letter of transmittal · nabard at a glance (rs. crore) sources of funds uses of funds as at end -...
TRANSCRIPT
Letter of Transmittal
NATIONAL BANK FOR AGRICULTURE
AND RURAL DEVELOPMENT
Plot: C-24/‘G’, Bandra-Kurla Complex
Post Box: 8121, Bandra (East)
Mumbai - 400 051
Chairman
Ref.No.NB.Secy./957/C.7/2008-09
11 July 2008
20 Ashadha 1930 (Saka)
The Secretary
Government of India
Ministry of Finance
Department of Financial Services
New Delhi-110 001
The Governor
Reserve Bank of India
Central Office
Mumbai- 400 001
Dear Sir
In pursuance of Section 48(5) of the National Bank for Agriculture and Rural Development Act, 1981, I
transmit herewith the following documents :
i. A copy of the audited Annual Accounts for the year ended 31st
March 2008 together with a copy of the
Auditors’ Report and
ii. Two copies of the Annual Report of the Board of Directors on the working of National Bank during the
year ended 31st
March 2008.
Yours faithfully
Umesh Chandra Sarangi
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
Surampudi Sivakumar Dr. Ram S. Tarneja Dr. Anup Kumar
Sinha
Usha Thorat Lakshmi Chand Shashi Rekha
Rajagopalan
Dr. P. K. Mishra Dr. Rita Sharma Amitabh Verma
Raj Kumar Letkhogin Haokip D. K. Panwar A. K. Sarkar
Dr. K. G. Karmakar
Managing Director
ContentsPage No.
NABARD at a Glance
Key References
Principal Officers
Highlights .................................................................................................................................................................................. 1
I. Rural Economic Environment ...................................................................................................................................... 17
� Global Economy ........................................................................................................................................................ 17
� Indian Economy ......................................................................................................................................................... 18
II. Development Initiatives ................................................................................................................................................ 31
� Farm Sector ................................................................................................................................................................ 31
� Rural Non-Farm Sector .............................................................................................................................................. 37
� Micro-Finance ............................................................................................................................................................ 40
� Research and Development Activities ........................................................................................................................ 45
� Training Personnel of RFIs ......................................................................................................................................... 47
III. Business Operations ...................................................................................................................................................... 50
� Production Credit ....................................................................................................................................................... 50
� Investment Credit ....................................................................................................................................................... 55
� Loans under Rural Infrastructure Development Fund ................................................................................................ 64
� NABARD Consultancy Services ................................................................................................................................. 71
� Management of Resources ......................................................................................................................................... 72
IV. Capacity Building of Client Institutions .................................................................................................................... 76
� Institutional Development .......................................................................................................................................... 76
� Supervision over Banks ............................................................................................................................................. 89
V. Organisation and Management ................................................................................................................................... 92
Auditors’ Report ...................................................................................................................................................................... 98
Balance Sheet ......................................................................................................................................................................... 99
Profit and Loss Account 2007-08 ...................................................................................................................................... 100
Consolidated Financial Statements 2007-08 .................................................................................................................. 121
Regional Offices/Sub-Office/Training Establishments .................................................................................................... 127
Abbreviations ....................................................................................................................................................................... 129
Boxes
1.1 National Policy for Farmers 2007 ............................ 21
1.2 Union Budget 2007-08 : Highlights on
Agriculture and Rural Sector ...................................... 23
1.3 Expert Panel to address
Agrarian Distress: Recommendations ...................... 28
1.4 Conditions of Work and Promotion of
Livelihoods in the Unorganised Sector ..................... 30
2.1 From Wage-earners to Wage-providers .................... 38
2.2 Financing of SHG Federations ................................. 43
2.3 Centre for Micro-Finance Research at BIRD ........... 47
3.1 Study on ST Refinance to Kerala SCARDB.............. 50
3.2 Accretion to Rural Infrastructure and Employment .. 67
4.1 Legal and Institutional Reforms ............................... 85
NABARD AT A GLANCE(Rs. crore)
Sources of Funds Uses of Funds
As at end - March Net As at end - March Net
2007 2008 accretion 2007 2008 utilisation
Capital 2,000 2,000 0 Cash and Bank Balances 7,011 9,850 2,839
Reserves and Surplus 7,802 8,603 801 Collateralised Borrowing and
Lending Obligation 304 464 160
Investment in
NRC (LTO) Fund 13,214 13,615 401 a) GoI Securities 1,438 1,422 -16
b) Treasury Bills 0 260 260
c) ADFC Equity 16 16 0
NRC (Stabilisation) Fund 1,533 1,544 11 d) AFC Equity 1 1 0
e) SIDBI Equity 48 48 0
Deposits 82 106 24 f) AICI Ltd. 60 60 0
g) NCDEX Ltd. and
Bonds and Debentures 28,892 28,700 -192 MCX Ltd. 6 6 0
h) Nabcons 5 5 0
Certificate of Deposits 0 1,422 1,422 i) Mutual Funds,
BVF- APIDC- V Investment 503 764 261
Borrowings from GoI 382 370 -12 Loans and Advances
a) Production and
Marketing Credit 14,758 17,381 2,623
Borrowings from b) Conversion of Production
Commercial Banks 2,500 2,500 0 Credit into MT Loans 181 118 -63
c) Liquidity Support 2,491 1,940 -551
d) MT Investment Credit
Foreign Currency Loan 289 508 219 (non-project) 1 0 -1
e) MT and LT
Project Loans 31,683 32,401 718
RIDF Deposits 20,155 30,593 10,438 f) LT Non-project Loans 335 290 -45
g) Other Loans 13 27 14
Other Liabilities 2,364 3,089 725 h) Loans out of RIDF 20,005 30,649 10,644
i) Co-Finance 42 66 24
Fixed Assets 238 257 19
Other Funds 2,007 5,656 3,649 Other Assets 2,081 2,681 600
Total 81,220 98,706 17,486 Total 81,220 98,706 17,486
KEY REFERENCES
Page Particulars Unit Physical Units Amount (Rs. crore)
No. 2006-07 2007-08 2006-07 2007-08
Economic Indicators18 Overall GDP1 % Growth 9.6 Q 9.0 RE - -18 Agri GDP1+ % Growth 3.8 Q 4.5 RE - -19 Share of Agri GDP in total GDP % 18.5 Q 17.8 RE - -23 Foodgrains production million tonnes 217 231 - -23 Oilseeds production million tonnes 24 29 - -23 Sugarcane production million tonnes 356 344 - -23 Cotton production million bales++ 23 26 - -21 South-west Monsoon2 % deviation from normal -1 5 - -21 North-east Monsoon2 % deviation from normal -21 -32 - -26 GLC - - - 2,29,400 2,25,348 P
27 KCCs Issued lakh 85 39 - -Development Initiatives
31 Watersheds No. 37 S 63 S 12 D 28 D
34 NABARD-KfW Projects No. 5 8 16 D 242 D
33 FIPF- projects No. 15 S 29 S 1 G 2 G
33 Tribal development projects No. 11 S 16 S 21 G 49 G
36 Farmers’ Club No. of clubs 4,981 5,277 - -37 RIF- promotional programmes No. of projects - 29 S 15 D 8 S
37 DRIP@ - Units set up lakh 1 0.7 2,525 GLC 1,178 GLC
37 -Employment generated lakh persons 3 1.5 224 RF 275 RF
39 REDPs No. 688 1,422 5 G 8 G
39 SCCs Issued lakh 2 1.5 757 CL 679 CL
40 SHGs Credit Linked lakh 6.86 5.52 6,643 BL 2,542 BL
45 R&D Fund- Sanction No. of projects 4 S 10 S 0.31 S 2 S
45 - Disbursement - - 9 D 7 D
Business Operations50 Financial Support by NABARD - - - 33,496 38,680
Refinance - ST Credit51 ST (SAO) - SCBs No. 16 18 12,801 S** 14,826 S
52 - RRBs No. 74 74 2,497 S** 2,940 S
52 ST (OSAO) - RRBs - - - 188 S** 151 S
51 Weavers’ - SCBs No. 6 8 302 S 332 S
55 Refinance - Investment Credit 8,795 D 9,046 D
57 Farm Sector - - - 4,204 3,77757 NFS - - - 2,265 2,74857 SHGs - - 1,293 1,61659 Co-financing projects No. 7 S 12 S 36 D 27 D
60 Small Farmers’ coverage % 66 53 4,370 D 3,768 D
66 RIDF Loans - Sanction No. of projects 42,317 S 36,964 S 10,555 S 12,795 S
66 - Disbursement 6,223 D 8,035 D
68 ERR on rural bridge projectsunder RIDF % 31 44 - -
71 Consultancy Assignments No. of projects completed 155 366 8 973 Market Borrowings - - - 32,146 33,60673 Total Working Funds - - - 81,220 98,706
Performance of RFIsST Co-operatives
77 &78 SCBs in profit @ No. 26 27 p 371 $ 275 $P
77 &79 DCCBs in profit @ No. 276 271 P 195 $ 30 $P
LT Co-operatives77 &79 SCARDBs in profit @ No. 11 10 P 250 $ 90 $P
77 & 80 PCARDBs in profit @ No. 370 350 P -183 $ -147 $P
ST Co-operatives - NPA Position
80 SCBs- NPAs @ % to loan O/S 16.8 14.1 6,735 6,70480 DCCBs - NPAs @ % to loan O/S 19.6 18.5 15,709 16,495
LT Co-operatives - NPA Position80 SCARDBs - NPAs @ % to loan O/S 32.7 30.3 5,779 5,64380 PCARDBs - NPAs @ % to loan O/S 35.6 35.4 4,586 4,316
RRBs
86 RRBs in profit@ No. 111 * 81 * 617 $ 625 $
87 RRBs- NPA Position@ % to loan O/S 7.3 6.6 2,890 3,17890 Inspection of banks^@@ No. 353 385 - -90 Co-operative banks@@ No. 278 292 - -90 RRBs@@ No. 57 74 - -
Q: Quick Estimate RE: Revised Estimate P: Provisional S: Sanction D: Disbursement RF: Refinance1: At Factor Cost at 1999-2000 prices BL: Bank Limit +: Includes agriculture, forestry and fishing ‘++: Of 170 kgs each2: During calendar year ^: Voluntary inspections ‘@@: Statutory Inspections CL: Credit Limit *: After amalgamationG: Grant assistance sanctioned $: Net amount ‘-’: indicates loss @: Data pertains to financial years 2005-06 & 2006-07 **: July-June
PRINCIPAL OFFICERS(31 March 2008)
EXECUTIVE DIRECTORS
S. K. Mitra Dr. R. Balakrishnan Amaresh Kumar
CHIEF GENERAL MANAGERS
(Rural Development Banking Service)
P. L. Behera Dr. Prakash Bakshi R. Krishnamurthy D. B. Gore K. V. Raghavulu S.M.Mehta@
(Karnataka) (Tamil Nadu)
V. Ramakrishna Rao A. Ramanathan Y. N.Gupta** Sukhbir Singh V. S. Bhaduria Madan Mohan
(Punjab & Haryana) (Uttar Pradesh) (BIRD, Lucknow)
Bhawar Puri J. R. Sarangal B.B.Mohanty A. K. Mathur C. R. Patnaik B. S. Shekhawat
(Kerala) (Maharashtra) (Jammu & Kashmir) (Orissa) (Gujarat)
G. S. Menon S. R. Aluru S. G. Rathod R. Narayan A. K. Jain G. L. Tawte
(Andhra Pradesh) (NBSC, Lucknow) (Rajasthan)
S. Mohapatra C. K. Gopalakrishna Lajja Ram P. Satish K. C. Shashidhar Pankaj Pandit
(Madhya Pradesh) (Assam) (Jharkhand)
@ Chief Executive Officer, Nabcons ** On Deputation with ADFT, Chennai
Dr. Venkatesh Tagat S. K. Chatterjee S.C.Kaushik P. Mohanaiah S. T. Raghuraman
(Chhattisgarh) (West Bengal) (Himachal Pradesh)
P. Das (Uttaranchal) B. K. Mahunta
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
K. K. Gupta J. C. Mishra U. N. Biswal S. G. Siddesh J. G. Menon
(New Delhi) (Mizoram) (RTC, Bolpur) (RTC, Mangalore) (Meghalaya)
Ponniah Selvaraj K. Jindal H. R. Dave
(Goa) (Tripura) (Arunachal Pradesh)
DEPUTY GENERAL MANAGERS IN-CHARGE OF
REGIONAL OFFICES/SUB-OFFICE/SRINAGAR CELL
S. S. Yambem Subrata Gupta Dr. G. D. Banerjee R. Nithyanandan P. N. Sarangal
(Manipur) (Sikkim) (Nagaland) (Port Blair Sub-Office) (Srinagar Cell)
1
Highlights
Rural Economic Environment
The Indian GDP registered a growth of 9 per cent during
2007-08 owing to the consistently high growth trend of
the services and the industry sectors. The growth rate of
GDP emanating from agriculture and allied activities
improved to 4.5 per cent. The year was characterised
by turbulence in the global financial markets, increasing
global prices of oi l /commodities and subsequent
inflationary pressures in the world and domestic
economies.
Indian Economy
2. The Indian economy registered a GDP growth
at of 9 per cent during 2007-08 as against 9.6 per cent
during 2006-07 (at 1999-2000 prices). The GDP from
industry and services sectors were 8.5 and 10.8 per
cent during 2007-08 as against 10.6 and 11.2 per cent
during 2006-07, respectively, while that of agriculture
was 4.5 per cent during 2007-08 compared to 3.8 per
cent during 2006-07.
3. The share of agriculture and industry sector in
total GDP however, stagnated at 18 and 26 per cent,
respectively, during 2007-08, while that of the services
sector increased from 55 per cent during 2006-07 to 56
per cent. The savings and investment ratios increased
to 34.8 and 35.9 per cent during 2006-07 from 34.3
and 35.5 during 2005-06, respectively. Annual inflation
(year-on-year), measured in terms of variation in
wholesale price index (WPI) was 7.4 per cent as at end-
March 2008, owing to fluctuations in the international
prices of crude oil/primary articles and turbulence in
the global financial markets. However, as against
increasing world food prices, the WPI of food articles
in the country declined to 6.1 per cent during 2007-
08 from 8 per cent during 2006-07.
4. The share of agriculture in total exports of the
country declined to 9.9 per cent during 2006-07 from
11.8 per cent during 2003-04 but improved to and
10.7 per cent during 2007-08 (April-January). The share
of agriculture to total imports also witnessed a decline
to 2.9 per cent from 4.7 per cent and further to
1.91 per cent during the same period. However, both
total exports and imports registered a growth of
22.9 and 26.9 per cent, respectively, during 2007-08
over the previous year.
5. The gross capital formation (GCF) in agriculture
varied between Rs.39,027 crore and Rs.60,762 crore
during the period 1999-2007 (at 1999-2000 prices).
The ratio of GCF in agriculture to GDP from agriculture
sector varied between 9.6 and 12.5 per cent during the
same period. The investments in agriculture to total
GDP varied between 1.9 and 2.2 per cent during the
same period and improved from 1.9 (2003-06) to 2.1
per cent (2006-07).
6 . The rainfall during the South-West monsoon
season of the year was 5 per cent above normal
and well distributed over time. However, rainfall
during the North-East monsoon season was 32 per
cent below normal. Of the 36 meteorological sub-
divisions, 30 received excess/normal rainfall during
the Sou th -Wes t monsoon and 27 re ce i ved
scanty/no rain during North-East monsoon. While
satisfactory South-West monsoon helped to improve
crop coverage during kharif 2007 (2.7%), shortfall
in North-East monsoon resulted in drop in area
during rabi 2007-08 (3.8%).
7 . The production of foodgrains is estimated to
have registered an increase at 230.7 million tonnes
during 2007-08. Production of non-foodgrains crops,
viz., oilseeds and cotton is estimated to increase by
18.5 and 14.2 per cent, respectively, while that of
sugarcane is estimated to fall by 3.2 per cent during
2007-08 over the previous year.
8. As against the target of Rs.2,25,000 crore of
credit flow to agriculture for 2007-08, disbursements by
all agencies stood at Rs.2,25,348 crore achieving more
2
than cent per cent of the target. Commercial banks,
co-operative banks and RRBs disbursed Rs.1,56,850
crore, Rs.43,684 crore and Rs.24,814 crore achieving
106, 84 and 108 per cent of the targets, respectively.
During the year, 82.68 lakh new farmers were brought
under the institutional credit fold.
9. The Kisan Credit Card (KCC) scheme introduced
in August 1998, has facilitated in augmenting the GLC
flow for crop loans. In addition to ST credit and term
loans, a certain component of loan through KCC also
covers consumption needs. During the year, 38.64 lakh
fresh KCCS were issued and co-operative banks and
RRBs accounted for 20.91 lakh and 17.73 lakh of the
cards issued, respectively. Of the total 714.68 lakh cards
issued as on 31 March 2008, co-operative banks
accounted for 49 per cent of the share, followed by
commercial banks (37%) and RRBs (14%).
10. India maintained its position as the largest
producer of mi lk with the est imated product ion
reaching around 102 million tonnes during 2007-08.
Production of eggs, wool and meat was at 51 billion,
45 million kg and 2.3 million tonnes, respectively,
during 2006-07. Total fish production during 2006-07
increased to 6.9 million tonnes. Export earnings from
this sector also rose as value of f isheries export
increased to Rs.7,296 crore.
11. To promote and improve the agr icu l tura l
marketing scenario, Ministry of Agriculture (MoA),
GoI has prepared and circulated a model law on
a g r i - m a r k e t i n g . T h e G o v e r n m e n t h a s a l s o
circulated operational guidelines of the scheme of
operating terminal markets on the 'Hub-and-Spoke'
format to states that have amended APMC Acts.
12. To give a fillip to the Micro, Small and Medium
Enterprises Sector, the Union Budget 2008-09 suggested
creation of a risk capital fund with SIDBI. During
2006-07 number of units set up and employment
generated increased by 4 per cent each, while the value
of output increased by 12.6 per cent.
Development Initiatives
13. NABARD continued to focus on watershed
development, integrated development of backward areas,
supporting non-farm activities, farmers' club programme,
improving the outreach of the rural credit delivery system
through micro-finance initiatives, supporting research
and development activities and training of rural banking
personnel.
Farm Sector
14. The corpus of the Watershed Development Fund
(WDF) was augmented by Rs.34.74 crore during
2007-08, taking the cumulative amount to Rs.613.71
crore as on 31 March 2008. During the year, 63
watershed projects were sanctioned taking the cumulative
number to 416 spread over 94 districts across 14 States.
With a total commitment (loan and grant) of Rs.236 crore
under these projects, an area of 4.16 lakh ha. is expected
to be covered. During the year, 31 projects entered the
full implementation phase taking the cumulative number
of projects to 161. Consequent to GoI's announcement
of the Prime Minister's package for 31 districts in four
States, for developing an area of 15,000 ha. annually
over three years in each of the districts, 3.98 lakh ha. is
being developed involving total financial commitment
of Rs.299 crore. During 2007-08, an amount of Rs.23.78
crore and Rs.3.80 crore were disbursed as grant and
loan, respectively.
15. 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 2007-08, 18 watershed projects with grant
assistance of Rs.13.50 crore were sanctioned and Rs.1.54
crore disbursed.
16. During 2007-08, NABARD introduced the Village
Development Programme (VDP) across the country to
3
develop identified villages (one in each DDM district and
five in each of the PPID blocks) in a holistic and
integrated manner. The programme involves identifying
a village and its socio-economic and infrastructure needs,
creating awareness among stakeholders, engaging
services of the implementing agency, preparing and
implementing Village Development Plan, by pooling
together the available resources, etc. As on 31 March
2008, 913 villages across 24 States were identified for
implementation of the programme.
17. The pilot project for integrated development
(PPID) of backward blocks launched in 10 such blocks
spread over five States in 2003 was extended to cover
139 blocks across 16 States as at end-March 2008.
NABARD through its special scheme, 'Capacity building
for Adoption of Technology' (CAT) under takes
sensitisation of farmers to facilitate them in adopting
new/upgraded technologies for agriculture developed by
various organisations, progressive farmers/entrepreneurs,
etc. During the year, 136 exposure programmes were
conducted on vermi-culture, organic farming, poly-
house technology, cultivation of medicinal and aromatic
crops, etc., in collaboration with research institutes,
KVKs and Agriculture Universities.
18. Assistance under NABARD 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.
The Fund was augmented during 2007-08 by means of
RIDF interest differential of Rs.348.86 crore taking the
total amount to Rs.602.95 crore. During 2007-08,
assistance of Rs.48.71 crore was sanctioned for 16
projects benefiting 14,538 tribal families in seven States.
19. The Farm Innovation and Promotion Fund was
created in 2005 with an initial corpus of Rs.5 crore, to
support initiatives/innovations in the farm sector. During
the year, 29 projects involving grant assistance of Rs.1.66
crore in 15 States on areas l ike System of Rice
Intensification techniques, introduction of hybrid khaki
campbell duck farming, implementation of village farm
development plan in distress districts, implementation
of pilot projects for farmers' participation in commodity
futures trading involving NCDEX/MCX, etc.
20. Under externally aided projects supported by KfW,
which are at various stages of implementation, an
amount of Rs.241.91crore was disbursed and Rs.236.79
crore received as grant assistance during the year.
21. During the year 5,277 farmers' clubs (FCs) were
launched taking the total number of clubs to 28,226
covering 61,789 villages in 555 districts as on 31 March
2008. RRBs, commercial banks, co-operative banks and
other agencies accounted for 45, 30, 18 and 7 per cent,
respectively, of the clubs promoted. Region-wise
distribution of clubs indicate, that the southern region
has the major share (30%) while the NER accounted for
only 3 per cent share. During the year, NABARD reviewed
its policy for supporting FCs through various agencies
and decided to extend cent per cent financial support
to specified activities to RRBs and co-operative banks
while the support for commercial banks would continue
to be 50 per cent on cost sharing basis.
Rural Non-Farm Sector
22. 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,
29 projects with financial support of Rs.7.78 crore were
sanctioned.
23. 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 2006-07, the project was phased out in
23 districts. NABARD would however, continue to
support various deserving developmental interventions
in these districts. During 2007-08, GLC flow in 83 DRIP
distr icts covered under various phases reached
Rs.1,177.85 crore and refinance availed was Rs.275.41
crore. In all 70,000 units were set up, generating
employment for 1.53 lakh persons.
4
24. The 'Scheme for Strengthening of Rural Haats'
introduced in 1999 in DRIP districts was extended to all
DDM districts and districts in the NER. Under the
scheme, grant assis tance is made avai lable to
Panchayati Raj Institutions (PRIs)/PACS for providing
minimum essential infrastructure to new/existing haats.
During 2007-08, grant support of Rs.53.45 lakh was
sanctioned for infrastructure in three haats each in
Chhattisgarh and Uttar Pradesh, two haats each in
Andhra Pradesh, Tamil Nadu and West Bengal and one
haat each in Bihar, Kerala, Madhya Pradesh,
Maharashtra, Orissa and Rajasthan.
25. To promote rural industrialisation through the
cluster approach, NABARD had decided to develop 55
clusters within a period of 3-5 years. During 2007-08,
the cluster development programme was extended to
19 clusters, taking the total number of clusters adopted
under this programme to 61 as at end-March 2008. In
view of GoI's special emphasis on developing the
handloom sector, NABARD decided to develop 50
handloom c lus te r s in par tnersh ip wi th o ther
deve lopmenta l agenc ies . Extending the c lus ter
approach further for developing rural tourism, the
Bank approved two rural tourism clusters in Sikkim
and one in Tami l Nadu and one tour i sm-cum-
handicrafts cluster in West Bengal.
26. NABARD has been support ing the Rural
Entrepreneurship Development Programme (REDPs) and
the Skill Development Programme (SDPs) as a proven
model for generating employment opportunities in the
rural areas. During 2007- 08, grant support of Rs.767.61
lakh was provided for 1,422 REDPs/SDPs covering
33,148 rural youth. In addition, grant assistance of
Rs.141.99 lakh was sanctioned for conducting 443
REDPs/SDPs by 14 RUDSETIs/RUDSETI type institutions
in 15 States, as also, grant support of Rs.3.24 lakh
extended to IL&FS for conducting four IT related SDPs
for the rural youth of Jharkhand under the Common
Service Centre Scheme of GoI.
27. During the year, 1.55 lakh Swarozgar Credit Cards
(SCCs) involving credit limits of Rs.679.26 crore were
issued. As on 31 March 2008, the banking sector had
issued 8.34 lakh SCCs involving an aggregate credit limit
of Rs.3,379.35 crore. Under the pilot scheme introduced
during 2005-06, to support select RRBs and co-operative
banks with one-time grant assistance to promote the
scheme, 19 banks were sanctioned grant assistance of
Rs.12.11 lakh during the year.
28. NABARD continued to support gender
development programmes through its various schemes
like Marketing of Non-Farm Products of Rural Women
(MAHIMA) and Development of Women Through Area
(DEWTA) programme. During the year, grant assistance
of Rs.4.47 lakh was released during the year under
MAHIMA. During 2007-08, the scheme for setting-up
women development cells (WDCs) was modified and
69 WDCs in 37 RRBs, 31 DCCBs and 1 SCARDB were
sanctioned as on 31 March 2008.
29. During the year, NABARD suppor ted 206
marketing events/exhibitions across the country involving
grant assistance of Rs.94.13 lakh. The pilot scheme for
setting-up rural marts launched by NABARD in 2005 in
nine States was extended to all States. During the year,
50 rural marts were sanctioned involving grant support
of Rs.51.84 lakh. Meghalaya RO in partnership with
the Department of Posts, GoI successfully set up an
Artisans' Product Gallery in the General Post Office,
Shillong to market the products of SHGs/artisans
supported under NABARD's various development
programmes.
30. During the year, 50 training programmes on
financing NFS activities covering 1,327 officers from
various banks were supported. During the year, NABARD
released grant support of Rs.5.43 lakh to Tata Tea Ltd.
for establishing a Training-cum-Production Centre (TPC)
at Rowta, Assam to impart t raining on design
development, manufacture of special products,
marketing intervention and support to Bodo women
weavers. About 40 participants received training at the
TPC and 6 trainees have since set up their units.
5
Micro-Finance*
31. During the year 5,52,992 new SHGs were credit
linked with banks and bank loan of Rs.2,541.98 crore
was disbursed taking the cumulative number of SHGs
credit linked to 34,77,965 as on 31 March 2008. In
addition, 1,86,883 exsisting SHGs were provided repeat
loans of Rs.1,685.60 crore. The programme has covered
more than 5.80 crore poor households, making it the
largest Micro-Finance (MF) programme in the world. As
on 31 March 2007, 41.60 lakh SHGs maintained savings
and had savings worth Rs.3,512.71 crore outstanding
with the banking sector. During 2006-07, bank credit of
Rs.6,570.39 crore and Rs.1,151.56 crore was disbursed
to 11.05 lakh SHGs (including 1.88 lakh under SGSY)
and 334 MFIs, respectively.
32. During 2007-08, grant assistance of Rs.1,369.77
lakh was sanctioned to various agencies for promoting
52,877 groups, taking the cumulative assistance
sanctioned to Rs.6,119.37 lakh for 3.62 lakh groups as
at end-March 2008.
33. Under NABARD's capacity building programmes
for its partner institutions, 66 exposure/field visits to
SHGs and institutions pioneering in MF for 2,754
bank/NGO off icials, 606 training and awareness
programmes for 22,452 participants from banks and
NGOs, 258 sensitisation programmes covering 9,706
participants were arranged during the year involving
an expenditure of Rs.13.32 crore. NABARD also
extended support for conducting 4,121 awareness
creation and capacity building programmes covering
2,68,870 SHG members.
34. To motivate and assist members of matured SHGs
to take up income generating activities on a sustainable
basis, NABARD continued to promote micro-enterprise
development by SHG members. Under the Micro-
Enterprise Development Programme (MEDP), 394 such
programmes covering 9,182 SHG members were
conducted during the year. The pilot project launched
during 2005-06 for promotion of micro-enterprises among
members of matured SHGs, is being implemented in
nine districts across nine States involving 14 NGOs acting
as 'micro-enterprise promotion agency’ (MEPA).
Cumulatively 2,759 micro-enterprises were established
under the project involving bank credit of Rs.237.72 lakh
as on 31 March 2008. NABARD also supported three
exhibitions of products prepared by various SHGs for
grant assistance of Rs.3.85 lakh during 2007-08.
35. NABARD selectively extends the Revolving Fund
Assistance (RFA) to MFIs for experimenting with
various MF models. During the year, RFA of Rs.8.06
crore was sanct ioned to s ix agencies taking the
aggregate support to Rs.36.38 crore as on 31 March
2008 for 35 agencies. In addition, to enable rating of
MFIs and empowering them to intermediate between
the lending banks and the clients, NABARD provides
financial assistance to commercial banks and RRBs
to avail the services of credit rating agencies for the
purpose. During 2007-08, support of Rs.3.40 lakh was
extended to four agencies for availing credit rating
services. The scheme to provide capital/equity support
to MFIs 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. As on 31
March 2008, total capital support of Rs.9.25 crore
was sanctioned to 11 agencies.
36. NABARD continued to implement the pilot
projects launched during the earlier years. Encouraged
by the progress of the pilot project on SHG-Post Office
Linkage Programme in Tamil Nadu, the Bank extended
it to Meghalaya. During the year, RFA of Rs.5 lakh
was sanctioned for on-lending to 50 SHGs in East Khasi
Hills. Cumulatively 2,831 SHGs have opened zero
interest savings accounts of which 371 SHGs were
credit linked by the participating Post Offices and
loan amounting to Rs.88.23 lakh extended as on
31 March 2008. The pilot project for provding a social
security system for SHG members in two vil lages
* Due to change in database and MIS, the reporting is for the postion as on 31 March 2007.
6
covering 500 poor households from Betul district of
Madhya Pradesh is being implemented through the
Organizat ion for Awareness of Integrated Social
Security (OASIS) with a grant assistance of Rs.8 lakh.
During 2007-08, grant assistance of Rs.1.20 lakh was
released.
37. Recognising the growing role of the SHG
federations and their value addition to SHG functioning,
NABARD, during the year, decided to support the
federations on model neutral basis and solely on merits
of the proposal and also formulated the broad norms
for deciding grant of financial assistance. Support would
be extended to the federation by way of grant assistance
for training, capacity building, exposure visits of SHG
members, etc. During the year, grant assistance of
Rs.10.48 lakh was sanctioned to two federations.
38. During the year, Rs.26.67 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.50 lakh with
NABARD during the year for facilitating miscellaneous
training programmes involving government/ bank officials,
NGOs, SHGs from States in the NER and Sikkim. As on
31 March 2008, 73 programmes were sanctioned out of
the fund involving a total grant assistance of Rs.45.01
lakh. During the year, Karnataka Agri-Development
Finance Co. Ltd., was restructured into NABARD
Financial Services Limited (NABFINS) as a wholly owned
subsidiary of NABARD to facil i tate setting-up of
benchmarks and standards for the MFI sector
39. Under the NABARD-GTZ Rura l Finance
Programme, a study was undertaken to assess the
transaction cost of various agencies and MFIs in
purveying MF through SHGs or other types of groups.
