on 31 March 2009, while accumulated losses

declined by 2 per cent over 2007-08. Region-wise

performance of RRB during 2007-08 varied widely.

While all RRB (excepting Puduvai Bharathiar Grama

Bank that started functioning from 26 March 2008)

in the western and southern region were in profit,

126, 14, 13 and 5 RRB in the central, northern,

eastern and north-eastern regions, respectively, were in

profit (Table 4.19).

c. Recovery Performance

4.47 As on 30 June 2008, the recovery performance

of RRB (87) declined to 78 per cent from 81 per

cent as on 30 June 2007 (Table 4.19). Though RRB

in the northern (85%) and southern (80%) regions

maintained their recovery performance above national

average, it declined compared to their performance

during the previous year. Recovery performance of

RRB in NER (72%), though lower than the national

average improved over the previous year, while

that of eastern region (69%) declined. RRB in

Tamil Nadu registered the highest recovery (94%),

followed by Punjab (91%), Mizoram (87%) and

Kerala (83%). Out of 87 RRB as at end-June 2008,

36 had above 80 per cent and 2 had below 40 per

cent (Table 4.20).

d. Non-Performing Assets

4.48 The aggregate gross NPA of all RRB improved

from 6.55 per cent, as at end-March 2007 to 6.05

per cent as at end-March 2008 and further to 5.58,

as on 31 March 2009. During 2008-09, 56 RRB

recorded the gross NPA levels below the national

average. 22 RRB had NPA level above the national

average (> 5.58% and < 20%) and only 3 RRB

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Table 4.19: Region-wise Working Results of RRB


(Rs. crore)

Region RRBs Profit Earning Loss Net Accumu Loans & NPAs Recovery (%)

(No.) Incurring Profit lated Advances (As on

Losses O/S 30 June)

No. Amt. No. Amt. Amount % 2007 2008

North-Eastern 8 5 34.52 3 7.66 26.86 235.07 2190.51 217.94 9.95 64.73 71.54

Eastern 15 13 104.61 2 32.69 71.92 1726.56 10196.69 1147.13 11.25 70.65 68.52

Northern 16 14 245.01 2 12.38 232.63 261.47 8133.23 299.94 3.69 89.63 85.01

Central 27 26 458.04 1 2.85 455.19 271.12 15182.12 1166.64 7.68 80.00 77.20

Western 9 9 56.22 - - 56.22 130.00 3093.30 219.22 7.09 77.57 66.95

Southern 15 15 485.29 - - 485.29 0.00 20188.42 515.47 2.55 83.98 80.52

All-India 91 83 1383.69 8 55.58 1328.11 2624.22 58984.27 3566.34 6.05 80.81 77.76

# : Puduvai Bharathiar Grama Bank, Puducherry started functioning from 26.3.2008, hence, data pertains to 90 RRBs only as on 31.3.2008.

States

Bihar (1), Nagaland (1)

Assam (1), Bihar (2), Madhya Pradesh (1), Maharashtra (3), Uttar Pradesh (1), Manipur (1)

Andhra Pradesh (2), Chhattisgarh (2), Gujarat (3), Haryana (1), Himachal Pradesh (1), Karnataka (3),

Kerala (1), Jammu & Kashmir (2), Jharkhand (2), Madhya Pradesh (4), Maharashtra (2), Meghalaya (1),

Orissa (4), Rajasthan (2), Tripura (1), Uttarakhand (1), Uttar Pradesh (5), West Bengal (3).

Andhra Pradesh (3), Arunachal Pradesh (1), Assam (1), Bihar (1), Chhattisgarh (1), Haryana (1),

Himachal Pradesh (1), Jammu & Kashmir (1), Karnataka (3), Kerala (1), Madhya Pradesh (3), Maharashtra (1),

Mizoram (1), Orissa (1), Punjab (3), Rajasthan (4), Tamil Nadu (2), Uttarakhand (1) and Uttar Pradesh (6)

Recovery (%)

< 40

> 40 and < 60

> 60 and < 80

>80

Table 4.20: Frequency Distribution of States according to Levels of Recovery of RRBs


registered high NPA level (>20%). Low NPAs levels

were observed in the case of RRB in southern region

(2%) followed by northern (3%), central (5%), western

and eastern (8%) regions, while RRB in NER had

NPA of 14 per cent, as at end-March 2009.

e. Human Resource Policy for RRB

4.49 Major recommendations of the Committee to

formulate a Comprehensive Human Resource Policy for

RRB Personnel (Chairman: Dr. Y.S.P. Thorat) were

accepted by GoI during the year. These include norms

for, (i) categorisation of RRB/their branches, (ii) staffing

pattern at Head Office/controlling offices/branches and

(iii) recruitment/promotion of staff, transfer, etc.

NABARD circulated these recommendations among

sponsor banks/RRB for implementation.

4.50 The Committee to Undertake a Comprehensive

Review of Model RRB Officers’ and Employees’ Service

Regulations, 2000, and RRB (Appointment &

Promotion of Officers & Other Employees) Rules, 1998

(Chairman Shri Amaresh Kumar, ED, NABARD)

submitted its Report, which is under the consideration

of GoI.

4.51 The Working Group on Capacity Building

Requirements of RRB personnel, constituted under the

Chairmanship of Shri Amaresh Kumar, ED, NABARD

submitted its report to GoI. Action is being initiated

for implementing the recommendations involving

various agencies, viz., NABARD, sponsor banks, RRB,

BIRD, etc.

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4.52 NABARD inspects SCB and DCCB in terms of

the powers vested under Section 35 (6) of the

B. R. Act, 1949 (AACS) and RRB under Section 35

(6) of the B. R. Act, 1949. NABARD also conducts

voluntary inspection of SCARDB and Apex

Co-operative Societies and Federations having

borrowings outstanding from it. Considering the

unique nature of these institutions, NABARD’s

supervisory role is comprehensive and holistic,

encompassing inspections (on-site and off-site),

portfolio studies, monitoring, guiding and facilitating

functions, besides the basic objective of ensuring

conformity with banking regulations and prudential

norms. Statutory inspections of all SCB, DCCB and

RRB not complying with minimum capital

requirements of B. R. Act, 1949 (AACS)/RBI Act,

1934 and voluntary inspections of all SCARDB

continue to be conducted annually. Statutory

inspections of DCCB and RRB with positive net worth

and voluntary inspections of Apex Co-operative

Societies/Federations are conducted once in two years.

A. Operational Matters

a. Inspection of Banks

4.53 During 2008-09, statutory inspections of 324

banks (30 SCB, 243 DCCB and 51 RRB) and

voluntary inspections of 17 SCARDB and 2 Apex Co-

operative Societies (CO-OPTEX AND PONTEX) were

conducted. While several banks registered

improvement and recomplied with minimum capital

requirement/operational norms, sizeable number of

banks continue to exhibit weaknesses. Some of the

supervisory concerns brought out by the inspections of

these banks were, (i) non-compliance with statutory

provisions, (ii) improper application of IRAC norms

resulting in inflated profit/reduced losses, shortfall in

provisions, etc., (iii) high level of NPA/erosion of

assets, (iv) deficiencies in sanction, appraisal of loans/

advances and post-disbursement follow-up,

(v) inadequate financial margins/high cost of

management/adverse working results, (vi) ineffective

funds management, (vii) inadequate risk management

Supervision of Banks

systems, (viii) delay in submission of returns and

satisfactory compliance to inspection observations, (ix)

lack of corporate governance, (x) weaknesses in

internal checks and control system, (xi) incidence of

frauds, (xii) improper valuation of securities and

irregularities in investment portfolio, (xiii) insufficient

provision for depreciation and (xiv) violation of Credit

Monitoring Arrangement (CMA) norms, etc. These

were communicated to the concerned banks, RCS,

State Governments and sponsor banks for corrective

action. NABARD continued to hold discussions with

the Boards of Directors of SCB/DCCB/RRB, core area

compliance with CEOs of the banks, rating of

compliance reports, conveying the supervisory ratings

for confidential information of the top management

of the banks, etc.

b. Board of Supervision

4.54 The Board of Supervision [BoS] (for SCB,

DCCB and RRB) met thrice during the year. It

reviewed: (i) the functioning of SCB and SCARDB,

(ii) functioning of co-operative credit institutions and

RRB in Kerala, Bihar and Rajasthan, (iii) review of

frauds in supervised banks, (iv) functioning of

insolvent/weak DCCB and RRB, (v) impact of

supervision on banks performance, (vi) issues and

perspectives of listing of RRB, (vii) scheduling of

amalgamated RRB, (viii) supervisory trends pertaining

to rating of banks, (ix) banks’ compliance to various

important statutory provisions, (x) progress on disposal

of complaints against supervised banks, (xi) guidelines

for appointment of Chartered Accountants, (xii)

appropriate guidelines to banks detailing methodology

for valuation of properties and ensuring accountability

of valuers, etc.

c. Health of Supervised Banks

i. Compliance to Minimum Share Capital

Requirement

4.55 As on 31 March 2009, the number of SCB

and DCCB not complying with provisions of Section

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11(1) of the B.R. Act, 1949 (AACS), stood at 5

and 108, respectively. The total erosion in the value

of assets of these 113 non-compliant co-operative

banks aggregated Rs.15,106.81 crore, which had

affected deposits to the extent of Rs.4,937.47 crore

(19.6% of total deposits) in addition to their entire

share capital. Of the non-complying DCCB, 37 were

granted exemption from the provisions of Section

11(1) of the Act, ibid., by GoI, while the applications

for grant of exemption in respect of 62 banks

(1 SCB and 61 DCCB) were under consideration by

the RBI/GoI.

ii. Grant of Licence/Scheduling of Banks

4.56 No new licence was granted during the year

and the number of licensed co-operative banks, thus,

remained unchanged at 89 (14 SCB and 75 DCCB)

as on 31 March 2009.

4.57 During the year, no SCB was included in the

Second Schedule to the RBI Act, 1934. Thus, the

number of Scheduled SCB remained unchanged at

16. Following amalgamation of RRB, inspections of

22 RRB were taken up on an urgent basis during the

year. Based on the inspection findings and

recommendations, 33 RRB were included in the

Second Schedule to the RBI Act, 1934.

iii. Compliance with various Sections of Acts

4.58 As on 31 March 2009, 5 SCB and 108 DCCB

did not comply with Section 22 (3)(a) of

B. R. Act, 1949 (AACS), with respect to their

capacity to pay their depositors in full and 14 SCB

and 333 DCCB did not comply with Section

22 (3)(b) of the Act, ibid., as the affairs of these

banks were conducted in a manner detrimental to the

interests of their depositors. Similarly, out of 16

Scheduled SCB, 2 were not complying with Section

42 (6)(a)(i) of RBI Act, 1934 (minimum capital

requirement), and 11 were not complying with Section

42 (6)(a)(ii) of the Act, ibid.

4.59 As on 31 March 2009, out of 86 RRB, 61

complied with Section 42 (6)(a)(i) of the RBI Act,

1934, and 48 complied with Section

42 (6)(a)(ii) of the Act, ibid. Inspection of 4 RRB

would be taken up during 2009-10 as these RRB

were amalgamated in the year 2008-09. The erosion

in the value of assets of the 21 RRB not complying

with Section 42 (6)(a)(i) of the Act ibid stood at

Rs.2,310.07 crore, thus, eroding deposits worth

Rs.1,090.63 crore (6.2% of total deposits) as on

31 March 2009.

B. Policy Decisions/ Guidelines

a. Co-operative Banks

4.60 During the year, NABARD issued revised

guidelines for SCB/DCCB on (i) exposure norms

and monitoring/reporting procedures under CMA,

(ii) investment management by co-operative banks,

(iii) calculation of Net Demand and Time Liabilities

(NDTL) for the purpose of maintenance of CRR/SLR,

(iv) revised framework of Long Form Audit Report

(LFAR) in co-operative banks, etc. The Asset-Liability

Management (ALM) system (Box 4.2) introduced

in select SCB, on a pilot basis, during 2007-08,

was extended to all SCB from 1 August 2008

and was also introduced in 31 select DCCB from

1 September 2008. On the advice of NABARD,

the National Federation of State Co-operative Banks

Box 4.2

Asset Liability Management

The ALM system was introduced in 5 SCB and 12 RRB

from 1 April 2007. The RBI has also permitted NABARD to

introduce ALM system in all SCB, RRB and DCCB, based

on the feedback given by NABARD. The implementation of

ALM system in these banks was reviewed closely and after

taking into account the need for Risk Based Supervision, it

was further decided to introduce the ALM system in all RRB

and SCB from 1 August 2008. Subsequently, it was also

extended to 31 DCCB from 1 Spetember 2008. NABARD is

monitoring the progress in implementation of ALM in all

these banks.

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93

(NAFSCOB) issued a Code on Standards and

Fair Practices to all co-operative banks. All SCB

and DCCB were suitably advised on the modus

operandi of fraud in a branch of a DCCB in

cash credit under consortium arrangement. A circular

on adherence to prudential norms and completion

of reconciliation of accounts of the banks was

issued to all SCB and DCCB. A Master Cirular

was issued to all co-operative banks on ‘Toning

up of Internal Inspection and Audit System’ in the

banks.

4.61 In the case of SCARDB, NABARD issued (i)

guidelines on IRAC and provisioning norms to be

observed following implementation of the ADWDR

Scheme, (ii) advised SCARDB that GoI had decided

to pay interest on the second and subsequent

instalment/s of the ‘eligible amount’ under the

ADWDR Scheme at the prevailing yield-to-maturity

(YTM) rate on 364-day GoI Treasury Bills. Hence,

these banks need not make any provisions for loss in

present value (PV) terms for amount receivable from

GoI under the Scheme. A circular was issued to all

SCARDB revising the instruction dealing with the

accounting system related to the ADWDR Scheme,

2008.

b. RRB

4.62 For RRB, the following major decisions were

taken by the Bank.

i. Implementation of revised inspection guidelines

and the possibility of introducing inspections on

the pattern followed by RBI for commercial

banks on a pilot basis for amalgamated RRB to

be explored.

ii. Issue of Master Circular on disclosure norms and

instructions including Capital to Risk Weighted

Asset Ratio (CRAR) in the Annual Note on

Accounts in their Balance Sheets, as on 31

March 2008. A road map for stipulation of

CRAR for RRB from 31 March 2009, was

suggested to RBI.

iii. The ALM system introduced in 12 select RRB

during 2007-08 was extended to all RRB from 1

August 2008.

iv. Issue of detailed guidelines for forming Audit

Committees and convening their meetings.

v. Master Circular on frauds, rationalising the

classification of frauds, submission of returns and

monitoring thereof issued.

vi. A comprehensive circular for implementation of

compliance function issued to all RRB for

operationalisation. This is in conformity with

Basel I Principle and the recommendations of

Advisory Panel for Committee on Financial

Sector Assessment (CFSA), constituted by the

RBI and GoI.

vii. A circular each on Lenders’ Financial Discipline

(for co-operative banks and RRB), Codes of

Standards and Fair Practices to RRB, revised

off-site surveillance (OSS) returns for RRB, were

issued.

viii. RRB were advised to follow the LFAR on the

lines of commercial banks.

ix. Modus operandi of certain high-value frauds

detected were shared with the banks for their

safeguards.

x. Instructions on Know-Your Customer (KYC) and

Anti-Money Laundering (AML) obligations issued.

C. Other Developments

4.63 In order to improve the quality and

effectiveness of inspection, NABARD conducted three

regional supervision seminars for officers engaged in

supervision. The Bank also convened the seventh

National Seminar on Audit to sensitise Chartered

Accountants engaged for the first time in audit of

SCB/DCCB, consequent to amendment of the State

CSA in states that signed MoU for implementing the

STCCS package, thus, helping to improve the quality

and effectiveness of audit. The National Seminar on

Investment Management for SCB (in association with

the NAFSCOB) and state level seminars to streamline

the investment operations in SCB/DCCB were

Ch-Eng-4.p65 7/15/2009, 10:59 AM93

94

organised. Three Regional Seminars on Internal

Checks and Control Systems for Chiefs of Audit and

Inspection Departments of co-operative banks were

also organised. In addition, NABARD conducted

regional training programmes on investment

management for co-operative banks and RRB;

workshops for RRB/SCB/select DCCB implementing

ALM system; and workshop on AML, KYC and

monitoring of frauds through its TEs as well as state

level sensitisation programmes on prudential norms,

CMA, frauds, etc., for auditors and supervised banks

through its ROs. Special portfolio studies were

conducted in select co-operative banks on investment

portfolio, internal checks and control systems, CMA

and MIS.