Training modules were developed to sensitise bank
branch managers and SHG members for monitoring
groups so as to minimise risks in lending through early
warning and were circulated to training institutions
involved in MF. The NABARD-KfW programme,
Financia l Cooperat ion with India-Capita l izat ion
Program SEWA Bank' aims at sustainable improvement
in access of poor women to micro-credit, both in rural
and urban areas. The project with financial contribution
of Euro 4,090,330 will be implemented in Gujarat by
SEWA bank and NABARD would act as the
intermediary agency responsible for providing technical
support and undertaking periodic review, monitoring
and supervision of the project. During the year, KfW
released grant assistance of Rs.1 crore to SEWA bank
under the project.
Research and Development Activities
40. During the year, an amount of Rs.748.96 lakh
was utilised from the R&D Fund as grant assistance for
research projects/studies training activities and other
activities like conduct of seminars, preparation of
occasional papers, etc. , taking the cumulat ive
disbursement to Rs.99.92 crore. During 2007-08, 10
research projects/studies involving grant assistance of
Rs.178.33 lakh were sanctioned and 7 projects/studies
sanctioned earlier were completed.
41. Grant assistance of Rs.71.30 lakh was sanctioned
during the year to various universities and research
institutes for conducting 100 conferences, seminars and
workshops. An Occasional Paper was sanctioned with
grant assistance of Rs.1 lakh during the year. In addition,
Rs.579.62 lakh was utilised from the Fund during the
year for capacity building of the staff of RFIs in the
NER. Under the Summer Placement Scheme being
implemented since 2005-06, assignments/reports on
agriculture and rural development, allied sector, agri-
business and social development were received from 32
students from 17 ROs and involving financial outlay of
Rs.6.96 lakh during 2007-08.
Other Development Initiatives
42. During the year, NABARD conducted 368 training
programmes through its training establishments for the
benefit of 8,488 personnel of Rural Financial Institutions
and supplemented the efforts of other training institutions
in this area by providing technical and financial support.
To provide focused attention on MF related issues, a Centre
for Micro-Finance Research (CMR) was set up at BIRD,
Lucknow and a sub-centre at IIBM, Guwahati. Grant
7
assistance of Rs.16.12 lakh was released to IIBM,
Guwahati. Further, as recommended by the 'Committee
on Financial Sector Plan for NER', a comprehensive training
plan prepared by IIBM in collaboration with RTC (Bolpur)
was approved for sharing of estimated expenditure of Rs.50
lakh equally with RBI. NABARD also continued its
contribution towards subsidising the participation fees of
personnel of client institutions through various schemes of
providing such financial support. Financial support of
Rs.278.29 lakh was extended to JLTCs, ACSTIs and ITIs
during the year for conducting 330 programmes covering
5,544 participants out of the Co-operative Development
Fund (CDF). National Institute of Rural Banking (NIRB),
Bangalore was provided Rs.3.03 lakh for conducting 10
training programmes during the year. As part of the GoI
package for revival of STCCS, BIRD has designed and
developed programmes for capacity building of PACS
functionaries. During the year, eight Trainers Training
Programmes were conducted for 144 Master Trainers and
two programmes exclusively for 38 NABARD officers.
During 2007-08, NABARD entered into a MoU with
Women's World Banking (WWB), New York to work out
collaborative arrangements on initiating training strategies,
conduct of suitable training courses with special emphasis
on governance, strategic position and product
diversification training in the MF sector and was also
associated with the study team of GTZ, Germany to study
'Capacity Development and Certification System for Co-
operative Credit Structure in India'. The Bank constituted
a Working Group under the Chairmanship of Shri Amaresh
Kumar, ED, NABARD, during the year to look into the
capacity building needs of RRBs post amalgamation.
43. NABARD through its refinance operations has been
facilitating the banking sector to augment credit support
for production and investment purposes in the agriculture
and rural sector, 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 15
per cent and stood at Rs.38,680 crore as against Rs.33,496
crore during 2006-07.
Production Credit
44. Short- term (ST) ref inance support scheme
introduced on a pilot basis for SCARDBs in Haryana,
Kerala and Punjab was extended to all SCARDBs during
the year at 4.5 per cent against crop loans issued to
farmers to whom long-term (LT) loans were granted.
During the year, Rs.65.05 crore was disbursed to Kerala
SCARDB for ST-SAO purposes.
45. The quantum of refinance support for co-operative
banks for ST-SAO continued to be linked to their gross
NPA levels. The ST credit limits sanctioned during
2007-08 (Apri l-March) for SCBs and RRBs were
Rs.14,825.71 crore and Rs.2,940.18 crore, against which
they have reached the maximum outstanding levels of
Rs.13,389.96 crore and Rs.2,688.60 crore, respectively.
A consolidated ST (others) limit was sanctioned to SCBs
on behalf of eligible DCCBs. During 2007-08, Rs.41.65
crore was sanctioned under this line of credit against
which utilisation was Rs.24.96 crore (maximum under
marketing of crop at Rs.23.96 crore).
46. During the year, ST (weavers) credit l imits
aggregating Rs.332.13 crore were sanctioned to eight
SCBs (Andhra Pradesh, Gujarat, Karnataka, Kerala,
Orissa, Tamil Nadu, Pondicherry and West Bengal) for
financing production/procurement and marketing
activities of Weavers' Co-operative Societies. With a view
to reviving the handloom sector, NABARD has
formulated a scheme for f inancing production/
investment/consumption needs of the members of
Handloom Weaver's Groups (HWGs) by co-operative
banks, RRBs and commercial banks. As at end-December
2007, co-operative banks in Andhra Pradesh, Assam,
Orissa, West Bengal and Sikkim have formed 893
HWGs, of which 52 are were credit linked involving
sanctioned loans of Rs.37.59 lakh. Similarly, RRBs in
Orissa, West Bengal, Kerala and Himachal Pradesh have
formed 41 HWGs of which 33 are were credit linked
involving sanctioned loans of Rs.28.89 lakh.
Business Operations
8
47. NABARD continued to provide LT loans to
State Governments for contributing to the share capital
of co-operative credit institutions. During 2007-08,
SCBs/DCCBs with gross NPAs not exceeding 20 per cent
as on 31 March 2007 were considered eligible and
sanction of loan to State Governments in respect of
SCBs/DCCBs not complying with the provisions of
Section 11(1) of the B.R. Act, 1949 (AACS), were also
considered irrespective of deposit erosion, subject to
certain conditions. During 2007-08, Rs.20.54 crore was
sanctioned to State Governments of Haryana, Kerala,
Orissa, Rajasthan and West Bengal.
48. The Grameen Tatkal Scheme, formulated by
NABARD and GTZ to address the credit needs of all
rural families comprehensively is being implemented since
2006-07 on a pilot basis in Andhra Pradesh, Haryana,
Karnataka, Maharashtra, Punjab, Tamil Nadu, Uttar
Pradesh and West Bengal. As on 31 March 2008, the
Pandyan Gramin Bank and Salem DCCB in Tamil Nadu
were sanctioned loan of Rs.255 lakh and Rs.2,385.02
lakh covering 468 and 829 families, respectively.
49. GoI had announced a relief package in 2006 to
mitigate distress of farmers in 31 debt stressed districts
of Andhra Pradesh, Karnataka, Kerala and Maharashtra.
NABARD had settled interest waiver claims of the
co-operatives and RRBs operating in these districts,
amounting to Rs.896.30 crore as 50 per cent share of
GoI under the package. To enable co-operative banks
and RRBs tide over the liquidity gap arising out of
implementation of the package for effecting conversion/
reschedulement of farmers' dues, the Bank has decided
to extend liquidity support to SCBs and RRBs by way
of medium-term (MT) refinance. The banks drew a sum
of Rs.265.67 crore during the year.
50. The Union Budget 2007-08 had announced the
continuance of interest subvention during 2007-08 to
enable banks to provide crop loans upto Rs.3 lakh to
farmers at an interest of 7 per cent p.a. Suitable interest
subvention to NABARD and 2 per cent interest
subvention on own involvement of co-operative banks
and RRBs was envisaged. Accordingly, GoI has released
to NABARD Rs.1,331.36 crore was received towards
interest subvention for 2006-07 and it is estimated to
be Rs.1,778 crore during 2007-08.
51. Based on GoI announcement, NABARD had
launched a restructuring package for sugar mills in the
country. However, in view of the falling sugar prices and
difficulties faced by mills in meeting their financial
obligations, GoI constituted a committee (Chairman:
Shri S.K. Mitra, ED, NABARD) for re-examining the
ear l ier package. The committee recommended,
(i) covering all operational co-operative sugar mills which
had term loan outstanding as on 31 March 2005 and
were commercially viable with adequate operational
surplus to repay the said term loan, (ii) considering term
loans provided to the mills by SCBs, PUCBs and other
FIs/agencies, either individually or in consortium and
outstanding as on 31 March 2005 along with interest
accrued or the outstanding as on the date of application
whichever was lower, for restructuring and (iii) reducing
interest rate on restructured loan to 10 per cent p.a.
with effect from 1 April 2005. GoI has accepted most
of the recommendations. Further, interest subvention to
be provided by GoI to co-operative banks and other
institutions on restructured loan upto maximum of 3
per cent. Under the package, Rs.75.31 crore was released
to co-operative banks towards interest subvention. GoI
also approved a scheme for extending f inancial
assistance to all sugar mills that were/shall be functional
during 2006-07 and 2007-08 sugar seasons, wherein,
loan shall be sanctioned for clearance of cane arrears
for 2006-07 and cane price of 2007-08 sugar season
relating to statutory minimum price fixed/to be fixed by
GoI and shall be granted equivalent to the notional
central excise duty payable on total production of sugar
during 2006-07 and 2007-08 seasons. GoI would provide
interest subvention upto 12 per cent p.a. on such loan.
52. GoI continued it support to make available GLC
at 7 per cent p.a. to farmers availing crop loan upto
Rs.3 lakh fo kharif 2007 and rabi 2007-08. NABARD
extended refinance to co-operative banks and RRBs at
3 and 4.5 per cent p.a., respectively, with interest
subvention from GoI to only those banks, which
including their own involvement, extended crop loans
upto Rs.3 lakh per borrower at 7 per cent p.a.
9
Investment Credit
53. In view of their significant role in purveying
agriculture and rural credit, NBFCs with AAA rating,
experience of lending business for last five years, net
profit during previous three consecutive financial years
with no accumulated losses, were also included as
eligible institutions for grant of refinance by NABARD.
The tenure of refinance to be not less than three years
and is proposed to be to the extent of 50 per cent of the
loan to the ultimate borrowers.
54. To provide relief to farmers affected by the
outbreak of avian flu, NABARD advised RRBs and
co-operative banks to convert the principal and interest
due on working capital loans, instalments and interest
on term loans, due for payment on/after 31 December
2007 and remaining unpaid, into term loans. Further,
the converted loans are to be recovered in instalments
based on projected future inflows over a period of three
years with an initial moratorium upto one year. The
remaining portion of term loan is to be rescheduled
similarly with a moratorium period upto one year
depending upon the cash flow generating capacity of
the unit. The reschedulement/conversion was to be
completed on or before 30 Apri l 2008 and the
rescheduled/converted loans to be treated as current
dues. The relief measures would be extended to all
accounts of poultry industry, which were classified as
Standard accounts as on 31 December 2007.
55. NABARD revised the eligibility criteria for drawal
of refinance by various agencies for 2007-08. It
comprised of, (i) Broad Criteria which included
complet ion of audit of banks, compliance with
Section 11(1) of B.R. Act, 1949, conduct of spot
verification of assets by NABARD, etc., and (ii) a set of
Special Criteria which are reviewed annually and would
form the basis of classifying agencies in A/B/C/D
categories based on their gross/net NPAs, recovery, net
worth and profitability. The quantum of refinance under
each category was linked to the refinance availed during
the previous year and was hiked or decreased depending
on improved or declined performance of the constituents.
Further, release of refinance to SCBs and SCARDBs was
only against government guarantee except in the case
of good performing SCBs/DCCBs where requirement of
the Guarantee was waived off on compliance of certain
conditions by them. However, refinance to eligible Section
11 non-compliant SCBs/DCCBs and non-scheduled
SCBs (for farm sector) was only against government
guarantee. In the event of government guarantee,
wherever required for SCBs/SCARDBs, not forthcoming,
alternative security, viz., pledge of government securities
or fixed deposit receipts issued by scheduled banks was
considered on a case-by-case basis. Commercial banks,
RRBs and PUCBs continued to be exempted from
furnishing security/government guarantee for availing
refinance.
56. During 2007-08, refinance disbursement to
commercial banks, SCBs, SCARDBs and RRBs
aggregated Rs.9,046.27 crore as against Rs.8,795.02 crore
during the previous year. Commercial banks continued
to be the single largest group availing refinance with the
highest share (44%), while the share of RRBs improved
considerably (25%) and that of co-operative banks (31%)
declined further during the year.
57. The flow of refinance varied widely across regions.
Southern, northern and central regions accounted for
36, 22 and 20 per cent, respectively, of the total refinance
disbursed during the year. The share of southern region
increased by around 5 percentage points during
2007-08, that of western region declined significantly,
while NER remained almost stagnant. Sector-wise, farm
sector activities accounted for 42 per cent, followed by
non-farm sector including rural housing (30%), SHGs
(18%) and other purposes (10%).
58. Under the scheme for financing purchase of land
for agriculture purposes, bank loan of Rs.50.83 crore
was disbursed for 1,468 units spread across 10 states
and refinance support of Rs.41.76 crore for 1,216 units
was extended during the year.
59. Of the total refinance disbursed under NFS during
the year, Rs.876.41 crore was towards rural housing
(32%). Agency-wise, commercial banks accounted for
the major share (53%), followed by co-operative banks
10
(32%) and RRBs (15%). As on 31 March 2008, the
cumulative refinance support under NFS stood at
Rs.21,354.72 crore. The Working Group on Rural
Habitat constituted by NABARD to address various
issues relating to provision of bank finance for rural
housing and rural habitat development, has
recommended providing housing loans l inked to
livelihood loans to non-salaried class of individuals,
including cost of construction of worksheds/shops for
pursuing income generating activities in the housing loan,
financing common work place for SHGs, construction
of toilets and bathing rooms for individuals/community
sanitation, delivery for infrastructure development
through collaboration with Village Panchayats, etc.
NABARD has advised all agencies that bank loans issued
for the rural housing and rural habitat sector under the
schemes formulated as per the recommendations of the
Working Group would be eligible for refinance support
under Automatic Refinance Facility.
60. During the year, NABARD extended refinance of
Rs.1,615.50 crore under the SHG-bank l inkage
programme. During 2007-08, bank loan of Rs.4,227.58
crore was disbursed to 7,39,875 SHGs (including repeat
finance of Rs.1,685.60 crore to 1,86,883 existing SHGs)
taking the average loan disbursed per SHG to Rs.57,139.
The agency-wise disbursements reveal that, as at end-
March 2008, commercial banks accounted for 42 and
48 per cent of the SHGs credit linked and bank loan
disbursed, respect ively, fol lowed by RRBs and
co-operative banks. As on 31 March 2007, 28.95 lakh
SHG accounts (including those under SGSY) had loans
outstanding worth Rs.12,366.49 crore from all agencies
and 41.60 lakh SHGs maintained savings outstanding
of Rs.3,512.71 crore with the banks.
61. During the year, the interest rates on refinance
for investment credit were revised thrice with effect from
14 May 2007, 1 November 2007 and 23 January 2008
depending on the money market conditions and cost of
incremental market borrowings of NABARD. The rate
of interest on refinance for commercial banks/PUCBs/
ADFCs/NEDFi and for co-operative banks/RRBs was
fixed at 9 and 8.5 per cent p.a., respectively, for all
eligible activities and at 8.5 per cent for all agencies in
the NER, Sikkim and Andaman & Nicobar Islands. While
the rate of interest on interim finance provided to
SCARDBs was enhanced to 9.5 per cent p.a. in respect
of drawals released on or after 6 July 2007, the interest
rate on default in repayment of principal/interest amount
of refinance under any line of credit was fixed at 11.5
and 10.5 per cent (depending on the amount of default
for the period) for commercial banks and other agencies,
respectively.
62. NABARD sanctioned 12 projects involving a total
financial outlay of Rs.118.83 crore, bank loan of
Rs.85.05 crore and NABARD's share of Rs.42.53 crore
under the co-financing arrangement and an amount of
Rs.27.31 crore was disbursed during the year. As a nodal
agency, NABARD continued to oversee the
operationalisation of the various Capital Investment
Subsidy (CIS) schemes of GoI, monitoring its progress
and administration of subsidy.
63. During the year, 30 investment and 8 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.
64. NABARD continued to review and refined its
district level Potential Linked Credit Plans (PLPs) in view
of RBI's decision to keep PLPs as basis for preparing
DCPs. An exercise undertaken on dovetailing the DCP
projections with PLP estimates during 2007-08, revealed
a variation of only 4.64 per cent at macro level. To
further improve the quality and content of PLPs, two
new chapters covering 'Agri Extension and Other Support
Services ' and 'Panchayat Raj Inst i tut ions ' were
incorporated. The Working Group comprising members
from RBI, NABARD, IBA and nine commercial banks,
set up to review and recommend modifications in the
Service Area Monitoring and Information System
(SAMIS), recommended adopting BSR Codes in revised
SAMIS returns to facilitate integration with the banks'
internal MIS, thus ensuring timely submission of the
returns. RBI is in the process of issuing the necessary
guidelines on revised SAMIS to banks.
11
65. With a view to making the district planning process
an integral part ofthe process of preparation of States'
XI Five Year Plan (207-2012) and the annual plan
(2007-08), GoI had constituted an Expert Group in 2005
to suggest the modalities.Accordingly, the District Plan
for each district will be finalised by the District Planning
Committee (DPC) as an aggregation of the Gram
anchayat Plans, the Intermediate Panchayat Plans,
District Pancayat Plans and plans of Urban Local Bodies
and the same will be integrated with the sectoral plans
and would also include the Comprehensive District
Agriculture Plan (C-DAP).The Planning Commission and
NABARD conducted regional wrkshops to orient various
State/district level officials for prparing C-DAP. NABARD
has been identified as one ofthe Technical Support
Institutions for extending suppot for capacity building,
consolidation of plans at ditrict levels, etc., in the 30
allotted districts covering 10 States. Two exposure-cum-
trainers' training progrmme covering 58 officials including
DDMs was conducted during the year.
66. NABARD continued its policy of facilitating
largermittee on Financial Sector Plan for NER, the
norms for minimum members in a SHG for NABARD's
refinance and grant assistance were relaxed and the
amount of grant per SHG enhanced. A Sub-Committee
set-up under the Task Force on Revival of STCCS
examined the issues regarding relaxations in eligibility
for CCS in the NER with respect to the health of the
STCCS in the NER and recommended different sharing
pattern of losses.
Rural Infrastructure Development
67. The allocation under XIII tranche of RIDF was
raised to Rs.12,000 crore for 2007-08 and Rs.4,000 crore
allocated under the separate window for funding rural
roads component of Bharat Nirman Programme. During
the year 36,964 projects involving a loan amount of
Rs.12,795.01 crore were sanctioned under RIDF XIII,
taking the cumulative number of projects to 2,80,227
and amount sanctioned to Rs.74,073.41 crore. An
amount of Rs.4,500 crore (Rs.4,000 crore and Rs.500
crore under RIDF XII and XIII, respectively), was
disbursed under the Bharat Nirman Component. Of the
total amount sanctioned during the year, irrigation
accounted for 37 per cent, rural roads and bridges 36.5
per cent, social sector projects 12.5 per cent and others
14 per cent. Out of the total amount sanctioned during
the year, the share of rural roads and bridges and power
sector projects declined while that of irrigation and social
sector projects improved as compared to their share in
cumulative sanctions under RIDF I to XII.
68. As per the phasing of projects, the total amount
phased was Rs.62,857.80 crore against which
disbursements aggregated Rs.45,594.85 crore indicating
72.5 per cent achievement. However, the slow pace of
actual utilisation of loans under RIDF compared to the
sanctions in some states vis-à-vis the all-India level was
mainly due to delay in administrative and technical
approval by the State Governments, land acquisition
problems, delay in obtaining statutory clearances and
tendering process, inadequate budgetary support at State
level , lack of coordination among implementing
departments, etc.
69. During the year, disbursements increased by 29
per cent to Rs.8,034.93 crore, deposits of Rs.11,807.87
was received from commercial banks and repayment
amounting to Rs.1,891.17 crore was received from the
State Governments.
70. NABARD continued to monitor the projects
through desk review based on periodic returns and field
visits undertaken by its officers from ROs/HO/DDMs and
consultants hired by the Bank for the purpose. Guidelines
for monitoring were revised after rationalising the norms
for better compliance and improvement in
implementation of projects. During the year 5,506
projects were monitored through field visits. Major
observations/issues were taken up with the implementing
departments of the concerned State Governments for
initiating the necessary actions so as to improve the pace
and quality of implementation of projects.
Impact Evaluation of Investments
71. NABARD cont inued i t s e f for t s to obta in
feedback on performance of various investment
activities through evaluation studies. These studies
12
were undertaken to assess the impact of investments
on income, employment generation and their viability.
During 2007-08, in addition to two ex-post evaluation
studies on projects supported under RIDF and four
studies on comparative cost models for SHG-bank
l inkage programme, th ree commodi ty s tud ies
examining the entire supply chain management were
completed.
NABARD Consultancy Services
72. NABARD Consultancy Services Pvt. Ltd Rs.1,019
lakh and Rs.381 lakh, respectively, during 2007-08.
Management of Resources
73. The financial resources of NABARD increased
by Rs.17,486 crore during 2007-08 as against an
increase of Rs.13,615 crore during 2006-07. The
resources were augmented by issue of Corporate Bonds
(Rs.10,403 crore), Bhavishya Nirman Bonds (Rs.1,783
crore), NABARD Rural Bonds (Rs.3 crore), RIDF
Deposits (Rs.11,808 crore) and Certificate of Deposits
(Rs.1,422 crore). The total working funds increased by
21.5 per cent to Rs.98,706 crore as on 31 March 2008
from Rs.81,220 crore as on 31 March 2007. The
outstanding market borrowings of the Bank constituted
34 per cent of working funds as on 31 March 2008.
74. 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.32,401
crore, Rs.17,381.50 crore and Rs.30,648.59 crore,
respectively, as on 31 March 2008.
75. The total income of the Bank during the year
was at Rs.5,509.10 crore (Rs.4,474.41 crore during the
previous year). After making provision for Income Tax
(Rs.521.95 crore), contribution to Special Reserve
(Rs.320 crore), t ransfer r ing to NRC (LTO) Fund
(Rs.400 crore) and NRC (Stabi l isat ion) Fund
(Rs.10 crore), the balance income left over was
Rs.4,257.15 crore. After meeting expenditure of
Rs.3,761 crore, the surplus amounted to Rs.496.15 crore
(includes withdrawals of Rs.30.31 crore from funds
against expenditure debited to P&L Account) which was
transferred to various funds maintained by the Bank.
76. The funct ioning and performance of rural
co-operative credit institutions continued to suffer from
several weaknesses including high NPAs/poor recovery
and accumulated losses. In view of this, NABARD
continued to provide focussed attention to facilitate the
growth and development of rural credit institutions.
Institutional Development
77. During 2006-07, loans issued by SCBs and
DCCBs increased by 9 and 12 per cent, respectively,
while that by SCARDBs and PCARDBs declined by 16
and 14 per cent, respectively, over the previous year.
The overall profit earned by 31 SCBs was Rs.319 crore,
while the profit earned by 27 SCBs, which were in profit
during 2006-07, was Rs.275 crore. The profit of profit-
earning SCBs declined by 21 per cent during 2006-07,
over the previous year. Out of 369 DCCBs, 271 were in
profit to the tune of Rs.754 crore. However, at the
aggregate level, DCCBs earned a net profit of Rs.30
crore during 2006-07, as compared to net profit of
Rs.195 crore during the previous year. SCARDBs earned
a net profit of Rs.90 crore during 2006-07 compared to
profit of Rs.250 crore earned during 2005-06. However,
PCARDBs as a whole continued to incur loss, aggregating
Rs.147 crore during 2006-07.
78. There were wide variations across the regions in
the performance of co-operative credit institutions. During
2006-07, profits of SCBs declined in all regions except
the western region. Losses of SCBs in the NER declined
by 71 per cent during 2006-07 over the previous year. In
the case of DCCBs overall profit declined across all
Capacity Building of Client Institutions
13
regions during 2006-07 due to decrease in number of
profit-making DCCBs and amount of profit. While the
losses of DCCBs in northern region increased
considerably, those in the southern region reduced
substantially during 2006-07 over 2005-06. SCARDBs
in the western region increased their profits substantially
during 2006-07 while those in central, eastern and
southern regions incurred losses. During 2006-07, in the
case of PCARDBs, despite central, southern and western
regions earning profits, their losses increased.
79. As on 31 March 2007, of the reporting banks, 4
out of 31 SCBs, 97 out of 369 DCCBs, 53,050 out of
1,06,384 PACS#, 8 out of 17 SCARDBs and 342 out of
692 PCARDBs incurred losses, which together amounted
to Rs.9,917 crore (excluding PACS). The poor recovery
of loans/high proportion of NPAs to the outstanding
loans and advances in co-operative banks continued to
be an area of concern.
80. In view of the persist ing weakness in the
co-operative credit structure, Phase IV of preparing of
institution specific DAPs by co-operative banks and
entering into MoUs for ST and LT structures was initiated
during the year with certain revisions. The revisions
proposed repositioning NABARD's role to that of a
facilitator. The methodology for conduct of ODIs was
also revised during the year accounting for the changes
in the environments of RRBs and co-operative banks.
In the case of co-operative banks, ODIs were renamed
as 'Business Revitalisation and Managing Human
Aspirations' (BRAHMA).
81. With the objective of supporting developmental
initiatives of co-operative credit institutions, NABARD
provides financial support through the CDF. During the
year, an amount of Rs.5.68 crore was sanctioned and
Rs.6.27 crore was disbursed including earlier sanctions
taking the cumulative sanctions and disbursements under
CDF to Rs.82.03 crore and Rs.73.92 crore, respectively,
as on 31 March 2008.
82. The GoI based on the recommendations of the
Task Force on Short-Term Rural Co-operative Credit
Structure (STCCS), announced a revival package with
an outlay of Rs.13,596 crore. The assistance is to be
provided for cleansing the balance sheets of STCCS (as
on 31 March 2004), capital infusion to ensure CRAR of
7 per cent, technical support for capacity building,
introduction of CAS and MIS and their computerisation,
etc. As on 31 March 2008, 18 States have executed MoUs
with GoI and NABARD, covering 95 and 93 per cent of
the PACS and DCCBs, respectively.
83. The special audit of PACS as on 31 March 2004
was completed in six States (Andhra Pradesh, Gujarat,
Haryana, Maharashtra, Rajasthan and Orissa), covering
59,294 PACS as at end-March 2008. State Level Task
Forces comprising of State Government, RCS, RBI,
NABARD and SCB have been constituted in the
implementing States to review (i) the performance of
the SCB/DCCBs, (ii) the aspects relating to good
governance, and ( i i i ) compliance with statutory
requirements and actions suggested by RBI/NABARD,
and suggest (i) improvements in the functioning of
SCB/DCCBs and (ii) suggest measures required for
improving the efficiency and viability of SCB/DCCBs.
84. As at end-March 2008, six States, viz., Andhra
Pradesh, Gujarat, Haryana, Madhya Pradesh, Orissa
and Uttar Pradesh have passed bills to amend their
Co-operative Societies Act (CSA) and Maharashtra has
promulgated an ordinance. Amendments in the B.R.
Act, NABARD Act and DICGC Act wil l be made
wherever necessary.
85. A Working Group set up by NABARD prepared
two separate training modules, training material and
trainers' guides for Secretaries and staff of PACS and
Board members. Training was imparted to 206 Master
Trainers from 11 implementing States who in turn trained,
1,059 district level trainers for conducting actual field
level programmes. Till date, 491 DCCB personnel and
40,391 secretaries/staff and 42,730 elected members of
PACS from 10 States have been trained. The Technical
Committee headed by MD, NABARD finalised guidelines
on computerisation of CAS and MIS of PACS.
# As on 31 March 2006.
14
86. As on 31 March 2008, NABARD released
Rs.1,307.04 crore as GoI's share towards recapitalisation
of eligible PACS in Andhra Pradesh, Gujarat, Haryana,
Madhya Pradesh, Maharashtra, Orissa and Uttar Pradesh,
taking the total support released in these States to
Rs.1,467.36 crore including State Government share of
Rs.160.32 crore.
87. The Task Force appointed under the Chairmanship
of Prof. A. Vaidyanathan, for the revival of Long-Term
Co-operative Credit Structure (LTCCS) submitted its
report to GoI in August 2006. Based on the observations
and suggestions of the States as to the recommendations
of the Task Force, Hon'ble Union Finance Minister in
the Union Budget 2008-09 announced that GoI and
State Governments have reached an agreement as to
the contents of the package.
88. Following amalgamation (2005-06 onwards), the
number of RRBs has been reduced from 196 to 96 as
on 31 March 2007. In a l l , 81 RRBs showed
improvement in their performance either by way of
increase in profits or reduction in losses by transcending
from loss to profits as at end-March 2007. The net
profit of RRBs at aggregate level increased from
Rs.617.13 crore during 2005-06 to Rs.625.15 crore
during 2006-07. The net worth of RRBs increased from
Rs.4,009.74 to Rs.4,526.48 crore during the same period.
The performance of RRBs varied widely across regions.
While all RRBs were in profit in the southern region, 29
(out of 31) in central, 14 (out of 16) in northern, 9 (out
of 10) in western, 9 (out of 16) in eastern and 5 (out of 8)
in north-eastern regions were in profit.
89. The recovery performance of RRBs as on 30 June
2007 was above 85 per cent in four States, viz., Punjab,
Tamil Nadu, Haryana and Himachal Pradesh. Out of
96 RRBs (as on 30 June 2007), 45 and 44 had recovery
of above 80 and 60 per cent, respectively. At the
aggregate level, the recovery of RRBs was 80.49 per
cent as at end-June 2007.
90. There was a decline in gross NPAs of all RRBs as
a percentage of loans and advances outstanding from
7.28 as at end-March 2006 to 6.55 as at end-March
2007. However, 51 RRBs had NPA levels below the
national average of 6.55 per cent and only 6 RRBs had
NPA levels above 20 per cent as at end-March 2007.
Lowest level of NPAs was observed in the case of RRBs
in southern (3.24%) and northern (3.9%) regions. NPAs
of RRBs in the western (7.03%), central (8%), eastern
(11.3%) and north-eastern (12.2%) regions were
comparatively higher than the all-India average of 6.55
per cent as on 31 March 2007.
91. The recapitalisation support announced by Hon'ble
Finance Minister in the Union Budget 2007-08, will be
extended to RRBs with negative net worth in a phased
manner. As at end-March 2008, out of 96 RRBs, 27
had negative net worth, requiring recapitalisation support
worth Rs.1,795.97 crore. GoI, sponsor banks and State
Governments will contribute in the ratio of 50:35:15.
As on 31 March 2008, s ix State Governments
contributed their share to 12 RRBs (7 full share and 5
partial share).
92. In accordance to the announcement in the Union
Budget 2007-08, 49 hitherto uncovered districts will be
covered by RRBs as notified by GoI and 11 districts are
under consideration for notification. Of the 678 proposed
branches, 268 were opened as at end-March 2008.
Fur ther, the Securitization and Reconstruction of
Financial Assets and Enforcement of Securitization of
Interest (SARFAESI) Act was extended for loans
advanced by RRBs.
Supervision over Banks
93. NABARD inspects SCBs and DCCBs in terms of
the powers vested under Section 35(6) of the B.R. Act,
1949 (AACS), and of RRBs 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 SCBs, DCCBs and RRBs not
complying with minimum capital requirements and
voluntary inspections of all SCARDBs continued to be
conducted annually. The statutory inspections of DCCBs
15
and RRBs having positive net worth and voluntary
inspections of Apex Co-operative Societies/Federations
are conducted once in two years.
94. During the year, statutory inspections of 366 banks
(31 SCBs, 261 DCCBs and 74 RRBs) and voluntary
inspections of 18 SCARDBs and 1 apex institution
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 NPAs/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.
95. The Board of Supervision (for SCBs, DCCBs and
RRBs) [BoS] met four times during the year. The issues
reviewed by BoS included, (i) functioning of SCBs and
SCARDBs, (i i) functioning of co-operative credit
institutions of Orissa, Maharashtra, Karnataka and
Gujarat and RRBs, (iii) functioning of insolvent SCBs
and DCCBs, (iv) trigger-point policy for supervisory
prescription and regulatory action for co-operative credit
institutions, (v) impact of amalgamation of RRBs,
(vi) policy, procedure and status of complaints, grievance
redressal and courteous service, (vi i ) f rauds,
misappropriation, embezzlements, defalcations, etc.,
(viii) implementation of DAPs by co-operative banks,
(ix) implementation of reforms under GoI package for
STCCS, (x) the revised inspection strategy, (xi) revision
of exposure norms and CMA guidelines, (xii) investment
portfolio management based on special studies, etc.
96. As on 31 March 2008, 6 SCBs and 121 DCCBs
were not complying with the 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.14,998.10 crore, which had affected
deposits to the extent of Rs.4,244.31 crore in addition
to their entire share capital.
97. NABARD revised the inspection guidelines for
on-site inspection of all banks keeping in view the latest
development and policy environment. The Bank
conducted pilot inspections of 20 select banks before
implementing the revised guidelines which include,
(i) revised audit classification/rating norms for audit of
co-operative banks, (ii) guidelines on Customer Service
and Grievance Redressal Mechanism in co-operative
banks, (iii) guidelines on Asset-Liability Management
to 5 SCBs and 12 RRBs to be introduced on a pilot
basis, etc.
98. NABARD constituted a Central Fraud Monitoring
Cell to monitor and investigate frauds above Rs.10 lakh.
In addition special portfolio studies on internal control
system in select RRBs, investment management, NPA
management, CMA in select co-operative banks, etc.,
were also undertaken.
99. NABARD continued its efforts for capacity
building of its employees/upgrading their skills and
introduced new/refined training programmes, to enable
them to keep abreast of the constantly changing socio-
economic and technical environment.
100. During the year, the Board of Directors of
NABARD met f ive t imes, whi le the Executive
Committee, the Sanctioning Committee for loans under
RIDF and the Audit Committee met four, six and five
times, respectively. The Risk Management Committee
met thrice during the year.
101. Reserve Bank of India conducted the financial
inspection of NABARD with reference to the financial
position as on 31 March 2007 between January and
March 2008.
Training and Skill Enhancement
102. During the year, 91 training programmes covering
1,546 officers were conducted at NBSC, Lucknow on
functional, behavioural and technical areas. Exposure
visits for Natural Resource Management projects
exclusively for senior officers, sensitisation of officers
Organisation and Management
16
posted in NER and 18 new programmes were also
introduced. Besides 59 officers were deputed for tailor-
made programmes on Appraisal and Scrutiny of RIDF
projects, Commodity Futures and Derivatives, etc., as
also 177 officers deputed for 103 workshops/seminars/
conferences at reputed institutions. Further, 103 officers
were deputed abroad for various overseas training
programmes, exposure visits, seminars, etc. In addition,
63 training programmes covering 860 employees were
conducted at NBTC, Lucknow and ZTC, Hyderabad.
Pre-promotional t raining programmes were also
conducted for 41 and 112 Group 'B' and 'C' staff,
respectively.
103. During the year, 50 employees availed of facilities
under the incentive scheme, for professional studies in
part-time and distance learning courses. The Bank also
introduced during the year, a scheme for granting
sabbatical to officers to encourage them to pursue research
programme/project on subjects relevant to the Bank.
Other Matters
104. The process of recruiting 120 officers in Grade
'A' of RDBS and Rajbhasha Services and Grade 'B' of
Legal Service was initiated during the year. Further, 163
promotions were effected in various grades of the officers'
cadre. As at end-March 2008, NABARD had a total
staff strength of 4,924 employees.
105. Preventive Vigilance Inspection of eight ROs/TEs
and one Chief Technical Examiner type inspection of
electrical work of the Bank at Assam were undertaken
during the year. The Bank observed Vigilance Awareness
Week in November 2007.
106. Du r ing t he yea r, NABARD in t roduced
www.nabnet. in , an inter-of f ice por ta l access ible
from any location in the country through the internet.
The Bank's corporate e-mail 'NABARD mail ' was
provided to all officers including DDMs/DDOs.
107. Inspection of 19 ROs/TEs and 17 HO departments
was undertaken during the year. In order to improve the
efficiency and effectiveness of the staff posted in
concurrent audit Cells at ROs/TEs, two workshops were
organised. It was decided to set up a Zonal Audit Cell
at Guwahati to take care of the concurrent audit of
seven smaller ROs in the NER. Chartered Accountants
were engaged to conduct special audit of Treasury
Operations for a period of one year commencing from
the quarter ending 31 December 2006.
108. The Central Complaints Committee at HO and
23 Committees at ROs are functioning for prevention of
sexual harassment of women at the work place.
109. The Bank continued to promote use of Hindi in
its day-to-day working. In addition to 46 customised
workshops, a sensitisation workshop towards official
language policy of GoI for 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 the HO and Orissa
and West Bengal ROs, while the third Sub-Committee
of the Parliamentary Committee an Official Language
inspected New Delhi RO. The Committees found the
performance of these offices satisfactory. Inspections of
nine ROs/TEs were undertaken with a view to accelerating
the use of Hindi and to assess compliance to the official
language policy of GoI.
17
Rural Economic Environment
I
The Indian economy has recorded in recent times more
than 8 per cent growth in GDP powered by higher growth
rates in the services and the industry sectors. Consistent
with the trend, growth rates of 10.8 and 8.5 per cent in
the services and industry sectors, respectively, have
contributed to the overall growth of GDP at 9 per cent
during 2007-08. 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.22,553 during 2006-07 and Rs.24,321 during
2007-08. Inflation remained stable for most part of
2007-08, despite disturbances in the global prices of
commodities including oil and upsurge in capital inflows,
and except for the jump above 7 per cent at the fag-end
of the year. Revenue and fiscal deficits as percentage of
GDP are expected to be 1.4 and 3.1, respectively, during
2007-08 as against 1.9 and 3.4 per cent during 2006-07.
1.2 Agricul ture growth at 4.5 per cent during
2007-08 was higher than 3.8 per cent during 2006-07.
The ensuing sections review the trends in agriculture and
rural sectors in the Global and Indian economies.
Global Economy
Economic Scenario
1.3 Growth in the global economy witnessed a
marginal decline from 3.7 per cent in 2006 to 3.4 per
cent in 2007, as a result of the slowdown in the advanced
economies and is expected to further dip to 2.6 per cent
in 2008. Though the growth rate of emerging and
developing economies (7.9%) was less affected by the
financial turbulence in 2007, it is expected to decline to
6.7 per cent in 2008 (Table 1.1). The robust growth
rates of Chinese (11.4%) and Indian (9%) economies
as well as other emerging and developing countries
counterbalanced the moderate growth recorded by the
advanced economies (2.7%). The growth momentum
was largely on account of strong productivity gains in
these developing countries and their progressive
integration into the global economy. However, the slow
down in world output was also reflected in the drop in
volume of world trade in goods and services by 2.4
percentage points.
1.4 During 2007, inflation around the world remained
at high levels owing to consistently high food prices.
Food price increase accounted for more than 70 per
Table 1.1: Overview of Global Economy
(Annual percentage change)
Growth 2006 2007 2008*
A. GDP (Real)
a. World Output 3.7 3.4 2.6
b. Advanced Economies 3.0 2.7 1.3
i. United States 2.9 2.2 0.5
ii. Euro Area 2.8 2.6 1.4
iii. Japan 2.4 2.1 1.4
iv. Newly Industrialised
Asian Economies 5.6 5.6 4.0
c. Other Emerging and
Developing Economies 7.8 7.9 6.7
i. Developing Asia 9.6 9.7 8.2
ii. China 11.1 11.4 9.3
iii. India 9.7 9.0 7.9
iv. ASEAN – 5@ 5.7 6.3 5.8
B. Consumer Prices
a. Advanced Economies 2.4 2.2 2.6
b. Other Emerging and
Developing Economies 5.4 6.4 7.4
C. World Trade Volume
(goods & services) 9.2 6.8 5.6
a. Imports by Emerging and
Developing Economies 14.4 12.8 11.8
b. Exports by Emerging and
Developing Economies 10.9 8.9 7.1
D. Commodity Prices
a. Oil Prices 20.5 10.7 34.3
b. Non-Fuel Prices 23.2 14.0 7.0
* : Projections.
@ : Includes Indonesia, Malaysia, Philippines, Singapore and
Thailand.
Source: (i) World Economic Outlook, IMF, April 2008.
(ii) RBI Bulletin, June 2008.
18
cent increase in headline inflation in emerging economies
compared to around 20 per cent in the case of advanced
economies. The continuing slow down in growth in
advanced economies could have an adverse impact on
growth, trade performance and stifle capital inflow in
emerging and developing economies. While the world
inflation level increased marginally in 2007 over 2006
(Table 1.2), there was a 2.8 percentage point jump in
the world food inflation level during the same period.
Table 1.2: Trend in Inflation
(Per cent)
Particulars Headline Inflation Food Inflation*
2006 2007 2006 2007
World 3.4 3.9 3.4 6.2
Advanced Economies 2.3 2.2 2.0 3.0
Developing Asia 3.7 4.9 4.4 10.0
Central & Eastern Europe 5.2 5.4 4.6 8.2
*: Changes in food related consumer prices (or closest equivalent).
Source: Data on food and fuel price inflation based on 137 countries
(World Economic Outlook, 2007).
Indian Economy
A. Economic Scenario
a. Gross Domestic Product
1.5 Indian economy registered a growth of 9 per cent
in GDP (at 1999-2000 prices) during 2007-08, as against
9.6 per cent during 2006-07. The average annual growth
attained during the Tenth Plan Period (2002-07) at 7.8
per cent, though marginally less than the targeted 8 per
cent, was the highest for any Plan period. The shortfall
can be partly attributed to the low growth in agriculture
and allied sectors (2.5%). Select economic indicators
of the Indian Economy are presented in Table 1.3.
1.6 Sectoral analysis of growth rates reveal that
deceleration in growth in agriculture and allied sectors
brought down its share in overall GDP further by 0.7
percentage point to 17.8 per cent during 2007-08, while
the share of services sector increased by similar proportion
to 55.6 per cent and that of industry sector marginally
declined to 26.6 per cent during the year (Table 1.4).
b. Consumption, Savings and Investments
1.7 Private final consumption expenditure as a
proportion to GDP in the economy declined marginally
from 55.8 per cent during 2006-07 to 55.3 per cent
during 2007-08. However, a higher growth in Gross Fixed
Capital Formation (GFCF) is expected to improve its
relative share in GDP (at market prices) to 31.9 per cent
during 2007-08 as against 30.6 per cent during 2006-07.
The relative share of private consumption and GFCF in
GDP during the Tenth Plan stood at 60.9 and 27 per
cent, respectively. Gross domestic savings as a proportion
to GDP also improved marginally to 34.8 per cent
during 2006-07 from 34.3 per cent during 2005-06. The
savings rat io during the Tenth FYP at 31.4 was
substantially higher than that of Ninth FYP at 23.6.
The gross domest ic capital formation GDCF as
percentage to GDP (at current market prices) also
improved marginally from 35.5 during 2005-06 to 35.9
during 2006-07. However, the improvement was notable
Table 1.3: Economic Indicators
Particulars 2005-06 2006-07 2007-08
Growth in (%)
a. Overall GDP ^ 9.4 9.6Q 9.0RE
b. GDP from Agriculture &
Allied Activities^ 5.9 3.8Q 4.5RE
c. Foodgrain Production 5.2 4.2 4.6#
d. Industrial Production^ 9.6 10.6 8.5P
e. Inflation as measured by WPI 4.1 5.9 7.4B
Gross Domestic Savings (as % of GDP)^ 34.3 34.8 NA
Gross Domestic Investment (as % of GDP)^ 35.5 35.9 NA
Fiscal Deficit (as % of GDP)^^ 4.1 3.4 3.1
Imports (US$ million)^^ 33.8 24.5R 26.9P
Exports (US$ million)^^ 23.4 22.6R 22.9P
Trade Balance (as % of GDP)^^ -6.4 -6.9 NA
External Debt (as % of GDP)^^ 17.2 17.8 18.8
Q : Quick Estimate. RE : Revised Estimate.
P : Provisional R : Revised
# : 3rd Advance Estimate 2007-08. NA : Not Available
B : As at end-March 2008. ^^: At current market price
^ : At factor cost - 1999-2000 prices.
Source: (i) Economic Survey 2007-08. (ii) RBI Bulletin, June 2008.
19
during the Tenth FYP and averaged at 31.4 per cent as
compared to 24.3 per cent during the previous Plan
period and 25.2 per cent during the beginning of the
Tenth Plan (2002-03).
c. Inflation
1.8 On a year-on-year basis, inflation measured in
terms of wholesale price index (WPI) was 7.4 per cent
as at end-March 2008, as against 5.9 per cent as at
end-March 2007. However, on an annual average basis
inflation was 4.7 per cent during 2007-08 as against
5.4 per cent during 2006-07. Inflation declined from
6.4 per cent at the beginning of 2007-08 to a low of 3.1
per cent in the middle of October 2007, before firming
up at 4.4 per cent from mid-February 2008. A part of
the inflation was due to increase in prices of steel, iron
ore, crude oil derivatives, oilseeds and edible oils in line
with the rise in international prices of these commodities.
Table 1.4: Sectoral Growth Rates of Real GDP*
(Per cent)
Sector 2003-04 2004-05 2005-06 2006-07Q 2007-08RE
Agriculture & Allied 10.0 (22.2) - (20.8) 6.0 (19.9) 3.8 (18.5) 4.5 (17.8)
Industry# 7.4 (25.8) 9.8 (26.0) 9.6 (26.1) 10.6 (26.8) 8.5 (26.6)
Services 8.5 (52.0) 9.6 (53.2) 9.8 (54.0) 11.2 (54.7) 10.8 (55.6)
Total GDP at factor cost 8.5 (100.0) 7.5 (100.0) 9.4(100.0) 9.6 (100.0) 9.0 (100.0)
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.
A notable feature was that while the world food prices
recorded an increase during 2007 compared to 2006
(Table 1.2), the converse was observed in India with the
WPI of food articles declining to 6.1 per cent during
2007-08 from 8 per cent during 2006-07.
B. Trade
1.9 The Indian economy showed progress in
integration 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 of 48 per cent as against 29.2 per cent
during the same period. India’s export and import growth
in US$ terms were 22.6 and 24.5 per cent, respectively,
during 2006-07 over 2005-06. During 2007-08, both
exports and imports in US$ terms registered growth of
22.9 and 26.9 per cent, respectively, over the previous
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) 9.91 149.17 (33.8) 2.5
2006-07 R 126.36 (22.6) 9.91 185.75 (24.5) 2.9
2007-08P 155.40 (22.9) 10.7* 235.70 (26.9) 1.91**
R : Revised. P : Provisional. * : April- January. **: 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, June 2008
20
year (Table 1.5). Share of agriculture in total exports
was 10.7 per cent during 2007-08 (April-January).
However, it was higher compared to the share of 9.7
per cent during the same period of the previous year.
The share of agriculture in total imports also declined
during the year to 1.91 per cent (April-December), and
was marginally lower than 1.93 per cent registered during
the same period of the previous year.
C. Agricultural Marketing and
Commodity Futures
1.10 The model law on agricultural marketing was
prepared and circulated by Ministry of Agriculture (MoA),
GoI, to promote and improve agricultural marketing.
Till date, 15 States and 5 UTs have modified their APMC
Act to derive benefits of market reforms. During the 53rd
Meeting of the National Development Council, MoA,
requested States and UTs to complete the process of
amendments and notification in respect of APMC by
2007-08. GoI has taken an initiative to promote modern
terminal markets for fruits, vegetables and other
perishables in important urban centres, providing state-
of-the-art infrastructure facilities for electronic auction,
cold chain and logistics and operating through primary
collection centres conveniently located in producing
areas. The terminal markets are envisaged to operate
on a ‘Hub-and-Spoke’ format wherein the terminal
market (the hub) would be linked to a number of
collection centres (the spokes). Operational guidelines
of the scheme have been circulated to the States that
have amended their APMC Acts.
1.11 The commodity futures markets help farmers
in price discovery and risk management. To make the
price discovery process more efficient, the Forward
Market Commission, initiated various steps in 2007
to attract larger participation of all stakeholders, by
creating awareness about the markets, organising
training programme for the farmers, etc. GoI has also
allowed investments upto 26 per cent FDI and 23 per
cent FII , subject to the condit ion that no single
investor holds more than 5 per cent, in commodity
markets from January 2008. The total volume of trade
in the commodit ies futures market increased to
Rs.36,540 billion as against Rs.34,840 billion in 2006,
wherein the MCX and NCDEX registered a share of
74.7 and 21.2 per cent , respec t ive ly, in to ta l
transactions in 2007.
D. Support Prices, Procurement and
Stock of Foodgrains
1.12 Minimum Support Prices (MSPs) were announced
for 24 major crops before the sowing season, enabling
farmers to plan their crops. During 2007-08, MSPs were
revised upwards and were significantly higher by 33.3,
11.2, 11.8, 11.8 and 9.9 per cent for wheat, paddy,
moong, urad and arhar, respectively. During 2006-07,
decline in wheat procurement (35.8 million tonnes)
during the rabi season led to the reduction in the overall
procurement of cereals as compared to 2005-06 (42.4
million tonnes). While the procurement of rice remained
almost the same during 2006-07 (26.3 million tonnes)
as compared to 2005-06 (26.7 million tonnes), wheat
procurement further declined to 9.2 million tonnes during
2006-07 as against 14.8 mil l ion tonnes during
2005-06. Actual stock of foodgrains (rice and wheat) at
21.4 mil l ion tonnes as on 1 February 2008 was
marginally higher than the buffer stock norms of 20
million tonnes for the month (Box 1.1).Replantation of paddy crop
21
GoI’s National Policy for Farmers, 2007, provides greater focus
on the economic well being of the farmers, in addition to
production and productivity. The policy aims to stimulate attitudes
and actions, which result in assessing agricultural progress in
terms of improvement in the income of the farm families in terms
of their consumption requirements and capacity to invest in
farm related activities. Broad coverage of the policy includes:
a. Asset reforms ensuring that farmer household/s has access to
a production asset/marketable skill for sustainable income
generation.
b. Water use and rain water harvesting for maximising yield
and income per unit of irrigation water in all the crop
production programmes.
c. Encouraging use of biotechnology, information and
communication technology (ICT), renewable energy
technology, space applications and nano-technology, etc.,
for improving productivity per unit of land and water.
d. Establish National Agricultural Bio-security System to
organise a co-ordinated agr icul tural bio-secur i ty
programme.
e. Involving co-operatives, SHGs, Agricultural Universities,
seed companies in providing quality seeds, disease free
planting material and soil health enhancement.
f. Development, introduction and diffusion of environmentally
safe and effective pesticides, encouraging bio-pesticides and
preventing use of spurious pesticides.
g. Timely, adequate and accessible financial services available
at reasonable interest rates. Revamping NAIS to make it more
farmer friendly.
h. Gyan Chaupals at village level with the help of ICT and farm
schools in the fields of outstanding farmers to promote farmer-
to-farmer learning.
i. Measures to cover farmers, especially SF/MF and landless in
social security scheme.
j. MSP mechanism to be implemented effectively across
the country and market intervention scheme to be
strengthened. Efforts to develop a single national market by
relaxing internal restrictions.
k. Initiatives to improve the economic condition of tribal
farmers, pastoralists, small plantation farmers, island farmers,
urban farmers, organic farmer, etc.
l. Suitable institutional support for organic farming, green
agriculture, genetically modified crops, protected (green house)
agriculture, etc.
Box 1.1
National Policy for Farmers 2007
E. Agriculture and Rural Economy
a. Rainfall Situation
1.13 Cumulative precipitation during the South-West
monsoon season (1 June to 30 September) 2007 was
5 per cent above normal and well distributed over time.
However, during the North-East monsoon season
(1 October to 31 December) 2007, it was 32 per cent
below normal as against 21 per cent below normal during
the corresponding period of the previous year. Out of
the 36 meteorological sub-divisions in the country, rainfall
was excess/normal in 30 sub-divisions (26 sub-divisions
during 2006) during the South-West monsoon and
scanty/no rain in 27 sub-divisions during the North–East
monsoon (Table 1.6). Water storage capacity in 81 major
reservoirs in the country during South-West and North-
East monsoons declined to 79 and 55 per cent during
2007 from 89 and 59 per cent, respectively, during 2006.
Table 1.6 : Trends in the Rainfall and Water Storage
Particulars South - West Monsoon North - East Monsoon
2005 2006 2007 2005 2006 2007
A. Cumulative rainfall (% variation from normal) -1 -1 5 10 -21 -32
B. Number of Sub-divisions with
i. Normal 23 20 17 6 6 7
ii. Excess 9 6 13 11 3 2
iii. Deficient/Scanty/No Rain 4 10 6 19 27 27
C. Reservoir status (% of FRL*) 81 87 79 37 59 55
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.
Source: Indian Meteorological Department
22
Table 1.7: Area Sown under Major Crops
(Million ha.)
Crop Kharif (a) Rabi* (b) Total (a+b)
2006 2007 2006 2007 2006 2007
Rice 37.1 37.3 0.9 0.8 38.0 38.1
Wheat - - 28.0 27.4 28.0 27.4
Coarse Cereals 22.1 22.0 6.4 6.5 28.5 28.5
Pulses 11.4 12.6 13.7 12.9 25.1 25.5
Oilseeds 16.8 17.7 9.5 8.5 26.3 26.2
Cotton 9.0 9.3 - - 9.0 9.3
Sugarcane 4.8 5.1 - - 4.8 5.1
Total 102.1 104.9 58.5 56.3 160.6 161.2
Source: Ministry of Agriculture, GoI. *: Upto 18 January 2008 - : Nil
b. Crop Acreage
1.14 Satisfactory rainfall and remunerative market
prices enabled improved coverage during kharif 2007 at
104.9 million ha. (increase of 2.7%), especially in the
case of pulses and sugarcane (Table 1.7). Shortfall in
North-East monsoon adversely affected the sown area
under rabi crops (3.8%). As a result, while area under
all major crops improved during kharif season, it declined
during the rabi season, except coarse cereals which
registered a reverse trend.
c. Agricultural Production
i. Foodgrains and Non-Foodgrains
1.15 Overall foodgrains production during 2007-08 is
estimated at 230.7 million tonnes as against the previous
year’s production of 217.3 million tonnes and target of
221.5 million tonnes. The achievement during 2006-07
at 217.3 million tonnes was on account of improved
production of wheat, rice and pulses. During the year,
production of coarse cereals, pulses, paddy and wheat
is estimated to increase by 20.3, 6.3, 3.2 and 3.4
per cent, respectively. Production of oilseeds and cotton
is estimated to increase by 18.5 and 14.2 per cent,
respectively, while that of sugarcane is likely to fall by
3.2 per cent as compared to 2006-07 (Table 1.8).
Banana Plantation
ii. Plantation Crops
1.16 Tea production in the country stagnated at 9.47
lakh tonnes during 2006-07 and is estimated to drop to
8.05 million tonnes during 2007 (April-November)
(Table 1.9). Export of tea, however, increased both in
terms of volume and value by 11 and 14 per cent,
respectively, during the year. For funding replantation
and rejuvenation act ivi t ies, aimed at improving
productivity of tea gardens, GoI has set up a Special
Purpose Tea Fund, to be under implementation till the
end of Eleventh FYP with the plan outlay of Rs.567.10
crore. Union Budget 2008-09 has proposed setting up
of similar Funds for rubber (Rs.19.41crore), coffee (Rs.18
crore) and cardamom (Rs.10.68 crore) (Box 1.2).
23
Box 1.2
Union Budget 2008-09: Highlights on Agriculture and Rural Sector
• A scheme of debt waiver and debt relief to farmers for loans
taken from scheduled commercial banks, RRBs, co-operative
banks, upto March 2007, overdue as on 31 December 2007
and remained unpaid as on 29 February 2008. Complete
waiver in the case of 3 crore SF/MF farmers (Rs.50,000
crore) and 25% rebate (Rs.10,000 crore) to 1 crore other
farmers. The process is to be completed by 30 June 2008
and farmers availing the scheme would be entitled to fresh
loans from credit institutions.
• Setting-up of a Fund with corpus of Rs.5,000 crore in NABARD
to enhance its refinance operations to ST co-operative credit
institutions. The Fund is to be created on the lines of RIDF
and will be governed by the general guidelines applicable to
RIDF with some modifications. The corpus of RIDF-XIV
raised to Rs.14,000 crore for 2008-09 and the window for
rural roads to continue under RIDF XIV with a corpus of
Rs.4,000 crore. The GoI and the State Governments have
agreed to implement the Vaidyanathan Committee’s Report
on reviving the LT co-operative credit structure, at an estimated
cost of Rs.3,074 crore (GoI’s share: Rs.2,642 crore).
• Farm credit target for 2008-09 fixed at Rs.2,80,000 crore.
ST crop loan to continue at 7% interest and Rs.1,600 crore
allocated for interest subvention during 2008-09. Two
recommendations of the Financial Inclusion Committee
accepted, viz., (i) to advise commercial banks, including
RRBs, to add at least 250 rural household accounts every
year at each of their rural and semi-urban branches, and (ii)
to allow individuals such as retired bank officers, ex-
servicemen, etc., to be appointed as business facilitator/
business correspondent/credit counsellor. Banks will be
encouraged to embrace the concept of Total Financial
Inclusion.
• Commercial banks to meet the entire credit requirements of
SHG members, viz., (i) income generation activities,
(ii) social needs like housing, education, marriage, etc., and
(iii) debt swapping. All women SHGs credit linked to banks
will be covered under Janashree Bima Yojana operated by
Life Insurance Corporation of India, with 50% subsidy in
premium from the Social Security Fund (contribution of
Rs.500 crore for 2008-09).
• Tax exemption for income arising from saplings or seedlings
grown in a nursery. NHM to be provided Rs.1,100 crore
during 2008-09, 500 soil-testing laboratories to be set up in
the public and private sectors during the Eleventh Plan period
with GoI’s assistance of Rs.30 lakh/laboratory. Before
March 2009, 250 districts of the country will get one fully
fitted mobile soil-testing laboratory. The Special Purpose Fund
for plantation crops such as cardamom (Rs.10.68 crore),
rubber (Rs.19.41 crore) and coffee (Rs.18 crore) to be
created and a crop insurance scheme for tea, rubber, tobacco,
chilli, ginger, turmeric, pepper and cardamom to be
introduced during 2008-09.
Table 1.8: Production of Foodgrains and Non-Foodgrains Crops
(Million tonnes)
Crop 2003-04 2004-05 2005-06 2006-07 2007-08
Target Achievement*
Paddy 88.5 83.1 91.8 93.4 93.0 96.4
Wheat 72.2 68.6 69.4 75.8 75.5 78.4
Coarse Cereals 37.6 33.5 34.1 33.9 37.5 40.8
Pulses 14.9 13.1 13.4 14.2 15.5 15.1
Foodgrains 213.2 198.4 208.6 217.3 221.5 230.7
Kharif 117.0 103.3 109.9 110.6 114.2 121.8
Rabi 96.2 95.1 98.7 106.7 107.3 108.9
Oilseeds 25.2 24.4 28.0 24.3 30.0 28.8
Sugarcane 233.9 237.1 281.2 355.5 310.0 344.2
Cotton@ 13.7 16.4 18.5 22.6 22.0 25.8
Jute & Mesta@@ 11.2 10.3 10.8 11.3 11.0 11.3
@: In million bales of 170 kgs. each. @@: In million bales of 180 kgs. each. *: Fourth Estimate.
Source : Ministry of Agriculture, GoI.
24
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 2.02 8.03 8.01 0.74
2006-07 9.47 7.71 2.18 2.88 0.80 2.49 8.53 8.20 0.57
2007-08* 8.05 NA 1.01 2.62 0.85 1.20 8.19 8.57 NA
*: April-November. NA : Not available Source: Ministry of Commerce and Industry, GoI.
1.17 During 2006-07, coffee production improved by
5.1 per cent over 2005-06, and volume and value (in
US$) of coffee export by 23.3 and 28.3 per cent,
respectively. However, domestic consumption stagnated
at 0.8 lakh tonnes. India is the fourth largest producer
of natural rubber accounting for 9 per cent of the world
production and enjoying highest productivi ty
(1,879 kg/ha.) among the major producers. During
2006-07, domestic production and consumption of
rubber increased by 6.2 and 2.4 per cent, respectively,
over the previous year.
iii. Horticulture
1.18 Horticulture sector, contributed nearly 28 per cent
of GDP in agriculture during 2005-06. Despite an
increase of 1.4 per cent in the area under horticultural
crops to 18.98 mil l ion ha. during 2006-07 over
2005-06, growth in production decelerated by 2.8 per
cent to 186.9 million tonnes during the same period
(Table 1.10). It was mainly on account of decline in
production of onion and stagnation in production of
spices. Under the National Horticulture Mission (NHM)
launched in 2005, during 2005-06 and 2006-07, a sum
of Rs.1,575.3 crore was released. During 2007-08,
Rs.1,150 crore was earmarked for implementation of
the scheme and as at end-January 2008, Rs.691 crore
was released.
d. Agricultural Inputs
i. Seeds
1.19 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 0.74
lakh quintals during 2006-07 registering a 7.5 per cent
growth over previous year. Quality seed distribution
during 2006-07 at 155 lakh quintals was 22.3 per cent
higher than the previous year’s distribution level.