4.64 For a holistic and more effective approach

towards supervision, especially in strengthening internal

checks and control systems in the supervised banks,

NABARD initiated dialogue with the Institute of

Chartered Accountants of India (ICAI) for

strengthening the audit mechanism in co-operative

banks. Senior officials of ICAI were invited to

deliberate at the seventh National Seminar on Audit.

NABARD invited officials of Financial Intelligence Unit

of India (FIU), Ministry of Finance, GoI, to several

seminars involving co-operative banks and RRB to

deliberate on KYC and AML norms under the Anti-

Money Laundering Act, 2002, and was also

associated with the Conferences of Principal Officers

of RRB and Trainers’ Training Programme on AML

convened by FIU. Similarly, inputs and feedback on

policy issues received from NAFSCOB culminated in

a number of collaborative activities.

4.65 A team of officers from NABARD provided

consultancy services to Bank Indonesia, on developing

an early warning system (EWS) for the rural banks

supervised by the BI, in October 2008. A five-

member delegation from BI visited NABARD in

November 2008 to study supervisory practices adopted

by NABARD and other related interventions. The

exchange of experience between the two institutions

has been mutually rewarding and led to good

organisational linkage.

4.66 During the year, NABARD also initiated

measures towards re-engineering of the supervisory

tasks. Licences for use of an IT-based product,

Regulator Plus, were obtained for strengthening

knowledge management of inspecting officers. The

software provides relevant circulars, instructions and

reports, subject-wise, from the statutory/regulatory

institutions (RBI, IBA, SEBI, FEDAI, IRDA, CVC,

NABARD, etc.) both offline and on a web-based

platform. The trial version of a new IT product

on risk-based supervision was installed for three

months in Maharashtra and Andhra Pradesh ROs on

a pilot basis. An ‘e-mail forum’ has been put in

place on the Bank’s corporate intranet, NABNET,

wherein users can post any query/suggestion on

supervision related matters, which are quickly

responded to by a team of experts, thus, helping to

build an FAQ.

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95

NABARD continued to lay emphasis on capacity

building, development of skills and technical

expertise of its staff and strove to refine existing

training modules, design new programmes and

enhance exposure to various institutions

V Organisation and Management

within the country and abroad to achieve

this. The developments during the year vis-à-vis

the management and administration of

human resources of the Bank are encaptured

here.

General

A. Board of Directors

5.2 The Board of Directors met five times during

the year. The Executive Committee and the Audit

Committee of the Board met four times each while the

Sanctioning Committee for Loans under RIDF met six

times. The Risk Management Committee of the Board

met thrice.

5.3 The following changes took place in the

composition of the Board during the year.

a. Shri T. Nandakumar, Secretary, Agriculture and

Co-operation, Ministry of Agriculture, GoI, was

appointed as Director with effect from

1 September 2008, vice Dr. P. K. Mishra. He was

also nominated as Member of the Sanctioning

Committee for Loans under RIDF.

b. Dr. S. Chellappa, Agriculture Production

Commissioner and Principal Secretary, Government

of Andhra Pradesh, was appointed as Director vice

Shri Pankaj Dwivedi with effect from 9 May 2008

and was also nominated as a Member of the

Sanctioning Committee for Loans under RIDF.

Shri Pankaj Dwivedi had been appointed as

Director with effect from 29 April 2008 vice

Shri D. K. Panwar.

c. Shri Krishna Mohan, Financial Commissioner and

Principal Secretary, Agriculture Department,

Government of Haryana was appointed as Director

with effect from 10 July 2008 vice Shri Raj Kumar.

He was also nominated as a Member of the

Executive Committee.

d. Smt. Shakuntala Jakhu, on her taking over as

Financial Commissioner and Principal Secretary,

Agriculture Department, Government of Haryana,

was appointed as Director vice Shri Krishna Mohan,

with effect from 5 November 2008. She was

also nominated as Member of the Executive

Committee.

e. Shri Amarendra Pratap Singh, Secretary,

Department of Agriculture and Sugarcane,

Government of Jharkhand was appointed as

Director with effect from 1 December 2008 vice

Shri A.K. Sarkar. He was also nominated as a

Member of Audit Committee and Risk

Management Committee of the Board.

f . Shri O. Nabakishore Singh, Commissioner

(Agriculture), Government of Manipur was

appointed as Director with effect from

19 January 2009 vice Shri Letkhogin Haokip.

He was also nominated as a Member of Project

Sanctioning Committee for Loans under RIDF.

B. Other Senior Executives

5.4 S/Shri S.K. Mitra and Amaresh Kumar continued

as Executive Directors of the Bank and guided the RO

and HO Departments for effective functioning of the

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96

organisation. Dr. R. Balakrishnan, ED, superannuated on

30 September 2008. Shri P. L. Behera and Dr. Prakash

Bakshi were elevated to the post of Executive Directors

during the year.

C. Inspection of NABARD

5.5 The financial inspection of NABARD was

conducted by RBI between 6 January and

19 February 2009 with reference to its financial position

as on 31 March 2008.

D. Regional/DDM Offices

5.6 In addition to the Head Office at Mumbai, the

Bank has 28 RO, a sub-office at Port Blair, a Cell

at Srinagar and Training Establishments in Bolpur,

Hyderabad, Lucknow and Mangalore. As on 31 March

2009, there were 392 DDM offices, covering 490 districts

including 98 tagged districts. The remaining districts are

managed by the District Development Officers (DDO)

from their respective RO. No new DDM office was

opened during the year.

A. Training and Skill Upgradation

a. Officers and Executives

5.7 During 2008-09, National Bank Staff College

(NBSC), Lucknow conducted 91 programmes on various

subjects for 1,816 officers and 9 programmes for

232 officers of client banks on various finance related

issues. New programmes on bio-diesel, bamboo

cultivation, financial inclusion, etc., were introduced

during the year. In addition, 40 officers were deputed for

tailor-made programmes on software development,

outdoor management, etc., while 218 officers were

deputed for 118 off-the-shelf programmes, workshops,

seminars and conferences organised by various reputed

institutions. Some of the areas covered in these

programmes were strategic HRM, information systems,

audit, risk management, treasury management, Right to

Information Act, women empowerment, negotiation

skills, mutual funds, water harvesting and ground water

recharge, etc.

i. Overseas Training / Exposure Visits

5.8 During the year, 223 officers were deputed for

various overseas training programmes, exposure visits,

seminars, etc. Besides this, 98 officials from client/

partner institutions, viz., GoI, RBI, State Government,

commercials banks, RRBs, co-operative banks, NGO,

etc., were also deputed for programmes organised by

HO, RO and RTC.

5.9 During the year, 18 exposure visits for officers

were organised with funding support from GTZ to study

mF co-operatives and MFI regulation in Indonesia,

Bangladesh, Sri Lanka, Philippines, Malaysia, Germany

and South Africa. A separate team of 10 officers from

NABARD and MFI visited Indonesia under the

leadership of Shri S. K. Mitra, ED, NABARD to study

the regulatory arrangements for rural/smaller financial

institutions.

ii. Visits by Senior Management

5.10 Shri U. C. Sarangi, Chairman, attended the

Study Visit Programme on Deposit Protection

Mechanism for PACS in Germany and Hungary in

September 2008. He also attended the 55th EXCOM

Meeting and other related events of APRACA in Russia

in November 2008.

b. Other Employees

5.11 Training was imparted to employees (Group ‘B’

and ‘C’) at National Bank Training Centre (NBTC),

Lucknow and Zonal Training Centre (ZTC), Hyderabad.

During 2008-09, 62 training programmes covering 771

participants were conducted. A pre-promotional training

programme for DA (Secretarial) in Group ‘B’ for

promotion to Private Secretary in Group ‘A’ was

conducted at NBTC, Lucknow.

Human Resource Management

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97

c. Support for Higher Studies by

Officers

5.12 The Bank introduced schemes to facilitate/

support officers to pursue higher education. The

modified incentive scheme for professional studies in

part-time and distance learning courses was introduced

with effect from 2 April 2008. During the year, 33

employees availed of the facility. Further, under the staff

scheme for higher studies, one officer was granted study

leave to pursue Post-Graduate Diploma in Management

at the Institute of Management Technology (IMT),

Ghaziabad.

B. Recruitment, Promotion and Staff

Strength

a. Recruitment and Promotion

5.13 During the year, recruitment of 102 officers in

Grade ‘A’ in the Rural Development Banking Service

(RDBS), Rajbhasha Service and Grade ‘B’ in Legal

Service was completed and 99 (97 in RDBS and 2 in

Rajbhasha) and 3 (Legal) officers were appointed in

Grades ‘A’ and ‘B’, respectively. The process of

recruiting an additional 120 officers in Grade ‘A’ in

RDBS during 2009-2010 has also been initiated. During

the year, 13, 27 and 43 promotions were effected from

Grade ‘E’ to ‘F’, ‘D’ to ‘E’ and ‘C’ to ‘D’, respectively.

The details of other promotions effected upto Grade ‘C’

are given in Table 5.1.

b. Staff Assessment

5.14 An in-house group under the Chairmanship

of Shri S.K. Mitra, ED was constituted to assess

staff requirements of the Bank. Based on the

recommendation of the Group, additional 3, 12 and 21

posts in Grade ‘F’, ‘E’ and ‘D’, respectively, were

approved by the Board.

c. Staff Strength

5.15 As on 31 March 2009, the total staff strength

stood at 4,886 out of which 1,255 belonged to SC

(17.4%) and ST (8%) categories. The total number of

employees in Group ‘A’, ‘B’ and ‘C’ stood at 2,887,

1,122 and 877, respectively, The strength of

ex-servicemen and physically challenged employees

stood at 103 and 91, constituting 2.1 and 1.8 per cent

of the total staff strength, respectively. During the year,

88 officers in Grade ‘C’ availed of the Optional Early

Retirement Scheme.

Table 5.1: Promotions effected during the Year

Particulars Total Of which

SC ST

Officers in Grade ‘B’ to ‘C’ 86 12 5

Officers in Grade ‘A’ to ‘B’ 100 17 9

Group ‘B’ to Group ‘A’ 21 1 1

Group ‘C’ to Group ‘B’ 46 12 8

Total 253 42 23

A. Industrial Relations

5.16 Industrial relations in the Bank continued

to be harmonious during the year. Periodic discussions

were held between the Management and the

All India NABARD Employees’ Association and

National Bank Officers’ Association. About 372

employees from the Bank’s various units participated in

the XII NABOTSAV – the annual cultural and sports

event, held at Thiruvananthapuram between 19 and

23 January 2009. The Meet was inaugurated by

Shri V. S. Achutanandan, Hon’ble Chief Minister,

Kerala, and presided over by Shri U. C. Sarangi,

Chairman.

5.17 The Central Complaints Committee at HO and

Committees at RO have been functioning effectively for

preventing of sexual harassment of women at workplace.

B. Welfare Measures for SC/ST

Employees

5.18 The Bank continued to adhere to instructions

issued by GoI regarding reservations for SC/ST in

recruitment and promotions. Quarterly meetings of the

Administrative and Other Matters

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98

Senior Executives and Chief Liaison Officer with

representatives of the Welfare Association of SC/ST were

held at HO and RO. Pre-promotional training

programmes for 242 SC/ST staff members and pre-

recruitment training for 5,194 SC/ST candidates were

conducted at 21 Centres.

C. Other Staff Benefits

5.19 During the year, housing loan aggregating

Rs.1,956.38 lakh was sanctioned to 270 employees. The

disbursements against the sanctions, including sanctions

of previous year, amounted to Rs.2,297.74 lakh.

D. Library

5.20 NABARD maintains a Central Library at HO,

Mumbai, besides its units in RO. The Library Committee

supervises the functioning of these libraries. The Central

Library houses 26,000 books in English and Hindi and

subscribes to 105 journals and magazines, on agriculture

and allied activities, banking, rural development,

information technology, etc. The Library also subscribes

to institutional memberships of the British Library and

NIRD-Hyderabad, and networks with other major

libraries in Mumbai. Further, on-line access to the

Library Catalogue and relevant articles was also

enabled. With a view to providing a wider choice to the

staff and broad base the selection of books, four

exhibitions were arranged at HO.

E. Data Management

5.21 During 2008-09, district profile data containing

information in 14 broad areas, viz., geo-physical

features of the district, demographic profile, animal

population, land holding/utilisation, irrigation, rural

infrastructure, key banking statistics, trend in area/

production/productivity of major crops, etc., in respect

of 560 districts were uploaded on the NABNET.

In addition, two new data products, (i) MIS for Top

Management, comprising of 66 statements, on latest

achievements in all major business and development

areas and (ii) Star Performance Indicators indicating the

comparative position of achievements by RO in

important functional areas were also hosted on the

NABNET. These are updated every month. NABARD

also developed the District Agricultural Development

Index for a comparative position of districts in respect of

agricultural development in various states. The model

was tested in Maharashtra, Karnataka and Rajasthan.

Apart from internal and external circulars, an e-journal

‘Issues in Agriculture and Rural Development’ was

made available on the NABNET. To improve the quality

of data management in the Bank, a three-day workshop

was conducted at NBSC, Lucknow, for officers handling

data in RO.

F. Information Technology

5.22 During the year, LAN was set up in 34 units

(HO/RO/SO/TE) of the Bank. The scope of the Bank’s

inter-office portal was enlarged to host more information

regarding model projects, NABARD publications, Annual

Report, business and organisational data/statistics, etc. A

discussion forum was introduced to make the portal more

interactive and user-friendly. Limited accessibility was

extended to ex-staff members also. The Bank decided to

replace Lotus Smart Suite as the corporate office

automation system with the Open Office Suite. In order

to improve the efficiency of DDM and facilitate them in

discharging field duties, each of them was provided a

Laptop. The Human Resource Management System

(HRMS), developed in-house to cater to the needs

of HRMD and GAD, was expanded to include

the entire processes of training needs assessment,

annual transfer operations, assessment on promotion,

interviews, etc. Members of the Interview Board set up for

internal promotions were given online access to enable

them to retrieve the profile of the candidates. During

the year, NABARD engaged the services of

M/s. KPMG to study the activities, systems, processes and

IT applications currently in vogue in the Bank as also to

suggest a suitable IT Roadmap. In order to effectively

control travel and related costs, save executive time and

facilitate direct interaction it has been decided to set up

the Video Conferencing System in the Bank.

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99

G. Office Premises / Residential

Quarters

5.23 The construction of Natural Resource Management

Centre (NRMC) in Kolkata, RO building in Itanagar and

sub-office in Port Blair is in progress. In addition, 17 other

major construction activities aggregating Rs.150 crore are

in the pipeline. The Bank owns 17 office premises out of

29. The Bank has placed an order for procuring 62

residential flats for officers in Ranchi from the State

Government and has also procured a suitable plot for its

office building in Raipur.

H. Vigilance

5.24 NABARD conducted six Preventive Vigilance

Inspections of RO for maintaining transparency in

decision-making by laying emphasis on systems and

procedures followed by them. In addition, one Chief

Technical Examiner (CTE) type inspection of civil/

electrical works at Cenotaph Road quarters of Tamil

Nadu RO was carried out. Two training programmes

were conducted at RTC, Mangalore and NBSC,

Lucknow to equip officers attached to RO/TE about the

role of Enquiry Officer and Presenting Officer. The Bank

also observed ‘Vigilance Awareness Week’ from 3 to 7

November 2008.

I. Inspections

5.25 During 2008-09, inspections of 21 RO, 2 TE

and 14 HO Departments were conducted as approved

by the Audit Committee of the Board (ACB).

Major findings of the inspections along with the

compliance status were placed before the Executive

Directors’ Committee and ACB. The major areas of

concern were also put forth to the top management as

flash reports.

5.26 The concurrent audit of all RO/TE continued to

be undertaken by the Concurrent Audit Cells (CAC) of

respective RO/TE, while that of select HO departments,

viz., FD, AD, GAD, Premises Department and

Co-financing Cell of ICD continued to be done by

external auditors. The concurrent audit of Central

Library and HRMD (leave section) was also entrusted to

the external auditors during the year. The checklist for

concurrent audit was further revised keeping in view the

items falling under Information System Audit. Off-site

monitoring of CAC established in RO/TE was

undertaken through monthly audit returns. Two

workshops to improve the efficiency and effectiveness of

the CAC in RO/TE, were organised at RTC-Mangalore

and NBSC-Lucknow. Pursuant to the directions of the

Board of NABARD, ICRA Management Consulting

Services Ltd. (iMACS) was assigned a study on Risk

Management System in NABARD. The study was

completed and the recommendations have been

submitted for consideration of the top management. The

operational risk to NABARD by the constituents

continued to be monitored on an on-going basis. During

the year, the Operational Risk Management Committee

met twice.