Table 1.10: Area and Production of Major Horticultural Crops
(Area - million ha; Production - million tonnes)
Year Area Production
Fruits Vege- Flowers Total Fruits Vege- Flowers Total
tables Horticulture tables 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
2006-07P 5.5 7.2 0.1 18.9 57.7 111.8 0.9 186.9
P: Provisional Source: 1. National Horticulture Board. 2. Horticulture Division., Dept of Agriculture & Co-operation, GoI
25
ii. Fertilizers
1.20 During 2006-07, fertilizer consumption reached
220.45 million tonnes and 113.26 kg/ha. both registering
an increase of 8.4 per cent. 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
6:2.4:1, thus adversely affecting soil profile, micronutrient
use and crop productivity.
iii. Irrigation
1.21 Total irrigation potential in the country created
through major, medium and minor irrigation schemes
improved from 94 million ha. during Ninth FYP to 102.8
million ha. during the Tenth Plan and is estimated to be
73.5 per cent of the ultimate potential. However, only
85 per cent of the potential created was util ised.
Accelerated Irrigation Benefit Programme (AIBP), started
in 1996-97, aimed at extending assistance to incomplete
irrigation schemes for their completion. As on 29 January
2008, loan/grant assistance of Rs.24,867 crore was
extended under AIBP to State Governments for 229
major/medium irrigation projects and 6,205 surface
minor irrigation schemes. Till 2006-07, total potential
of 4.64 million ha. has been created under AIBP. The
outlay for 2007-08 was Rs.11,000 crore and estimated
outlay for 2008-09 is Rs.20,000 crore with grant
component of Rs.5,500 crore. The centrally sponsored
scheme on micro irrigation, launched in January 2006,
has brought in 3.4 lakh ha. under drip and sprinkler
irrigation as at end-March 2007, involving budgetary
support of Rs.366.40 crore. Under the scheme, Rs.550
crore was allotted for covering 3.6 lakh ha. during
2007-08 of which, Rs.266.70 crore was released as at
end-January 2008.
1.22 As per the Union Budget 2008-09, an Irrigation
and Water Resource Finance Corporation is proposed
to be set up, with an initial capital of Rs.100 crore, with
the objective of mobilising large resources, required to
fund major/medium irrigation projects. Under the
National Project for Repair, Renovation and Restoration
of Water Bodies, being implemented since 2005 in 26
districts across 15 States covering 1,098 water bodies,
an amount of Rs.179.30 crore was released as on
30 November 2007. Following the pilot scheme, Andhra
Pradesh, Karnataka and Tamil Nadu have signed
agreements for assistance with the World Bank, for a
total sum of Rs.3,276 crore covering 7.02 lakh ha. The
irrigation component of Bharat Nirman aims at
creating the irrigation potential of 10 million ha., mainly
through completion of on-going major and medium
irrigation schemes. During 2005-06 and 2006-07,
irrigation potential of 1.68 million ha. and 1.94 million
ha., respectively, have been created.
iv. Agricultural Credit
1.23 As against the target of Rs.2,25,000 crore of credit
flow to agriculture for 2007-08, the banking system has
disbursed Rs.2,25,348 crore as on 31 March 2008,
achieving more than cent per cent of the target.
Commercial banks, co-operative banks and RRBs
disbursed Rs.1,56,850 crore, Rs.43,684 crore and
Rs.24,814 crore during 2007-08, against the targets of
Rs.1,50,000 crore, Rs.52,000 crore and Rs.23,000 crore,
respectively. Commercial banks, co-operative banks and
RRBs thus achieved 104,84 and 108 per cent of the
targets, respectively (Table 1.11).
1.24 During the period 2003-07, the GLC flow for
agriculture and allied activities registered a compounded
annual growth rate (CAGR) of 38 per cent wherein the
CAGR for crop loans and term loans disbursements was
36 and 42 per cent, respectively. During 2006-07, GLC
flow for both crop loans (31%) and term loans (21%)
witnessed high growth over 2005-06. Sub-sectoral credit
flow during 2006-07 reveals that highest growth was
observed in the case of hi-tech agriculture, fisheries and
land development (Table 1.12).
1.25 The GLC f low dur ing 2006-07 s tood a t
Rs.2,29,400 crore registering a 27 per cent growth
over 2005-06. Over the period 2003-08, the CAGR
of credit flow from co-operative banks, RRBs and
commercia l banks was 13, 35 and 32 per cent,
26
Table 1.11: Agency-wise Ground Level Credit Flow
(Rs. crore)
Agency 2003-04 2004-05 2005-06 2006-07 2007-08P Growth Rate (%)
2003-08# 2006-07*
Co-operative Banks 26,875 31,231 39,404 42,480 43,684 13 8
RRBs 7,581 12,404 15,223 20,435 24,814 35 34
Commercial Banks 52,441 81,481 1,25,477 1,66,485 1,56,850 32 33
Other Agencies 84 193 382 NA NA - -
Total 86,981 1,25,309 1,80,486 2,29,400 2,25,348 27 27
#: Compound Annual Growth Rate. *: Percentage change over the previous year. NA: Not Available. P: Provisional
respectively. As against the target set by GoI for
2007-08, 82.68 lakh new farmers were brought
under the institutional fold by all agencies as at
end-March 2008.
Kisan Credit Card Scheme
1.26 The Kisan Credit Card (KCC) scheme, introduced
in August 1998 for short-term (ST) loans for Seasonal
Agricultural Operations (SAO), with the objective of
providing adequate, timely, cost effective and hassle free
credit support to the farmers is being implemented across
the country by all public sector commercial bank, RRBs
and co-operative banks. To cater to the comprehensive
credit requirements of farmers under a single window,
the scope of KCC was broad-based by NABARD, from
time to time. In addition to ST credit and term loans
for agriculture and allied activities, a certain component
of loan through KCC also covers consumption needs.
1.27 During 2007-08, 38.64 lakh KCCs were issued
with co-operative banks and RRBs issuing 20.91 lakh
and 17.73 lakh KCCs, respectively (Table 1.13). Of the
Table 1.12: Sub-sector-wise Ground Level Credit Flow for Agriculture and Allied Activities
(Rs. crore)
Sr. Sector/ Sub-sector 2003-04 2004-05 2005-06 2006-07 Growth Rate (%)
No. 2003-07@ 2006-07*
I Crop Loan (ST-Production Credit) 54,977 76,062 1,05,350 1,38,455 36.05 31.42
II Term Loans (MT & LT Investment Credit) 32,004 49,247 75,136 90,945 41.64 21.04
i. Minor Irrigation 2,730 4,186 8,663 8,566 46.40 -1.12
ii. Land Development 579 840 1,749 2,285 58.03 30.65
iii. Farm Mechanisation 3,986 4,555 9,695 10,113 36.39 4.31
iv. Plantation & Horticulture 1,436 1,720 4,481 5,266 54.21 17.52
v. Animal Husbandry# 2,928 3,097 7,341 8,045 40.06 9.59
vi. Fisheries 1,142 1,301 1,019 1,424 7.63 39.74
vii. Hi-tech agriculture 4,017 6,648 9,737 21,498 74.92 120.79
viii. Others$ 15,186 26,900 32,451 33,748 30.50 4.00
Total (I+II) 86,981 1,25,309 1,80,486 2,29,400 38.16 27.10
* : Percentage change over the previous year. @: Compound Annual Growth Rate.
# : 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 for which sector-wise break-up is not available.
27
Table 1.13: Agency-wise, Year-wise Kisan Credit Cards Issued
(lakh)
Year Co-operative RRBs Commercial Total
Banks Banks
2003-04 48.78 12.75 30.94 92.47
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 - * 38.64
Cumulative# 348.01 100.56 266.11 714.68
* : Data for commercial banks available upto 31 March 2007.
# : Since inception of the scheme. NA : Not Available
total 714.68 lakh cards issued by the banking system
since inception of the scheme, co-operative banks
accounted for the largest share (49%), followed by
commercial banks (37%) and RRBs (14%). State-wise
analysis of KCCs issued as at end-March 2008 revealed
that Andhra Pradesh, Karnataka, Madhya Pradesh,
Maharashtra, Orissa, Rajasthan, Tamil Nadu and Uttar
Pradesh were the forerunners in implementation of the
scheme, accounting for 75 per cent of total cards issued
by banks across the country. The progress was however,
slow in Goa, Jammu & Kashmir, Sikkim and the States
in NER.
1.28 Keeping in view GoI’s emphasis on increasing
credit flow to agriculture sector, NABARD has advised
banks to bring into the KCC fold all farmers including
defaulters, oral lessees, tenant farmers, etc., and to
identify new farmers. The banks were advised to issue
KCCs in a hassle-free manner, extend and renew crop
loans only though KCC to ensure ‘quality in operations’.
F. Agrarian Distress
1.29 Witnessing the continued low growth and
productivity in agriculture, as also to tackle issues related
to farmers’ indebtedness and distress, GoI had
constituted the Dr. R. Radhakrishna Committee on
Agricultural Indebtedness, Dr. S.S. Johl Committee on
Agricultural Distress, Dr. C. Rangarajan Committee on
Financial Inclusion, National Farmers’ Commission under
Dr. M.S. Swaminathan, etc. These Expert groups had
made a number of useful recommendations. In order to
address farmers’ distress in a focussed and time bound
programme, MoA, GoI and NABARD in collaboration
with the Swiss Agency for Development and Cooperation
(SDC) set up an Independent Expert Panel to prepare
an Implementable Action Plan to address Agrarian
Distress. The Panel’s Report submitted in February 2008,
recommends a four-pronged strategy involving Financial
Management, Risk Mitigation, Social Support Networking
Mechanism and Farm Practices (Box 1.3).
G. Capital Formation
1.30 Gross Capital Formation in Agriculture (GCFA)
showed an improvement during 2005-06 and 2006-07,
wherein an increase of 12 and 11 per cent were
discerned, respectively. However, GCFA as share to
GDCF declined substantially from 10.2 per cent during
2001-02 to 5.8 per cent during 2006-07 (Table 1.14).
During the same period, GCFA as a share to total GDP
was almost stable at 2 per cent and as a share of agri
GDP fluctuated between 10.2 (2003-04) and 12.5
(2006-07) per cent. Though GCFA as a rat io to
agricultural GDP improved gradually since 2000-01,
there is a need to further step up capital formation in
agriculture on account of targeted 4 per cent growth in
agriculture sector and the level of incremental capital
output ratio (which was 5 during the Tenth FYP).
H. Agricultural Insurance
1.31 The National Agricultural Insurance Scheme
(NAIS), being implemented since rabi 1999-2000 season
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 49,108 6.2 11.1 1.9
2005-06 54,905 5.8 11.7 1.9
2006-07 60,762 5.8 12.5 2.1
28
A. Financial Management
• One-Time Settlement (OTS) for formal sector loans and the
financial burden to be shared among the banks, State
Governments and GoI.
• Debt-swapping facility to enable farmers to switch over their
loans from moneylenders to the formal sector.
• Putting in place a Credit Guarantee Scheme to be
implemented by DICGC. The scheme shall be applicable soon
after declaration of distress and before rescheduling of loans
instead of granting compensation in areas with consecutive
distress year.
• Any kind of distress to be addressed immediately through
insurance, risk mitigation and credit guarantee mechanism.
B. Risk Mitigation
• Setting-up a Fund for Agriculture Risk Mitigation (FARM)
with the Agricultural Insurance Corporation of India (AICI)
for the drought prone and flood prone areas, created from
the budgetary resources of GoI.
• Setting-up of Agriculture Meteorological Laboratories in 31
distress districts by Indian Meteorological Department, and
to be managed by Panchayat/Village Knowledge Centres.
C. Social Networking
• Promoting social network groups on the lines of Pragati
Bandhu (Karnataka) and Rythu Mitra Groups (Andhra
Pradesh).
• Setting-up debt counselling centres, based on the Bank of
India model in Wardha district, Maharashtra. The centres
should be first extended in the remaining distress districts of
the State, followed by Andhra Pradesh and Karnataka and
subsequently to cover the remaining 100 agriculturally
backward districts in other States covering 204 lakh SF/MF.
D. Farm Practices
• Replication of ‘Integrating Poor Into Market System’(IPMAS)
Model implemented by International Development Enterprises
India (IDEI) wherein small farmers are assisted to overcome
poverty by removing water & market constraints and
increasing agricultural output.
• Adoption of organic agriculture and non-pesticide agriculture
to ensure sustainable agriculture.
E. Other Aspects
• Medium-term implementat ion plans for f inancial
management through Financial Inclusion.
• Providing food security to households based on the Rice
Credit Line model (Andhra Pradesh).
• Regulatory mechanism for inputs (seeds for quality and price),
risk mitigation for relief from failure of investments and reduce
vulnerability on health related issues. Covering price risk
through making micro futures.
• Engage private insurance companies to offer crop insurance
by giving incentives similar to the programme in USA.
• Developing agro-economic region specific insurance products
for various crops and a systematic documentation of crop
losses as a result of different eventualities in different agro
regions.
Box 1.3
Expert Panel to address Agrarian Distress: Recommendations
to cater to both loanee and non-loanee farmers, is aimed
at providing insurance coverage in the event of crop
failure due to natural calamities, pests and diseases.
Since inception of the scheme, till rabi 2006-07, 9.71
crore farmers have been covered with claims amounting
to Rs.9,855 crore and benefiting 270 lakh farmers. The
NAIS will be continued in kharif and rabi 2008-09
seasons also. The weather based crop insurance scheme
(WBCIS) being implemented in select States on a pilot
basis by Agriculture Insurance Corporation of India (AICI)
provides insurance protection to farmers against vagaries
in weather conditions, viz., deficit/excess rainfall. The
WBCIS was implemented during kharif 2007 in Karnataka,
covering eight rainfed crops, over an area of 50,000 ha.
involving a sum of Rs.50 crore and for rabi 2007-08 in 12
States. The WBCIS will be continued during 2008-09 also.
I. Agriculture and Allied Sector
a. Livestock and Poultry
1.32 India ranks first, second, third and fifth in buffalo,
cattle and goat, sheep and poultry populations in the
world, respectively. The sector contributes 25 per cent
of the GDP from agriculture and provides gainful
employment to 5.5 per cent of the working population
(61st Round NSSO) in the country. With 102 million
tonnes of milk production during 2007-08, the country
continues to rank as the largest producer of milk in the
world. During 2006-07, the country produced 51 billion
eggs, 45 million kg of wool and 2.3 million tonnes of
meat from the organised sector. Per-capita availability
of milk increased to 246 gms/day during 2006-07 but
continued to be low (by 8%) as compared to world
29
average of 265 gms/day. Milk production in the country
continues to be dominated by the unorganised sector
with a share of 80 per cent while co-operative and private
dairies account for the remaining share. Under the
livestock insurance scheme implemented since 2005-06
on a pilot basis in 100 selected districts, 5.2 lakh animals
were insured involving a cover of Rs.23.40 crore during
the initial two years. The scheme was continued during
2007-08 with an outlay of Rs.35 crore.
b. Fisheries
1.33 Fisheries sector accounted for livelihood options
for over 14 million people during 2005-06. Total fish
production in the country during 2006-07, increased by
4.5 per cent and reached 6.9 million tonnes (3 million
tonnes marine and 3.8 million tonnes inland). Export
earning from the sector is also on the increase with the
value of fisheries export amounting to Rs.7,296 crore
(increase of 4%) during 2006-07.
J. Agro and Food Processing Sector
1.34 India is one of the world’s major food producers
but accounts for only 1.5 per cent of international food
trade owing to low level of value addition to food
production. The food-processing sector in India covers
fruits and vegetables, meat and poultry, milk and milk
products, fisheries, plantation, grain processing and other
consumer product groups. The Eleventh Plan, targets
to utilise over 20 per cent of agricultural products for
processing from 6 per cent and 35 per cent towards
value addition. The Food Industry presently employs 1.6
million workers directly, which is projected to grow to
37 million (direct and indirect job workers) by 2025
(Box 1.4). To achieve the target, consistent efforts need
to be made to minimize expenses at all levels of food
processing, develop facilities for storage of agricultural
food produce, transportation and processing, utilise
residues and by-products of food processing industries,
encourage R&D in food processing and packaging, HRD
to meet the increased demand for managers,
entrepreneurs and skilled workers, etc. Food processing
industry has been identified as one of the thrust areas
for export promotion and hence, GoI initiated wide
ranging fiscal policy changes, excise and import duty
relief, reduction in custom duty, various tax reductions/
incentives for new manufacturing units.
K. Initiatives for NER
1.35 With a view to harnessing the potential of horticulture
in the NER and other special category States, the ‘Technology
Mission for Integrated Development of Horticulture in
northeastern States, Sikkim, Jammu & Kashmir and
Uttarakhand’ scheme was sanctioned in 2001-02. During
2007-08, Rs.323.4 crore was earmarked for the scheme of
which, Rs.227.40 crore was for NER. An amount of
Rs.210.60 crore was released as at end-January 2008.
1.36 The Special Accelerated Road Development
Programme for the North Eastern Region (SARDPNE)
aims at improving 3,846 km of National Highways (NH)
and 4,891 km of State Highway, providing connectivity
to 85 district headquarters in the region to NHs and
State roads. The High Powered Inter Ministerial
Committee has approved sub-projects, covering 664 km
at an estimated cost of Rs.1,613 crore as at end-
December 2007. Union Budget 2008-09, made an
enhanced allocation of Rs.1,455 crore to the Ministry
of Development of NER. Total budgetary allocation for
NER will increase to Rs.16,447 crore during 2008-09
from Rs.14,365 crore during 2007-08. In order to start
the process of identifying the urgent needs of NER,
especially Arunachal Pradesh and border areas, and
address them through special mechanism, a dedicated
fund was also created with a sum of Rs.500 crore.Inland Fisheries
30
The National Commission for Enterprises in the Unorganised
Sector was constituted in September 2004, to examine work
conditions and livelihood issues of the unorganised sector.
Report highlights:
• Substantial proportion of wage workers in agriculture and all
workers in non-agriculture are either landless or land poor.
• Low education level and poor access to assets (including land)
denies access to jobs in organised sector. Educational levels
and skill development among farmers are to be enhanced to
increase occupational diversification among the farmers.
• Nearly 88% of rural women workers are either illiterate or
have primary education requiring promotional interventions
with strong emphasis on education.
• Casual work and SC/ST status have high association with
incidence of poverty. About 85% and 57% of the casual
workers in rural and urban areas, respectively, earn below
minimum wages.
• Of the total workforce, 8-10 % are migrants and their limited
social network increases their vulnerability in the labour market.
• Self-employed outweigh the share of wageworkers in agriculture
and other activities. Majority of the self-employed are own
account workers, i.e., working as tiny enterprises requiring
greater access to credit, marketing and infrastructure.
• Within the group of agricultural workers, labourers are worse
Box 1.4
Conditions of Work and Promotion of Livelihoods in the Unorganised Sector
off compared to the farmers. Seasonal nature of agricultural
work and low wages lead to high poverty levels among the
agricultural labourers. MF/SF belonging to SC/STs are most
affected by poverty and economic status.
• More than 40% of MF/SF households dislike the occupation
and would rather give it up.
• Liberalisation and globalisation have accentuated the risks
and vulnerability faced by the unorganised enterprises and
workers as the laws/regulations are biased in favour of large
producers and well off and impact negatively on the livelihoods
of the poorer unorganised workers.
Recommendations:
• Revival of targeted programme focused on SF/MF with an
initial thrust on areas where the existing yield gap is high.
Improved access to institutional credit to SF/MF
• Accelerated expansion of Watershed Development and Rainfed
Area Programmes to revive agriculture in rainfed areas.
• Creation of a National Fund for the Unorganised Sector to
promote livelihood of the unorganised workers.
• Encouraging SHGs & MFIs for livelihood promotion.
• Increasing employability through skill development.
• Two comprehensive bills for unorganised agricultural and non-
agricultural workers to ensure minimum working conditions,
welfare, livelihood promotion and social security.
L. Micro and Small Enterprises
1.37 The micro and small enterprises (MSEs) achieved
significant growth in terms of production (12.3%) and export
earnings (20.8%) during 2005-06 over the previous year (Table
1.15). The sector accounted for 39 per cent of the gross
value of output in the manufacturing sector. During
2006-07, number of units established and employment
generated showed a rise of 4 per cent each compared to
2005-06, while the value of output increased by 12.6 per
cent during the same period. Various initiative were taken
to revitalise the sector, viz., implementation of Micro, Small,
and Medium Enterprises Development Act, 2006,
announcement of a package for promotion of Micro and
Small Enterprises, modification in credit guarantee scheme,
phased deletion of products from the list of items reserved
for exclusive manufacture of micro and small enterprises,
etc. Further, Union Budget 2008-09, to give fillip to the sector,
suggested creation of a risk capital fund with SIDBI. As on
31 January 2008, the Credit Guarantee Trust with SIDBI
has extended guarantee worth Rs.2,479 crore to 89,129
units. SIDBI was asked to reduce the guarantee fee from 1.5
to 1 per cent and annual service fee from 0.75 to 0.5 per cent.
Table 1.15: Performance of Micro and Small Enterprises
(Rs. crore)
Particulars 2002-03 2003-04 2004-05 2005-06 2006-07*
1. Total Units (No. million) 10.95 (4.1) 11.40 (4.1) 11.86 (4.4) 12.34 (3.4) 12.84 (4.1)
of which Unregistered 9.35 9.68 10.00 10.41 10.81
2. Value of Output (2001-02 prices) 3,06,771 (8.7) 3,36,344 (9.6) 3,72,938 (10.9) 4,18,884 (12.3) 4,71,663 (12.6)
3. Employment (million persons) 26.37 (4.5) 27.53 (4.4) 28.76 (4.5) 29.99 (4.3) 31.25 (4.2)
4. Exports 86,013 (20.7) 97,644 (13.5) 1,24,417 (27.4) 1,50,242 (20.8) NA
*: Estimation based on the definition prior to enactment of MSMED Act, 2006. NA: Not Available
Figures in the parentheses indicate percentage growth over previous year.
Source: Office of the Development Commissioner (MSME), Economic Survey 2007-08.
31
Development Initiatives
II
A. Watershed Development
2.2 The corpus (Rs.200 crore) of the Watershed
Development Fund (WDF) setup in NABARD during
1999-2000 to create replicable watershed development
models with participatory approach, was augmented
during the year by way of interest accrued on the
unutilised portion of the Fund (Rs.34.74 crore), thus
taking the total amount to Rs.613.71 crore as on
31 March 2008. During 2007-08, 63 watershed projects
were sanctioned, taking the cumulative number of
watershed projects to 416 spread over 94 districts in 14
States. With a total commitment (loan and grant) of
Rs.236 crore under these projects, an area of 4.16 lakh
ha. is expected to be covered. These projects are
implemented in two phases, viz., Capacity Building
Phase (CBP) and Full Implementation Phase (FIP).
During the year, 31 projects graduated to FIP, taking the
total to 161.
This chapter discusses the various development
initiatives supported by NABARD related to farm sector
act ivi t ies, viz. , watershed development, vi l lage
development, farmers’ club programme, integrated
development of backward area etc. It also considers
non-farm activit ies, promotion of Micro-Finance
Institutions (MFIs)/Self-Help groups (SHGs), capacity
bui lding in the rural banking sector, women
empowerment, research and development activities in
agriculture and rural sector, during the year. In addition
it recounts the various developmental programmes of
GoI and State Governments.
Farm Sector
2.3 Consequent to Government of India’s (GoI)
announcement of the Prime Minister’s package for 31
districts in four States, for developing an area of 15,000
ha. annually over three years in each of the districts,
3.98 lakh ha. is being developed involving a total
commitment of Rs.299 crore. The watersheds are
implemented in a holistic manner on a cluster basis,
focussing on family based livelihood activities in the
project area and are to significantly mitigate farmers’
distress. Several innovations and initiatives were taken
by the Bank to expedite implementation of the projects,
viz. , engaging Resource Support Agencies for
handholding and capacity building among implementing
agencies, use of satellite imageries for planning, software
development for enhancing family based livelihood
opportunities, and greater convergence with Government
implemented programmes.
2.4 While the projects are entirely grant based in the
distress districts, assistance in non-distress districts is a
combination of grant and loan. During the year,
Rs.23.78 crore and Rs.3.80 crore were disbursed as
grants and loans taking the cumulative disbursement to
Rs.58 crore and Rs.7 crore, respectively.
2.5 The part ic ipatory 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 2007-08, 18
watershed projects with grant assistance of Rs.13.50 crore
were sanctioned and a sum of Rs.1.54 crore disbursed.Canal irrigation in watershed area
32
B. Village Development Programme
2.6 During 2007-08, NABARD introduced the Village
Development Programme (VDP) across the country to
develop identified villages in a holistic and integrated
manner. It aims towards involving the local populace,
governmental agencies, banks, NGOs, etc. The
programme envisages developing one village in each
DDM district and five villages in each of the PPID blocks.
The programme involves, (i) identifying a vil lage
and its socio-economic and infrastructure needs,
(ii) awareness creation among stakeholders, (iii) engaging
services of the implementing agency (governmental/
NGOs), (iv) conducting base line survey/PRA and
(v) preparing and implementing Village Development
Plan, by pooling together the available resources. A
Vil lage Development Committee compris ing of
progressive villages, government departments, banks,
NGOs, select academicians/social workers, etc., would
take care of plan preparat ion, implementat ion,
monitoring, etc. As on 31 March 2008, 913 villages
across 24 States have been identified for implementation
of the programme.
C. Integrated Development of
Backward Blocks
2.7 The objective of pilot project for integrated
development (PPID) launched in 2003, is to bring about
integrated development of backward blocks through
credit and convergence of development programmes of
various agencies. The programme is being implemented
primarily by Regional Offices (ROs) through DDMs. The
project, which was initially implemented in 5 States
covering 10 blocks was subsequently expanded to 5 more
States to cover 40 more blocks. As at end-March 2008,
the project covers 139 blocks across 16 States. During
the year, NABARD conducted three field visits-cum-
sensitisation workshops on PPID and VDP programmes
for DDMs and nodal off icers f rom ROs. These
programmes brought forth the need for merging PPID/
VDP in Haryana, Kerala, Punjab and Uttarakhand and
delegating powers to DDMs as per the approved plans
under PPID, VDP and Farmers’ Club programmes.
D. Capacity Building for Adoption of
Technology
2.8 With a view to facilitating farmers to adopt new
and innovative methods of farming, NABARD has been
implementing the ‘Scheme for Capacity Building for
Adoption of Technology’ (CAT) through exposure visits
and training. Farmers, preferably marginal, small and
tribal, are taken on exposure-cum-training visits to
innovative projects adopting proven technologies
developed by research institutes, corporate houses, NGOs
and progressive farmers/entrepreneurs. Such visits/
programmes are supported under the Rural Innovation
Fund (RIF). During the year, 136 exposure visits were
conducted in collaboration with select research institutes,
KVKs, and Agriculture Universities on areas like bio-
globules, vermi-culture, bio-manures, organic farming,
poly-house technology, medicinal and aromatic plant
cultivation.
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. The Fund was augmented by
means of RIDF interest differential during 2006-07
(Rs.219 crore) and during 2007-08 (Rs.348.86 crore).
As on 31 March 2008, the Fund had balance of
Rs.602.95 crore after marking out disbursements
(Rs.10.68 crore) and taking into account amounts
Vermi – compost preparation pit
33
credited by State Governments (Rs. 56 lakh) during
2007-08. Assistance is available for ‘wadi’ programme
for cultivation of suitable horticulture/agriculture crops,
soil conservation and water resource development
through people’s part ic ipat ion for sustainable
development of select tribal families on a cluster basis.
Support is also extended for micro-enterprises for the
landless, women development, community health,
training and capacity building. The projects will ensure
sustainable livelihood opportunities for tribal families,
increased hort icul ture production and ecological
sustainability. During 2007-08, assistance of Rs.48.71
crore was sanctioned for 16 projects benefiting 14,538
tribal families in Andhra Pradesh, Assam, Chhattisgarh,
Karnataka, Madhya Pradesh, Orissa and Rajasthan, thus
taking the sanction to Rs.104.35 crore covering 31,293
families in 15 states and one UT.
F. Farm Innovation and Promotion
Fund
2.10 The Farm Innovation and Promotion Fund (FIPF)
was created in 2005 with Rs.5 crore to support initiatives/
innovations in farm and information technology, develop
bankable concepts in agriculture/allied sectors and its
prototypes, undertake market survey, acquire/obtain
patents of innovative technologies, etc. During 2007–08,
29 projects were sanctioned in 15 states involving grant
assistance of Rs.1.66 crore on areas like system of Rice
Intensification (SRI) techniques, introduction of hybrid
khaki campbell duck farming, implementation of village
farm development plan in distress distr icts ,
implementat ion of pi lot projects for farmers’
participation in commodity futures trading involving
NCDEX, MCX, etc.
G. Commodity Futures Trading
2.11 Despite significant development and the fast pace
of growth of the commodities markets, the benefits of
commodity futures trading have not percolated to the
farming communities. For this, NABARD in collaboration
with the Forward Market Commission (FMC) had
undertaken pilot projects for skill upgradation of farmers
to ensure their participation in the market. During
2007-08, 22 farmers’ awareness programmes were
conducted to create awareness among farmers and rural
extension workers vis-à-vis., three programmes conducted
in the previous year. To facilitate farmers’ participation
in commodity futures trading, NABARD sanctioned
three pilot projects involving assistance of Rs.9.87 lakh,
Rs.10 lakh and Rs.8.46 lakh to Aga Khan Rural Support
Programme- Ahmedabad, Viswas Business Synergies (P)
Ltd.- Andhra Pradesh and Shakari Sheetgrih Sanstha
Maryadit- Indore, respectively.
H. Kutch Drought Proofing Project
2.12 The Kutch Drought Proofing Project, being
implemented through community based organisations
and NGOs, aims to (i) improve capacity of vulnerable
sections of society to cope with natural calamities and
(i i ) s trengthen vi l lage communit ies to shoulder
responsibility to improve and maintain natural resources,
improve quality of drinking water/fodder/food availability
and overall livelihood security. NABARD is implementing
the programme since 2005. Of the 10 on-going projects,
implementation in the case of six projects is complete.
As on 31 March 2008, NABARD received Rs.3.54 crore
from GoI of which Rs.2.54 core was disbursed.
I. Cattle Development Projects
2.13 The Cattle Development Projects of GoI aim at
providing gainful employment to rural poor through
animal husbandry and livestock development. It is being
implemented in 13 districts of Bihar and 17 districts of
Uttar Pradesh since 2004-05 for a period of five years.
NABARD has been designated as the co-ordinating
agency and facilitator for channelising funds, ensuring
its utilisation, project supervision and monitoring. As
on 31 March 2008, Rs.726.50 lakh and Rs.702.90 lakh
were released to BAIF, Pune, the implementing agency
for Uttar Pradesh and Bihar, respectively, of the Rs.13.61
crore each allocated. BAIF organised two Central
Monitoring and Review Committee meetings and field
visits to project areas during the year.
34
J. Livelihood Based Development
Project
2.14 The Special Project on Livel ihood Based
Development sanctioned under SGSY by GoI in
Sultanpur and Rae Bareli districts of Uttar Pradesh is
under implementation since 2006-07. The project aims
to cover 11,500 below poverty line families in each
district at an approved cost of Rs.14.97 crore for
Sultanpur and Rs.14.90 crore for Rai Bareli. NABARD
is the project holder on behalf of MoRD. As on 31 March
2008, of the grant of Rs.5.16 crore and Rs.5.13 crore
received from GoI for Sultanpur and Rae Bareli districts,
an amount of Rs.4.02 crore and Rs.2.21 crore was
disbursed, respectively.