J. Public Relations

5.27 In its endeavour to build a strong corporate image

and disseminate information on rural development

programmes, NABARD initiated measures to widen its

media coverage. The Bank continued to publicise

‘Bhavishya Nirman Bonds’ and ‘Rural Bonds’ as well as

areas like ‘Co-financing’, ‘Rural Innovation Fund’,

‘Village Development Programme’, etc. Recruitment of

staff was also widely advertised. NABARD regularly

responded to queries/issues on agriculture and rural

sector. The Bank continued to bring out its monthly and

quarterly publications, NABARD Newsletter and

NABARD Parivar, which were also made available to

retired employees. During the year, NABARD Parivar

won the first prize in the ‘Headlines’ category of the

Annual House Journal Awards of ABCI. NABARD

Newsletter is also available electronically.

K. Visit of Parliamentary Committees

5.28 Eight Parliamentary Committees held discussions

with NABARD on various aspects. These were:

(i) Committee on Government Assurances (Lok Sabha),

Ch-Eng-5.p65 7/15/2009, 11:03 AM99

100

(ii) Committee on Subordinate Legislation, (iii) Standing

Committee on Agriculture, (iv) Drafting and Evidence

Sub-Committee of the Parliament on Official Language,

(v) Parliamentary Standing Committee on Personal/

Public Grievance, Law and Justice, (vi) Committee on

Government Assurances (Rajya Sabha), (vii) Committee

on Subordinate Legislation – RRB’ Service Regulation,

and (viii) Committee of Parliament on Official

Language.

L. Promotion of Hindi

5.29 NABARD continued to promote the use of Hindi

in its everyday functioning. To enable the staff to work

in Hindi, 56 workshops were conducted and training on

the use of new bilingual software APS Saral was

imparted. A three-day orientation programme was

organised to sensitise senior officers to the official

language policy of GoI. In addition, the 20th Business

Plan Meet of Rajbhasha officers at Hyderabad, a five-

day translation training programme for Rajbhasha

officers at NBSC, Lucknow and an orientation

workshop for nodal officers handling the work of Hindi

in the RO in NER were also conducted. The Official

Language Implementation Committees (OLIC) at HO/

RO/TE undertook quarterly reviews on use of Hindi in

their respective offices. On-site inspections of five RO

and two TE were conducted. Hon’ble Members of the

Drafting and Evidence Sub-Committee of

Parliamentary Committee on Official Language

reviewed the progress of Hindi in Sikkim and Kerala

RO and NBSC, Lucknow.

5.30 The Bank continued to organise various

competitions across all offices to encourage the use of

Hindi. In order to motivate staff members to work in

Hindi, the Cash Award Scheme continued to be

implemented. Staff members were also deputed for

participation in inter-bank competitions organised by

respective TOLIC. Rajbhasha Shield for 2007-08 was

awarded to Madhya Pradesh, Gujarat and Andhra

Pradesh RO for Regions ‘A’, ‘B’ and ‘C’, respectively,

and NBSC, Lucknow among TE. At the HO level, the

Shield was awarded to Corporate Planning Department

and Central Statistical Information Department.

Effective from 2008-09, the evaluation criteria for

Rajbhasha Shield were modified to make the scheme

more objective and productive. Gujarat RO was

awarded Rajbhasha Shield by TOLIC, Ahmedabad for

best performance in use of Hindi among FI while Assam

RO ranked first among banks operating in NER by the

Regional Implementation Office, GoI.

5.31 During the year, ‘Rashtriya Bank Srijana’ bagged

three National Level Awards, viz., Best Hindi House

Journal Award from Ashirvad-Mumbai, Mayaram

Surjan Foundation-Raipur and ABCI Award in the

category of Indian language publications. The corporate

license for APS Saral, the advanced unicode-compliant

version of APS 2000++ was procured and the software

installed across regional offices. This is expected to ease

the process of electronic communication in Hindi

between NABARD and other institutions. In addition to

regular translation work, the ‘Model Operational

Procedure for Settlement of Claims of Deceased

Depositors’, ‘Funds and Investment Management in

Co-operatives’, ‘Reading Material for the Elected

Members on Boards of DCCB and SCB’ were translated

in Hindi. Many RO brought out PLP and Inspection

Reports in Hindi.

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101

Annual

Accounts

2008-2009

Balance Sheet-09-A Final.p65 7/15/2009, 11:33 AM101

102

Khimji Kunverji & Co. Chartered Accountants

AUDITORS’ REPORT

We have audited the attached Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (the ‘Bank’) as at

March 31, 2009 and the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed

thereto in which are incorporated the returns of 12 Regional Offices and 1 Training Centre audited by us. These offices and

training Centre have been selected in consultation with the Bank in terms of notification no. 1/14/2004–BOA dated March

26, 2009 issued by Ministry of Finance, Department of Economic Affairs (Banking Division). Also incorporated in the

Balance Sheet, Profit and Loss Account and Cash Flow Statement are the returns from 16 Regional Offices, 1 Sub–Office and

2 Training Centers which have not been subjected to audit. These unaudited offices account for 15.56% of advances,

0.13% of deposits and term money borrowings, 15.19% of interest income and 0.30% of interest expenses. These

financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for

our opinion.

Subject to the limitations of the audit mentioned in paragraph 1 above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purposes of our audit and have found them to be satisfactory;

b. In our opinion, the transactions of the Bank which have come to our notice have been within the powers

of the Bank;

c. The returns received from Regional Offices and Training Centers of the Bank have been found adequate for

the purposes of our audit;

d. The Balance Sheet and Profit and Loss Account have been drawn up in accordance with Schedule ‘A’ and

Schedule ‘B’ of Chapter IV of the National Bank for Agriculture and Rural Development (Additional)

General Regulations, 1984;

e. In our opinion and to the best of our information and according to the explanations given and as shown by

the books of the Bank:

i. the Balance Sheet, read with Significant Accounting Policies and notes on accounts contains all necessary particulars

and is properly drawn up in conformity with the accounting principles generally accepted in India so as to exhibit

a true and fair view of the state of affairs of the Bank as at March 31, 2009; and

ii. the Profit and Loss Account, read with Significant Accounting Policies and notes on accounts, shows a true

balance of the ‘profit’ for the year ended on that date, and is in conformity with accounting principles generally

accepted in India; and

iii. the Cash Flow Statement gives a true and fair view of the cash flows of the Bank for the year ended on that date.

Place: Mumbai

Dated: June 17, 2009

For and on behalf of

Khimji Kunverji & Co.

Chartered Accountants

Hasmukh B. Dedhia

Partner (F-033494)

Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.

Telephones: +91 22 22662550, 22661270, 22662011 ••••• Fasimile: +91 22 22664045

E-mail: [email protected] ••••• Website: www.khimjikunverji.com


103

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

BALANCE SHEET AS ON 31 MARCH 2009 (Rupees)

Sr. FUNDS AND LIABILITIES SCHEDULE As on As on

No. 31.03.2009 31.03.2008

1. Capital

(Under Section 4 of the NABARD Act, 1981) 2000,00,00,000 2000,00,00,000

2. Reserve Fund and Other Reserves 1 9535,20,60,005 8602,84,75,385

3. National Rural Credit Funds 2 15571,00,00,000 15159,00,00,000

4. Funds out of grants received from International Agencies 3 154,81,78,661 170,38,44,460

5. Gifts, Grants, Donations and Benefactions 4 5111,01,92,515 3967,49,29,810

6. Other Funds 5 2101,80,68,588 1518,00,64,973

7. Deposits 6 52127,12,34,628 30698,81,85,462

8. Bonds and Debentures 7 23703,63,05,906 28700,12,30,600

9. Borrowings 8 3592,94,14,312 4800,26,56,118

10. Current Liabilities and Provisions 9 4278,56,76,956 3089,53,14,729

Total 118176,11,31,571 98706,47,01,537

Forward Foreign Exchange Contracts 634,56,79,356 605,58,18,093

(Hedging) as per contra

(Rupees)

Sr. PROPERTY AND ASSETS SCHEDULE As on As on

No. 31.03.2009 31.03.2008

1. Cash and Bank Balances 10 13975,21,04,689 10314,24,14,644

2. Investments 11 2994,68,29,886 2582,05,89,335

3. Advances 12 98852,67,05,981 82872,42,54,280

4. Fixed Assets 13 247,17,14,222 257,28,88,784

5. Other Assets 14 2106,37,76,793 2680,45,54,494

Total 118176,11,31,571 98706,47,01,537

Forward Foreign Exchange Contracts (Hedging) as per contra 634,56,79,356 605,58,18,093

Commitment and Contingent Liabilities 17

Significant Accounting Policies and Notes on Accounts 18

Schedules referred to above form an integral part of accounts.

As per our attached report of even date



Hasmukh B. Dedhia S. Akbar

Partner Chief General Manager

Mumbai Accounts Department

Date : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandkumar Usha Thorat

Chairman Managing Director Director Director


104


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2009 (Rupees)

Sr.No. INCOME SCHEDULE 2008-09 2007-08

1. Interest received on Loans and Advances(Refer Note B-2 & 3 of Schedule 18) 5693,02,22,426 4518,08,36,863

2. Income from Investment Operations/ Deposits 1214,81,25,586 903,34,71,3773. Discount and Commission 92,55,15,672 51,71,40,176

4. Other Receipts (Refer Note B-5 of Schedule 18) 50,29,52,260 35,95,18,391

Total “A” 7050,68,15,944 5509,09,66,807

Sr.No. EXPENDITURE SCHEDULE 2008-09 2007-08

1. Interest and Financial Charges 15 4255,90,25,220 3137,48,84,4642. Establishment and Other Expenses 16 A 693,38,57,487 495,96,97,8513. Provisions 16 B 92,49,80,587 105,91,02,349

4. Depreciation (Refer Note B-16 of Schedule 18) 21,36,41,786 21,63,06,861

Total “B” 5063,15,05,080 3760,99,91,525

5. Profit before Tax (A - B) 1987,53,10,864 1748,09,75,282

6. a) Provision for Income Tax 674,00,00,000 560,00,00,000b) Deferred Tax - Asset (Adjustment)(Refer Note B-12 of Schedule 18) (-) 80,20,00,000 (-) 41,45,00,000

c) Provision for Fringe Benefit Tax 3,60,00,000 3,40,00,000

7. Profit after Tax 1390,13,10,864 1226,14,75,282

Significant Accounting Policies and Notes on Accounts 18

Schedules referred to above form an integral part of accounts.

PROFIT AND LOSS APPROPRIATION ACCOUNT (Rupees)

Sr.No. APPROPRIATIONS / WITHDRAWALS 2008-09 2007-08

1. Profit for the year brought down

Add: Withdrawals from Funds against

expenditure debited to Profit & Loss A/c 1390,13,10,864 1226,14,75,282

a) Co-operative Development Fund (Refer Schedule 1) 3,81,14,043 3,06,99,557b) Research and Development Fund (Refer Schedule 1) 8,76,10,683 7,48,95,872c) Watershed Development Fund (Refer Schedule 5) 24,91,45,824 11,90,51,701d) Micro Finance Development and Equity Fund (Refer Schedule 5) 9,92,70,242 7,38,32,004

e) Farm Innovation & Promotion Fund (Refer Schedule 1) 73,40,088 46,08,634

2. Profit available for Appropriation 1438,27,91,744 1256,45,63,050

Less: Transferred to:a) Special Reserve u/s 36(1) (viii) of IT Act, 1961 340,00,00,000 320,00,00,000b) National Rural Credit (Long Term Operations) Fund 400,00,00,000 400,00,00,000c) National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000d) Co-operative Development Fund 3,81,14,043 53,06,99,557e) Research and Development Fund 8,76,10,683 7,48,95,872f) Investment Fluctuation Reserve 42,00,00,000 25,78,45,000g) Financial Inclusion Fund 18,50,00,000 5,00,00,000h) Financial Inclusion Technology Fund 32,50,00,000 5,00,00,000i) Farmers Technology Transfer Fund 31,61,42,310 25,00,00,000j) Farm Innovation & Promotion Fund 46,55,57,504 0k) Reserve Fund 504,53,67,204 405,11,22,621

Total 1438,27,91,744 1256,45,63,050

Refer Schedule 18 for Significant Accounting Policies and Notes on Accounts.

As per our attached report of even dateKhimji Kunverji & Co.Chartered Accountants

Hasmukh B. Dedhia S. AkbarPartner Chief General ManagerMumbai Accounts DepartmentDate : June 17, 2009 Mumbai : June 17, 2009

Umesh Chandra Sarangi Dr. K.G. Karmakar T. Nandakumar Usha ThoratChairman Managing Director Director Director


105

SCHEDULES TO BALANCE SHEET

Schedule 1 - Reserve Fund and Other Reserves (Rupees)

Sr. Particulars Opening Transferred Transferred Balance as on

No. Balance From P&L to P&L 31.03.2009

as on 01.04.2008 Appropriation Appropriation

1. Reserve Fund 4718,80,35,657 504,53,67,204 0 5223,34,02,861

2. Research and Development Fund 50,00,00,000 8,76,10,683 8,76,10,683 50,00,00,000

3. Capital Reserve 74,80,53,208 0 0 74,80,53,208

4. Investment Fluctuation Reserve 73,00,00,000 42,00,00,000 0 115,00,00,000

5. Co-operative Development Fund 125,00,00,000 3,81,14,043 3,81,14,043 125,00,00,000

6. Soft Loan Assistance Fund for Margin Money 10,00,00,000 0 0 10,00,00,000

7. Agriculture & Rural Enterprise Incubation Fund 5,00,00,000 0 0 5,00,00,000

8. Foreign Currency Risk Fund 147,06,03,936 0 0 147,06,03,936

9. Special Reserve Created & Maintained

u/s 36(1)(viii) of Income Tax Act, 1961 3395,00,00,000 340,00,00,000 0 3735,00,00,000

10. Farm Innovation & Promotion Fund 4,17,82,584 46,55,57,504 73,40,088 50,00,00,000

Total 8602,84,75,385 945,66,49,434 13,30,64,814 9535,20,60,005

Previous year 7802,41,16,398 811,45,63,050 11,02,04,063 8602,84,75,385

Schedule 2 - National Rural Credit Funds

Schedule 3 - Funds out of Grants received from International Agencies

(Rupees)

Sr. Particulars Opening Balance Contribution by Transferred from Balance as on

No. as on 01.04.2008 RBI P&L 31.03.2009

Appropriation

1. National Rural Credit

(Long Term Operations) Fund 13615,00,00,000 1,00,00,000 400,00,00,000 14016,00,00,000

2. National Rural Credit (Stabilisation) Fund 1544,00,00,000 1,00,00,000 10,00,00,000 1555,00,00,000

Total 15159,00,00,000 2,00,00,000 410,00,00,000 15571,00,00,000

Previous year 14747,00,00,000 2,00,00,000 410,00,00,000 15159,00,00,000

(Rupees)

Sr. Particulars Opening Grants received/ Interest Exp./Disb./ adjust. Balance

No. Balance as on adjusted during credited to during the as on

01.04.2008 the year the Fund year 31.03.2009

1. National Bank - Swiss

Development Coop. Project 54,71,00,174 90,77,000 0 0 55,61,77,174

2. Rural Innovation Fund

(Refer Note B-9 of Schedule 18) 109,73,98,549 0 5,05,40,943 25,50,49,494 89,28,89,998

3. Rural Promotion Fund

(Refer Note B-8 of Schedule 18) 5,49,05,183 1,76,25,141 0 0 7,25,30,324

4. KfW - NABARD V Fund for

Adivasi Programme 44,40,554 5,09,07,803 0 2,87,67,192 2,65,81,165

Total 170,38,44,460 7,76,09,944 5,05,40,943 28,38,16,686 154,81,78,661

Previous year 182,63,92,591 6,16,75,699 6,21,16,899 24,63,40,729 170,38,44,460


106

Schedule 4 - Gifts, Grants, Donations and Benefactions

(Rupees)

Sr. Par ticulars Opening Grant received Interest Adjusted Balance as on

No. Balance as on during Credited to against the 31.03.2009

01.04.2008 the year the Fund expenditure

A.

1. KfW - NB - IX Adivasi Development Programme -

Maharashtra (Refer Note B-9 of Schedule 18) 11,45,898 6,47,96,054 4,42,023 6,23,98,314 39,85,661

2. KfW-NB-Indo German Watershed Development

Programme - Phase III - Maharashtra

(Refer Note B-9 of Schedule 18) 0 16,37,34,736 2,28,182 14,38,42,327 2,01,20,591

3. Indo German Watershed Development Programme -

Andhra Pradesh (Refer Note B-9 of Schedule 18) 52,84,458 3,42,22,285 1,76,130 3,59,98,229 36,84,644


Gujarat (Refer Note B-9 of Schedule 18) 74,39,581 1,00,80,108 2,43,625 1,23,15,630 54,47,684


Rajasthan (Refer Note B-9 of Schedule 18) 42,37,753 70,40,297 3,25,906 73,89,813 42,14,143

6. KfW Umbrella Programme on Natural Resource

Management (Refer Note B-9 of Schedule 18) 9,65,12,324 45,00,000 9,91,638 3,04,99,000 7,15,04,962

7. NABARD Grant for Fixed Assets

under NB-SDC HID Project 7,02,569 0 0 42,503 6,60,066

8. GTZ-NABARD RFP - Financial Component 0 2,39,35,333 0 2,39,35,333 0

9. NE Council Fund for

Miscellaneous Training Programme 4,98,357 60,00,000 0 72,35,053 (-) 7,36,696

10. KfW NB SEWA Bank Capitalisation of RFIs 0 2,96,39,708 0 2,96,39,708 0

B.

1. Capital Investment Subsidy for

Cold Storage Projects - NHB 20,82,710 14,81,22,000 0 14,03,14,800 98,89,910

2. Capital Subsidy for Cold Storage - NHM 4,26,890 21,09,52,600 0 20,85,95,400 27,84,090

3. Capital Subsidy for Cold Storage - TM North East 0 3,64,42,626 0 2,10,00,000 1,54,42,626

4. Credit Linked Capital Subsidy for

Technology Upgradation of SSIs 7,08,39,480 1,31,36,000 0 7,75,85,128 63,90,352

5. Capital Investment Subsidy for Rural Godowns 4,94,51,650 78,00,00,000 0 59,17,74,198 23,76,77,452

6. On-farm Water Management for Crop Production 89,62,638 0 0 87,70,820 1,91,818

7. Million Shallow Tubewell Programme - Bihar 228,95,48,442 0 0 (-) 2,71,81,447 231,67,29,889

8. Cattle Development Programme - Uttar Pradesh

(Refer Note B-9 of Schedule 18) 3,74,98,385 0 17,28,923 1,69,54,000 2,22,73,308

9. Cattle Development Programme - Bihar

(Refer Note B-9 of Schedule 18) 4,01,40,212 0 19,82,468 1,49,45,000 2,71,77,680

10. National Project on Organic Farming 3,52,31,798 3,68,33,000 0 2,57,52,960 4,63,11,838

11. Integrated Watershed Development Programme -

Rashtriya Sama Vikas Yojana 7,93,35,452 14,41,93,344 0 3,72,33,304 18,62,95,492

12. Capital Investment Subsidy Scheme -

Horticulture Development - Bihar 14,41,93,344 0 0 14,41,93,344 0

13. Rain Water Harvesting Scheme 57,93,313 0 0 (-) 24,88,031 82,81,344

14. Kutch Drought Proofing Project 68,90,555 0 0 4,43,336 64,47,219


107

Schedule 4 - Gifts, Grants, Donations and Benefactions

(Rupees)

S r. Pa r t icu la rs Opening Grant received Interest Adjusted Balance as on

N o . Balance as on during Credited to against the 31.03.2009

01.04.2008 the year the Fund expendi ture

15. Dairy and Poultry Venture Capital Fund 24,06,52,774 35,00,00,000 0 34,96,79,705 24,09,73,069

16. Capital Subsidy for Agriculture Marketing

Infrastructure, Grading and Standardisation 53,21,990 77,05,09,000 0 61,43,30,770 16,15,00,220

17. Vidharbha Package 63,26,230 0 0 63,26,230 0

18. Livelihood Advancement Business School -

Sultanpur, Uttar Pradesh

(Refer Note B-9 of Schedule 18) 70,68,766 0 4,57,349 0 75,26,115

19. Livelihood Advancement Business School -

Rae Bareli , Uttar Pradesh

(Refer Note B-9 of Schedule 18) 1,01,03,957 0 6,53,726 0 1,07,57,683

20. Multi Activity Approach for Pover ty

Alleviation - Sultanpur, Uttar Pradesh

(Refer Note B-9 of Schedule 18) 86,44,952 0 4,70,663 82,00,000 9,15,615

21. Multi Activity Approach for Pover ty

Alleviation - BAIF - Rae Bareli, Uttar Pradesh

(Refer Note B-9 of Schedule 18) 2,24,91,402 0 12,22,446 2,15,25,000 21,88,848

22. Capital Subsidy Scheme -

Agri Clinics Agri Business Centres 2,31,46,360 0 0 1,60,54,665 70,91,695

23. Ar tificial Recharge of

Groundwater in Hard Rock Area 1536,75,00,000 0 0 143,34,08,400 1393,40,91,600

24. Subsidy Reserve - CSAMI under RIDF 0 69,47,300 0 0 69,47,300

25. DWDR Scheme 2008 0 17500,00,00,000 0 16611,01,23,675 888,98,76,325

26. Interest Subvention (Sugar TL) 0 138,53,76,000 0 116,18,47,080 22,35,28,920

C Revival Package of Short Term

Cooperative Credit Structure

1. Cost of Special Audit 26,09,93,479 (-) 3,50,00,000 0 6,78,13,854 15,81,79,625

2. Recapitalisation Assistance to

Credit Cooperative Societies 2048,32,12,766 3838,76,00,000 0 3567,41,93,693 2319,66,19,073

3. Technical Assistance 14,96,75,184 40,00,00,000 0 13,33,71,772 41,63,03,412

4. Human Resources Development 14,09,11,818 50,00,00,000 0 12,72,87,260 51,36,24,558

5. Implementation Cost 6,26,64,323 35,00,00,000 0 26,73,69,939 14,52,94,384

D Long Term Co operative Credit

Structure (LTCCS) 0 20,00,00,000 0 0 20,00,00,000

Total 3967,49,29,810 21902,90,60,391 89,23,079 20760,27,20,765 5111,01,92,515

Previous year 711,81,48,778 4923,66,29,181 81,57,993 1668,80,06,142 3967,49,29,810

E As on 31.03.2009 As on 31.03.2008

1. Grants to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937

2. Less : Grants Released to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937

Total 0 0


108

Schedule 5 - Other Funds

Schedule 6 – Deposits

Schedule 7 – Bonds and Debentures

(Rupees)

Sr. Particulars as on as on

No. 31.03.2009 31.03.2008

1. From Central Government 0 0

2. From State Government 0 0

3. From Others

a) Tea / Rubber / Coffee Deposits 60,45,95,645 106,08,44,199

b) Term Deposits 421,63,02,000 0

c) Commercial Banks (Deposits under RIDF) 47022,75,11,983 30592,73,41,263

d) Short Term Cooperative Rural Credit Fund 4622,28,25,000 0

Total 52127,12,34,628 30698,81,85,462

(Rupees)

Sr. Particulars as on as onNo. 31.03.2009 31.03.2008

1. SLR Bonds 277,98,11,000 394,21,11,000

2. Tax Free Bonds 0 535,15,00,000

3. Priority Sector Taxable Bonds 0 325,00,00,000

4. Non Priority Sector Bonds 18156,50,00,000 20877,50,00,000

5. Capital Gains Bonds 690,93,90,000 4777,45,10,000

6. Bhavishya Nirman Bonds 4554,22,17,906 1787,45,72,600

7. NABARD Rural Bonds 23,98,87,000 3,35,37,000

Total 23703,63,05,906 28700,12,30,600

(Rupees)

Sr. Particulars Opening Additions/ Transferred Interest Expenditure/ Transferred Balance as on

No . Balance as on Adjustments from P & L Credited Disb.during to P&L 31.03.2009

01.04.2008 during the year Appropriation the year Appropriation

1. Watershed DevelopmentFund (Refer Note B-9 ofSchedule 18) 613,68,48,645 527,52,11,636 0 33,83,13,420 24,91,45,824 24,91,45,824 1125,20,82,053

2. Micro FinanceDevelopment and EquityFund (Refer Note B-9 ofSchedule 18) 126,60,86,662 20,00,00,000 0 6,04,41,953 8,80,32,101 9,92,70,242 133,92,26,272

3. Interest Differential Fund -(Forex Risk) 117,67,59,671 14,05,00,274 0 0 0 0 131,72,59,945

4. Interest Differential Fund -(Tawa) (Refer Note B-1 ofSchedule 18) 11,41,518 13,930 0 0 0 0 11,55,448

5. Adivasi Development Fund 1,93,60,592 1,45,94,702 0 0 0 0 3,39,55,294

6. Tribal Development Fund 602,98,67,885 5,00,000 0 0 28,05,33,698 0 574,98,34,187

7. Financial Inclusion Fund(Refer Note B-9 of Schedule 18) 15,00,00,000 0 18,50,00,000 94,71,129 36,14,706 0 34,08,56,423

8. Financial InclusionTechnology Fund(Refer Note B-9 of Schedule 18) 15,00,00,000 0 32,50,00,000 96,43,865 9,44,899 0 48,36,98,966

9. Farmers TechnologyTransfer Fund 25,00,00,000 0 31,61,42,310 0 6,61,42,310 0 50,00,00,000

Total 1518,00,64,973 563,08,20,542 82,61,42,310 41,78,70,367 68,84,13,538 34,84,16,066 2101,80,68,588

Previous year 1112,28,92,249 385,67,09,519 35,00,00,000 42,67,77,994 38,34,31,085 19,28,83,704 1518,00,64,973


109

Schedule 8 – Borrowings

Schedule 9 - Current Liabilities and Provisions

Schedule 10 - Cash and Bank Balances

(Rupees)


No. 31.03.2009 31.03.2008

1. From Central Government 353,80,83,226 370,20,89,182

2. From Reserve Bank of India 0 0

3. From Others :

(a) In India

(i) Certificate of Deposits 1816,15,33,900 1421,92,03,300

(ii) Commercial Paper 180,61,86,000 0

(iii) Term Money Borrowings 244,07,00,000 0

(iv) From Commercial Banks 500,00,00,000 2500,00,00,000

(b) Outside India

(i) From International Agencies 498,29,11,186 508,13,63,636

Total 3592,94,14,312 4800,26,56,118

(Rupees)


No. 31.03.2009 31.03.2008

1. Interest / Discount Accrued 2012,53,59,327 1674,07,05,305

2. Sundry Creditors 596,61,60,450 67,63,27,343

3. Provision for Gratuity (Refer Note B-17 of Schedule 18) 261,52,90,025 232,66,17,081

4. Provision for Pension (Refer Note B-10 and B-17 of Schedule 18) 637,35,36,151 466,91,98,168

5. Provision for Encashment of Ordinary Leave

(Refer Note B-17 of Schedule 18) 24,52,09,592 19,30,26,212

6. Unclaimed Interest on Bonds with RBI 6,54,086 11,56,586

7. Unclaimed Interest on Bonds 9,36,66,167 6,29,04,755

8. Unclaimed Interest on Term Deposits 27,913 0

9. Bonds matured but not claimed (Refer Note B-11 of Schedule 18) 69,11,50,000 81,87,70,000

10. Provisions and Contingencies

(a) Depreciation in Value of Investment a/c - G. Sec.

(Refer Note B-7 of Schedule 18) 0 35,73,98,880

(b) Amortisation of G. Sec. - HTM 72,72,63,808 54,54,47,856

(c) For Standard Assets 493,07,00,000 419,37,00,000

(d) Depreciation in value of Investments 2,12,28,000 1,66,08,000

(e) Sacrifice in Interest Element of Restructured Loans 4,54,00,000 13,16,00,000

(f) Provision for Other Assets & Receivables 35,48,250 37,97,358

(g) Provision for Income Tax [Net of Advance Tax] 94,64,83,187 15,80,57,185

Total 4278,56,76,956 3089,53,14,729

(Rupees)


No. 31.03.2009 31.03.2008

1. Cash in hand 21,579 21,531

2. Balances with :

a) Reserve Bank of India 169,67,65,931 3795,85,77,121

b) Others

(I) In India

(i) Other banks in India

a) On Current Account 420,21,61,811 107,56,48,175

b) Deposit with Banks 13067,10,00,000 5789,00,00,000

(ii) Remittances in Transit 185,25,16,092 157,59,35,668

(iii) Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149

(II) Outside India 0 0

Total 13975,21,04,689 10314,24,14,644


110

Schedule 11 – Investments

Schedule 12 – Advances

(Rupees)


No. 31.03.2009 31.03.2008

1. Government Securities

a) Securities of Central Government (Refer Note B-6 of Schedule 18) 1555,21,24,186 1422,29,02,151

[Face Value Rs. 1530,30,50,000 (Rs. 1380,30,50,000)]

[Market Value Rs. 1602,95,63,114 (Rs. 1406,58,19,973)]

b) Treasury Bills [Face Value Rs. 168,50,00,000 (Rs.278,77,75,000)] 156,51,75,000 260,41,87,184

2. Other Approved Securities 0 0

3. Equity Shares in :

a) Agri-Development Finance Companies :

i) NABARD Financial Services Ltd. Rs. 5,20,00,000

[52,00,000 - Equity shares of Rs.10 each]

ii) Agri-Business Finance [Andhra Pradesh] Ltd. Rs. 5,20,00,000


iii) Agri Development Finance [Tamil Nadu] Ltd. Rs. 5,20,00,000 15,60,00,000 15,60,00,000


b) Agricultural Finance Corporation Ltd. 1,00,00,000 1,00,00,000

[1,000 - Equity shares of Rs.10,000 each]

c) Small Industries Development Bank of India 48,00,00,000 48,00,00,000

[1,60,00,000 - Equity shares of Rs.10 each (face value)]

d) Agriculture Insurance Company of India Ltd. 60,00,00,000 60,00,00,000

[6,00,00,000 - Equity shares of Rs.10 each]

e) NABARD Consultancy Services Pvt. Ltd. 5,00,00,000 5,00,00,000


f) National Commodity and Derivatives Exchange Ltd. 4,50,00,000 4,50,00,000


g) Multi Commodity Exchange of India Ltd. 1,25,00,000 1,25,00,000


4. Others

a) Units of Liquid Mutual Funds 1000,00,00,000 760,00,00,000

(Refer Note B-24 of Schedule 18)

b) APIDC-Venture Capital Pvt. Ltd. - BVF

[50,000 (50,000) class A units of Rs. 1000 (800) each] 5,00,00,000 4,00,00,000

c) Commercial Paper 142,60,30,700 0

[Face Value Rs.150,00,00,000 (Rs. Nil)]

Total 2994,68,29,886 2582,05,89,335

(Rupees)


No. 31.03.2009 31.03.2008

1. Refinance Loans

a) Production & Marketing Credit 16896,23,31,000 17381,49,72,000

b) Conversion Loans for Production Credit 20,06,77,000 118,20,43,000

c) Medium Term Investment Credit- Non-Project loans 4,80,000 9,60,000

d) Liquidity Support 2590,91,89,000 1939,88,56,605

e) Other Investment Credit :

i) Medium Term and Long Term Project Loans

(Refer Note B-15 of Schedule 18) 33334,81,37,417 32401,00,02,486

ii) Long Term Non-Project Loans 251,92,69,717 290,14,34,014

2. Direct Loans

a) Loans under Rural Infrastructure Development Fund 45616,21,10,206 30648,59,05,219

b) Other Loans:

i) Cooperative Development Fund 3,27,78,368 3,51,05,480

ii) Micro Finance Development Equity Fund 29,74,13,365 16,41,99,746

iii) Watershed Development Fund 14,72,11,100 6,64,64,900

iv) Tribal Development Fund 23,52,000 3,68,000

c) Co-Finance Loans (Net of Provision) 94,47,56,808 66,39,42,830

Total 98852,67,05,981 82872,42,54,280


111

Schedule 13 - Fixed Assets

Schedule 14- Other Assets

(Rupees)


No. 31.03.2009 31.03.2008

1. LAND : Freehold & Leasehold


Opening Balance 144,16,62,113 118,43,09,971

Additions/adjustments during the year 34,73,754 25,73,52,142

Closing Balance (at cost) 144,51,35,867 144,16,62,113

Less: Amortisation of Lease Premia 32,37,09,461 30,07,14,152

Book Value 112,14,26,406 114,09,47,961

2. PREMISES


Opening Balance 256,05,62,671 244,58,60,686

Additions/adjustments during the year 1,96,46,744 11,47,01,985


Less: Depreciation to date 135,58,29,200 125,56,08,556

Book Value 122,43,80,215 130,49,54,115

3. FURNITURE & FIXTURES

Opening Balance 54,85,48,549 56,90,90,253


Sub-Total 56,42,86,526 58,15,37,481

Less: Cost of assets sold/written off 15,65,752 3,29,88,932



Book Value 3,55,95,382 4,83,69,006

4. COMPUTER INSTALLATIONS & OFFICE EQUIPMENTS

Opening Balance 61,87,59,611 63,23,32,978


Sub-Total 68,14,57,444 66,86,14,261

Less: Cost of assets sold/written off 2,00,55,046 4,98,54,650



Book Value 6,90,29,777 6,05,23,823

5. VEHICLES

Opening Balance 4,19,68,259 3,92,01,244

Additions/adjustments during the year 1,63,83,824 51,79,072

Sub-Total 5,83,52,083 4,43,80,316

Less: Cost of assets sold/written off 1,07,49,021 24,12,057



Book Value 2,12,82,442 1,80,93,879

Total 247,17,14,222 257,28,88,784

(Rupees)


No. 31.03.2009 31.03.2008

1. Accrued Interest 1501,44,94,051 2173,58,69,541

2. Deposits with Landlords 1,23,85,912 1,00,90,952

3. Deposits with Government Departments and Other Institutions 2,28,58,811 2,16,00,208

4. Housing loan to staff 103,55,76,565 98,42,58,611

5. Other Advances to staff 64,33,12,331 56,24,05,783

6. Advances to Landlords 1,54,000 2,73,433

7. Capital Work in Progress [Purchase of Staff Quarters & Office Premises] 9,84,29,348 4,96,86,759

8. Sundry Advances 26,19,12,331 28,44,91,070

9. Advance Tax (Net of Provision for Income Tax) 0 0

10. Deferred Tax Assets [Refer Note B-12 of Schedule 18] 384,99,00,000 304,79,00,000

11. Expenditure recoverable from Government of India/International Agencies 4,37,219 1,64,48,340

12. Discount Receivable 12,43,16,225 9,15,29,797

Total 2106,37,76,793 2680,45,54,494


112

Schedule 15 – Interest & Financial Charges

(Rupees)

Sr. Particulars 2008-09 2007-08

No.