K. Externally Aided Projects
2.15 NABARD disbursed an amount of Rs.241.91 crore
and received Rs.236.79 crore as grant assistance during
the year under the KfW supported externally aided
projects, which are at various stages of implementation
(Table 2.1).
a. On-going Projects
2.16 The KFW-NABARD-V-Adivasi Development
Programme in Gujarat with an outlay of Rs.62.89 crore
has been under implementation since 1994-95 in Valsad
and Dangs districts. The programme scheduled to end
by 30 December 2007 was extended upto 30 December
2010. The focus is on development of wadi (small
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
2007-08 31.03.2008 2007-08 31.03.2008
1. KfW-NABARD
i. V-Adivasi Development 23 Dec 1994 30 Dec 2010 Euro 13.29 276.19 5,507.72 250.23 5,5556.19
Programme in Gujarat* (+ 1.5 Suppl. Grant)
i i . IX-Adivasi Development 2 June 2000 30 Dec 2010 Euro 14.32 746.51 4,040.59 710.17 4,021.11
Programme in Maharashtra
iii. Indo-German Watershed
Development Programme in
Andhra Pradesh 15 July 2002 31 Dec 2011 Euro 8.69 124.27 301.97 141.52 349.30
iv. Indo-German Watershed
Development Programme in
Maharashtra (Phase III) 27 Aug 2005 30 Dec 2009 Euro 19.94 684.97 1,030.59 127.72 868.09
v. Indo-German Watershed
Development Programme in
Gujarat 7 Feb 2006 31 Dec 2012 Euro 9.20 43.47 57.30 92.63 129.54
vi. Indo-German Watershed
Development Programme in
Rajasthan 7 Dec 2006 30 Dec 2014 Euro 11 49.51 49.51 90.22 90.22
vii. Adivasi Development
Programme in
Gujarat (Phase II) 28 March 2006 31 Dec 2014 Euro 7.00 - - - -
viii. KfW-Sewa Bank Project 28 June 2002 31 Dec 2009 Euro 4.09 100.00 100.00 100.53 100.53
2. NABARD- X- Credit Line
i. Grant 20 Oct 2006 31 Dec 2008 Euro 1.20 - - - -
i i . Loans 20 Oct 2006 31 Dec 2008 Euro 40.00 22,165.88 22,165.88 22,165.88 22,165.88
* : Includes Rs.145 lakh transferred to Gujarat Special Programme
35
orchard) while other supportive interventions, viz.,
development of water resources and agricultural
activities, women development, health and sanitation
are also effected. While small and marginal farmers,
including women, are selected under the programme,
the landless are supported through provision of micro-
enterprises in farm and non-farm sectors, employment
opportunities in processing units. The programme has
helped in reducing distress migration, a shift in cropping
pattern towards cultivation of vegetables and pulses,
regular income generation and development of saving
habits through SHGs. Since inception of the programme,
savings of Rs.97.75 lakh was achieved through 181
Gram Vikas Mandals (GVMs) and Rs.30.01 lakh through
466 SHGs from 127 villages.
2.17 Through this programme 13,663 families (target:
10,000 families) have been rehabilitated. Wadis of
cashew and mango along with boundary plantations of
fuel wood and fodder on 5,155 ha. of private land
belonging to those families have been established. Ten
tribal co-operatives have been registered to facilitate self-
sufficiency in processing and programme management.
These co-operatives collected 283.54 tonnes of raw
cashew (165.3 tonnes were processed), traded in 5.13
tonnes of mangoes and processed 1.09 tonnes of
karvanda (a forest fruit) and 2.90 tonnes of mango for
making pickles through GVMs. Under the in-built credit
programme since 1998-99, loan disbursed and recovery
effected was to the tune of Rs.4.82 crore and Rs.3.96
crore, respectively, through GVMs as on 31 March 2008.
The KfW has also sanctioned Phase II of the programme
involving grant assistance of Euro 7 million (equivalent
Rs.42.47 crore) to cover 4,700 families from these
districts. The baseline surveys for the project villages
were conducted during the year.
2.18 Under KfW-NABARD-IX-Adivasi Development
Programme in Maharashtra, the ‘wadi’ model, which
succeeded in Gujarat is replicated in Nasik and Thane
districts through Maharashtra Institute of Technology
Transfer for Rural Areas (MITTRA), Nasik. The
programme with project period of ten years (2000-2010)
aims to support 13,000 tribal families by developing
wadis on their marginally productive lands. A total of
13,848 families from 258 villages and wadi area of
4,975.06 ha. were covered till end-March 2008 as
against the target of 4,046.90 ha. As on 30 September
2007, an area of 138 ha. was brought under block
plantation and 3,714 ha. under soil conservation work.
Under water resources development act ivi t ies,
construction of 1,316 temporary check dams, 28
permanent dams, 641 spring development sites, 2,714
jalkunds and deepening/de-silting of 18 old wells was
completed as at-end December 2007.
2.19 The Indo-German Watershed Development
Programme (IGWDP) in Maharashtra, introduced in
1990s is an integrated programme for the regeneration
of natural resources implemented by Village Watershed
Committees (VWCs) in association with NGOs. In all,
95 watersheds aggregating 1.13 lakh ha. spread over 25
districts have been covered under the two phases of the
programme. Under Phase III, which commenced in
January 2005, 91 projects were sanctioned under CBP
of which 40 have entered the FIP, while 17 are under
feasibility/interim phase. An additional 32 projects have
been further identified.
2.20 KfW, Germany committed to provide grant
assistance of Euro 8.69 million (approx Rs.48.66 crore)
under the Indo-German Watershed Development
Programme in Andhra Pradesh, for rehabilitation ofTerrace farming
36
watershed in four districts (Adilabad, Karimnagar,
Medak and Warangal). Of the 9 projects sanctioned
under Phase I of the programme, 7 have graduated to
FIP, and 23 new projects have been selected for
implementation. An additional assistance of approx
Euro 2 million (approx.Rs.11 crore) was approved by
KfW for Complementary Measures Programme for
capacity building of stakeholders.
2.21 The Indo-German Watershed Development
Programme in Gujarat envisages rehabilitation of
watersheds in four districts (Dahod, Panchmahal,
Sabarkantha and Vadodara) involving commitment of
Euro 9.2 million (approx. Rs.51.52 crore). Treatment
measures under CBP are in progress in eight projects.
Baseline survey in respect of the first set of projects was
undertaken and the findings shared with the stakeholders.
NABARD has also positioned a Programme Management
Unit (PMU) at Dahod, to oversee the implementation
of the project.
2.22 Under the Indo-German Watershed Development
Programme in Rajasthan, KfW, Germany committed to
provide grant assistance of Euro 11 million (approx
Rs.61.60 crore) for Banswara, Chittorgarh, Dungarpur
and Udaipur districts. In all 41 projects were identified,
hydrological survey completed in 14 watersheds and CBP
sanctioned for 10 projects. A PMU has also been set up
at Udaipur.
b. Indo-German Umbrella Programme
for Natural Resource Management
2.23 Based on the outcome of feasibility study on
Umbrella Programme for Natural Resource Management
(UPNRM) f inal ised during 2006-07, NABARD in
consultation with KfW and GTZ has finalised a business
plan for implementing the same during the year. While
the Bank finalised its NRM Policy, the Guiding Principles
of UPNRM and Appraisal Matrix for channel partners
and NRM Projects were developed in consultation with
KfW-GTZ. The first phase of the programme was launched
by utilising currently available funds under various
Indo-German projects. During the year, four community
managed and sustainable NRM based livelihood projects
in Gujarat, Maharashtra and Orissa were sanctioned.
2.24 Discussions were also held between a joint KfW-
GTZ Appraisal Mission on UPNRM and NABARD on
various aspects of the programme and the projects
mobi l ised. Vis i ts to some of the project s i tes in
Maharashtra and Orissa were also undertaken. The
Mission appreciated the modalities vis-à-vis, the rating
of channel partners/project proposals and quality of
appraisal for projects sanctioned under Phase-I. The
Minutes of Meeting (MoM) outlined various modalities
for implementing the programme and the way forward
for bilateral agreement on UPNRM. The total cost of the
programme has been at Euro 22.4 mil l ion
(Rs.123.2 crore), of which KfW and NABARD contribution
being Euro 19.4 million (Rs.106.7 crore) and Euro 3 million
(Rs.16.5 crore), respectively. In addition, assistance of
Euro 3 million will be made available by GTZ for capacity
building, information knowledge management, product
development, etc., under Technical Cooperation.
L. Farmers’ Club Programme
2.25 Farmers’ Club (FC) Programme was redesigned
to be in line with ‘Farmer First’ agenda in the development
strategy. The programme aims to organise farmers to
gain access to credit, technology and extension services.
During the year 5,277 clubs were launched taking the
total number of clubs to 28,226 covering 61,789 villages
in 555 districts as on 31 March 2008. Agency-wise RRBs
promoted the maximum number of clubs (12,604),
Storage tanks for bio-diesel
37
A. NABARD-SDC Rural Innovation
Fund
2.26 Under the Rural Innovation Fund (RIF) constituted
with effect from 1 October 2005, support for innovative,
risk friendly, experiments in farm, non-farm and micro-
finance sectors is provided and projects having potential
to generate employment opportunities in rural areas
assisted. During the year, 29 innovative projects with
financial support of Rs.7.78 crore were sanctioned. As
on 31 March 2008, financial assistance of Rs.8.19 crore
was sanctioned for 32 projects spread across 16 States
and Rs.2.03 crore disbursed for 13 projects.
2.27 The projects supported involve both product and
process innovations. Of the 32 projects sanctioned, 6
are from NER, 4 from Karnataka, 3 each from Orissa,
Uttar Pradesh and West Bengal, 2 each from
Chhattisgarh, Gujarat, Maharashtra and Tamil Nadu, 1
each from Himachal Pradesh, Kerala, Punjab and
Rajasthan, and 1 with pan-India coverage. With a view
to developing the skills of staff involved in RIF work,
three regional workshops on Identification and Funding
of Innovative Projects, two workshops on Evaluation of
Innovative Projects and a workshop on Innovation for
OICs of ROs were organised. A special software was
also developed to monitor the promotional programmes
sanctioned under RIF.
B. District Rural Industries Project
2.28 The District Rural Industries Project (DRIP),
introduced as a pilot project in six districts during 1993-94
aimed at creating sustainable employment opportunities
in rural areas through enhanced credit flow to the rural
non-farm sector (RNFS). It was extended in phases, to
more districts across the country and by end-March 2007
covered 106 districts. During 2006-07, the project, on
its successful implementation, was phased out in 23
districts. NABARD would however, continue to extend
promotional support to various deserving developmental
interventions in these districts.
2.29 During 2007-08, GLC flow in 83 DRIP districts
covered under various phases reached Rs.1,177.85 crore
and refinance availed was Rs.275.41 crore. In all 70,000
units were set up, generating employment for 1.53 lakh
persons. Since inception, GLC f low aggregated
Rs.22,240.95 crore, facilitating establishment of 17.99
lakh units and generating employment opportunities for
41.08 lakh and persons. The cumulative amount of
refinance availed was Rs.3,514.70 crore.
C. Strengthening of Rural Haats
2.30 The ‘Scheme for Strengthening of Rural Haats’
introduced in 1999 to create marketing opportunities
for farm and non-farm products in DRIP districts has
also been extended to all DDM districts and districts in
the NER. Under the scheme, grant assistance is made
available to Panchayati Raj Institutions (PRIs)/PACS for
providing minimum essential infrastructure to new/
existing haats. During 2007-08, grant support of
Rs.53.45 lakh was sanctioned for infrastructure in three
haats each in Chhattisgarh and Uttar Pradesh, two haats
each in Andhra Pradesh, Tamil Nadu and West Bengal
and one haat each in Bihar, Kerala, Madhya Pradesh,
Maharashtra, Orissa and Rajasthan. Cumulatively, grant
followed by commercial banks (8,471), co-operative
banks (5,237) and other agencies (1,914). The region-
wise distribution of clubs indicate, that the southern
region has the major share (30%) followed by central
(24%), eastern (18%), western (16%) and northern (9%)
regions while NER accounts for only 3 per cent share.
During the year, NABARD reviewed its policy for
supporting FCs through various agencies. It was decided
to extend cent per cent financial support to specified
activities to RRBs and co-operative banks while the
support for commercial banks would continue to be 50
per cent on cost sharing basis.
Rural Non-Farm Sector
38
Extending the cluster approach for developing rural
tourism, especially, home-based rural tourism and agri-
tourism in association with State Tourism Department,
Tourism Corporations, private tour operators and the
rural community, NABARD approved three rural tourism
clusters- two in Sikkim and one in Tamil Nadu, and one
tourism-cum-handicrafts c luster in Santiniketan,
West Bengal.
2.33 To ensure smooth implementation and monitoring
of the cluster development initiatives, capacity building,
training programmes were organised through BIRD and
RTC, Mangalore. During 2007-08, the Bank conducted
four on-location workshops on cluster development and
one exclusive programme on Rural Tourism at Kewzing
(Sikkim) for bank/NGO personnel.
E. Rural Entrepreneurship Development
Programmes and Skill Development
Programmes
2.34 NABARD has been support ing both Rural
Entrepreneurship Development Programmes (REDPs)
Box 2.1
From Wage-earners to Wage-providers
Shri Addala Ramakrishna and Smt. Addala Suryakala,
participated in NABARD’s Cluster Development Programme
on Brass and Bell Metal in Srikakulum district. The couple was
trained under the Bank’s programme and financially supported
by Andhra Bank, Cheedipudi branch, for their term and working
capital requirements, to the extent of Rs.70,000 for setting-up
of a unit. KVIB provided Rs.30,000 as margin money and the
balance of Rs.5,000 was the couple’s own contribution. As a
result, the couple journeyed from being daily wage earners,
earning Rs.150/ day to becoming proud owners of a brass and
bell metal unit with ten employees.
Impressed by their quality of and variety in workmanship,
Lepakshi Emporium, Visakhapatnam, became their regular
clients. The unit has become the highlight of the cluster. In
addition to being profiled in the Srikakulum Tourism Brochure,
they were also invited by the Dastakar Haat Samiti, Mumbai to
present their art in an exclusive exhibition at the Prince of
Wales Museum, Mumbai.REDP on fabric painting
assistance of Rs.144.91 lakh was sanctioned for
strengthening infrastructure in 55 rural haats across
16 States.
D. Cluster Development
2.31 Recognising the innate potential of development
through cluster approach in promoting rural
industrialisation and realising economies of scale by the
rural artisans in the entire range of production operations,
NABARD in 2005-06 decided to develop 55 clusters
(50 partnering with other agencies and 5 intensively on
its own) within a period of 3-5 years (Box 2.1). During
2007-08, the cluster development programme was
extended to 19 clusters, i .e. , 17 clusters under
participatory mode and 2 under intensive mode taking
the total number of c lusters adopted under this
programme to 61 (56 in partnership and 5 under
intensive mode) as at end March 2008.
2.32 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 2008, 28
handloom clusters (10 from Assam) were adopted.
39
and Skill Development Programmes (SDPs) since early
nineties as a proven model for generating employment
opportunities in rural areas. During 2007-08, grant
support of Rs.767.61 lakh was provided for 1,422 REDPs/
SDPs covering 33,148 rural youth. Cumulatively, grant
support of Rs.4,735.94 lakh have been sanctioned for
9,822 REDPs/SDPs covering 2.49 lakh persons. NABARD
also sanctioned Rs.141.99 lakh as grant for conducting
443 REDPs/SDPs by 14 RUDSETIs/RUDSETI type
institutions in 15 States. Grant support of Rs.3.24 lakh
was also extended to Infrastructure Leasing & Financial
Services (IL&FS) for conduct of four IT related SDPs
for the rural youth of Jharkhand under the Common
Service Centre Scheme of the Department of Science &
Technology, GoI.
F. Women Empowerment
2.35 The scheme for setting-up of Women Development
Cells (WDCs) in RRBs and co-operative banks was
modified during the year and was made performance
linked. As on 31 March 2008, 69 WDCs in 37 RRBs, 31
DCCBs and 1 SCARDB were sanctioned under the
modified scheme.
2.36 Two of the three projects implemented under the
pilot scheme for Development of Women Through Area
programme (DEWTA)- one each in Andhra Pradesh and
Orissa were closed on successful completion. The third
one in Aligarh district, Uttar Pradesh was extended up
to March 2008. Under the Scheme for Marketing of Non-
Farm Products of Rural Women (MAHIMA), introduced
in 1997, assistance of Rs.4.47 lakh was released during
the year.
G. Marketing/Other Initiatives
2.37 NABARD continued to provide promotional and
financial support for marketing of products of rural
craftsmen/entrepreneurs. During the year, 206 marketing
events/ exhibitions were supported across various States
involving grant assistant of Rs.94.13 lakh. NABARD
also co-sponsored SARAS-Mahalaxmi Fair at Mumbai
wherein 84 artisans from 23 States participated in the
12 day long exhibition-cum-sale. Participation in such
events/exhibit ion provides necessary exposure
opportunities to directly interact with the consumers, to
the artisans thus enabling them to understand the urban
market/client preferences.
2.38 The pilot scheme for setting-up of rural marts
launched by NABARD in 2005 in nine States was
extended to all States to enable rural artisans/craftsmen
realise optimum prices and enable marketing linkages.
During the year, 50 rural marts were sanctioned with
grant support of Rs.51.84 lakh. Cumulatively, grant
support of Rs.125.62 lakh has been provided to SHGs/
producers’ groups for setting-up of 129 rural marts
across 17 States.
2.39 Meghalaya RO in partnership with the
Department of Posts, GoI was successful in setting-up
an Artisans’ Product Gallery in General Post Office,
Shillong to market the products of SHGs/artisans
supported under NABARD’s various development
programmes. Efforts are on to replicate this model in
other States.
H. Swarozgar Credit Card Scheme
2.40 The Swarozgar Credit Card Scheme (SCC) was
introduced in 2003 for facilitating hassle-free availability
of credit for meeting investment and working capital
requirements of small/micro-entrepreneurs. During the
year, 1.55 lakh cards with credit limit of Rs.679.26 croreMarketing of pottery wares in the NER
40
were issued. As on 31 March 2008, various banks issued
8.34 lakh cards involving credit limits of Rs.3,379.35
crore. Under the pilot scheme introduced during
2005-06 for supporting select RRBs and co-operative
banks with one-time grant assistance for promoting the
SCC scheme, 19 banks were sanctioned grant assistance
aggregating Rs.12.11 lakh.
I. Training and Sensitisation
Programmes
2.41 NABARD continued to provide financial support
to institutions like BIRD- Lucknow, RTCs at Mangalore
and Bolpur, NIRB-Bangalore and IIBM-Guwahati for
cumulative number of SHGs credit linked to 34,77,965
as on 31 March 2008. In addition 1,86,883 existing SHGs
were provided repeat loan of Rs.1,685.60 crore. As on
31 March 2007, 41.60 lakh SHGs maintained savings
and had savings of Rs.3,512.71 crore outstanding with
the banking sector. The programme has covered more
than 5.8 crore poor households, making it the largest MF
programme in the world. During 2006-07, bank credit of
Rs.6,570.39 crore and Rs.1,151.56 crore was disbursed
to 11.05 lakh SHGs (including 1.88 lakh under SGSY)
and 334 MFIs, respectively. The overall progress of the
MF programme is given in Table 2.2.
* Due to change in database and MIS, the reporting is for the position as on 31 March 2007.
Table 2.2: Progress of the Micro-Finance Programme
(As on 31 March 2007)
(Rs. crore)
Particulars Self-Help Groups* Micro-Finance
2006-07 2007-08 @$ Institutions#
No. Amount No. Amount No. Amount
Loans disbursed 11,05,749 6,570.39 7,39,875 4,227.58 334 1,151.56
(1,88,962) (1,411.02) - -
Loans outstanding 28,94,505 12,366.49 - - 550 1,584.48
(6,87,212) (3,273.03)
Savings Accounts with banks 41,60,584 3,512.71 - - - -
(9,56,317) (757.50) - - - -
*: Figures in parentheses indicate the share of SHGs covered under SGSY. @ Provisional data excluding SGSY groups.#: Actual number of MFIs provided with bank loans would be lower as several MFIs have availed loans from more than one bank
$: Including repeat loans of Rs.1,685.60 crore to 1,88,883 existing SHGs..
imparting training to participants in financing NFS
activities. During the year, NABARD supported 50
training programmes covering 1,327 officers from
various banks.
2.42 During the year, NABARD released grant support
of Rs.5.43 lakh to Tata Tea Ltd. for establishing a
Training-cum-Production Centre (TPC) at Rowta, Udalgiri
distr ict , Assam, to impart t raining on design
development, manufacture of special products,
marketing intervention and support to Bodo women
weavers. About 40 participants received training at the
TPC and 6 trainees have since set up their units.
Micro-Finance*
2.43 The SHG-Bank Linkage Programme of NABARD
has emerged as the primary model for providing Micro-
Finance (MF) services in the country. It is a proven tool
of extending to the unbanked rural clientele access to
formal financial services. Encouraged by the success of
the programme, NABARD promoted the linkage of Micro-
Finance Institutions (MFIs) with the banking sector. The
MFI–bank linkage model too has assumed importance
on account of credit support extended by banks for on-
lending to clients by MFIs. During the year 5,52,992
new SHGs (excluding SGSY) were credit linked with banks
and bank loan of Rs.2,541.98 crore disbursed, taking the
41
A. Support to Partner Agencies
2.44 NABARD by way of grant assistance continued
to support NGOs, RRBs, DCCBs, Farmers’ Clubs and
Individual Rural Volunteers (IRVs) for promoting and
nurturing of quality SHGs. It continued to direct its
efforts towards roping in the services of new Self-Help
Promoting Institutions (SHPIs) while continuing to
support the existing ones. During 2007-08, grant
assistance of Rs.1,369.77 lakh was sanctioned to various
agencies for promoting 52,877 groups, taking the
cumulative assistance sanctioned to Rs.6,119.37 lakh
for 3.62 lakh groups as at end-March 2008 (Table 2.3).
As on 31 March 2008, an amount of Rs.2,541.04 lakh
was released and 1.75 lakh SHGs credit linked to banks.
B. Capacity Building of Partner
Agencies
2.45 NABARD continued to play the role of a facilitator
in scaling-up the MF programme. Three zonal workshops
covering all regional offices were conducted to fine tune
strategies for up-scaling support to the MF sector. During
2007-08, an expenditure of Rs.13.32 crore was incurred
on various promotional activities as against Rs.11.07
crore in the previous year.
2.46 During the year, NABARD supported conduct of:
• 4,121 awareness creation and capacity building
programmes for SHG members covering 2,68,870
SHG members to inculcate skills for managing thrift
and credit;
• 135 awareness-cum-refresher programmes for CEOs
and field staff of NGOs, covering 3,664 participants;
• 471 training programmes for officers of commercial
banks, co-operative banks and RRBs covering
18,788 participants;
• 52 trainers’ training programmes covering 2,382
participants;
• 66 exposure vis i ts to banks and inst i tut ions
pioneering in MF initiatives for 2,754 bank/NGO
officials;
• 206 field visits to nearby SHGs for 4,877 Block
Level Bankers’ Committee members;
• 38 programme for the elected members of PRIs
covering 1,423 participants to create awareness
among them;
• 5 training-cum-exposure visits for new DDMs/ DDOs
and 2 exposure programmes on MF and SHGs for
senior IAS officers;
• 258 sensitisation programmes for government
officials covering 9,706 participants;
• 704 other programmes covering 34,523 participants.
C. Documentation and Dissemination
2.47 During the year, 107 meets/seminars on MF were
supported with financial assistance of Rs.11.14 lakh. In
order to get practical insights into the challenges, issues
and bottlenecks in the way of expanding and smooth
Table 2.3: Grant Assistance Extended to various Partners in SHG-Bank Linkage Programme
(Rs. lakh)
Agency Sanctions during the Year Cumulative Sanctions@ Cumulative Progress
No. Amount No. of No. Amount No. of Amount SHGs SHGs
SHGs SHGs Released Formed Linked
Co-operative Banks 6 45.70 3,400 83 426.22 44,410 178.49 34,381 19,388
RRBs 1 22.35 1,750 111 368.60 43,790 173.73 51,061 33,850
NGOs 351 1,166.13 40,194 2,007 4,841.41 2,45,276 2,093.08 1,74,890 1,11,828
Farmers’ Clubs - - - - - - 60.90 14,023 7,640
IRVs 14 135.59 7,533 59 483.14 28,643 34.84 6,116 2,655
Total 372 1,369.77 52,877 2,260 6,119.37 3,62,119 2,541.04 2,80,471 1,75,361
@ : Discrepancies in cumulative sanctions position from last years position is on account of revised position being advised by a few ROs
subsequent to submission of data for Annual Report.
42
flow of financial services to clients in depth studies are
necessary. Two study proposals were sanctioned during
the year. On account of varied and successful MF system
in the country, several foreign delegations from China,
Pakistan, South Korea and Bahrain visited NABARD to
understand the MF perspective.
D. Micro-Enterprise Promotion by SHGs
a. Micro-Enterprise Development
Programme
2.48 NABARD had launched the micro-enterprise
development programme (MEDP) on skill upgradation
and development for sustainable livelihoods for members
of matured SHGs during 2005-06. During the year, 394
MEDPs were conducted covering 9,182 SHG members
on activities like bee-keeping, mushroom cultivation,
horticulture and floriculture, vermi-compost/organic
manure preparation, dairy, etc. As on 31 March 2008,
674 MEDPs had been conducted covering 16,761
participants.
b. Pilot Project for Promotion of
Micro-Enterprises
2.49 Launched in 2005-06, the pilot project for
promotion of micro-enterprises among members of
matured SHGs is being implemented by 14 NGOs acting
as ‘micro-enterprise promotion agency’ (MEPA) in nine
distr icts, viz. , Ajmer (Rajasthan), Chandrapur
(Maharashtra), Kangra (Himachal Pradesh), Madurai
(Tamil Nadu), Mysore (Karnataka), Panchmahal
(Gujarat), 24 Pargana (West Bengal), Puri (Orissa) and
Rae Bareli (Uttar Pradesh). The project is being
implemented in two blocks in each of the selected district.
Cumulatively 2,759 micro-enterprises were established
under the project involving bank credit of Rs.237.72 lakh
as on 31 March 2008.
c. Marketing Support
2.50 During the year, NABARD suppor ted three
exhibitions of products prepared by various SHGs at
Bhopal, Chennai and Navi Mumbai involving grant
assistance of Rs.3.85 lakh.
E. Support to Micro-Finance
Institutions
2.51 Recognising the role played by MFIs, in extending
MF services in the unbanked areas, NABARD extends
support to these institutions through grant and loan
based assistance.
a. Revolving Fund Assistance
2.52 NABARD has been selectively supporting MFIs
for experimenting with various MF models like replication
of Grameen Model, NGO Networking (bigger NGO
support ing smal ler NGOs), credit unions, SHG
Federations, etc., to meet credit requirement of the
unreached poor. During the year, Revolving Fund
Assistance (RFA) amounting to Rs.8.06 crore was
sanctioned to six agencies taking the cumulative credit
sanctioned to Rs.36.38 crore covering 35 agencies.
b. Rating support to MFIs
2.53 To identify, classify and rate MFIs and empower
them to intermediate between lending banks and clients,
NABARD provides grant assistance to commercial banks
and RRBs to enable them to avail the services of credit
rating agencies (CRISIL, M-CRIL, ICRA, CARE and
Planet Finance) for rating of MFIs. The financial
assistance by way of grant for meeting the cost of rating
is met by NABARD to the extent of cent per cent of the
total professional fees subject to a maximum of Rs.1
lakh. The assistance is available for the first rating of
MFIs with loan outstanding greater than Rs.50 lakh and
SHG members engaged in basket making
43
less than Rs.500 lakh. During the year, rating support of
Rs.3.40 lakh was extended to four agencies.
c. Capital/ Equity Support
2.54 The scheme seeks to provide capital/equity
support to MFIs to enable them to leverage capital/equity
for accessing commercial and other funds from banks,
providing financial services at an affordable cost to the
poor, and to enable MFIs to achieve sustainability in
their credit operations over a period of 3 to 5 years. As
on 31 March 2008, capital/equity support amounting
to Rs.9.25 crore was sanctioned to 11 agencies.
d. Support to SHG Federations
2.55 The SHGs Federations are emerging as important
players in nurturing of SHGs, increasing the bargaining
powers of group members and livelihood promotion.
However, the features and functions of SHG federation
models promoted in the country vary depending on the
promoting agencies. Recognising the growing role of the
SHG federations and their value addition to SHG
functioning, NABARD, during the year decided to
support the federations on model neutral basis and solely
on merits of the proposal. Support would be extended
to the federation by way of grant assistance for training,
capacity building, exposure visits of SHG members, etc.
The Bank also formulated the broad norms for deciding
grant of f inancial assistance to SHG federations
(Box 2.2). During the year, grant assistance of Rs.10.48
lakh was sanctioned to two federations.
F. Innovative Pilot Projects
2.56 To assess the suitability of various innovative
initiatives and also enhance the sustainability of MF
activities, NABARD continued to extend support for
various pilot projects.
a. SHG-Post Office Programme
2.57 The pilot project on SHG-Post Office Linkage
Programme was initially launched in five select districts
of Tamil Nadu (Pudukottai, Sivaganga, Tiruvannamalai,
Thanjavur and Tiruvarur) to examine the feasibility of
utilising the vast network of Post Offices in rural areas
in disbursement of credit to rural poor on agency basis.
Encouraged by its progress, the project was extended to
Meghalaya. During the year, RFA of Rs.5 lakh was
sanctioned for on-lending to 50 SHGs in East Khasi
Hills. Cumulatively 2,831 SHGs have opened zero
interest savings accounts of which 371 SHGs have been
credit linked by the participating Post Offices and loan
amounting to Rs.88.23 lakh granted as on 31 March 2008.
b. Social Security System for SHG
Members
2.58 The pilot project launched during 2004-05 in two
villages covering 500 poor households from Betul district
of Madhya Pradesh with a view to developing a
community based social security system for SHG
members in rural areas is being implemented by a NGO,
Organization for Awareness of Integrated Social Security
(OASIS), with a grant assistance of Rs.8 lakh. The
scheme envisages providing a single package covering
health and life insurance by paying premium generated
through discounts offered by service providers like grocery
shops, cloth merchants, etc., in the project area. During
2007-08, grant assistance of Rs.1.20 lakh was released
to the agency.
c. Financial assistance for developing
software-MYRADA
2.59 NABARD had sanctioned financial assistance of
Rs.10.29 lakh to MYRADA for developing a software
Box 2.2
Financing of SHG Federations
• SHG Federation should evolve as per the need of the SHGs
wherein each SHG is free to join /not join the Federation.
• The promoting organisation to ensure that the Federation
is able to sustain its functioning and becomes self-managed
over a period of 3 years.
• The Federations should be member-owned, member-driven
institutions and democratic in its functioning.
• The SHG Federations may act as business facilitator/
business correspondent to the banks.