1. Interest Paid on

a) Loans from Central Government 25,76,35,682 27,02,49,958

b) Borrowings from Reserve Bank of India 5,99,45,694 0

c) Bonds (Refer Note B-4 of Schedule 18) 1581,54,51,596 1361,55,15,697

d) Special Loan Deposits from State Governments 0 6,690

e) Tea / Coffee / Rubber Deposits 3,24,31,169 4,76,68,588

f) Term Money Borrowings 38,26,30,457 0

g) Term Deposits 8,95,97,323 0

h) Borrowings from International Agencies 27,70,71,578 24,32,59,546

i) Commercial Paper (Refer Note B-4 of Schedule 18) 7,18,81,566 0

j) Short Term Cooperative Rural Credit Fund

(Refer Note B-4 of Schedule 18) 27,69,81,135 0

k) Deposits under RIDF 2157,00,88,384 1400,62,85,028

l) Cattle Development Programme (UP & Bihar) 37,11,391 14,90,600

m) Watershed Development Fund 33,83,13,420 34,73,68,791

n) Financial Inclusion Fund 94,71,129 0

o) Financial Inclusion Technology Fund 96,43,865 0

p) Micro Finance Development and Equity Fund 6,04,41,953 7,94,09,203

q) Indo German Watershed Development Programme - Andhra Pradesh 1,76,130 2,17,699

r) Indo German Watershed Development Programme - Rajasthan 3,25,906 1,67,216

s) KfW - NB Indo German Watershed Development Programme -

Phase III - Maharashtra 2,28,182 12,31,130

t) KfW - NB - IX Adivasi Development Programme 4,42,023 2,11,824

u) Indo German Watershed Development Programme - Gujarat 2,43,625 1,09,631

v) Corporate Borrowings from Banks and FIs in India 130,08,45,106 187,90,01,244

w) Rural Innovation Fund 5,05,40,943 6,21,16,899

x) Livelihood Advancement Business School RF Project -

Sultanpur, Uttar Pradesh 4,57,349 4,95,616

y) Multi Activity Approach for Poverty Alleviation BAIF Project -

Sultanpur, Uttar Pradesh 4,70,663 17,64,718

z) Livelihood Advancement Business School RF Project -

Rae Bareli, Uttar Pradesh 6,53,726 8,81,983

aa) Multi Activity Approach for Poverty Alleviation BAIF Project -

Rae Bareli, Uttar Pradesh 12,22,446 15,76,950

ab) Other Deposits / Borrowings 12,83,178 0

ac) Discount on Certificate of Deposits 175,19,07,902 61,49,39,574

ad) Tribal Development Fund - Wadi [West Bengal] 0 29,824

2. Discount on Collateralised Borrowing and Lending Obligations 3,17,86,414 3,91,67,660

3. Swap Charges 3,14,00,171 3,28,30,183

4. Discount, Brokerage, Commission & Issue exp. on Bonds and Securities 13,17,45,114 12,64,14,035

5. Repo Interest Expenditure 0 24,74,177

Total 4255,90,25,220 3137,48,84,464


113

Schedule 16 A - Establishment and Other Expenses

Schedule 16 B - Provisions

Schedule 17 - Commitments and Contingent Liabilities

(Rupees)

Sr. Particulars As on As on

No. 31.03.2009 31.03.2008

1. Commitments on account of capital contracts remaining to be executed 16,80,39,000 4,51,19,000

Sub Total “A” 16,80,39,000 4,51,19,000

2. Contingent Liabilites

Disputed claims for additional payments towards construction of premises 3,36,60,000 9,11,29,000

Sub Total “B” 3,36,60,000 9,11,29,000

Total (A + B) 20,16,99,000 13,62,48,000

(Rupees)


No.

Provisions for :

1. Amortisation of G. Sec 18,18,15,952 18,18,15,952

2. Standard Assets 73,70,00,000 62,52,00,000

3. Non Performing Assets 8,88,11,531 2,22,76,786

4. Depreciation in Investments G.Sec [Refer Note B-7 of Schedule 18] 0 35,73,98,880

5. Depreciation in Value of Investment Account - Equity 46,20,000 (-) 36,12,000

6. Sacrifice in Interest Element of Restructured Accounts (-) 8,62,00,000 (-) 12,35,00,000

7. Other Assets / Receivables (-) 10,66,896 (-) 4,77,269

Total 92,49,80,587 105,91,02,349

(Rupees)


No.

1. Salaries and Allowances 251,39,90,425 233,08,89,082

2. Contribution to / Provision for Staff Superannuation Funds 266,79,98,747 123,39,40,370

3. Travelling & Other allowances in connection with Directors’ &

Committee Members’ Meetings 34,35,966 16,47,887

4. Directors’ & Committee Members’ Fees 1,49,375 1,58,250

5. Rent, Rates, Insurance, Lighting, etc. 19,14,09,388 19,11,04,599

6. Travelling Expenses 23,59,04,413 19,68,77,252

7. Printing & Stationery 2,52,26,434 2,76,11,644

8. Postage, Telegrams & Telephones 6,58,96,399 6,42,32,097

9. Repairs 5,85,61,031 3,89,31,822

10. Auditors’ Fees

[includes Rs.Nil (Previous Year Rs 2,03,136) paid to erstwhile auditors] 7,11,496 7,11,466

11. Legal Charges 11,55,909 15,81,688

12. Miscellaneous Expenses 50,27,83,251 41,63,64,138

13. Expenditure on Miscellaneous Assets 55,30,410 67,10,778

14. Expenditure on Study & Training 25,00,60,356 19,77,01,338

[Including Rs.5,52,86,037 (Rs. 4,77,77,782) pertaining to

establishment expenses of Regional Training Colleges]

15. Expenditure on Promotional Activities under

(i) Cooperative Development Fund 3,81,14,043 3,06,99,557

(ii) Micro Finance Development and Equity Fund 9,92,70,242 7,38,32,004

(iii) Watershed Development Fund 24,91,45,824 11,90,51,701

(iv) Farm Innovation and Promotion Fund 73,40,088 46,08,634

16. Wealth Tax 1,71,73,690 2,30,43,544

Total 693,38,57,487 495,96,97,851


114

A. Significant Accounting Policies

1. Basis of Preparation

1.1 The accounts are prepared on the historical cost

convention and comply with all material aspects

contained in the National Bank for Agriculture and Rural

Development Act, 1981 and Regulations thereof,

applicable Accounting Standards (AS) issued by the

Institute of Chartered Accountants of India (ICAI) and

regulatory norms prescribed by the Reserve Bank of India

(RBI). Except otherwise mentioned, the accounting

policies have been consistently applied by National Bank

for Agriculture and Rural Development (NABARD / the

Bank) and are consistent with those used in the previous

year.

1.2 Preparation of financial statements as per

Generally Accepted Accounting Policies (GAAP) requires

the management to make several assumptions and

estimates that affect reported results and the reported

state of affairs of the Bank; the example of such cases

include the estimated life of fixed assets, liability on

account of employee retirement benefits, provision for

anticipated losses, etc. Actual results could differ from

such estimates. Such differences are recognized in the

year of outcome of such results.

2. Income and expenditure

2.1 Income and expenditure are accounted on

accrual basis except the following, which are accounted

on cash basis:

a. Interest on non-performing assets are identified as per

RBI guidelines.

b. Income by way of penal interest charged due to

delayed receipt of loan dues or non-compliance with

terms of loan.

c. Service Charges on loans given out of Agriculture

and Rural Enterprises Incubation Fund, Micro Fin-

ance Development and Equity Fund, Watershed

Development Fund and Cooperative Development

Fund.

d. Expenses not exceeding Rs.10,000 at each

accounting unit under a single head of

expenditure.

Schedule 18

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF

ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2009

2.2 Issue expenses relating to floatation of bonds are

recognised as expenditure in the year of issue of Bonds.

2.3 Dividend on investments is accounted for when

the right to receive the dividend is established.

3. Fixed Assets and Depreciation

3. 1 Fixed assets are stated at cost of acquisition less

accumulated depreciation and impairment losses, if any.

The cost of assets includes taxes, duties, freight and other

incidental expenses related to the acquisition and

installation of the respective assets. Subsequent

expenditure incurred on existing assets is capitalised only

when it increases the future benefit from the existing

assets beyond its previously assessed level of

performance.

3.2 Expenditure incurred on assets purchased for the

value not exceeding Rs.5,000 per unit is charged to Profit

and Loss Account.

3.3 Land includes free hold and leasehold land.

3.4 Premises include value of land where segregated

values are not readily available.

3.5 Depreciation on premises situated on free hold

land is charged @ 10% p.a. on written down value basis

3.6 Depreciation on leasehold land and premises

situated thereon is computed and charged at higher of 5%

on written down value basis or the amount derived by

amortising the premium / cost over the remaining period

of lease hold land on straight-line basis.

3.7 Depreciation on other fixed assets is charged over

the estimated useful life of the assets ascertained by the

management at the following rates on Straight Line

Method basis:

Type of Assets Depreciation Rate

Furniture and Fixtures 20%

Computer Installations 32%

Office Equipments 20%

Vehicles 20%


115

Depreciation is charged for the full year

irrespective of the date of purchase of asset. No

depreciation is charged on assets sold during the year.

4. Intangible Assets and Amortisation

Intangible assets are recognized / amortised as per

the criteria specified in AS 26 "Intangible Assets".

5. Investments

5.1 In accordance with the RBI guidelines,

Investments are classified into "Held for Trading" (HFT),

"Available for Sale" (AFS) and "Held to Maturity" (HTM)

categories (hereinafter called "categories"). Under each of

these categories, investments are further classified under

(i) Government Securities (ii) Other Approved Securities

(iii) Shares and (iv) Others.

5.2 Securities that are held principally for resale

within 90 days from the date of purchase are classified as

"HFT" . Investments that the Bank intends to hold till

maturity are classified as "HTM". Securities which are not

to be classified in the above categories, are classified as

"AFS".

5.3 Investments categorized under "HTM" are carried

at cost and provision for depreciation / diminution /

amortisation, if any, in value of investments is included

under Current Liabilities and Provisions.

5.4 Provision for diminution, other than temporary,

in the value of investments in subsidiaries under the

category "HTM" is made, wherever necessary.

5.5 Profit on sale of investment categorized under

"HTM" is recognized in Profit & Loss A/c and then

transferred to Capital Reserve A/c. Loss on sale of

investment categorized under "HTM" is recognized in

Profit & Loss A/c.

5.6 Investments under "AFS" and "HFT" are marked

to market scrip wise at the rate declared by Primary

Dealers Association of India (PDAI) jointly with Fixed

Income Money Market and Derivative Association of

India (FIMMDA) at prescribed intervals. While only net

depreciation, if any, is provided for investments in the

category classified as "AFS", depreciation / appreciation is

recognised in the category for investments classified as

"HFT".

5.7 Treasury Bills are valued at carrying cost.

5.8 Unquoted Shares are valued at breakup value,

if the latest Audited Accounts of the investee

companies is available, or at Re.1/- per share as per

RBI guideline.

5.9 Brokerage, commission, etc. paid at the time of

acquisition, are charged to revenue.

5.10 Broken period interest on debt investment is

treated as a revenue item.

5.11 Transfer of a security between the categories is

accounted for at lower of the acquisition cost / book

value / market value on the date of transfer and

depreciation, if any, on such transfer is fully provided

for.

6. Advances and Provisions thereon

6.1 Advances are classified as per RBI guidelines.

Provision for standard assets and non-performing assets is

made in respect of identified advances based on a

periodic review and in conformity with the provisioning

norms prescribed by RBI.

6.2 In case of restructuring / rescheduling of

advances, the difference between the present value of

future interest as per the original agreement and the

present value of future interest as per the revised

agreement is provided for at the time of restructuring /

rescheduling.

6.3 Advances are stated net of provisions towards

Non-performing Advances.

7. Foreign Currency Transactions

7.1 Foreign currency borrowings, which are covered

by hedging agreements, are marked to market at every

reporting date, the resultant gain if any is ignored and loss

if any, is provided for. The liability towards foreign

currency borrowings at the prevailing exchange rate on the

reporting date is mentioned under the Balance sheet as a

contra entry.

7.2 Profit on cancellation of or renewal of currency

SWAP agreement, if any, is accounted for on the final

settlement of agreement; however, loss on such

transactions is provided at the market rates as on the date

of Balance Sheet.


116

8. Retirement Benefits

8.1 The Bank has a Provident Fund Scheme

managed by RBI. Contribution to the Fund is made on

actual basis.

8.2 Provision for gratuity is made based on actuarial

valuation, in respect of all employees including employees

transferred from RBI. The amount of gratuity due from

RBI, in respect of employees transferred from RBI, is

accounted on cash basis.

8.3 Provision for Pension is made based on actuarial

valuation.

8.4 Employer's contribution to Provident Fund

relating to the pension optees (part of Pension Fund) are

maintained with RBI.

8.5 Provision for Encashment of Ordinary Leave is

made on the basis of actuarial valuation.

9. Taxes on Income

9.1 Tax on income for the current period is

determined on the basis of taxable income and tax credits

computed in accordance with the provisions of Income

Tax Act, 1961 and based on expected outcome of

assessments / appeals.

9.2 Deferred tax is recognized, on timing difference,

being the difference between taxable income and

accounting income for the year and quantified using the

tax rates and laws that have been enacted or substantively

enacted as on Balance Sheet date.

9.3 Deferred tax assets relating to unabsorbed

depreciation / business losses are recognised and

carried forward to the extent that there is virtual

certainty that sufficient future taxable income will be

available against which such deferred tax assets can be

realized.

9.4 Other deferred tax assets are recognised and

carried forward to the extent that there is a reasonable

certainty that sufficient future taxable income will be

available against which such deferred tax assets can be

realized.

9.5 Fringe Benefit Tax and Wealth Tax is provided in

accordance with the provisions of the relevant Acts.

10. Segment Reporting

10.1 Segment revenue includes interest and other

income directly identifiable with / allocable to the

segment.

10.2 Expenses that are directly identifiable with /

allocable to segments are considered for determining the

segment result. The expenses, which relate to the Bank as

a whole and not allocable to segments, are included under

"Other Unallocable Expenditure".

10.3 Income, which relates to Bank as a whole and

not allocable to segments is included under "Other

unallocable bank income".

10.4 Segment assets and liabilities include those

directly identifiable with the respective segments.

Unallocable assets and liabilities include those that relate

to the Bank as a whole and not allocable to any segment.

11. Impairment of Assets

11.1 As at each Balance Sheet date, the carrying

amount of assets is tested for impairment so as to

determine:

a) the provision for impairment loss, if any required; or

b) the reversal, if any, required for impairment loss

recognized in the previous periods.