• Support for SHG federations should clearly establish value
additions to the SHG functioning.
44
for NGOs. The software, NABYUKTI is being made
available to all NGO partners involved in the promotion
and linkage of SHGs.
G. Other Developments
2.60 The Micro-Finance Development and Equity Fund
(MFDEF) maintained by NABARD is used for promotion
of MF through scaling-up of the SHG-bank linkage
programme, extending RFA and capital support to MFIs
and undertake various promotional initiatives. During
the year, Rs.26.67 crore was utilised from the fund
towards MF related activities.
2.61 The Advisory Board of MFDEF consisting of
representat ives from RBI, commercial banks,
professionals with domain knowledge and NABARD
provides guidance in formulation and refinement of
policy initiatives. The Advisory Board met four times
during the year.
2.62 The North-Eastern Council (NEC), Shil long
parked a fund of Rs.50 lakh with NABARD during the
year for facilitating miscellaneous training programmes
involving government/ bank officials, NGOs, SHGs from
States in the NER and Sikkim. Accordingly, an Advisory
Group has been constituted to guide and review the
progress under the fund. As on 31 March 2008, 73
programmes were sanctioned out of the fund and total
grant assistance of Rs.45.01 lakh released during the year.
2.63 The State Level ‘Agriculture Development Finance
Companies’ (ADFCs) were established during 1996-97
in Andhra Pradesh, Karnataka and Tamil Nadu for
strengthening credit flow for hi-tech/high value export
oriented agriculture, processing, storage, transportation,
marketing and infrastructure support systems. During the
year, Karnataka Agri-Development Finance Co. Ltd.,
was restructured into NABARD Financial Services
Limited (NABFINS) as a wholly owned subsidiary of
NABARD to facilitate setting-up of benchmarks and
standards for the MFI sector. NABFINS will promote
and continue providing MF, life insurance, general
insurance services, etc., to individuals, either directly or
through groups/MFIs/Federations in rural and urban areas
throughout the country.
2.64 Under the NABARD-GTZ Rural Finance
Programme, a study was undertaken to assess the
transaction cost of various agencies, viz., commercial
banks, RRBs, co-operative banks and MFIs in purveying
MF through SHGs or other types of groups. Training
modules were also developed to sensitise bank branch
managers and SHG members for monitoring groups so
as to minimise risks in lending through early warning.
The training modules were circulated to the training
institutions involved in MF. One of the components of
the programme aims at linking savings and credit SHGs
to banks, focussing on improving the quality and viability
of financial services under SHG-linkage banking. The
project period has been extended upto 31 December 2008.
2.65 The NABARD-KfW programme titled ‘Financial
Cooperation with India-Capitalization Program SEWA
Bank’ to be implemented in Gujarat aims at sustainable
improvement in access of poor women to micro-credit,
both in rural and urban areas. The project will be
implemented by SEWA bank and NABARD would act
as the intermediary agency responsible for providing
technical support and undertaking periodic review,
monitoring and supervision of the project. The financial
contribution of Euro 4,090,330 under the programme
would be utilised for setting-up, (i) Capitalisation Fund
(designed as a revolving fund) for financing the loan
portfolio growth in rural and urban areas and (ii)
Development Fund for providing consultancy services to
increase the institutional capacity of SEWA bank, rural
district associations (RDAs), extension counters (ECs)
and equipment of RDAs. The funds will be routed
through NABARD. During the year, KfW released grant
assistance of Rs.1 crore to SEWA bank under the project.
45
2.66 The Research and Development (R&D) Fund was
set up since inception by NABARD to provide financial
support for conducting in-depth studies, promoting
applied research and technology based innovations. It
also aimed at training and skill upgradation of personnel
of client institutions and dissemination of research
findings. As on 31 March 2008, the corpus of the Fund
stood at Rs.50 crore.
A. Utilisation of the Fund
2.67 During the year, an amount of Rs.748.96 lakh
was utilised for supporting activities like research projects/
studies, training, conduct of seminars and other activities.
As on 31 March 2008, the cumulative disbursement
under R&D Fund stood at Rs.99.92 crore.
B. Research Projects
2.68 During 2007-08, ten research projects/studies, viz.,
( i ) Corporate ini t iat ives on agricul tural /rural
transformation, (ii) Study on risk management system
in NABARD, ( i i i ) Preparat ion of comprehensive
infrastructure plan, (iv) Agricultural credit in Rajasthan-
status and performance, (v) Study on agricultural credit
in Maharashtra (2004-05 to 2006-07), (vi) An analysis
of outreach and effectiveness of agricultural credit policy
in Tamil Nadu, (vii) Study on issues relating to Doubling
of Agricultural Credit : mismatch between credit flow
and agricultural production, (viii) Performance and
challenges to agricultural lending: an empirical study in
Madhya Pradesh, (ix) A monograph on ‘Kangayam
cattle – A retrospective and prospective study’ and
(x) Study of transgene expression towards increasing oil
content of Jatropha – Phase I were sanctioned involving
total grant assistance of Rs.178.33 lakh. Further,
seven projects sanctioned earlier, were completed during
the year.
2.69 The project on empowerment and capacity
building to implement herd health and productivity
improvement in dairy animals by Bombay Veterinary
College, successfully developed a computer based
dynamic dairy annual data grid with village as a primary
herd unit, thus aiding farmers in optimising animal
productivity and quantity gains in herd improvement and
production. It also resulted in training of milk union
staff in new animal health delivery system focusing on
farm business planning and profit optimisation by
reducing economic losses due to health fertility and
related problems.
2.70 The project on Casuarina Nursery EDP for coastal
farmers of north-eastern zone of Tamil Nadu was
conducted by sugarcane Research Centre, Tamil Nadu
Agriculture University,Cuddalore. The project created
awareness on scientific knowledge of raising elite
seedlings of Casuarina and farmers were encouraged to
form a Nursery Farmers Association. Seven EDPs were
conducted covering 227 farmers.
2.71 Krishi Vigyan Kendra (KVK)–PIRENS,
Babhaleswar, Ahmednagar, Maharashtra as part of the
integrated project to improve the agricultural productivity
in saline/alkali affected soils conducted 9 on-campus
and 35 off-campus training programmes covering 1,341
participants and 105 crop demonstrations and an
exposure visit. Integrated crop management and practices
advocated by the agency resulted in lowering pH and
electrical conductivity, improved soil’s organic carbon
Research and Development Activities
Testing and developing newer plant varieties.
46
content resulting in increased yield. They also advocated
conversion of soil residue into compost through vermi-
compost technologies as part of soil improvement
practices.
2.72 Shri Paramkalyani Centre for Environmental
Sciences, Manonmaniam, Sundaranar University,
Alwarkurichi, Tamil Nadu in i ts s tudy on bio-
management of sugar factory and paper mill sludge
through the application of vermi and mico-technology
revealed that the earthworm ‘Eudrilus eugeniae’ is more
active, breeds rapidly and produces more compost within
a short period. Field studies conducted on black gram
and paddy revealed that use of vermi-compost resulted
in increased yield and enhanced the texture, colour, smell
and shelf life of the agricultural produce.
2.73 The project on improved cropping system for
commercial exploitation of medicinal plants in red soils
of semi arid tropics conducted by CIMAP, Lucknow,
studied the cropping systems involving suitable
combination of select crops (Centel laasiat ica,
Bacopamonieri – both cal led Brahmi, Withania
Somnifera-Aswagandha, Ocimumsanchem-tulasi/holy
basil, Aloevera) and evolving agro-techniques for
productivity improvement. They also conducted a field
demonstrat ion for farmers, representat ives from
industries, NABARD and the State Medicinal Plant
Board.
2.74 The project on incubation-cum-development fund
for grassroots technologies conducted by Sustainable
Agriculture and Environmental Voluntary Action (SEVA),
Madurai, Tamil Nadu supported 17 innovators to work
on new technologies, encompassions l ike herbal
pesticide, modified panchakavya, herbal veterinary
medicine, automatic border weft insertion (handloom),
sugarcane off bearer-cum-trash mulcher, garlic peeler,
mobile sewing machine, three wheel weeder-cum-
intercultivator, coconut dehusker, cashew nut peeling
machine, palmyrah tree climber, etc. The agency has
trained/demonstrated these field tested technologies to
1,025 farmers and 30 weavers.
2.75 The University of Agricultural Sciences, Dharwad,
Karnataka conducted a case study in Belgaum and
Haveri districts on impact of SHGs on rural poor. The
study revealed that the social and economic impact of
SHGs resulted in development of leadership qualities,
improving confidence level amongst members, increasing
asset position of the members by way of household
durables and improving the economic status through
various income generating activities (poultry, cattle
rearing, marketing of agricultural produce, tailoring, dairy,
etc.). It was also observed that for SHG members the
employment period increased from 26 to 72 persondays
p.a. in the post SHG phase. Further, a positive change
through less borrowings and higher savings and reduced
dependence on moneylenders was also observed.
C. Seminars, Conferences and
Workshops
2.76 During the year, grant assistance of Rs.71.30 lakh
was sanctioned to universities, research institutes, NGOs
and other agencies spread across the country for
organising 100 seminars, conferences, symposia and
workshops covering subjects/areas related to agriculture
and rural development, farm business economics, agri-
extension, agri-market ing, rural infrastructure,
commodities’ futures, micro-credit, bio-technology,
fisheries, plantation and horticulture, etc. The grant
support extended enabled the organisers to document
the proceedings, publish background papers, have wider
dissemination of the recommendations/action points to
init iate suitable policy interventions by agencies
concerned.
D. Occasional Papers
2.77 Publication of occasional papers was yet another
channel to seek increased dissemination of research
findings on policy issues in the realm of rural and
agricultural development. As part of this programme,
an occasional paper titled ‘Hi-Tech Floriculture in
Karnataka’ involving grant assistance of Rs.1 lakh was
sanctioned during the year.
47
E. Training Activities
2.78 Apart from extending grant assistance for the
above activities, an amount of Rs.579.62 lakh was
utilised from the Fund during the year for capacity
building of the staff of RFIs in the NER.
F. Summer Placement Scheme
2.79 The Summer Placement Scheme is being
implemented since 2005-06 to enable students selected
from reputed agriculture and management institutes, to
be associated with various projects/studies taken up by
NABARD with respect to agriculture and rural sector.
Under the scheme, students are assigned tasks/projects
of relevance to the Bank and are intended to generate
new product and service ideas that could be introduced
for the benefit of its constituents. During 2007-08,
Box 2.3
Centre for Micro-Finance Research at BIRD
The committee formed under the Chairmanship of Shri S.K.
Mitra, Executive Director, NABARD, had recommended
establishing a Centre for Micro-Finance Research at BIRD,
Lucknow as the main centre and a sub-centre at IIBM,
Guwahati. This was suggested to enable focussed attention on
issues relating to MF in the NER that are varied and different
than the rest of the country. The Centre at BIRD would be
involved in, (i) research covering critical and relevant themes
spanning different geographical locations, (ii) publication and
sharing of research outcomes, best practices and (iii) policy
planning and advocacy through conferences, seminars, etc.
The sub-centre would support the main Centre in all of its
activities, including collection and uploading of data to the
main centre.
assignments/reports on agricul ture and rural
development, allied sector, agri-business and social
development were received from 32 students from 17
ROs and involving financial outlay of Rs.6.96 lakh.
G. Utilisation of Research Findings
and Future Prospects
2.80 Major recommendations and proceedings of
NABARD assisted conferences/seminars, findings of
research studies/projects and occasional papers
supported out of the Fund were internalised. They were
also forwarded to state/central government, financing
agencies, NGOs and bankers for wider dissemination
and follow up action at their end. The research institutes/
universities, individual research scholars were also
provided copies of the report on request.
Training Personnel of RFIs
2.81 The three training establishments (TEs) set up by
NABARD, viz., RTCs at Bolpur, Mangalore and BIRD,
Lucknow for training the personnel of RFIs aim at
improving the effect iveness of the RFIs. These
establishments also supplement the efforts of other
training institutions by providing technical and financial
support. To provide focused attention on Micro-Finance
related issues, a Centre for Micro-Finance Research
(CMR) was set up at BIRD, Lucknow. BIRD has executed
a MoU with IIBM, Guwahati to set up a sub-centre of
CMR at Guwahati (Box 2.3). A consultative meet to
identify research themes was held. During 2007-08, RTCs
and BIRD conducted 368 training programmes covering
8,488 participants (Table 2.4).
Table 2.4: Training of RFI Personnel
(Number)
Training Institute Programmes Conducted Personnel of RFIs Trained
2005-06 2006-07 2007-08 2005-06 2006-07 2007-08
BIRD, Lucknow 240 207 192 5,553 4,969 4,311
RTC, Mangalore 81 86 103 2,080 1,946 2,399
RTC, Bolpur 67 60 73 1,515 1,207 1,778
Total 388 353 368 9,148 8,122 8,488
48
A. Programme Diversification
2.82 Keeping in mind the shift in business strategies,
having regard to future needs, findings of specific studies
and feedback received from the trainees/institutional
clients, TEs constantly endeavour to update their
programmes, design new ones, in consultation with the
client banks. During 2007-08, BIRD introduced 17 new
programmes like, ‘Know Your Customer and Anti- Money
Laundering’, ‘Managing non-SLR Investments’, ‘Financial
Inclusion’, ‘Information Risk and IT Security’, ‘ICT
Banking Avenues in Rural Credit’, ‘Management of
Change’, ‘Tree Borne Oilseeds’, ‘IT in Banking and
Management and Troubleshooting for Computer
Resources’, etc. The training calendars of RTCs are
finalised based on the recommendations of Academic
Advisory and Syllabus Committees. During the year, the
RTCs in addit ion to conducting bank specif ic
programmes, introduced newer programmes on
Designing and Marketing of Banks Products, Audit
Rating, Change Management, Integrated Programme on
MSMEs, Motivation and Men Management, etc.
2.83 NABARD’s efforts towards capacity building of
the personnel of RFIs through various programmes
organised at the TEs have had a positive impact on the
performance of the participants.
2.84 To explore the use of information and
communication technology in rural areas, NABARD
organised a seminar titled ‘Seminar on e-Empowerment’.
The seminar was attended by delegates from commercial
banks, co-operative banks and RRBs wherein 15 papers
were presented by experts in this field. Similarly, a
workshop on ‘Redefining Rural Financial Services through
ICT’ was organised at BIRD. The workshop aimed to
provide a platform to discuss various opportunities
available for the use of ICT in rural areas and to identify
the issues in adopting them as also finding suitable
solutions for widespread up-scaling.
2.85 NABARD continued to subsidise the participation
fees of personnel from client institutions. National
Institute of Rural Banking (NIRB), Bangalore was
provided Rs.3.03 lakh for 10 training programmes 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 (JLTCs), 11 Agricultural
Co-operative Staff Training Institutes (ACSTIs) and 3
Integrated Training Institutes (ITIs) set up by SCARDBs
and SCBs, respectively, to enable them to improve their
training system. During 2007-08, Rs.278.29 lakh
was disbursed to JLTCs, ACSTIs and ITIs out of the
Co -ope ra t i v e Deve lopmen t Fund (CDF) f o r
conduct ing 330 programmes (5,544 t rainees) as
against Rs.258.72 lakh disbursed during 2006-07
for conducting 793 programmes (17,558 trainees).
2.86 As part of the GoI package for revival of the Short-
term Co-operative Credit Structure (STCCS), BIRD has
designed and developed programmes for capacity building
of PACS functionaries. During the year, eight Trainers
Training Programmes were conducted for 144 Master
Trainers. Similarly, two programmes exclusively for
38 officers of NABARD were also conducted to enable
them to provide handholding support to Master Trainers
wherever required. A team of FMs from BIRD, NBSC
and RTCs (Mangalore and Bolpur) prepared training
modules, reading material and trainer’s guides for training
supervisors and inspectors of DCCBs on CAS and training
PACS Secretaries on CAS, MIS and business
development/diversification under Phase II of capacity
building initiatives under the revival package for
co-operatives.
2.87 The capacity building requirements of RRB
personnel and lateral assimilation of work in the
reconstituted RRBs have assumed greater significance
in view of the restructuring and consolidation processes
49
under the on-going amalgamation of RRBs. To
understand the training needs of the RRB personnel,
study the existing arrangements and suggest measures
for addressing the key issues requiring intervention,
NABARD constituted a Working Group under the
Chairmanship of Shri Amaresh Kumar, Executive
Director, comprising of General Managers from two
sponsor banks and Chairmen of three RRBs as members.
2.88 During 2007-08, NABARD entered into a MoU
with Women’s World Banking (WWB), New York to work
out collaborative arrangements on initiating training
strategies, conduct of suitable training courses with
special emphasis on governance training, strategic
position training and product diversification training in
the MF sector. WWB has since organised an Individual
Training Workshop. During the year, NABARD facilitated
and associated BIRD with the study team of GTZ,
Germany to study ‘Capacity Development and
Certification System for Co-operative Credit Structure
in India’. The team visited BIRD, NABARD ROs in
Maharashtra and West Bengal, SCBs and the TEs of
the respective states, Co-operative Training Institutes of
West Bengal and other co-operative training institutions,
State Governments, etc. The f indings and
recommendations of the team are under examination.
B. Training Arrangements for NER
2.89 NABARD continued to focus on skill upgradation
of RFIs in NER through grant support to Indian Institute
of Bank Management (IIBM), Guwahati and Manpower
Development and Management Institute (MDMI),
Shillong in addition to own training establishment. During
the year, Rs.16.12 lakh was released to IIBM, Guwahati
as NABARD’s share. Further, as recommended by the
‘Committee on Financial Sector Plan for NER’, a
comprehensive training plan prepared by IIBM in
collaboration with RTC (Bolpur) was approved for sharing
of estimated expenditure of Rs.50 lakh equally with RBI.
The travel cost of participants from co-operative banks
in the NER is also being subsidised by NABARD to enable
them to attend training programmes of National Institute
of Rural Banking (NIRB), Bangalore.
50
Business Operations
III
Through its refinance operations, NABARD has been
aiding the banking sector to augment credit support for
production and investment purposes in the agriculture
and rural sector, is act ively involved in fur ther
streamlining and improving its credit planning process
at grass root level taking into account the changing
requirements of the agriculture and rural sector. The Bank
also continued its involvement in developing rural
infrastructure by providing loans under RIDF to State
Governments for such projects.
3.2 By leveraging on the core competence and multi-
discipl inary expert ise of i ts parent organisat ion,
NABARD Consultancy Services Pvt. Ltd. (Nabcons), a
wholly owned subsidiary of NABARD has established
itself as a committed and professional consultancy service
provider.
3.3 This Chapter presents a review of the Bank’s
refinance and loaning operations, their impact at the
ground level, consultancy services provided by its
subsidiary and mobilisation and management of its
resources. The total financial support extended by
NABARD during 2007-08 increased by 15.5 per cent
and stood at Rs.38,680 crore as against Rs.33,496 crore
during 2006-07 (Chart 3.1).
Production Credit
A. Short-Term Refinance
a. State Co-operative Agriculture and
Rural Development Banks
3.4 During 2007-08, the scheme of extending short-
term (ST) ref inance to SCARDBs for seasonal
agricultural operations (SAO), hitherto available on a
pilot basis only to SCARDBs in Kerala, Punjab and
Haryana, was extended to all SCARDBs (Box 3.1) at
4.5 per cent for crop loans issued to farmers to whom
long-term loans have been granted. An up-to-date audit,
receipt of audit reports by NABARD, A/B audit
classification and minimum recovery level of 80 per cent
was prequisite for the SCARDBs to be eligible for
refinance under the scheme. During the year, Rs.65.05
crore was disbursed to Kerala SCARDB for ST-SAO
purposes.
Box 3.1
Study on ST Refinance to Kerala SCARDB
NABARD conducted a quick study in four districts of Kerala on
the effect of ST loans extended by KSCARDB under NABARD’s
pilot scheme launched during 2004-05. The study revealed that
the facility enabled the borrowers to, (i) carry out farm
operations like manuring, plant protection, soil and water
conservation, etc., from a single window, (ii) bring additional
land under banana and vegetable cultivation, (iii) save interest
burden enormously by avoiding credit from private sources
and (iv) avail ST loans from PCARDBs on early repayment of
their LT loans. An increase of 20% to 30% in the business
volume of the PCARDBs was also observed. Further, the recovery
under ST loans in the PCARDBs under study ranged between
86.3 to 99.5 % and was much more than the overall recovery
of the SCARDB. As the procedure for renewal of loan was fairly
simple, the satisfaction level of the borrowers and bank was
high. The scheme was well received in Kerala.
51
b. State Co-operative Banks
i. Support for Seasonal Agricultural
Operations
3.5 The quantum of refinance assistance for short-
term Seasonal Agricultural Operations (ST-SAO) to
co-operative banks continued to be linked to their gross
NPA level. Consolidated ST-SAO limits were sanctioned
to eligible SCBs to the extent of 35 to 40 per cent of
crop loans expected to be issued during 2007-08,
depending on their NPA levels. The limit continued to
be divided into core and flexible components in the ratio
of 80:20. Further, the minimum coverage for SF/MF was
stipulated at 30 per cent.
3.6 During 2007-08 (April-March), ST-SAO credit
limits aggregating Rs.14,825.71 crore were sanctioned
to 18 SCBs against Rs.12,800.64 crore sanctioned during
2006-07 (July-June) to 16 SCBs. The credit limits
included Rs.1,439.61 crore for the Oilseeds Production
Programme (OPP), Rs.180.92 crore for National Pulses
Development Programme (NPDP) and Rs.414.22 crore
for credit requirements of tribals under the Development
of Tribal Population (DTP). The operative period of ST-
SAO credit limit has been changed from 1 July-30 June
to 1 April-31 March with effect from the year 2007-08.
The SCBs had reached a maximum outstanding of
Rs.13,389.96 crore during 2007-08 constituting 90 per
cent utilisation as against 87 per cent utilisation during
2006-07 (July-June).
3.7 While the SCBs in northern (Haryana, Punjab
and Rajasthan) and southern regions (Andhra Pradesh,
Karnataka, Kerala, Pondichery and Tamil Nadu)
accounted for 36 and 25 per cent, respectively, of
aggregate credit limits sanctioned, those in the central
(Chhattisgarh, Madhya Pradesh and Uttar Pradesh),
western (Gujarat and Maharashtra) and eastern (Bihar,
Orissa and West Bengal) regions accounted for 13, 18
and 8 per cent, respectively. Refinance availed by the
co-operative banks in NER continued to be low despite
relaxations. Only Meghalaya SCB could avail of credit
limits during the year.
3.8 A consolidated ST (others) limit was sanctioned
to SCB on behalf of eligible DCCBs. It included ST-
agriculture, allied and marketing 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 2007-08, Rs.41.65 crore was
sanctioned under this line of credit against which
utilisation was Rs.24.96 crore. The major take-off was
in the case of marketing of crop at Rs.23.96 crore.
ii. Support to Weavers
3.9 The policy in respect of sanction of working capital
credit limits to SCBs/DCCBs for financing production/
marketing activities of Primary Weavers’ Co-operative
Societ ies (PWCS), procurement and market ing
operations and trading-in-yarn by regional/apex weavers’
co-operative societies was reviewed and the following
modifications effected.
i. Eligibility norms as linked to NPAs were de-linked
from working results and were made less stringent.
ii. NPA norms relaxed by 5 per cent for banks in the
NER, Sikkim, Jammu & Kashmir and Andaman &
Nicobar Islands.
3.10 During 2007-08, ST (weavers’) credit limits
aggregating Rs.332.13 crore were sanctioned to eight
SCBs (Andhra Pradesh, Gujarat, Karnataka, Kerala,
Orissa, Tamil Nadu, Pondicherry and West Bengal) for
financing production/procurement/ marketing activities.
3.11 The High Level Committee appointed by GoI, to
suggest measures for revival of Handloom Sector under
the Chairmanship of Managing Director, NABARD had
recommended organis ing weavers outside the
co-operative fold/members of non-viable or defunct
PWCSs/weavers in areas of weak co-operative credit
structure into Handloom Weaver’s Groups (HWGs) on
52
the lines of Joint Liability Groups (JLGs) to focus on
handloom clusters. The scheme, prepared by NABARD,
has been circulated among co-operative banks, RRBs
and commercial banks for implementation. The scheme
envisages f inancing production/investment and
consumption needs of weaver members in a flexible
manner. As at end-December 2007, co-operative banks
in Andhra Pradesh, Assam, Orissa, West Bengal and
Sikkim have formed 893 HWGs of which 52 were credit
linked involving sanctioned loans of Rs.37.59 lakh.
Similarly, RRBs in Orissa, West Bengal, Kerala and
Himachal Pradesh have formed 41 HWGs of which
33 were credit linked involving sanctioned loans of
Rs.28.89 lakh
3.12 With the object of promoting investment/retention
of weavers in the handloom sector and recognising the
pivotal role of master weavers in providing employment
to the vast majority of unorganised weavers outside the
co-operative fold, NABARD formulated a scheme for
financing the production/investment/ marketing needs of
master weavers by SCBs, RRBs and commercial banks.
The scheme has been circulated to all agencies.
c. Regional Rural Banks
3.13 During the year, quantum of refinance to RRBs
was restricted to 15 per cent of Realistic Lending
Programme. Concessional refinance at 4.5 per cent p.a.
was available only to those RRBs who agreed to provide
loans at 7 per cent p.a. to farmers. RRBs were advised
to increase lending to tenant farmers, oral lessees through
the JLG scheme or otherwise.
3.14 During 2007-08 (April-March), 74 RRBs were
sanctioned limits of Rs.2,940.18 crore under ST-SAO
against Rs.2,497.23 crore sanctioned in 2006-07
(July-June) to 74 RRBs. These limits included Rs.207.64
crore for OPP, Rs.83.98 crore for DTP and Rs.1.80 crore
for NPDP. Uttar Pradesh, with a sanction of Rs.594.93
crore had the largest share of sanctioned credit limits,
fol lowed by Andhra Pradesh (Rs.515.10 crore),
Karnataka (Rs.364.86 crore) and Kerala (Rs.297.15
crore). The maximum outstanding against sanctioned
limit was Rs.2,688.60 crore during 2007-08. The
aggregate sanction of credit limit for ST-OSAO purposes
to RRBs during 2007-08 (April-March) was Rs.151.42
crore, as against Rs.188.47 crore during 2006-07 (July-
June). The utilisation of the limit was to the tune of
Rs.64.12 crore.
B. Long-Term Loans to State
Governments
3.15 NABARD continued to provide long-term loans
to State Governments under Section 27 of the NABARD
Act, 1981, for contributing to the share capital of
co-operative credit institutions. During 2007-08, SCBs/
DCCBs with gross NPAs not exceeding 20 per cent as
on 31 March 2007 were considered eligible for sanction
of loan to State Governments in respect of SCBs/DCCBs
not complying with the provisions of Section 11(1) of
the B.R. Act, 1949 (AACS), were also considered
irrespective of deposit erosion, subject to certain
conditions. An amount of Rs.20.54 crore was sanctioned
during the year to State Governments of Haryana,
Kerala, Orissa, Rajasthan and West Bengal.
C. Other Policy Initiatives
a. NABARD-GTZ Rural Finance
Programme
3.16 The Gramin Tatkal Scheme (GTS), formulated
by NABARD in co-ordination with GTZ and working on
‘family as a unit’ basis to provide financial assistance
for mult iple act ivi t ies of rural famil ies, is being
implemented since 2006-07 on a pilot basis in Andhra
Pradesh, Haryana, Karnataka, Maharashtra, Punjab,
Uttar Pradesh and West Bengal with Tamil Nadu
emerging as the frontrunner in implementing the scheme.
As on 31 March 2008, the Pandyan Gramin Bank and
Salem DCCB in Tamil Nadu assisted 468 and 829
families with loan sanctioned to the tune of Rs.255 lakh
and Rs.2,385.02 lakh, respectively.
53
3.17 A study undertaken by GTZ in association with
NABARD during the year indicated that the scheme was
accepted at the ground level and rural families were
benefited owing to finance available for multiple activities
and consumption purposes. The Bank has leveraged
Farmers’ Clubs, SHGs and Milk Co-operatives to identify
families to provide support under the GTS.
b. Relief Package for debt stressed
districts
3.18 The GoI had announced relief package in 2006
to mitigate distress of farmers in the 31 debt stressed
districts of Andhra Pradesh, Karnataka, Kerala and
Maharashtra. NABARD had advised co-operative banks
and RRBs operating in these districts to implement the
package and had settled interest waiver claims of the
co-operatives and RRBs amounting to Rs.896.30 crore
as 50 per cent share of GoI under the package. To
enable co-operative banks and RRBs tide over the
liquidity gap arising out of implementation of the
package for effecting conversion/reschedulement of
farmers’ dues, the Bank has decided to extend liquidity
support to SCBs and RRBs by way of medium-term
(MT) refinance. A sum of Rs.265.67 crore was drawn
by the banks during the year.
c. Interest Subvention to Farmers
3.19 The Hon’ble Union Finance Minister in the Union
Budget 2007-08 announced the continuance of interest
subvention in 2007-08 to enable banks to provide crop
loans upto Rs.3 lakh to the farmers at an interest of 7
per cent p.a. In order to operationalise the scheme,
suitable interest subvention to NABARD and 2 per cent
interest subvention on own involvement of co-operative
banks and RRBs was envisaged. Accordingly, GoI has
released to NABARD Rs.1,331.36 crore towards interest
subvention for 2006-07. Further, the interest subvention
payable to NABARD, co-operative banks and RRBs has
been estimated at Rs.1,778 crore for 2007-08.
d. Package for Sugar Industry
3.20 NABARD, based on GoI announcement, had
launched during 2005-06 a package for restructuring the
outstanding term loans of co-operative sugar mills.
However, owing to the falling sugar prices and difficulties
faced by mills in meeting their financial obligations, GoI
constituted a committee under the chairmanship of Shri
S.K. Mitra, ED, NABARD, for re-examining the earlier
package. The committee recommended that: (i) all
operational co-operative sugar mills which had term loan
outstanding as on 31 March 2005 and were
commercially viable with adequate operational surplus
to repay the said term loan would be covered under the
package, (ii) term loans provided to the mills by SCBs,
PUCBs and other FIs/agencies, either individually or in
consortium and outstanding as on 31 March 2005 along
with interest accrued or the outstanding as on the date
of application whichever was lower, be considered for
restructuring, and (iii) interest rate on restructured loan
to be reduced to 10 per cent p.a. with effect from
1 April 2005. Interest subvention shall be provided by
GoI to co-operative banks and other financial institutions
on restructured loan upto maximum of 3 per cent. GoI
has accepted most of the committee’s recommendations
and has further advised financing banks to consider,
conversion of (i) outstanding loans of eligible co-operative
sugar mills on account of harvesting and transport
charges and (i i) short margin on sugar stocks as
appearing in the books of the sugar mil ls as on
1 April 2007 into term loans upto a maximum of 5
years without any reduction in the existing interest rate.
NABARD, as the facilitator and nodal agency for co-
operative banks in implementation of the scheme, has
issued operational guidelines to all SCBs. Under the
package, Rs.75.31 crore was released to co-operative
banks towards interest subvention.
3.21 GoI also approved a scheme for extending
financial assistance to all sugar mills that were/shall be
functional during 2006-07 and 2007-08 sugar seasons.
Under the scheme, loan shall be sanctioned for clearance
of cane arrears for 2006-07 and cane price of 2007-08
sugar season relating to statutory minimum price (SMP)
fixed/to be fixed by GoI and shall be granted equivalent
to the notional central excise duty payable on total
production of sugar during 2006-07 and
2007-08 seasons. GoI would provide interest subvention
54
Table 3.1: Rates of Interest
(Per cent)
Sr. Purpose Agency Interest Rate
No.
1. SAO SCBs/RRBs 3.0/4.5
2. Pledge of securities SCBs 9.5
3. Working capital requirements of pisciculture/fishery activities SCBs & RRBs 9.5
4. Marketing of crops SCBs & RRBs 9.5
5. Production/Procurement and marketing of cloth by
WCS/working capital to individuals/HWGs SCBs 9.5
6. Procurement, marketing and supply of yarn by Apex/Regional WCS SCBs 9.5
7. Working capital requirements of SHDCs SCBs & Scheduled 9.5
Commercial Banks
8. Industrial Co-operative Societies (other than WCS) SCBs 9.5
9. Individual Rural artisans of PACS SCBs 9.5
10. Purchase and distribution of fertilizers (PACS and Apex societies) SCBs 9.5
11. Working capital provided to Master Weavers SCBs, RRBs & 9.5#
Commercial Banks
12. ST-OSAO loans RRBs 9.5
13. Financing of PWCS Scheduled 9.5
Commercial Banks
14. ST approved agricultural, allied, production and marketing activities SCBs 9.5
15. LT loans to State Governments State Governments 9.5
16. MT (Conversion) loan SCBs 5.5-5.75
RRBs 5.75-6.0
17. Liquidity support (MT) SCBs & RRBs 9.5
#: Term loans extended to Master Weavers by (i) SCBs at 9% and (ii) RRBs & commercial banks at 9.5%
upto 12 per cent p.a. on such loan. The Bank has issued
operational guidelines on this to all SCBs and RRBs.
D. Interest Rates on Refinance
Assistance
3.22 The rates of interest on ST/MT refinance to
co-operative banks, RRBs, and scheduled commercial
banks and long-term (LT) loans to State Governments
for contribution to share capital of co-operative credit
institutions during 2007-08 have been indicated in
Table 3.1
3.23 GoI continued its support to make available
ground level credit at 7 per cent p.a. to farmers availing
crop loan upto Rs.3 lakh for kharif 2007 and rabi
2007-08. NABARD extended refinance to co-operative
banks and RRBs at 3 and 4.5 per cent p.a., respectively,
with interest subvention from GoI. The refinance was
made available to those SCBs and RRBs, which including
their own involvement, extended crop loans upto Rs.3
lakh per borrower at 7 per cent p.a.
Women engaged in embroidery work
55
A. Inclusion of NBFCs as a class of
eligible institutions
3.24 In view of their significant role in purveying
agriculture and rural credit, non-banking finance
companies(NBFCs) were also included as eligible
institutions for grant of refinance by NABARD. NBFCs
fulfilling, among others, the criteria of AAA rating,
experience of lending business for last five years, net
profit during previous three consecutive financial years
with no accumulated losses have now become eligible
for refinance for a tenure of not less than three years.
The refinance is proposed to be to the extent of 50 per
cent of the loan to the ultimate borrowers for agriculture
and allied activities, agro processing and small and micro
enterprises.
B. Relief Measures for Poultry units
affected by Avian Flu
3.25 The outbreak of avian flu in the poultry units in
some parts of the country resulted in loss of income
and steep fall in the demand and price of poultry
products. Keeping this in view, co-operative banks and
RRBs were advised to provide relief to the affected
poultry units financed by them. They were advised to
convert the principal and interest due on working capital
loans, instalments and interest on term loans, due for
payment on/after the onset of bird flu, i.e., 31 December
2007 and remaining unpaid, into term loans. Further,
the converted loans are to be recovered in instalments
based on projected future inflows over a period of three
years with an initial moratorium upto one year. The
remaining portion of term loan is to be rescheduled
similarly with a moratorium period upto one year
depending upon the cash flow generating capacity of
the unit. The reschedulement/conversion was to be
completed on or before 30 Apri l 2008 and the
rescheduled/converted loans to be treated as current
dues. The relief measures would be extended to all
accounts of poultry industry, which were classified as
Standard accounts as on 31 December 2007.
C. Eligibility Criteria for drawal of
refinance
3.26 The el igibi l i ty cri teria for ref inance during
2007-08 was fixed in such a way that it incentivised
better performing institutions vis-à-vis those performing
poorly. The eligibility criteria comprised of, (i) Broad
Criteria which included completion of audit of banks,
compliance with Section 11(1) of B.R. Act, 1949,
conduct of spot verification of assets by NABARD, etc.,
and (ii) a set of Special Criteria which are reviewed
annually and would form the basis of classifying agencies
in A/B/C/D categories based on their gross/net NPAs,
recovery to demand, net worth and profitability. The
quantum of refinance under each category was linked
to the refinance availed during the previous year and
was hiked or decreased depending on improved or
declined performance of the constituents.
D. Security Norms
3.27 Release of refinance to SCARDBs was only
against government guarantee and for SCBs also against
government guarantee except in the case of good
performing SCBs/DCCBs where requirement of the
Guarantee was waived off on compliance of certain
conditions by them. However, refinance to eligible Section
11 non-compliant SCBs/DCCBs and non-scheduled
SCBs (for farm sector) was only against government
guarantee. In the event of government guarantee,
wherever required for SCBs/SCARDBs, 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 banks,
RRBs and PUCBs continued to be exempted from
furnishing security/government guarantee for availing
refinance.
E. Refinance Support
3.28 The to ta l re f inance d i sbursement during
2007-08 stood at Rs.9,046.27 crore as compared to
the disbursement of Rs.8,795.02 crore during the
previous year.
Investment Credit
56
Table 3.3: Region-wise Refinance Disbursement
(Rs. crore)
Region 2005-06 2006-07 2007-08
Central 2,306.95 1,695.62 1,810.40
Eastern 1,057.44 1,102.83 1,134.73
Northern 2,152.54 2,111.10 1,957.78
North-Eastern 147.41 167.96 178.57
Southern 2,065.40 2,710.62 3,252.53
Western 892.63 1,006.98 712.26
Total 8,622.37 8,795.02 9,046.27
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.
a. Agency-wise disbursements
3.29 With a share of 44 per cent of the total refinance
disbursed during the year (Table 3.2/Char t 3.2),
commercial banks continued to be the largest group of
banks availing refinance. Despite an increase in share
of SCARDBs (21%) during the year, that of SCBs has
been progressively declining both in absolute terms and
as percentage share to the total refinance disbursed, the
share of RRBs improved to 25 per cent during 2007-08.
b. Spatial Distribution of Refinance
3.30 Refinance disbursement across regions depicted
wide variations underlying the varying absorptive capacity
of different agencies in different regions. Region-wise
highest disbursements were reported in the southern
region followed by northern, central, eastern, western
and north-eastern regions (Table 3.3/Chart 3.3).
Table 3.2: Agency-wise Refinance Disbursement
(Rs. crore)
Agency 2005-06 2006-07 2007-08
SCARDBs 2,082.47 1,742.72 1,950.58
SCBs 1,173.72 1,130.67 826.55
Commercial Banks 4,027.74 4,568.82 3,951.73
RRBs 1,332.40 1,352.81 2,313.99
PUCBs/ADFCs 6.04 - 3.42
Total 8,622.37 8,795.02 9,046.27
3.31 Disaggregation of refinance disbursements by
agencies and states indicate that while 76 per cent of
the disbursement to RRBs was in Andhra Pradesh,
Karnataka, Madhya Pradesh, Orissa, and Uttar Pradesh,
60 per cent of the refinance disbursed to SCBs was in
Andhra Pradesh, Karnataka, Orissa, Punjab and Uttar
Pradesh and 69 per cent of refinance disbursed to
SCARDBs was in Haryana, Punjab, Rajasthan and Uttar
Pradesh. The trends once again reflect the varying
absorptive capacity of different categories of banks in
different states.
57
c. Sector-wise disbursements
3.32 During the year, the total refinance disbursement
aggregated Rs.9,046.27 crore, of which 42 per cent was
towards farm sector activities, the major being farm
mechanisation (19.3%), minor irrigation with land
development (9.6%) and animal husbandry (9.1%). Non-
farm sector (NFS) including rural housing (30%), SHGs
(18%) and other activities, viz., storage and market
yards, SGSY, SC-ST action plan, etc., (10%) constituted
the remaining share (Table 3.4).
i. Farm Sector
3.33 The scheme for ‘Financing Purchase of Land for
Agricultural Purposes’ under implementation since
August 2001, aims at providing credit to small/marginal
farmers, share croppers/tenant farmers for purchase of
land. During 2007-08, bank loan of Rs.50.83 crore was
disbursed for 1,468 units spread in ten Sates (Andhra
Pradesh, Haryana, Karnataka, Kerala, Tamil Nadu,
Madhya Pradesh, Maharashtra, Punjab, Rajasthan and
West Bengal) with refinance of Rs.41.76 crore for 1,216
units.
ii. Non-Farm Sector
3.34 During the year, refinance disbursed under NFS
stood at Rs.2,747.95 crore, of which Rs.876.41 crore
was towards rural housing (32%). Agency-wise,
commercial banks accounted for the major share (53%),
Table 3.4: Sector-wise Disbursement of Refinance
(Rs. crore)
Sector 2005-06 2006-07 2007-08
MI 540.90(6.3) 670.97(7.6) 403.68(4.5)
LD 637.22(7.4) 651.30(7.4) 462.14(5.1)
FM 1,712.96(19.9) 1,857.51(21.1) 1,747.65(19.32)
P&H 322.36(3.7) 313.73(3.6) 341.82(3.8)
DD 694.72(8.1) 504.02(5.7) 605.87(6.7)
PF/SGP/
AH-Others 231.53(2.7) 206.66(2.4) 216.29(2.4)
Fisheries 38.49(0.4) 38.30(0.4) 25.45(0.3)
Forestry 7.47(0.1) 8.38(0.1) 6.39(0.1)
S & M Yard 52.49(0.6) 35.61(0.4) 136.28(1.5)
SGSY 252.52(2.9) 355.06(4.0) 258.58(2.8)
NFS 2,285.98(26.5) 2,265.16(25.8) 2,747.95(30.4)
SC/ST-AP 69.90(0.8) 28.32(0.3) 20.52(0.2)
SHG 1,067.72(12.4) 1,292.86(14.7) 1,615.50(17.8)
Others 708.11(8.2) 567.14(6.4) 458.15(5.1)
Total 8,622.37 8,795.02 9,046.27
(100.0) (100.0) (100.0)
MI: Minor Irrigation. LD: Land Development.
FM: Farm Mechanisation. PF: Poultry Farming.
DD: Dairy Development. AH: Animal Husbandry.
SGP: Sheep, Goat and Piggery. P & H: Plantation and Horticulture.
S&M Yard: Storage and Market Yards
Figures in parentheses indicate percentage to total.
followed by co-operative banks (32%) and RRBs (15%).
As on 31 March 2008, the cumulative refinance support
under NFS stood at Rs.21,354.72 crore.
58
Table 3.5: Agency-wise SHG - Bank Linkage Programme: Cumulative Progress
(As on 31 March)
(Rs. crore)
Agency SHGs Credit Linked Bank Loan Disbursed
2007 2008* 2007 2008
Commercial Banks 5,71,636 (52) 3,12,359 (42) 3,918.94 (60) 2042.56 (48)
RRBs 3,81,199 (34) 2,40,596 (33) 2,052.73 (31) 1,599.51 (38)
Co-operative Banks 1,52,914 (14) 1,86,920 (25) 598.72 (09) 585.51 (14)
Total 11,05,749 (100) 7,39,875 (100) 6,570.39 (100) 4227.58 (100)
Figures in parentheses indicate percentages to total. * : Provisional data, excluding SGSY
3.35 The Working Group on Rural Habitat constituted
by NABARD to address various issues relating to
provision of bank finance for rural housing and rural
habitat development, has recommended; (i) providing
housing loans linked to livelihood loans to non-salaried
class of individuals to accelerate credit delivery to rural
families, (ii) including cost of construction of worksheds/
shops for pursuing income generating activities in the
housing loan, (iii) financing common work place for
SHGs, (iv) construction of toilets and bathing rooms
for individuals/community sanitation, (v) providing
incremental housing loan for different purposes,
(vi) delivery for infrastructure development through
collaboration with Village Panchayats, (vii) exploring
possibility of providing land title insurance, composite
package of affordable life, accident and health insurance
for the rural home loan borrowers, (viii) promoting the
use of eco-friendly construction technologies in rural
areas, (ix) establishment of a Credit Guarantee Fund
for rural habitat lending and a Venture Fund for building
material centres and infrastructure development,
(x) adoption of villages by banks and (xi) incorporation
of rural housing and habitat finance in the Bank Credit
Plans. Some of the recommendations of the Group are
under consideration by RBI. NABARD has advised all
agencies that bank loans issued for rural housing and
rural habitat sector under the schemes formulated as
per the recommendations of the Working Group would
be eligible for refinance support under Automatic
Refinance Facility (ARF).
iii. Micro-Finance
3.36 During 2007-08, bank loan of Rs.4,227.58 crore
was disbursed to 7,39,875 SHGs (including repeat
finance of Rs.1,685.60 crore to 1,86,883 existing SHGs)
vis-à-vis Rs.6,570.39 crore disbursed to 11,05,749 SHGs
during 2006-07. The agency-wise disbursements reveal
that, commercial banks accounted for 42 and 48 per
cent of the SHGs credit linked and bank loan disbursed,
respectively, followed by RRBs and co-operative banks
(Table 3.5). The average loan disbursed per SHG
amounted to Rs.57,139 during 2007-08 compared to
Rs.59,420 during 2006-07. During 2007-08, NABARD
extended refinance of Rs.1,615.50 crore under the
programme.
3.37 Further, 28.95 lakh SHG accounts (including those
under SGSY) had loans outstanding worth Rs.12,366.49
crore from all agencies and 41.60 lakh SHGs maintained
savings outstanding of Rs.3,512.71 crore with the banks
as on 31 March 2007 (Table 3.6).
3.38 The recovery performance of SHGs too reflects a
high percentage of recovery. As on 31 March 2007, of
the 290 reporting banks, 73 per cent banks reported
recovery of >80 per cent in respect of their SHG portfolio.
Agency-wise, 26 commercial banks (out of 36), 55 RRBs
(out of 73) and 131 co-operative banks (out of 181)
reported recovery above 80 per cent (Chart 3.4).
59
3.39 Recognising the growing role of MFIs as institutions
other than banks engaged in providing financial services
to the poor, the banking sector too has been extending
loans to MFIs for on-lending to SHGs. MFIs in India
have emerged in four organisational forms, viz., NGO-
MFIs, non-profit Section 25 NBFC-MFIs, co-operative
MFIs and for-profit NBFC-MFIs. During 2006-07, bank
loan amounting Rs.1,151.56 crore was disbursed to 334
MFIs taking the total loans outstanding to Rs.1,584.48
crore to 550 MFIs as on 31 March 2007 (Table 3.7)
d. Co-financing
3.40 NABARD has executed MoU with 16 commercial
banks, 2 RRBs and 1 NBFC for supporting innovative
agricultural projects, viz., agro/food processing, animal
husbandry, poultry, plantation & horticulture, wasteland
development, bio-fuel, cold storage, agri- marketing
complex, bio-fer t i l iser, etc. , under co-f inancing
arrangement. Cumulatively, 28 projects were sanctioned
involving total financial outlay (TFO) of Rs.618.31 crore,
bank loan of Rs.409.79 crore and NABARD’s share of
Rs.176.88 crore as on 31 March 2008. During 2007-08,
12 projects were sanctioned with TFO of Rs.118.83
crore, bank loan of Rs.85.05 crore and NABARD’s share
of Rs.42.53 crore. An amount of Rs.27.31 crore was
disbursed during the year taking the cumulative
disbursement to Rs.72.81 crore as on 31 March 2008.
e. Coverage of Small Farmers
3.41 During 2007-08, 53 per cent of the refinance
(excluding refinance in respect of loans for farm
mechanisation, storage and market yards, forestry, etc.)
was against loans disbursed to small farmers (Table 3.8).
F. Capital Investment Subsidy
Schemes
3.42 As a nodal agency, NABARD has been asked to
oversee the operationalisation of the various Capital
Investment Subsidy (CIS) schemes of GoI, monitoring
the progress and administration of subsidy. During
2007-08, three CIS schemes, viz., (i) construction of
cold storages, onion godowns and rural godowns,
(ii) development/strengthening of agriculture marketing
Table 3.6: Agency-wise Savings and Loans Outstanding to SHGs
(As on 31 March 2007)
(Rs. crore)
Agency Number Amount
a. Savings Outstanding
Commercial Banks 22,93,771 (55) 1,892.42 (54)
RRBs 11,83,065 (29) 1,158.29 (33)
Co-operative Banks 6,83,748 (16) 462.00 (13)
Total 41,60,584 (100) 3,512.71 (100)
Savings per SHG (Rs.) 8,469
b. Loans Outstanding
Commercial Banks 18,93,016 (65) 8,760.38 (71)
RRBs 7,29,255 (25) 2,801.76(23)
Co-operative Banks 2,72,234 (10) 804.35 (06)
Total 28,94,505 (100) 12,366.49 (100)
Loan o/s per SHG (Rs.) 42,724
Figures in parentheses indicate percentages to total.
Table 3.7: Progress under MFI-Bank Linkage Programme
(Rs. crore)
Agency Bank loan disbursed Loans Outstanding
(2006-07) (As on 31 March 2007)
No. Amount No. Amount
Commercial Banks 327 1,151.34 541 1,584.28
RRBs 7 0.22 8 0.20
Co-operative Banks - - 1 0.006
Total 334 1,151.56 550 1,584.48
The actual number of MFIs would be less as some MFIs have
availed loans from more than one bank.
Data Provisional.
60
Table 3.8: Refinance disbursed to Small Farmers vis-à-vis Total Disbursements
(Rs. crore)
Purpose Total Disbursement Assistance to SFs
Disbursement to SFs (% to total disbursement)
Minor Irrigation and Land Development 865.82 282.70 33
Diversified Purposes* 6,290.13 3,485.37 55
Total 7,155.95 3,768.07 53
*: Excludes refinance for farm mechanisation, storage and market yards, forestry, etc.
infrastructure, grading and standardisat ion and
(iii) establishing ACABCs by agriculture graduates
continued to be implemented.
i. Cold Storages, Onion Godowns and Rural
Godowns
3.43 During the year, 220 and 2,188 projects were
sanctioned under cold storages/onion godowns and rural
godowns with TFO of Rs.522.47 crore and Rs.682.81
crore, bank loan of Rs.321.45 crore and Rs.470.23 crore
and subsidy of Rs.44.06 crore and Rs.95.34 crore,
respectively. Cumulatively, as at end-March 2008,
projects sanctioned under cold storage/onion godowns
and rural godowns schemes stood at 1,697 (1,484 cold
storages and 213 onion godowns) and 13,580 involving
TFO of Rs.2,531.34 crore and Rs.2,990.56 crore, bank
loan of Rs.1,406.15 crore and Rs.1,957.36 crore and
subsidy of Rs.376.32 crore and Rs.454.35 crore,
respectively.
ii. Agricultural Marketing Infrastructure,
Grading and Standardisation
3.44 The scheme aimed at establishing/strengthening
of infrastructure for marketing, grading, standardisation
and quality certification of agricultural produce is
implemented in only such States that have amended
the APMC Act to allow private participation. As on 31
March 2008, 20 states and 5 UTs were eligible to receive
assistance from GoI as back-ended subsidy. During the
year 1,093 projects involving TFO of Rs.425.59 crore
and bank loan of Rs.273.76 crore were sanctioned and
subsidy of Rs.48.91 crore was disbursed. Cumulatively
2,701 units involving TFO and bank loan of Rs.749.72
crore and Rs.496.70 crore, respectively, were sanctioned
and subsidy of Rs.79.57 crore disbursed.
iii. Establishing Agri-clinics and Agri-business
Centres by Agriculture Graduates
3.45 To encourage provision of fee based extension
services to farmers, MoA, GoI, announced the scheme
for implementation during 2006-07 and the Eleventh
Plan period. The scheme envisages capital subsidy
upto 25 per cent of the TFO and full interest subsidy
during first two years of the successful operation of the
unit and regular repayment of the bank loan. During
the year, 57 units involving subsidy of Rs.68.54 lakh
were sanctioned.
G. Investment and Scheme Specific
Studies
3.46 During the year, 30 investment and 8 scheme
specific studies under farm sector, rural housing and coldFashion designing and tailoring unit run by SHG members
61
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.
H. Interest Rates on Refinance
3.47 The interest rates were revised depending on the
money market conditions and cost of incremental
market borrowings of NABARD. The rate of interest on
refinance for commercial banks/RRBs/PUCBs/ADFCs/
NEDFi and for co-operative banks was fixed at 9.5 and
9 per cent p.a., respectively, with effect from 14 May
2007 for all eligible activities. The refinance rates for
RRBs were reduced to 9 per cent p.a. with effect from 1
November 2007. They were again revised downwards
to 9 and 8.5 per cent p.a. for commercial banks/PUCBs/
ADFCs/NEDFi and co-operative banks and RRBs,
respectively, with effect from 23 January 2008. The rate
of interest on refinance was fixed at 9 and 8.5 per cent
for all agencies in the NER, Sikkim and Andaman &
Nicobar Islands from 28 May 2007 and 23 January
2008, respectively. Further, the rate of interest on interim
finance provided to SCARDBs was enhanced from 7.5
to 9.5 per cent p.a. in respect of drawals released on or
after 6 July 2007. The interest rate on default in
repayment of principal/interest amount of refinance
under any line of credit was fixed at 11.5 and 10.5 per
cent (depending on the amount of default for the period)
for commercial banks and other agencies, respectively.
I. Physical Achievements
3.48 The refinance disbursement, supporting varied
economic activities under various types of investments
aggregated Rs.9,046.27 crore during the year (Table 3.9).
Under minor irrigation (MI) 24,000 tubewells with
pumpsets and 32,000 pumpsets on existing wells were
financed. Tractor financing continued to be the major
item of investment under FM with 51,000 units financed
during the year. During 2007-08, the animal husbandry
sector witnessed good growth with dairy farming and
sheep/goat rearing showing an increase of 1.96 lakh and
2.81 lakh animal, respectively. The poultry sector showed
signs of improvement with 17 lakh birds being financed
during 2007-08.
J. Credit Planning
a. Potential Linked Credit Plans
3. 49 NABARD continued to prepare its district-wise
Potential Linked Credit Plans (PLPs) in a time bound
manner, following the consultative approach. The quality
and contents of the PLP are being continuously reviewed
and refined in view of RBI’s policy decision to keep PLPs
as basis for DCPs. An exercise undertaken on dovetailing
the DCP project ions with PLP est imates during
2007-08, revealed a variation of only 4.64 per cent at
macro level. The PLP document, due to the quality and
the valuable inputs had ever increasing demand from
various organisations engaged in rural development.
3.50 Keeping this in view, NABARD continued its
efforts to improve the quality and content of PLPs. Some
of the initiatives taken during the years are:
i. Two new chapters covering ‘Agri Extension and
Other Suppor t Services’ and ‘Panchayat Raj
Institutions’ were incorporated.
ii. General and technical scrutiny of select PLPs was
undertaken to enhance the sectoral contents and
in fine-tuning of certain chapters like ‘Infrastructure
Support’, ‘Agro and Food Processing’, ‘Responses
from Farmers and Non-Farmers’, etc.
b. State Focus Paper
3.51 The district-wise/sector-wise potential projected in
the PLPs are aggregated into a State Focus Paper (SFP)
highlighting a comprehensive picture of potential
available in the State for development of agriculture,
allied and non-farm activities. The SFPs also show the
critical gaps requiring priority attention. The SFPs were
presented to concerned State Government and the
bankers through Credit Seminar to facilitate state level
planning. ROs also indicate the initiatives needed from
the State Government and the bankers to ensure
adequate credit flow to different sectors and make
necessary budgetary provisions through SFP.
62
c. Review of SAMIS
3.52 The Working Group comprising members from
RBI, NABARD, IBA and nine commercial banks, was
set up to review and recommend modifications in the
Service Area Monitoring and Information System
(SAMIS). The Group recommended adopting BSR Codes
in revised SAMIS returns to facilitate integration with
the banks’ internal MIS, thus ensuring timely submission
of the returns. NABARD has recommended the proposed
modifications/changes in SAMIS and requested RBI to
issue operational guidelines on revised SAMIS which may
be termed as ‘Priority Sector MIS’. RBI is in the process
Table 3.9: Units Financed and Completed
(As on 31 March)
Sr. Investments Units financed upto 31 March Units completed upto 31 March
No. 2007 2008 2007 2008
1. Minor Irrigation
i. Tubewells with pumpsets @ ‘000 1,575 1,599 1,559 1,582
ii. Dugwells with pumpsets * ‘000 2,072 2,076 2,061 2,063
iii. Dugwells with conventional lift ‘000 1,707 1,707 1,706 1,706
iv. Pumpsets on existing wells ‘000 2,419 2,451 2,395 2,422
v. Others ** ‘000 1,800 1,837 1,782 1,805
2. Land Development*** ‘000 ha. 3,201 3,252 3,169 3,190
3. Farm Mechanisation
i. Tractors ‘000 1,333 1,384 1,320 1,350
ii. Power tillers ‘000 160 162 158 159
iii. Other farm equipments ‘000 694 719 687 711
4. Plantation & Horticulture ‘000 ha. 2,214 2,261 2,192 2,215
5. Forestry lakh ETPs 2,340 2,348 2,317 2,332
6. Storage ‘000 tonnes 18,632 18,635 18,446 18,448
7. Market Yards No. 2,563 3,013 2,537 2,987
8. Dairy Development ‘000 animals 15,647 15,843 15,491 15,626
9. Sheep/ Goat Rearing ‘000 animals 37,880 38,161 37,501 37,725
10. Piggery 000 animals 1,686 1,692 1,680 1,685
11. Poultry lakh birds 1,802 1,819 1,784 1,797
12. Fishery
i. Mechanised Boats No. 22,259 22,679 22,036 22,036
ii. Other Boats No. 73,287 73,681 73,000 73,000
iii. Brackish Water Aquaculture ha. 5,355 5,362 5,301 5,301
iv. Fresh Water Aquaculture ‘000 ha. 411 414 407 409
13. Non-Farm Sector ‘000 7,832 8,032 7,754 7,892
14. Miscellaneous$ ‘000 14,280 14,786 14,137 14,486
@ : Includes borewells with pumpsets. * : Includes dug-cum-borewells with pumpsets. ETPs : Entire Trans-Planting.
** : Includes dugwells/ dugwells-cum-borewells, deep tubewells with pumpsets, deepening/ renovation of wells, sprinkler, pipeline,
storage/water harvesting tank, lift/drip irrigation, pump house, shallow tubewells/ million shallow tubewell programme, etc.
*** : Includes soil conservation, saline/ alkaline soil, channels/ lining/ under ground 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 2008, 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.
63
of issuing the necessary guidelines on revised SAMIS as
Priority Sector MIS, to banks.
d. Comprehensive District Plans
3.53 With a view to making the district planning process
an integral part of the process of preparation of States’
XI Five Year Plan (2007-2012) and the annual plan
(2007-08), GoI had constituted an Expert Group in 2005
to suggest the modalities. The Group’s report was
accepted by GoI and the same was circulated to the
States. Accordingly, the District Plan for each district
will be finalised by the District Planning Committee
(DPC) as an aggregation of the Gram Panchayat Plans,
the Intermediate Panchayat Plans, District Panchayat
Plans and plans of Urban Local Bodies and the same
will be integrated with the sectoral plans. It would also
include the Comprehensive District Agriculture Plan
(C-DAP), which is a prerequisite for receiving support
under Rashtriya Krishi Vikas Yojana (RKVY). The
Planning Commission and NABARD conducted regional
workshops to orient various State/district level officials
for preparing C-DAP. NABARD was also associated with
the Technical Support Group constituted by Planning
Commission for preparing the ‘Manual of Guidelines’
for preparation of C-DAP. NABARD has also been
identified as one of the Technical Support Institutions
for extending support for capacity building, consolidation
of plans at district levels, etc., in the 30 allotted districts
covering 10 States. For the purpose, two exposure-cum-
trainers’ training programme covering 58 officials
including DDMs had already been conducted.
K. Special Package for NER
3.54 NABARD continued its policy of facilitating larger
credit flow to the NER and Sikkim by granting relaxations
to co-operative banks and RRBs operating in these areas.
The salient features of the policy followed during
2007-08 are discussed below.
i. To enable SCBs and RRBs to avail refinance for
ST-SAO purposes, NABARD extended relaxation
in its NPA norms by 5 (gross NPA) and 3 (net NPA)
per cent, respectively. Relaxation of 5 per cent in
the NPA norms was also granted in sanction of ST
limits to SCBs for f inancing working capital
requirements of WCS during 2007-08.
ii. The eligibility criteria for drawal of refinance under
investment credit was relaxed by 5 per cent for
co-operative banks and 3 per cent for RRBs. The
security requirements stipulated for refinance to
RRBs classified under Category C was dispensed
with subject to certain conditions. The rate of
interest on refinance was fixed at 8.5 per cent
irrespective of the quantum, agency and purpose.
3.55 Based on the recommendations of the Committee
on Financial Sector Plan for NER, the following policy
changes were effected during the year:
• The norms for minimum members in a SHG was
relaxed to f ive in hi l ly distr icts of NER for
consideration of refinance and grant assistance from
NABARD.
• The grant assistance for promotion and nurturing
of SHGs by NGO SHPIs working in the hilly districts
of NER was revised to Rs.5,000 per SHG.
3.56 In pursuance of the MoU between NABARD and
Tata Tea Ltd., for development of Boro design through
training of Boro Women, Tata Tea established a Training-
cum-Production Centre during the year, comprising 11
looms with 3 jacquards and 1 dobby. Of this, 4 looms
are permanently earmarked exclusively for imparting
training to the identified weavers. A separate residential
building for trainees has also been constructed. The
centre has already started production of cloth and is in
the process of providing marketing tie-up for the products.
Against total expenditure of Rs.13 lakh, NABARD
released its share of Rs.6 lakh as grant.
3.57 A Sub-Committee set-up under the Task Force
on Revival of STCCS examined the issues regarding
relaxations in eligibility for CCS in the NER with respect
to the health of the STCCS in the NER. The Sub-
Committee while deciding on the special concessions
for co-operative banks located in NER, took into account
their present business, training requirements and
recommended different sharing pattern of losses. The
recommendations are under examination at GoI level.
64
3.58 The Rural Infrastructure Development Fund (RIDF)
which was set up during 1995-96 with an initial corpus
of Rs.2,000 crore has since been continued with annual
allocation being announced in the Union Budget. The
XIII Tranche for RIDF of Rs.12,000 crore was announced
in the Union Budget 2007-08 raising the aggregate
allocation to Rs.72,000 crore. The separate window for
funding rural roads component of Bharat Nirman
Programme, introduced in the Union Budget 2006-07,
was continued during 2007-08, with an allocation of
Rs.4,000 crore, raising the aggregate allocation to
Rs.8,000 crore.