11.2 Impairment loss is recognized when the carrying

amount of an asset exceeds recoverable amount.

12. Provisions, Contingent Liabilities

and Contingent Assets

12.1 Provisions are recognised for liabilities that can be

measured only by using substantial degree of estimation

if:

a) the Bank has a present obligation as a result of a past

event;

b) a probable outflow of resources is expected to settle

the obligation; and

c) the amount of the obligation can be reliably

estimated.

12.2 Reimbursement, expected in respect of

expenditure, which require a provision, is recognised only

when it is virtually certain that the reimbursement will be

received.


117

12.3 Contingent liability is disclosed in the case of:

a) a present obligation arising from past events, when it

is not probable that an outflow of resources will be

required to settle the obligation,

b) a present obligation when no reliable estimate is

possible, and

c) a possible obligation arising from past events where

the probability of outflow of resources is not remote.

12.4 Contingent assets are neither recognized, nor

disclosed.

12.5 Provisions, contingent liabilities and contingent

assets are reviewed at each Balance Sheet date.

B. Notes forming part of the Accounts

1. In terms of TAWA Command Area Development

Project Agreement, interest chargeable by the

Government of India (GoI) on loans to the Bank at 6.5%

(6.5%) per annum has been accounted to the extent of

4.5% (4.5%) by credit to the "Interest Differential Fund" to

be utilised for certain specified purposes and the balance

2% has been paid to GoI.

2. Interest Received on Loans and Advances

includes Rs. Nil (Rs. 37.36 crore) representing Interest

Subvention received from GoI for providing assistance

under Liquidity Support to State Co-operative Banks

(SCBs) / Regional Rural Banks (RRBs). The scheme is

closed.

3. Interest Received on Loans and Advances

includes Rs. 10.70 crore (Nil) representing Interest

Subvention received from GoI for providing assistance

under Liquidity Support to State Co-operative Banks

(SCBs) / Regional Rural Banks (RRBs) for Rabi 2008-09.

4. Subvention received / receivable from GOI

amounting to Rs. 874.44 crore (Rs. 879.74 crore) being

the difference between the cost of borrowing by NABARD

and the refinance rate, has been reduced from interest

and financial charges.

5 Other receipts includes Rs.32.02 crore (Rs.28.87

crore) received / receivable from GoI towards

administration charges on providing refinance under

interest subvention scheme to SCBs and RRBs for

financing Seasonal Agricultural Operations.

6. Investments in Government securities includes

the following securities pledged with Clearing Corporation

of India Limited as collateral security for Business

segments:

(Rs. crore)

Particulars Face Value Book Value

Pledged for Business 10.00 (10.00) 9.25 (11.19)

Segment (Securities)

Pledged for Business 1,212.00 (1212.00) 1,220.97 (1256.67)

Segment (Collateralised

Borrowing and Lending

Obligation)

7. Investments under HTM category excluding

investments in subsidiaries as on 31 March 2009 stood at

22.90% as against 43.43 % as at 31 March 2008. As per

RBI directives, the bank has shifted investments

amounting to Rs. Nil (Rs. 480.65 crore, book value Rs.

432.30 crore) from HTM to AFS category. The resultant

diminution in the value of the shifted investments

amounting to Rs. Nil (Rs. 35.74 crore) has been provided

for, at the year end.

8. In accordance with the Memorandum of

Understanding entered into with the Swiss Agency for

Development Cooperation, repayments of loan, service

charges and other receipts made out of Rural Innovation

Fund (RIF) are being credited to the Rural Promotion

Fund (RPF).

9. Interest at the rate of 6.00% per annum on

unutilised balances of RIF, Watershed Development

Fund, KfW NB IGWDP - (Andhra Pradesh, Gujarat,

Maharashtra and Rajasthan), KfW NB IX Adivasi

Development Programme and KfW Umbrella Programme

on Natural Resource Management has been credited to

respective fund based on respective agreements. Further,

interest at the rate of 6.47% per annum on unutilised

balances of Micro Finance Development and Equity

Fund, Cattle Development Programme (Uttar Pradesh &

Bihar), LAB's Revolving Fund (Sultanpur & Rae Bareli)

and MAPA BAIF - (Sultanpur and Rae Bareli), Financial

Inclusion Fund and Financial Inclusion Technology Fund

has been credited to the respective funds.

10. Pending receipt of confirmation of balance of

Provident Fund Account in respect of employer's

contribution as on March 31, 2009 maintained with RBI,

provision for pension is made after considering the

balance of PF maintained with RBI as per the records

available with the Bank.


118

11. Outstanding balance payable on account of

'bonds matured but not claimed' amounting to Rs.69.12

crore (Rs.81.88 crore) includes Rs.1.53 crore (Rs.1.53

crore) on account of SLR Bonds issued by the Bank which

were earlier serviced / managed by RBI. From October 1,

2003, servicing of these bonds was taken over by the

Bank.

12. The Bank has, during the year, in accordance

with AS 22 "Accounting for taxes on Income", recognized

in the Profit and Loss account the difference of Rs.80.20

crore between net deferred tax assets of Rs.384.99 crore

and Rs.304.79 crore as at March 31, 2009 and March 31,

2008 respectively; as detailed below:

(Rs. crore)

Sr. Deferred Tax Assets 31 March 31 MarchNo. 2009 2008

1 Provision for Retirement Benefits 344.80 267.84made in the books but allowablefor tax purposes on payment basis

2 Depreciation on Fixed Assets 23.71 24.59

3 Amortisation of G Sec 16.48 12.36

Total 384.99 304.79

13. Provision for Income Tax on account of Special

Reserve created u/s 36(1)(viii) of the Income Tax Act,

1961, is not considered necessary, as the Bank has

decided not to withdraw the said reserve.

14. 'Land' and 'Premises' include Rs. 34.77 crore

(Rs.35.94 crore) paid towards Office Premises and

Staff Quarters for which conveyance is yet to be

completed.

15. The Bank has subscribed to debentures issued by

various State Land Development Banks / State

Cooperative Agriculture & Rural Development Banks,

which are included under "Advances - Other Investment

Credit - Medium Term and Long Term Project Loans".

The value of Allotment Letters / Debenture Scrips, yet to

be received, as at the year end, aggregates to Rs.195.33

crore (Rs.14.42 crore).

16. Depreciation charged in Profit & Loss Account is

net of Swiss Development Corporation share of

depreciation amounting to Rs. 42,503 (Rs. 1,27,677) on

assets purchased under SDC- HID project.

17. Disclosure required under AS 15 (Revised) on

"Employee Benefits" is as under:

17.1 Defined Benefit Plans

Employees Retirement Benefit plans of the bank include

Pension, Gratuity and Leave Encashment, which are

defined benefit plans. The present value of obligation is

determined based on actuarial valuation using the

Projected Unit Cost Method, which recognises each period

of services as giving rise to additional unit of employee

benefit entitlement and measures each unit separately to

build up the final obligation.

a. Reconciliation of opening and closing balances of

defined benefit obligations:

(Rs. crore)

Particulars Pension Gratuity LeaveEncashment

Present value of defined 705.11 232.66 92.18benefit obligation at the (632.97) (195.05) (72.88)beginning of year

Current Service Cost 20.90 17.26 9.10(18.67) (14.08) (5.64)

Interest Cost 56.41 18.62 7.37(50.64) (15.60) (5.83)

Actuarial (gain)/ loss 127.38 -9.84 10.64(17.34) (12.12) (15.66)

Benefits paid -17.79 -8.17 -3.78(-14.51) (-4.19) (-7.83)

Present value of defined 892.01 250.53* 115.51benefits obligations (705.11) (232.66) (92.18)at the year end

*Excludes incremental gratuity of Rs. 11 crore to be paid to

employees who have retired on or after January 01, 2006.

b. Amount recognized in the balance sheet as on 31

March 2009:

(Rs. crore)

Particulars Pension Gratuity Leave

(Partly (Unfunded) Encashment

Funded) (Funded)

Present value of 892.01 250.53 115.51

defined benefits (705.11) (232.66) (92.18)

obligations as

at the year end

Fair value of 254.66 0.00 90.99

plan assets as (238.19) @ (0.00) (72.88)$

at the year end

Liability recognized in 637.35 250.53 24.52

the Balance sheet as (466.92) (232.66) (19.30)

at the year end

@ Represents the Banks contribution towards PF for pension

optees available with RBI.

$ Represents the amount invested with Insurance companies

towards the liability for Leave Encashment.


119

c. Expenses recognized in the Profit and Loss

Account during the year:

(Rs. crore)


Encashment

Current Service Cost 20.90 17.26 9.10

(18.67) (14.08) (5.64)

Interest Cost 56.41 18.62 7.37

(50.64) (15.60) (5.83)

Actuarial (gain)/ loss 127.38 -9.84 11.21

(17.34) (12.12) (15.66)

Expected return on - 0.00 -2.69

Plan Assets - (0.00) (0.00)

Expense recognized in 188.06 26.04 24.99^

the statement of (68.10) (41.80) (27.13)

Profit & Loss

^ net of income on plan assets Rs. 3.11 crore (Rs. Nil).

d. Actuarial assumptions:


Encashment

Mortality Table (LIC) 1994-96 1994-96 1994-96

(Ultimate) (Ultimate) (Ultimate)

Discount rate (per annum) 7.5% 7.5% 7.5%

Salary growth (per annum) 4% 7% 7%

Withdrawal rate 1% 1% 1%

17.2 The estimates of rate of escalation in salary

considered in actuarial valuation, take into account

inflation, seniority, promotion and other relevant factors

including supply and demand in the employment

market.

17.3 The aforesaid liabilities include liability of

employees deputed to subsidiaries.

17.4 The above information is certified by the actuary,

except in respect of pension for fair value of plan assets,

expected return on plan assets and expense recognized in

profit and loss account.

17.5 Defined Contribution Plan:

The bank contributes a defined sum of 10% on the basic

salary for both pension optees and non pension optees

every month towards Provident Fund. The contribution

made for the pension optees forms part of the plan assets

of pension scheme. The total contribution charged to

Profit and Loss account during the year is Rs.12.29 crore

(Rs.12.74 crore)

18. In the opinion of the Bank's management, there

is no impairment to assets to which AS 28 - "Impairment

of Assets" applies requiring any provision.

19. The movement in Contingent Liability as required

in AS 29 "Provisions, Contingent Liabilities and

Contingent Assets" is as under:

(Rs. crore)

Particulars 2008-09 2007-08

Opening Balance 9.11 58.78

Provided during the year 0.01 0.00

Reversed during the year 5.75 49.67

Closing Balance 3.37 9.11

20. Prior period items included in the Profit and Loss

account are as follows:

(Rs. crore)

Sr. No. Particulars 2008-09 2007-08

1 Depreciation 0.032 0.000

2 Other Expenses 0.041 0.000

3 Dividend Income 0.000 0.625

Total 0.073 0.625

21. Capital adequacy ratio of the Bank as on 31

March 2009 is 25.85% (26.61%) as against a minimum

of 9% as stipulated by RBI.

22. During the year the bank has implemented an

Optional Early Retirement Scheme (OERS) for its

officers in Grade C who have completed 45 years of

age and 22 years of service with the bank. A provision

of Rs.15.03 crore has been made in current year and

included under the head "Salaries and Allowances".

23. NPA on staff loans:

(Rs. crore)


Opening Balance 0.10 0.11

Addition during the year 0.00 0.00

Written Back during the year 0.03 0.01

Closing Balance 0.07 0.10


120

24. Investments in Mutual Funds:

(Rs. crore)

S.No Name of the Mutual Fund FY 2008-09 FY 2007-08

Book Value Market Value Book Value Market Value

1 Birla Sun life 100.00 100.04 60.00 60.02

2 Tata 50.00 50.02 60.00 60.01

3 Kotak Mahindra 50.00 50.02 60.00 60.02

4 UTI 75.00 75.03 60.00 60.02

5 ICICI Prudential 100.00 100.02 60.00 60.02

6 HDFC 75.00 75.02 60.00 60.01

7 Canara Robeco 50.00 50.00 40.00 40.01

8 SBI 50.00 50.01 60.00 60.02

9 Reliance 50.00 50.01 60.00 60.02

10 ING 50.00 50.11 60.00 60.01

11 Franklin Templeton 50.00 50.01 60.00 60.02

12 LIC 100.00 100.05 60.00 60.02

13 Religare 50.00 49.93 0.00 0.00

14 IDFC 50.00 50.01 0.00 0.00

15 Deutsche 50.00 50.02 0.00 0.00

16 Baroda Pioneer 50.00 50.01 0.00 0.00

17 PRINCIPAL 0.00 0.00 60.00 60.01

Total 1000.00 1000.31 760.00 760.21

25. As per the information available with the Bank,

there are no dues payable under Micro, Small and

Medium Enterprises Development Act 2006.

26. Previous year's figures have been regrouped /

rearranged wherever necessary.

27. Figures in brackets pertain to previous year.

28. The following additional information is disclosed in

terms of RBI circular No.RBI/2008-2009/63

(DBOD.FID.FIC.2/01.02.00/2008-09) dated 01July 2008.

28.1 Capital

(a) Capital to Risk-weighted Assets Ratio

(CRAR)

(Percent)

Particulars 31 March 2009 31 March 2008

CRAR 25.85 26.61

Core CRAR 24.45 25.34

Supplementary CRAR 1.40 1.27

(b) Subordinated Debt

(Rs. crore)


Amount of Nil Nil

subordinated debt

raised and outstanding

as Tier II Capital

(c) Risk weighted assets(Rs. crore)


On - Balance Sheet Items 43,436.86 38,880.81

Off - Balance Sheet Items 27.61 36.47

(d) Pattern of Capital contribution as on the

date of the balance sheet(Rs. crore)

Contributor 31 March 2009 31 March 2008

Reserve Bank of India 1,450 1,450

Government of India 550 550

Total 2,000 2,000

28.2 Asset Quality and Credit Concentration

(e) Net NPA position


Percentage of Net NPAs 0.0306648 0.0232661

to Net Loans & Advances

(f) Asset classification

(Rs. crore)

Classification 2008-09 2007-08

Amount (%) Amount (%)

Standard 98822.36 99.969 82,853.14 99.977

Sub-standard 6.86 0.007 2.40 0.003Doubtfull 23.45 0.024 16.88 0.020Loss 0.00 0.000 0.00 0.000

Total 98852.67 100.00 82872.42 100.00


121

(g) Provisions made during the year

(Rs. crore)

Provisions against 2008-09 2007-08

Standard Assets 73.70 62.52

Non Performing Assets 8.88 2.23

Investments (Net) (35.28) 35.38

Income Tax (including 677.60 563.40

Fringe Benefit Tax)

Total 724.90 663.53

(h) Movement in Net NPAs

(Rs. crore)


(A) Net NPAs as at beginning of the year 19.28 22.96

(B) Add: Additions during the year 11.03 7.16

(C) Sub-total (A+B) 30.31 30.12

(D) Less: Reductions during the year 0.00 10.84

(E) Net NPAs as at the end of the year (C-D) 30.31 19.28

(i) Credit exposure as percentage to Capital

Funds and as percentage to Total Assets

(Rs. crore)

2008-09 2007-08

Category Credit Exposure Credit Exposure

as % to as % to

Capital Total Capital Total

Funds Assets Funds Assets

I Largest Single 106.32 10.15 43.25 4.56Borrower

II Largest Borrower Not Applicable Not ApplicableGroup

III Ten Largest 333.06 31.81 270.19 28.48Single Borrowersfor the year

IV Ten Largest Not Applicable Not Applicable

Borrower Groups

(j) Credit exposure to the five largest

industrial sectors as percentage to total

loan assets: Not Applicable

28.3 Liquidity

(k) Maturity pattern of Rupee Assets and Liabilities

(l) Maturity pattern of Foreign Currency Assets and Liabilities

(Rs. crore)

Sr. Item Less than More than More than More than More than Total #

No. or equal to 1 year upto 3 years upto 5 years upto 7 years

1 year 3 years 5 years 7 years

1. Rupee Assets 48326.90 28354.64 23204.68 14243.36 3551.34 117680.92

(43,339.36) (21,629.83) (17,758.77) (11,714.26) (3,843.23) (98,285.44)

2. Foreign currency 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00)

assets

Total Assets 48326.90 28354.64 23204.68 14243.36 3551.34 117680.92

(43,339.36) (21,629.83) (17,758.77) (11,714.26) (3,843.23) (98,285.44)

3. Rupee Liabilities 16553.97 22015.52 24003.42 17404.61 37205.11 117182.63

(19,155.78) (15,913.71) (17,067.14) (11,389.93) (34,250.74) (97,777.30)

4. Foreign currency 9.94 64.33 108.68 108.69 206.64 498.29

liabilities (9.96) (64.32) (108.68) (108.69) (216.50) (508.14)

Total Liabilities 16563.91 22079.85 24112.10 17513.3 37411.75 117680.92

(19,165.74) (15,978.03) (17,175.82) (11,498.62) (34,467.24) (98,285.44)

# Net of provision made as per RBI directives on Standard Assets, NPA as well as for diminution in value of Investments

aggregating to Rs.495.19 crore (Rs.421.03 crore).

28.4 Operating results


(m) Interest income as a percentage to average working funds 6.47 6.13

(n) Non interest income as a percentage to average working funds 0.13 0.08

(o) Operating profit as a percentage to average working funds 1.86 1.97

(p) Return on average Assets (%) 1.30 1.38

(q) Net Profit per Employee (Rs. in crore) 0.28 0.25


122

28.5 Movement in the provisions

(a) Provision for Non Performing Assets (Loan Assets) (Rs. crore)


Opening balance as at the beginning of financial year 5.52 3.18

Add: Provision made during the year 8.88 2.34

Less: Write off, write back of excess provision 0.00 0.00

Closing balance at the close of financial year 14.40 5.52

(b) Provision for depreciation in investments (Rs. crore)

Particulars 2008–09

A. Opening balance as at the beginning of the financial year 37.40 (2.02)

B. Add

(i) Provisions made during the year 0.63 (35.80)

(ii) Appropriation, if any, from Investment Fluctuation

Reserve Account during the year 0.00 (0.00)

C. Sub Total [A+B(i)+B(ii)] 38.03 (37.82)

D. Less

(i) Write off, Write Backs of excess provision 35.91 (0.42)

(ii) Transfer, if any, to Investment Fluctuation Reserve Account 0.00(0.00)

35.91 (0.42)

E. Closing balance as at the close of financial year (C-D) 2.12 (37.40)

28.6 Restructured accounts

During the current financial year six loan accounts

outstanding to the extent of Rs. 51.63 crore (Rs. 15.13

crore) have been rescheduled. Out of the above, two loan

accounts outstanding of Rs. 26.47 crore (Rs. 9.44 crore) is

classified as Standard asset and four loan accounts

outstanding of Rs.25.16 crore (Rs. 5.69 crore) has been

classified as Doubtful Asset. There is no Interest sacrifice

on these reschedulements.

The interest sacrifice on loans restructured during FY

2005-06 amounted to Rs.31.08 crore. Interest sacrifice is

reviewed at each balance sheet date and necessary

provision is made or reversed. Accordingly, Rs.8.62 crore

(Rs.12.35 crore) was written back during the current

financial year.

28.7 Assets sold to : NIL (NIL)

securitisation company/

reconstruction company

28.8 Forward Rate Agreements : NIL (NIL)

and Interest Rate Swaps

28.9 Interest Rate Derivatives : NIL (NIL)

28.10 Investments in Non : NIL (NIL)

Government Debt

Securities

28.11 Corporate Debt : NIL (NIL)

Restructuring (CDR)

28.12 Disclosure on risk exposure in

Derivatives

The Bank does not trade in derivatives. However, it has

hedged its liability towards borrowings from KfW

Germany to the extent of 55.99 million Euro and interest

thereon for a period of 10 years and 40 million Euros and

interest thereon for the entire loan period. Consequent

upon hedging of foreign currency borrowings the same is

shown at contracted value as per the Swap agreement.

The Bank does not have any open exposure in foreign

currency.

The value of outstanding principal amount of hedge

contract at the year-end exchange rate stood at Rs.

634.57 crore and the value of outstanding principal

liability in the books of account stood at contracted value

i.e. Rs. 498.29 crore. The quantitative disclosure in this

regard is as under:


123

(Rs. crore)

Sr. Particulars Currency Interest Rate

No. Derivatives Derivatives

1. Derivatives (Notional Principal amount)

A) For Hedging 498.29 (508.14) NA

B) For Trading NA NA

2. Marked to Market Positions [1]

a) Asset (+) 136.28 (97.44) NA

b) Liability (-) NA NA

3. Credit Exposure [2] NA NA

4. Likely impact of one percentage change in interest rate (100*PV01) NA NA

a) on hedging derivatives NA NA

b) on trading derivatives NA NA

5. Maximum and Minimum of 100*PV01 observed during the year NA NA

a) on hedging NA NA

b) on trading NA NA

28.13 Exposures where the FI had exceeded prudential exposure limits : NIL (NIL)

during the year

28.14 Related Party Transactions

As the Bank is state controlled enterprise within the meaning of AS-18 "Related Party Transactions", the details of the

transactions with other state controlled enterprises are not given.

List of Related Parties:

Key Management Personnel:

1. Shri Umesh Chandra Sarangi - Chairman

2. Dr. K G Karmakar - Managing Director(Rs. crore)

Name of the Party Nature of Relationship Nature of Amt. of transaction Outstanding

Transaction during the year

Dr. Y.S.P. Thorat Key Management Remuneration including 0.00 -

Personnel - Ex-Chairman perquisites (0.07)

Shri U. C. Sarangi Key Management Remuneration including 0.14 -

Personnel - Chairman perquisites (0.02)

Dr. K.G. Karmakar Key Management Remuneration including 0.22 -

Personnel - Managing Director perquisites (0.08)

No amounts, in respect of the related parties have been written off/back, or provided for during the year.

Related party relationships have been identified by the management and relied upon by the auditors.

28.15 Issuer categories in respect of investments made(Rs. crore)

Sr. No. Issuer Amount Investment 'Below 'Unrated' 'Unlisted'

made through investment grade' Securities held Securities

private placement Securities held

(1) (2) (3) (4) (5) (6) (7)

1. PSUs 60.00 (60.00) 60.00 (60.00) - - 60.00 (60.00)

2. FIs 48.00 (48.00) 48.00 (48.00) - - 48.00 (48.00)

3. Banks` - - - - -

4. Private Corporates - - - - -

5. Subsidiaries/Joint ventures 20.60 (20.60) 20.60 (20.60) - 20.60 (20.60) 20.60 (20.60)

6. Others (Net of Provision)

including Mutual Funds 1152.23 (769.09) 11.75 (0.00) 0.00 (0.00) 11.75 (0.00) 1152.23 (769.09)

7. Provision held towards

depreciation 2.12 (1.66) - - - 2.12 (1.66)

Total 1282.95 (899.35) 140.35 (128.60) 0.00 (0.00) 32.35 (20.60) 1282.95 (899.35)


124

28.16 Non performing investments: NIL (NIL)

28.17 Disclosure on Repo transactions

(Rs. crore)

Particulars Minimum Maximum Daily average Outstanding

outstanding outstanding outstanding as on

during the year during the year during the year 31 March 2009

Securities sold under repo 0.00 (206.42) 0.00 (206.42) 0.00 (0.56) 0.00 (0.00)

Securities purchased under reverse repo 275.00 (0.00) 275.00 (0.00) 0.75 (0.00) 0.00 (0.00)

28.18 Information on Business Segment

(a) Brief Background

The Bank has recognized Primary segments as under:

i) Direct Finance: Includes Loans given to state

governments for rural infrastructure development, co-

finance loans and loans given to voluntary agencies / non-

governmental organisations for developmental activities.

ii) Refinance: Includes Loans and Advances given

to State Governments, Commercial Banks, Land

Development Banks, State Coop. Banks, Regional Rural

Banks etc. as refinance against the loans disbursed by

them to the ultimate borrowers.

iii) Treasury: Includes investment of funds in

treasury bills, short-term deposits, government

securities, etc.

iv) Unallocated: Includes income from staff loans

and other miscellaneous receipts and expenditure incurred

for the developmental role of the bank and common

administrative expenses.

(b) Information on Primary Business Segment(Rs. crore)

Direct Finance Refinance Treasury Unallocated Total

Revenue 2337.37 (1536.94) 3389.92 (3007.63) 1307.36 (955.06) 16.03 (9.46) 7050.68 (5509.09)

Results 118.46 (79.66) 1181.87 (1224.76) 1283.21 (894.18) -596.01 (-450.51) 1987.53 (1748.09)

Asse ts 45798.54 (30822.03) 54265.45 (54058.31) 16434.04 (8950.55) 1678.08 (4875.58) 118176.11 (98706.47)

Liabilities 47695.61 (31176.46) 51039.60 (50951.52) 192.86 (167.86) 19248.04 (16410.63) 118176.11 (98706.47)

Other Items :Amortization & Depreciation 0.00(0.00) 0.00(0.00) 18.18(18.18) 21.36(21.63) 39.54 (39.81)

Non Cash Expenses(other than above) 9.07(23.19) 64.65(29.09) 0.46(35.38) 47.76(64.23) 121.94 (151.89)

(c) Since the operations of the Bank are confined to India only there is no reportable secondary

segment.

As per our attached report of even dateKhimji Kunverji & CoChartered Accountants

Hasmukh B. Dedhia S. AkbarPartner Chief General ManagerMumbai Accounts DepartmentMumbai: 17 June 2009 Date: 17 June 2009

Umesh Chandra Sarangi Dr. K. G. Karmakar T. Nandkumar Usha Thorat



125

(Rupees)


(a) Cash flow from Operating activities

Net Profit as per Profit and Loss a/c before tax 1987,53,10,864 1748,09,75,282

Adjustment for:

Depreciation 21,36,41,786 21,63,06,861

Provisions and Amortisations 18,53,69,056 53,51,25,563

Provision for Non performing Assets 8,88,11,531 2,22,76,786

Provision for Standard Assets 73,70,00,000 62,52,00,000

Provision for sacrifice in interest element of Restructured Loan (-) 8,62,00,000 (-) 12,35,00,000

Profit / Loss on sale of Fixed Assets (-) 7,61,670 2,05,11,318

Interest credited to various Funds

(including addition/ adjustment made to Interest Differential Fund) 61,78,34,663 64,16,48,347

Other Expenses 0 0

Income from Investment (including Discount Income) (-) 1307,36,41,258 (-) 955,06,11,552

Expenditure from various Funds (-)20857,49,50,989 (-)1731,84,53,498

Operating profit before changes in operating assets (-) 20001,75,86,017 (-) 745,05,20,893

Adjustment for net change in:

Current Assets (-) 6610,57,48,689 402,13,61,457

Current Liabilities 1110,19,36,226 710,03,19,377

Increase / Decrease of Bonds (-) 4996,49,24,694 (-) 191,77,45,150

Increase / Decrease in Borrowings (-) 1207,32,41,806 1628,56,71,289

Increase / Decrease in Deposits 21428,30,49,166 10461,96,05,956

Increase in Loans and Advances

(Including Housing Loan & Other Advances to Staff) (-) 16067,34,69,946 (-) 13429,94,33,700

Cash generated from operating activities (-) 26344,99,85,760 (-) 1164,07,41,664

Payment of Income Tax (-) 598,75,73,999 (-) 459,78,97,070

Net cash flow from operating activities (A) (-) 26943,75,59,759 (-) 1623,86,38,734

(b) Cash flow from Investing activities

Income from Investment (including Discount Income) 1307,36,41,258 955,06,11,552

Increase / Decrease in Fixed Asset (-) 11,17,05,555 (-) 42,28,33,123

Increase / Decrease in Investment (-) 431,26,76,503 (-) 559,22,13,016

Net cash used / generated from investing activities (B) 864,92,59,200 353,55,65,413

(c ) Cash flow from financing activities

Grants / contributions received 22461,69,90,603 5303,10,94,480

Net cash raised from financing activities (C) 22461,69,90,603 5303,10,94,480

Net increase in cash and cash equivalent (A)+(B)+(C ) (-) 3617,13,09,956 4032,80,21,159

Cash and Cash equivalent at the beginning of the period 4525,24,14,644 492,43,93,485

Cash and cash equivalent at the end of the period 908,11,04,689 4525,24,14,644

National Bank for Agriculture and Rural Development

Cash flow for the year ended 31 March 2009


126


Cash flow for the year ended 31 March 2009(Rupees)

1. Cash and cash equivalent at the end of the period includes : 2008-09 2007-08

Cash in hand 21,579 21,531

Balance with Reserve Bank of India 169,67,65,931 3795,85,77,121

Balances with other Banks in India 420,21,61,811 107,56,48,175

Remittances in Transit 185,25,16,092 157,59,35,668

Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149

Total 908,11,04,689 4525,24,14,644

2. Previous year’s figures have been regrouped/ rearranged to conform to the current year’s presentation, wherever

necessary.











127

Consolidated Balance Sheet

Profit and Loss Account

&

Cash Flow

of

NABARD

&

its Subsidiaries

(NABCONS,ADFT,ABFL & NABFINS)

2008-09


128

Khimji Kunverji & Co. Chartered Accountants

Auditors' Report on Consolidated Financial Statements

To the Board of Directors


1 We have examined the attached Consolidated Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

(‘The Bank’) and its Subsidiaries as at March 31, 2009, the Consolidated Profit & Loss Account and the Consolidated

Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility

of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in

all material respects, in accordance with an identified financial reporting framework and are free of material misstatement.

An audit also includes examining, on test basis, evidence supporting amounts and disclosures in financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by the management, as

well as evaluating overall financial statements. We believe that our audit provides a reasonable basis for our opinion

3 We did not carry out the audit of financial statements of subsidiaries of the Bank. The total Assets and total Revenues in

respect of these subsidiaries are Rs 53.83 crore and Rs14.79 crore respectively. The financial statements of three

subsidiaries, being not audited, any adjustments to their balances could have consequential effects on the attached

Consolidated Financial Statements, the impact of which is not ascertained. These financial statements have been certified

by the managements of the respective subsidiary companies and have been furnished to us. In our opinion, in so far as

it relates to the amounts included in respect of the Subsidiaries in Consolidated Financial Statements is based solely on

such certified financial statements

4 We report that the Consolidated Financial Statements have been prepared by the Bank in accordance with the requirements

of Accounting Standard (AS) 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of

India, and on the basis of the separate audited/ certified financial statements of the Bank and its Subsidiaries included in

the consolidated financial statements

5 We report that on the basis of the information and explanations given and on the consideration of separate audited/

certified financial statements of the Bank and its Subsidiaries and subject to our comment in para 3 above, we are of the

opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting

principles generally accepted in India:

a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Bank as at March 31, 2009;

b) in the case of the Consolidated Profit and Loss Account of the consolidated results of operations of the Bank for the

year ended on that date; and

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Bank for the year ended

on that date

Place: Mumbai

Dated: June 17, 2009

For and on behalf of



Hasmukh B. Dedhia

Partner (F-033494)

Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.

Telephones: +91 22 22662550, 22661270, 22662011 ••••• Fasimile: +91 22 22664045

E-mail: [email protected] ••••• Website: www.khimjikunverji.com


129


Consolidated Balance Sheet as on 31 March 2009

(Rupees)

Particulars As on 31.03.2009 As on 31.03.2008

FUNDS AND LIABILITIES

Capital 2000,00,00,000 2000,00,00,000

Reserve Fund and Other Reserves 9551,33,61,533 8614,18,37,839

National Rural Credit Funds 15571,00,00,000 15159,00,00,000

Funds Out of Grants received from International Agencies 154,81,78,661 170,38,44,460

Gifts Grants, Donations and Benefactions 5111,01,92,515 3967,49,29,810

Other Funds 2101,80,68,588 1518,00,64,973

Minority Interest 12,73,59,475 11,96,69,848

Deposits 52127,12,34,628 30698,81,85,462

Bonds and Debentures 23702,62,34,987 30122,04,33,900

Borrowings 3592,94,14,312 3378,34,52,818

Current Liabilities and Provisions 4281,43,94,987 3092,22,07,877

TOTAL FUNDS AND LIABILITIES 118206,84,39,686 98732,46,26,987

PROPERTY AND ASSETS

Cash and Bank Balances 14018,72,65,778 10352,51,52,981

Investments 2974,08,29,886 2561,45,89,335

Advances 98858,23,52,501 82878,81,34,744

Fixed Assets 247,31,45,985 257,42,30,724

Other Assets 2108,48,45,536 2682,25,19,203

TOTAL PROPERTY AND ASSETS 118206,84,39,686 98732,46,26,987











130


Consolidated Profit and Loss Account for the year ended 31 March 2009

(Rupees)


Income:

Interest Received on Loans and Advances 5694,13,82,207 4518,31,32,065

Income from Investment operations 1218,59,65,570 906,66,95,489

Discount Received 92,55,15,672 51,71,40,175

Other Receipts 60,18,62,544 44,91,27,953

TOTAL INCOME 7065,47,25,993 5521,60,95,682

Expenditure:

Interest and Financial Charges 4255,90,43,429 3152,68,04,735

Establishment and other expenses 698,69,20,566 486,19,42,059

Depreciation 21,39,95,163 21,65,89,205

Provisions 93,04,17,887 105,68,36,154

Preliminary expenses written off - 3,83,633

TOTAL EXPENDITURE 5069,03,77,045 3766,25,55,786

Profit before Income Tax 1996,43,48,948 1755,35,39,896

Provision for Income Tax 676,66,13,885 562,41,27,188

Provision for Fringe Benefit Tax 3,66,35,726 3,45,27,535

Deferred Tax Asset Adjustment (-) 80,28,25,064 (-) 41,42,86,923

Short / (Excess) provision for Income Tax in earlier years 9,397 1,43,06,538

Profit after Tax 1396,39,15,004 1229,48,65,558

Share of Profit / Loss in Subsidiaries attributable to Minority Interest 80,65,434 (-)18,93,517

Profit available for Appropriation 1395,58,49,570 1229,67,59,075

Appropriations:

Profit as above 1395,58,49,570 1229,67,59,075

Add: Withdrawals from various funds against expenditure 48,14,80,880 30,30,87,768

debited to Profit & Loss Account

Total Profit Available for Appropriation 1443,73,30,450 1259,98,46,843

Transferred to:

Special Reserve u/s 36(I)(viii) of the Income Tax Act, 1961 340,00,00,000 320,00,00,000

National Rural Credit (Long Term Operations) Fund 400,00,00,000 400,00,00,000

National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000

Co-operative Development Fund 3,81,14,043 53,06,99,557

Research & Development Fund 8,76,10,683 7,48,95,872

Investment Fluctuation Reserve 42,00,00,000 25,78,45,000

Financial Inclusion Fund 18,50,00,000 5,00,00,000

Financial Inclusion Technology Fund 32,50,00,000 5,00,00,000

Farm Innovation and Promotion Fund 46,55,57,504 0

Farmers Technology Transfer Fund 31,61,42,310 25,00,00,000

Reserve Fund 509,99,05,910 408,64,06,414

Total 1443,73,30,450 1259,98,46,843


131

1. Consolidation has been done pursuant to the listing agreement with stock exchange

2. Financial statements of the subsidiaries except NABARD Consultancy Services (Private) Limited are unaudited.

3. Details of the subsidiaries:

Name of the Subsidiary Country of incorporation Proportion of ownership

Agri Development Finance (Tamilnadu) Ltd. India 52.10

Agri Business Finance (AP) Ltd. India 47.82*

NABARD Financial Services Limited India 82.41

NABARD Consultancy Pvt. Ltd. India 100.00

* NABARD controls the Board of Directors of Agri Business Finance (AP) Ltd.and hence considered as a subsidiary.

4. The financial statements of the company and its subsidiary companies are combined on a line to line basis by adding

together expenses after fully eliminating infra-group balances and intra-group transactions in accordance with

Accounting Standard - (AS) - 21 -"Consolidated Financial Statement"

5. Depreciation on fixed asset is provided on Written Down Value Method (WDV), at the rates specified in Schedule XIV

to the Companies Act, 1956 by Agri Development Finance (Tamilnadu) Ltd and Agri Business Finance (AP) Ltd.,

whereas NABARD Financial Services Ltd. and NABARD consultancy services (Private) Limited has provided

depreciation on fixed assets by adopting Straight Line Method (SLM) at the rates specified in Schedule XIV to

the Companies Act, 1956 on prorata basis. Thus the Accounting Policy followed by subsidiaries for depreciation

are different from the Accounting Policy for depreciation followed by NABARD in the preparation of Consolidated

Financial Statements. Thus out of the total depreciation of Rs.21.40 crore (21.66 crore) included in the

Consolidated Financial Statement, 0.17% (0.13%) of that amount is determined based on depreciation provided

by following WDV / SLM at the rates as specified in Schedule XIV to the Companies Act, 1956.

6. Income on foreign assignments by NABCONS is accounted on "receipt" basis. The amount of such fees receivable is

not material.

7. Disclosure as required under AS – 17 "Segment Reporting" in consolidated financial statement are as under:

(Rs. crore)

Direct Finance Refinance Treasury Unallocated Total

Revenue 2340.89 (1539.27) 3389.92 (3007.63) 1307.36 (955.06) 27.30 (19.65) 7065.47 (5521.61)

Results 120.78 (81.02) 1181.87 (1224.76) 1283.21 (894.18) -589.43 (-444.61) 1996.43 (1755.35)

Assets 45814.35 (30837.30) 54265.45 (54058.31) 16434.04 (8950.55) 1693.00 (4886.31) 118206.84 (98732.46)

Liabilities 47711.41 (31191.72) 51039.60 (50951.52) 192.86 (167.87) 19262.97 (16421.36) 118206.84 (98732.46)

Other Items :

Amortisation & Depreciation 0.02(0.03) 0.00(0.00) 18.18(18.18) 21.37(21.63) 39.58(39.84)

Non Cash Expenses(other than above) 9.62(25.26) 64.66(29.09) 0.46(35.38) 47.75(64.27) 122.49(154.00)

Note: There are no reportable secondary segments for the bank and its subsidiaries.

8. Previous Year figures have been regrouped / rearranged wherever necessary








Umesh Chandra Sarangi Dr. K. G. Karmakar T. Nandkumar Usha Thorat


Additional Notes to Consolidated Accounts


132


Consolidated Cash Flow Statement for the year ended 31 March 2009










(Rupees)


(a) Cash flow from Operating activities

Net profit as per P & L a/c before tax 1996,43,48,948 1755,35,39,896

Depreciation 21,39,95,164 21,65,89,206

Provisions and Amortisations 18,53,69,056 53,51,25,563

Provision for Non performing Assets 9,42,07,091 2,22,76,786

Provision for Standard Assets 73,70,00,000 62,52,00,000

Provision for Sacrifice in interest element of restructured loan (-) 8,62,00,000 (-) 12,35,00,000

Interest credited to various funds 61,78,34,663 64,16,48,347

Other expenses 0 3,83,633

Income from Investment (-)1307,40,79,660 (-)903,34,71,377

Profit / Loss on sale of Fixed Asset (-) 7,61,799 2,05,11,318

Expenditure from various funds (-) 20857,49,50,989 (-) 1731,84,53,498

Operating profit before working capital changes (-)19992,32,37,526 (-) 686,01,50,126

Adjustment for net change in:

Current Assets (-) 6610,56,33,642 398,47,17,891

Current liabilities 1109,81,36,716 708,28,46,611

Proceeds of Bonds (-) 4996,49,24,694 (-)191,77,45,150

Increase / Decrease in Borrowings (-)1207,32,41,806 1628,56,71,289

Increase / Decrease in Deposits 21424,95,42,087 10461,02,50,436

Increase/Decrease in Loans and Advances (-)16067,23,06,900 (-)13425,10,46,317

Cash generated from operating activities (-) 26339,16,65,765 (-) 1106,54,55,366

Payment towards Income tax (-) 601,39,55,521 (-) 463,77,13,257

Net cash flow from operating activities (A) (-) 26940,56,21,286 (-) 1570,31,68,623

(b) Cash flow from Investing activities

Dividend paid (-) 29,24,875 (-) 32,93,101

Income from Investment 1307,40,79,660 903,34,71,377

Increase / Decrease of Fixed Assets (-) 11,21,48,627 (-) 42,28,66,375

Increase / Decrease in Investments (-) 432,27,47,422 (-) 559,22,13,016

Net cash used in investing activities (B) 863,62,58,736 301,50,98,885

(c ) Cash flow from financing activities

Grants / contributions received 22461,69,90,603 5303,10,94,480

Net cash raised from financing activities (C) 22461,69,90,603 5303,10,94,480

Net increase in cash and cash equivalent (A)+(B)+(C) (-) 3615,23,71,947 4034,30,24,742

Cash and cash equivalent at the beginning of the period 4527,11,51,488 492,81,26,746

Cash and cash equivalent at the end of the period 911,87,79,541 4527,11,51,488

Cash and cash equivalent at the end of the period includes : 2008-09 2007-08

Cash in hand 27,285 27,338

Balance with Reserve Bank of India 173,44,35,078 3797,73,08,158

Balances with other Banks in India 420,21,61,810 107,56,48,175

Remittances in Transit 185,25,16,092 157,59,35,668

Collateralised Borrowing and Lending Obligations 132,96,39,276 464,22,32,149

Total 911,87,79,541 4527,11,51,488


133

Regional Offices/Sub-Office/Training Establishments

REGIONAL OFFICES

ANDHRA PRADESH

1-1-61, RTC Cross Road,

Musheerabad,

Hyderabad – 500 020

Tel No. : (040)27685555, 27612640

Fax No.: (040) 27611829

E-mail : [email protected]

[email protected]

ARUNACHAL PRADESH

Bank Tinali, VIP Road,

P.B. No. 133,

Itanagar – 791 111

Arunachal Pradesh

Tel No. : (0360) 2212675, 215967

Fax No.: (0360) 2212675


ASSAM

G.S.Road, Post Box No.1

Opposite Assam Secretariat Dispur

Guwahati - 781 006

Tel No. : (0361) 2235661,

2238013/14

Fax No. : (0361) 2235657


BIHAR

Maurya Lok Complex, Block ‘B’,

4th & 5th floor, Dak Bunglow Road,

Post Box No.178,

Patna – 800 001

Tel No. : (0612) 2223985

Fax No.: (0612) 2238424


[email protected]

CHHATTISGARH

Pithalia Complex, K.K. Road

Fafadih

Raipur - 492 009

Tel No. (0771) 2888499

Fax No. (0771) 2884992

E-mail [email protected]

[email protected]

GOA

Third floor, Nizari Bhavan,

Menezes Braganza Road,

Panaji – 403 001.

Tel No. : (0832) 2220490,

2432967,

Fax No.: (0832) 2223429


GUJARAT

Opp.Municipal Garden,

Usmanpura

Ahmedabad – 380 013

Tel No. : (079) 27552257-58-59

Fax No.: (079) 27551584


HIMACHAL PRADESH

NABARD Bhavan, Block Number 32

S.D.A. Commercial Complex

Dev Nagar, Kasumpati

Shimla - 171 009

Tel No. : (0177) 2624160, 2622258

Fax No.: (0177) 2622271


[email protected].

JAMMU & KASHMIR

IVth Floor, B-II, South Block,

Bahu Plaza, Rail Head Complex,

Post Bag No. 2, Jammu-180012,

Tel No. : (0191) 2472355, 2472287

Fax No.: (0191) 2472337


JHARKHAND

Opp. Adivasi College Hostel

Karamtoli Road

Ranchi - 834 001

Tel No. : (0651) 2361107

Fax No. : (0651) 2361108


KARNATAKA

113/1, Jeevan Prakash Annexe,

J.C. Road, P. B. No.29,

Bangalore – 560 002

Tel No. : (080) 22225241/44

Fax No.: (080) 22222148


KERALA

Punnen Road, Statue,

P. B. No. 202

Thiruvananthapuram – 695 039

Tel No. : (0471) 2323846,

2323590, 2323859

Fax No.: (0471) 2324358


MADHYA PRADESH

E-5, Arera Colony,

Ravishankar Nagar,Post office

Bittan Market

Bhopal – 462 016

Tel No. : (0755) 2463341, 2463369,

2466695

Fax No.: (0755) 2466188


MAHARASHTRA

54, Wellesley Road,

Shivaji Nagar,

Pune – 411 005

Tel No. : (020) 25541439,

25542090

Fax No.: (020) 25542250


MANIPUR

89/686, Lalambung,

RIMS Road, Lamphelpat,

Imphal – 795 004, Manipur

Tel No. : (0385) 2416192,

2410706

Fax No. : (0385) 2416191


MEGHALAYA

Dipu Cottage,

Upper Lachumiere,

Shillong – 793 001

Tel No. : (0364) 2501518

Fax No.: (0364) 2227463


[email protected]

MIZORAM

Ramhlun Road

Bawngkawan

Aizwal - 796 014

Tel No. : (0389) 2346119, 2343428

Fax No. : (0389) 2340815


NAGALAND

4th Floor, West Wing

Administrative NSCB Bldg.

Khermahal, Circular Road

Dimapur - 797 112

Tel No. : (03862) 227040,

235600, 235601

Fax No. : (03862) 227040


NEW DELHI

NABARD Tower

24, Rajendra Place

New Delhi - 110 125

Tel No. : (011) 41539353, 25818707

Fax No.: (011) 41539187, 41539185


ORISSA

‘Ankur’, 2/1,

Nayapalli Civic Centre,

P. B. No. 179,

Bhubaneshwar – 751 015

Tel No. : (0674) 2553884

Fax No.: (0674) 2552019


[email protected]

PUNJAB & HARYANA

Plot No. 3, Sector 34-A,

Post Box No. 7,

Chandigarh – 160 022

Tel No. : (0172) 5046700, 5071401

Fax No.: (0172) 5046702


RAJASTHAN

3, Nehru Place,

Tonk Road,

Post Bag No.104,

Jaipur – 302 015

Tel No. : (0141) 2740821

Fax No.: (0141) 2742161


SIKKIM

Om Nivas, Church Road,

Post Box No.46,

Gangtok –737 101

Tel No. : (03592)203015, 204173

Fax No.: (03592) 204062


[email protected]

TAMIL NADU

48, Mahatma Gandhi Road,

Post Box No.6074,

Nungambakkam,

Chennai – 600 034

Tel No. : (044) 28276088 28304444

Fax No.: (044) 28275732


[email protected]

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134

UTTARAKHAND

113/2, Hotel Sunrise Building

2nd & 3rd Floor

Post Bag No.139, Rajpur Road

Dehradun - 248 001

Tel No. : (0135) 2740230-31

Fax No. : (0135) 2748610

E-mail : [email protected] [email protected]

SUB-OFFICE/CELL

PORT BLAIR

Kannada Sangh Building,

Ground Floor,18,Tagore Road,

Head Post Office,

Port Blair – 744 101

Tel No.: (03192) 233308

Fax No.: (03192) 237696

E-mail : [email protected] [email protected]

SRINAGAR CELL

Opp. Gate No. 1

Amar Singh College

Gogji Bagh

Srinagar - 190 008

Tel No. : (0194) 2310280

Fax No.: (0194) 2310479

TRAINING ESTABLISHMENTS

BOLPUR

Bolpur Lodge,

Regional Training College,

Bolpur – 731 204,

Birbhum (West Bengal)

Tel No. : (03463) 252812, 254065

Fax No.: (03463) 252295


[email protected]

HYDERABAD

Zonal Training Centre,

10-1-128, Masab Tank,

Hyderabad – 500 028

Tel No. : (040) 23375007


LUCKNOW

National Bank Staff College,

Sector ‘H’, LDA Colony,

Kanpur Road,

Lucknow – 226 012

Tel No. : (0522) 2421072

Fax No.: (0522) 2421035


LUCKNOW

National Bank Training Centre,

Sector D/S, Sitapur Road,

Opp. Mandi Samiti, Aliganj,

Lucknow – 226 020

Tel No. : (0522) 2757564, 2757610

Fax No.: (0522) 2757566


LUCKNOW

Banker’s Institute of Rural Development,

Sector ‘H’, L.D.A. Colony,

Kanpur Road, Lucknow – 226 012

Tel No. : (0522) 2421137, 2421154,

2421055, 2421187

Fax No.: (0522) 2421176, 2421047


[email protected]

Website : www.birdindia.com

MANGALORE

Regional Training College,

Manjusha Building,

Bejaji Church Road,

Near KSRTC Bus Main Stand,

Bejaji, Mangalore - 575004.

Tel No. : (0824) 2225836, 2225831

Fax No.: (0824) 2225835


TRIPURA

Palace Compound (East),

Uzirbari Road, Post Box No.9,

Agartala - 799 001

Tel No. : (0381) 2224125,

2229633,2229644

Fax No.: (0381) 2224125


UTTAR PRADESH

11, Vipin Khand,

Gomti Nagar,

Lucknow - 226 010

Tel No. : (0522) 2304530,

Fax No.: (0522) 2304531


WEST BENGAL

‘‘Abhilasha’, 2nd floor

6, Royd Street, Post Box No.9083

Kolkata - 700 016

Tel No. : (033) 22552102, 22267943

Fax No.: (033) 22494507


[email protected]

Add Reg.p65 7/14/2009, 3:55 PM134

letter of transmittal

Documents

nabard act

development activities

development initiatives

farm sector

anup kumar sinha directors

rural economic environment

nabakishore singh

global economy