A. Prioritisation of Projects
3.59 Thirty-one broad sectors/activities approved by
GoI for financing under RIDF XIII pertained to projects
relating to rural roads and bridges, micro/minor/medium/
major irrigation, community irrigation wells, mini/small
hydel projects, drinking water, soil conservation,
watershed development, reclamation of waterlogged
areas, drainage, flood protection, forest development,
market yards, godowns, apna mandi, rural haats and
other marketing infrastructure, cold storages (public or
joint sectors) at various exit points, seed/agriculture/
horticulture farms, plantation and horticulture, grading
and testing/certifying laboratories, fishing harbour/jetties,
riverine fisheries, animal husbandry, modern abattoirs,
infrastructure for rural education and public health
institutions (including mobile health clinics), construction
of toilet blocks in existing schools, ‘Pay and Use’ toilets
in rural areas, village knowledge centres, desalination
plants in coastal areas and infrastructure for Information
Technology in rural areas, construction of Anganwadi
Centres and setting-up of Rural Industrial Estates/Centres.
B. Terms and Conditions
3.60 The same terms and conditions as applicable
under RIDF XII were kept for projects under RIDF XIII.
The lending rate on loans continued to be 0.5 per cent
above the Bank rate prevailing at the time of sanction
of loan. Loans are secured by means of irrevocable letters
of authority (mandate) executed by State Governments
and registered with RBI and their Time Promissory Notes.
C. Operations
a. Sanctions and Disbursements
3.61 During the year 36,964 projects involving a loan
amount of Rs.12,795.01 crore were sanctioned under
RIDF XIII thus taking the cumulative number of projects
to 2,80,227 and amount sanctioned to Rs.74,073.41
crore. Of the total amount sanctioned during the year,
irrigation accounted for 37 per cent, rural roads and
bridges 36.5 per cent, social sector projects 12.5 per
cent and others 14 per cent (Table 3.10). The cumulative
position of sector-wise sanctions and disbursements is
given in Table 3.11. An amount of Rs.4,500 crore,
(Rs.4,000 crore and Rs.500 crore under RIDF XII and
XIII, respectively) was disbursed to the National Rural
Roads Development Agency (NRRDA) against aggregate
sanction of Rs.8,000 crore under the Bharat Nirman
Component.
3.62 The period of implementat ion of projects
sanctioned under RIDF VI and VII was closed as at end-
September and December 2007, respectively. However,
for projects sanctioned under RIDF VIII to X, the
implementation period was extended upto 31 March
Loans under Rural Infrastructure Development Fund
Major irrigation project under RIDF
65
2008 to enable State Governments to complete on-going
projects and avail reimbursement of expenditure incurred
there against.
Table 3.10: Sector-wise Projects and Amount Sanctioned
(As on 31 March 2008)
(Rs. crore)
Sector RIDF XII Share RIDF I to XI Share
(2007-08) (%) (Total) (%)
Irrigation
No. 13,189 35.7 1,18,890 48.9
Amount 4,730.86 37.0 20,278.24 33.1
Rural Bridge
No. 717 1.9 10,664 4.4
Amount 796.23 6.2 6,235.92 10.2
Rural Roads
No. 6,424 17.4 54,961 22.6
Amount 3,876.06 30.3 20,720.94 33.8
Social Sector*
No. 12,222 33.1 38,637 15.9
Amount 1,605.08 12.5 6,987.11 11.4
Power Sector**
No. 10 - 721 0.3
Amount 148.37 1.2 1,502.70 2.4
Others***
No. 4,402 11.9 19,390 7.9
Amount 1,638.41 12.8 5,553.49 9.1
Total
No. 36,964 100.0 2,43,263 100.0
Amount 12,795.01 100.0 61,278.40 100.0
* : Includes projects relating to Rural Drinking Water Supply,
Primary/ Secondary Schools, Public Health Institutions,
Pay and 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 Markets/Market
Yard/Rural Godown, Meat Processing, Rural Knowledge
Centres, etc.
3.63 During the year, disbursements increased by 29
per cent to Rs.8,034.93 crore. As per the phasing of
projects under various tranches (RIDF I to XIII), the total
amount sanctioned was Rs.62,857.80 crore against
which disbursements aggregated Rs.45,594.85 crore
(Table 3.12). As on 31 March 2008, nine States (Andhra
Pradesh, Gujarat , Karnataka, Madhya Pradesh,
Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and
West Bengal) accounted for 70 and 68 per cent of total
disbursements and total sanctions, respectively. The
state-wise analysis of ratio of disbursements to the
sanctions as per approved phasing reveals that Mizoram
topped with 95 per cent, followed by Sikkim (86%),
Himachal Pradesh (82%), Gujarat and Meghalaya (81%
each), Uttarakhand and Punjab (80% each), Tamil Nadu
and Nagaland (79% each), Haryana and Jammu &
Kashmir (78% each), Maharashtra (77%), Uttar
Pradesh (74%), Andhra Pradesh, Rajasthan,
Chhattisgarh, and Kerala (73% each), Madhya Pradesh
(72%) and West Bengal (70%). The slow pace of actual
utilisation of loans under RIDF when compared to the
sanctions was mainly due to delay in administrative and
technical approval by the State Governments, land
acquisition problems, delay in obtaining statutory
clearances and tendering process, inadequate budgetary
support at State level, lack of coordination among
implementing departments, etc.
3.64 The amount of loan sanctioned and disbursed to
States in the NER aggregated Rs.407.31 crore and
Rs.370.19 crore, respectively, during 2007-08.
Table 3.11: Sanctions and Disbursements under various Sectors
(As on 31 March 2008)
(Rs. crore)
Sector Amount % Of
Sanctioned Phased Disbursed disbursement*
Irrigation 25,009.10 20,993.31 15,621.13 74.4
Rural Road & Bridges 31,629.15 27,861.11 21,166.36 75.9
Social Sector 8,592.19 6,932.48 4,412.30 63.6
Power 1,651.07 1,514.16 1,124.80 74.3
Others 7,191.41 5,556.74 3,270.26 58.8
Total 74,073.41 62,857.80 45,594.85 72.5
*: With respect to amount phased
66
b. Deposits/Repayments
3.65 During the year, deposits received from
commercial banks amounted to Rs.11,807.87 crore
taking cumulative deposits received under RIDF to
Rs.47,524.21 crore (Table 3.13). Of the total deposits
received during the year, Rs.4,438.42 crore were received
under the Bharat Nirman programme.
3.66 An amount of Rs.1,891.17 crore was received
from the State Governments towards repayment of RIDF
loans during 2007-08.
Table 3.12: Cumulative Sanctions and Disbursements under different Tranches
(As on 31 March 2008)
(Rs. crore)
RIDF Corpus No. of Amount % of
Tranche Projects Sanctioned Phased Disbursed Disbursement@
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 2,453.50 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 4,072.14 90.7
VII 5,000 24,598 4,582.32 4,582.32 4,038.16 88.1
VIII 5,500 20,964 5,996.97 5,996.97 4,975.47 83.0
IX 5,500 19,579 5,649.09 5,649.09 4,513.74 79.9
X 8,000 17,368 ** 8,077.21 8,077.21 5,635.52 69.8
XI 8,000 30,305 8,412.07 8,412.07 4,395.22 52.2
XII 10,000 42,299 10,460.18 7,959.30 3,466.62 43.6
XIII 12,000 36,964 12,795.01 4,080.28 2,348.70 57.6
Total 72,000 2,80,227 74,073.41 62,857.80 45,594.85 72.5
*: One lakh STWs sanctioned to Government of Assam treated as single project. @ : With phased amount.
**: 42,616 Construction of Primary School structures sanctioned to Madhya Pradesh Government converted to 213 projects.
Table 3.13: Year/Tranche-wise Disbursements and Deposits received under RIDF
(As on 31 March 2008)
(Rs. crore)
Year Deposits Disbursements RIDF Tranche Deposits Disbursements
1995-96 350.00 387.34 I 1,586.56 1,760.87
1996-97 1,042.30 1,087.08 II 2,225.00 2,397.95
1997-98 1,007.04 1,009.03 III 2,308.02 2,453.50
1998-99 1,337.95 1,313.12 IV 1,412.53 2,482.00
1999-00 2,306.63 2,277.87 V 3,051.88 3,054.96
2000-01 2,653.64 3,176.85 VI 4,073.45 4,072.14
2001-02 3,590.72 3,790.37 VII 4,065.77 4,038.16
2002-03 3,857.09 4,103.42 VIII 5,031.61 4,975.47
2003-04 2,158.69 3,922.09 IX 4,490.24 4,513.74
2004-05 4,353.47 4,316.85 X 5,710.05 5,635.52
2005-06 6,092.37 5,953.32 XI 4,302.04 4,395.22
2006-07 6,966.43 6,222.58 XII 3,171.73 3,466.62
3,855.57* 4,000.00
2007-08 7,369.46 8,034.93 XIII 1,656.91 2,348.70
4,438.42* 4,500.00* 528.85* 500.00*
Total 47,524.21 50,094.85 Total 47,524.21 50,094.85
*: Under the Bharat Nirman programme.
67
D. Employment Generation
3.67 It is expected that the projects sanctioned under
RIDF on implementation will facilitate expansion of the
production base in rural areas and creation of additional
employment opportunities (Box 3.2).
E. Monitoring of RIDF Projects
3.68 Systematic monitoring of RIDF projects under
implementation had become imperative to ensure timely
completion and quality of assets created. Though the
primary responsibility of monitoring of RIDF projects rests
with the State Government, NABARD also undertakes
monitoring of RIDF projects by exception. This two-
pronged monitoring mechanism results in better
implementation of RIDF projects, as various factors
inhibiting the progress are reviewed at regular intervals.
The High Power Committee (HPC) at the State level
has proved to be a very effective tool for monitoring of
RIDF projects and ensuring their speedy and timely
completion. HPC is chaired by the Chief Secretary of
the State and meets quarterly to review the pace of
project implementation.
a. In-house Monitoring
3.69 NABARD carried out monitoring of projects through
desk review based on periodic returns and field visits
undertaken by its officers from ROs/HO/DDMs and
consultants hired by the Bank for the purpose. Guidelines
for monitoring were revised after rationalising the norms
for better compliance and improvement in implementation
of projects. During the year 5,506 projects were monitored
through field visits. Major observations/issues were taken
up with the implementing departments of the concerned
State Governments for initiating the necessary actions so
as to improve the pace and quality of implementation of
projects.
b. Monitoring Studies - Feedback
3.70 The monitoring visit to Kherde minor irrigation
project in Aurangabad district of Maharashtra in
November 2007, revealed an escalation in project cost
owing to the delay in project implementation by two
years as a result of slow pace of land acquisition and
completion of earthwork. A visit to the bridge-cum-
barrage project under RIDF XI across Bhima river in
Sindagi ta luka, Bi japur distr ict of Karnataka in
November 2007 revealed that cost of the project was
revised upwards owing to change in design of the project.
3.71 The Rural Drinking Water project in Nalgonda district
in Andhra Pradesh envisages to provide clean and safe
drinking water to water scarce and fluoride affected
habitations. The treatment plants, pump houses and
reservoirs were already constructed as per technical
specifications, safe drinking water as per the scientific norms
was provided and laboratories in each pumping station
was carrying out daily different tests. A few balancing
reservoirs on hillocks were put in place to create necessary
head for flow of water on gravitational force, thus helping
to further save electricity. The project has enabled supply
of drinking water for 6-8 hours during summer.
Box 3.2
Accretion to Rural Infrastructure and Employment
(lakh)
Rural Infrastructure
Additional irrigation potential 134.80 ha.
Rural road network 2.48 km.
Rural bridges 4.36 mt.
Generation of Employment
Due to increased irrigation
- Recurring (jobs) 67.87
- Non-recurring (persondays) 20,440
From non-irrigation projects-
Non-recurring (persondays) 37,635Water harvesting structure built under RIDF, Kerala
68
Economic Impact of Investments
3.72 NABARD continued its efforts to obtain feedback
on 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
2007-08, two ex-post evaluation studies on projects
suppor ted under RIDF, three commodity studies
examining the entire supply chain management and four
studies on comparative cost models for SHG-bank
linkage programme were undertaken (Tables 3.14 (a) &
(b) and 3.15).
a. Infrastructure Investments
3.73 The evaluation study on minor irrigation, rural
road, bridge and water supply projects, supported under
RIDF in Ahmednagar district of Maharashtra revealed
that the investments were economically viable after
accounting for tangible and intangible benefits. The high
rate of return (38%) in case of rural road projects was
owing to these roads being smaller and functioning as
connecting roads in the existing road network. Lower
economic rate of return (17%) in rural water supply
schemes suggested the need for rationalisation of water
rates and combining of smaller villages for water supply
projects. Lack of regular maintenance may affect the
sustainabi l i ty of benefi ts emanating from minor
irrigation, rural road and bridge projects. The need for
recovery of project cost from users of irrigation project
was also brought out.
3.74 The study on projects supported under RIDF in
Raipur district, Chhattisgarh, revealed that investments
in rural roads (black topping of existing roads) and
bridges apart from improving connectivity, reduced
vehicle operating cost and wastage of farm produce,
improved wage rates thus facilitating better price
realisation by reducing deterioration in quality and timely
marketing, especially of perishable commodities. Analysis
of cross sectional data for various districts of the State
also confirmed positive relationship between agricultural
productivity in terms of food grains, value of output per
ha. and the rural infrastructure comprising irrigation,
road length, electrification of villages and the storage
as well as credit faci l i t ies. At the macro level, a
percentage increase in infrastructure led to 2.2 and 3.1
per cent improvement in value of production and
productivity, respectively.
Table 3.14 (a): Benefits from RIDF Investments
(Per unit)
State/ Type of Capital Net Incremental Benefited ERR Additional Employment
Reference Investment* Cost Income Area (%) Generation
Year (Rs. Lakh) (Rs. Lakh) (ha./Km) (persondays per year)
Recurring Non-recurring
Maharashtra/ a. Minor Irrigation (2) 382.8 707.6 447 ha 41 5,700 1,14,000
2005-06 b. Rural Roads (4) 147.8 72.4 1.1-3.6 km 38 2,520 77,000
c. Bridges (1) 47.0 24.8 0.51 km 44 200 24,000
d. Water Supply (2) 70.2 15.8 320 users 17 930 35,000
Chhattisgarh/ a. Rural Roads (2) 209.6 44.4 8.30-13 km 18 3,900 6,036
2004-05 b. Submersible Bridge (1) 576.9 86.8 0.53 km 15 7,600 7,473
ERR : Economic Rate of Return
Figures in parentheses indicate number of projects under study.
69
3.75 In addition to in-house evaluation studies, the
Bank outsourced a study to assess the performance of
RIDF projects to IIM, Bangalore. The study suggested,
use of parameters like (i) number of villages instead of
geographical area, (ii) share of BPL rural population to
total rural population or rural population to total
population, (iii) Rural Infrastructure Index, and (iv) share
of unirrigated land to total cultivable area in the State
for allocation under RIDF. It was also observed that the
Bank’s processes for technical appraisal of projects and
disbursal of funds was well streamlined and seamless,
while the user department did not follow the latest
implementation techniques. It proposed, (i) mandatory
adoption of the CPM/PERT methodology for all projects
with project cost more than Rs.2 crore, and (ii) the
implementing department to compulsori ly submit
detailed project reports to NABARD for all medium and
large projects and all critical activities identified therein.
In view of the disbursements lagging behind sanctions
despite majority of projects being smaller ones, the study
suggested NABARD to focus on the low utilisation in
the eastern and north-eastern states.
b. Commodity Specific Studies
3.76 During the year, commodity specific studies (CSS)
on sugarcane, cashew and groundnut were undertaken
to analyse the entire supply chain management covering
the economics of crop production, status of backward/
forward l inkages, processing, market ing, export
potential, etc.
i. Cashew
3.77 A study on cashew undertaken in Orissa and Tamil
Nadu revealed that the investments were financially
viable for both traditional and grafted varieties of cashew
with the financial rate of return (FRR) ranging from 23
to 38 per cent in Orissa and 31 to 38 per cent in Tamil
Nadu. Most of the cashew plantations were of the
traditional variety and non-availability of quality grafts
was a major constraint in allowing a shift towards grafted
varieties. There was a large inflow of imported nuts at
cheaper rates, which posed a challenge to the farmers
to realise remunerative prices. The investments in cashew
nut processing units were also found to be financially
viable. Though the investments in processing units in
Orissa were financially viable with an installed capacity
of 20,000 tonnes, the capacity utilisation was only
10,000 tonnes with a turnover of Rs.4.16 crore. The
study further observed that promotion of cashew
plantation and processing on a commercial scale through
co-ordinated efforts of the stakeholders will not only
enhance income and generate employment in rural areas
but also facilitate the use of waste and marginal lands
Table 3.14 (b): Commodity Specific Studies
Commodity State/ Sample Net Income FRR for processing units
Reference Year Size@ (Rs./ha.) (%)
Sugarcane Haryana/ 67 (60) 4,258 Negative#
Plantation 2005-06
Groundnut Chhattisgarh/ 38 (30) 21,551 @@
2005-06
Cashew Orissa / 81 (35) 11750*
33,325**
Tamil Nadu/ 71 (37) 16,175*
> 50
2005-06 37,150**
FRR: Financial Rate of Return @@ : Net income of Rs.7.80/kg @ : Includes farmers, processors, traders, etc.
* : Traditional varieties, FRR on Investment was 23% in Orissa and 38% in Tamil Nadu
** : Grafted varieties, FRR on Investment was 38% in Orissa and 31% in Tamil Nadu
# : Loss (Rs.2,050/ qtl) due to high cost of production and processing capacity of less than 2,500 tonnes/day. Processing units having
capacity of 12,500-tonnes/ day earned net income of Rs 339/ qtl.
Figures in parentheses indicate number of farmers.
70
in the study area, besides the soi l conservation,
ecological and environmental benefits.
ii. Sugarcane
3.78 The study conducted on sugarcane in Kurukshetra
and Yamunanagar districts of Haryana, revealed that
though the price paid for sugarcane, net of marketing
cost (Rs.98/qtl.) covered the cost of purchased inputs
(Rs.96/qtl.), it did not cover the imputed cost of family
labour. The study suggested promotion of ‘pit planting
method’, intercropping with wheat, better management
practices, etc. Of the farmers covered under the study,
13 per cent adopted intercropping of wheat with
sugarcane and real ised addit ional income of
Rs.1,265/ha. Low productivity at farm level was
attributed to delay in planting, improper use of plant
nutrients such as excess use of urea and lesser use of
phosphatic fertilizers, non-availability of adequate and
timely water from the canals, etc. On the export front,
the commodity was not cost competitive due to stagnant
productivity and lower sucrose content vis-à-vis other
sugarcane producing countries like Australia and Brazil.
3.79 At the processing level, the viability of the unit
was also found to be less, especially those with capacity
of less than 2,500 tonnes/day. Though bagasse based
cogenerat ion and ethanol production helped in
improving returns (additional 20%) for the sugar mills,
it necessitated substantial investments and proper
marketing facilities. At the marketing level, direct supply
of sugarcane by farmers to the mills was found to be
the most preferred and efficient channel wherein the share
of producer in consumer rupee was about 67 per cent.
Contract farming was also prevalent in the study area
wherein sugar mills provided inputs (seeds, pesticides)
and extension services (plant variety, intercropping, pest
management) for the farmers and had an arrangement
to procure back the output.
iii. Groundnut
3.80 A study on groundnut cultivation in Sarguja
district, Chhattisgarh confirmed the profitability of
groundnut over vegetables and paddy in the cropping
system at the farmer level. Net income accrued from
groundnut was Rs.21,551/ha. as compared to vegetables
(Rs.18,742/ha.) and paddy (Rs.10,095/ha.). The study
also brought out the problems faced by the farmers in
groundnut cultivation like inadequate supply of quality
seeds, extension services, absence of risk mitigation
mechanism, etc. Further, groundnut cultivation was
primarily in rainfed areas and practiced on poor fertility
soil, thus increasing susceptibility to pests and diseases
and adversely affecting its production prospects in the
study area. To improve crop productivity and returns,
the study recommended adoption of improved farming
practices, insurance to cover income risk of groundnut
growers, adequate credit, especially for investments such
as micro irrigation systems, fencing, etc., proper linkage
with banks, input suppliers and processors. The study
also recommends promotion of contract farming with
the help of Farmers’ Clubs
c. SHG-Bank Linkage Programme
3.81 Studies on comparative cost models of SHGs
were undertaken in Karnataka, Rajasthan, Tamil Nadu
and West Bengal to assess the cost of borrowing, covering
both interest and non-interest costs (cost of
documentation and the opportunity cost of wages
foregone). The studies revealed that while the total cost
varied between 10 and 21 per cent, the variations were
higher in the case of interest cost (7.5 to 17.5%) than
non-interest cost (0.13 to 3.74%). The cost of borrowing
also varied according to the model adopted for SHG
formation. In the case of Model II wherein groups were
formed and nurtured by NGOs and financed by banks,
the cost of borrowing ranged from 9 to 12 per cent.
However, it was higher where group formation, nurturing
and financing was done by the banks (8.7 to 13.6%) as
in Model I or by NGOs/MFIs (12 to 21%) as in
Model III. The high cost of borrowing in Model III in
Rajasthan, Tamil Nadu and West Bengal was largely
due to high interest cost (15 to17.5%). The cost of lending
per Rs.100 of loan varied between 0.24 and 5.12 per
cent mainly on account of loan size as the absolute
cost per SHG was found to be similar. Relatively high
cost of lending in Model III was due to less diversified
activities of MFIs vis-à-vis banks.
71
3.82 NABARD Consultancy Services Pvt. Ltd
(Nabcons), a wholly owned subsidiary of NABARD, has
now established itself as a professional consultancy
services provider in agriculture, rural development and
al l ied act ivi t ies. I ts c l ients include GoI, State
Governments, National Institute of Agriculture Marketing
(NIAM), commercial banks, small entrepreneurs, etc.
Nabcons has signed Memoranda of Understanding (MoU)
with a number of banks and International Consultancy
organizations for promotion of business.
A. Management
3.83 The Board of Nabcons under the Chairmanship
of Dr. K.G. Karmakar, Managing Director, NABARD
comprises of eight directors. During 2007-08, the Board
was reconstituted by inducting Shri M.B.N. Rao, CMD,
Canara Bank; Shri Rana Kapoor, MD & CEO, Yes Bank;
Shri N Chandrasekaran, ED & COO, TCS, Shri P.H.
Ravi Kumar, CEO & MD, NCDEX and Dr. R.B.
Deshmukh, Vice-Chancellor, Mahatma Phule Krishi
Vidyapeeth. The affairs of the company are
professionally managed by the Chief Executive Officer
supported by a team of officers at HO. At the State
level, the Chief General Manager/Officer-in-Charge of
the concerned NABARD, RO functions as the Principal
Representative of Nabcons.
B. Progress
3.84 During the year, Nabcons contracted 321
assignments involving a consultancy fee of Rs.880.30
lakh. The company completed 366 assignments during
2007-08 as compared to 155 assignments during
2006-07 (Table 3.16). During 2007-08, the company
earned an income of Rs.1,019 lakh as compared to
Rs.945 lakh earned during 2006-07. The profit earned
Table 3.15: Costs of SHG-Bank Linkage under various Models
(Per cent)
State Model I (RRBs) Model II (commercial banks) Model III (MFIs)
Interest & Transaction Avg. Loan Interest & Transaction Avg. Loan Interest & Transaction Avg. Loan
Non- Cost / Amount Non- Cost / Amount Non- Cost / Amount
Interest SHG (Rs.) Interest (Rs.) Interest SHG (Rs.)
borrowing borrowing borrowing
Cost Cost Cost
Rajasthan 13.58 374(2.52) 14,804 10.67 521(2.96) 17,572 18.56 310(4.15) 7,462
11 8.5 15
Karnataka 12.13 580(1.32) 43,939 11.20 535(1.91) 28,010 12 380(2.58) 14,728
12 11 11
Tamil Nadu 12.70 315(0.24) 1,30,000 10.40 541(0.46) 1,17,600 18.15 1,345(1.47) 91,000
12 8.75 15.22
West Bengal 8.67 350(2.43) 14,358 9.54 396(2.44) 16,251 21.24 300(5.12) 5,860
7.5 8.5 17.5
Figures in italics indicate interest cost (%) only. Figures in parentheses indicate percentage transaction cost.
NABARD Consultancy Services
Table 3.16: Client Profile of Nabcons
(Rs. lakh)
Client Institution Assignments Completed
2007-08 2006-07
No. Amount No. Amount
Government of India 274 491.16 59 509.00
State Government 27 224.27 17 190.00
International
Organisations 10 49.14 4 35.77
Banks 5 19.15 5 8.20
Corporate Houses 19 63.37 29 86.70
Individuals 31 37.23 41 28.00
Total 366 884.28 155 857.67
72
after making provision for tax stood at Rs.381 lakh
during the year as against Rs.299.87 lakh during the
previous year.
C. Projects and Clientele
3.85 During 2007-08, Nabcons completed 319
assignments related to project appraisal and detailed
project report preparation for an aggregate fee of
Rs.506.90 lakh. Preparation of detailed project reports
and appraisal of projects on behalf of NIAM, Ministry
of Agriculture, GoI, for financing under the scheme for
development/strengthening of agriculture marketing
infrastructure scheme continued to be a major
assignment for Nabcons. Besides, Nabcons also
contracted assignments related to preparation of project
reports/appraisal form other cl ients, viz. , banks,
corporate houses, private entrepreneurs, etc.
3.86 The Ministry of Stat is t ics and Programme
Implementation, GoI awarded the assignment for
monitoring the implementation of the Member of
Parliament Local Area Development Scheme for 73
districts across various States to Nabcons for a fee of
Rs.219 lakh to be undertaken in two phases. As on 31
March 2008, 30 reports under the first phase were
submitted while study in respect of 43 districts under
the second phase is in progress.
Management of Resources
3.87 The financial resources of NABARD increased by
Rs.17,486 crore during 2007-08 as against an increase
of Rs.13,615 crore during 2006-07. The resources were
augmented by issue of Corporate Bonds of Rs.10,403
crore, Bhavishya Nirman Bonds of Rs.1,783 crore,
NABARD Rural Bonds of Rs.3 crore, RIDF Deposits of
Rs.11,808 crore and Certificate of Deposits of Rs.1,422
crore. Repayment of RIDF Deposits and redemption of
Bonds amounted to Rs.1,370 crore and Rs.12,381 crore,
respect ively. The funds deployed for suppor t ing
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.11,317 crore and
the production and marketing credit (including liquidity
support) increased by Rs.2,180 crore during 2007-08.
The details on sources and uses of funds are furnished
in Table 3.17 and 3.19, respectively.
Sources of Funds
A. Capital
3.88 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 the GoI and Rs.1,450 crore
by the RBI) as on 31 March 2008.
Table 3.17: Sources of Funds
(As on 31 March)
(Rs. crore)
Particulars 2007 2008
Capital, Reserves & Surplus 9,802 10,603
(12.1) (10.7)
NRC (LTO) and (Stab.) Funds 14,747 15,159
(18.1) (15.4)
Deposits, Bonds & Debentures 28,974 28,806
(35.7) (29.2)
Borrowings from RBI-GLC - -
(0.0) (0.0)
Borrowings from GoI 382 370
(0.5) (0.4)
Borrowings from Commercial Banks 2,500 2,500
(3.1) (2.5)
Certificate of Deposits - 1,422
(0.0) (1.4)
RIDF Deposits 20,155 30,593
(24.8) (31.0)
Foreign Currency Loan 289 508
(0.3) (0.52)
Other Liabilities/Funds 4,371 8,745
(5.4) (8.9)
Total 81,220 98,706
(100.0) (100.0)
Figures in parentheses indicate percentages to total.
B. Deposits
3.89 Deposits from tea, coffee and rubber companies
outstanding as on 31 March 2008 aggregated
73
ii. Priority Sector Bonds and Corporate Bonds
3.93 During the year, PSBs worth Rs.4,825.50 crore
were redeemed. Corporate Bonds worth Rs.3,478.80 crore
were redeemed while bonds worth Rs.10,402.50 crore
|were issued during 2007-08. The outstanding under
PSBs and Corporate bonds stood at Rs.325 crore
and Rs.20,877.50 crore, respectively, as on 31 March
2008.
iii. Tax Free Bonds
3.94 Tax Free Bonds worth Rs.464.85 crore were
redeemed during the year and the outstanding stood at
Rs.535.15 crore as on 31 March 2008.
iv. Statutory Liquidity Ratio (SLR) Bonds
3.95 While no SLR bonds were issued, bonds worth
Rs.198.63 crore were redeemed during the year. The
outstanding under SLR bonds aggregated Rs.394.21
crore as on 31 March 2008.
v. Bhavishya Nirman Bonds
3.96 During the year, Bhavishya Nirman Bonds (BNBs)
worth Rs.1,783.47 crore were issued. The total
outstanding under BNBs since inception aggregated
Rs.1,787.46 crore as on 31 March 2008.
vi. Certificate of Deposits
3.97 In order to meet the gap in resources for
extending support to banks and for meeting other
obl igat ions, NABARD raised resources worth
Rs.1,421.92 crore by way of Certificate of Deposits
(CoDs) during 2007-08 with face value of Rs.1,545
crore. As on 31 March 2008, outstanding under CoDs
amounted to Rs.1,421.92 crore.
b. Funds from GoI
3.98 During the year, an amount of Rs.11.80 crore
was repaid on maturity to the GoI against the loans
drawn earlier under various externally aided projects.
Table 3.18: Market Borrowings of NABARD
(As on 31 March)
(Rs. crore)
Year Total Working Outstanding Market
Funds Borrowings*
2004 55,889 15,306 (27.4)
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)
* : Includes deposits (excluding RIDF deposits), borrowings, bonds
and foreign currency borrowings.
Figures in parentheses indicate percentages of outstanding market
borrowing to total working funds.
Rs.106.08 crore. During the year, NABARD received
deposits from commercial banks aggregating Rs.11,808
crore under RIDF VI to XIII. Repayments of Rs.1,370
crore were made to commercial banks under RIDF V to
XI during 2007-08. Deposits outstanding under various
tranches of RIDF as on 31 March 2008 were Rs.30,593
crore as against Rs.20,155 crore as on 31 March 2007.
C. Borrowings
3.90 The borrowings of NABARD as a percentage to
working funds registered a significant increase from 27.4
per cent as on 31 March 2004 to 34 per cent as on 31
March 2008 (Table 3.18).
a. Bonds
3.91 Government of India has withdrawn the option
available to NABARD for raising resources through issue
of Capital Gains Bonds (CGBs), Tax Free Bonds and
Priority Sector Bonds (PSBs) with effect from 1 April
2006. Consequently, the issue of Corporate Bonds has
become the major source of raising resources during
2007-08.
i. Capital Gains Bonds
3.92 During the year, CGBs of Rs.3,413.32 crore were
redeemed and the outstanding stood at Rs.4,777.45
crore at the weighted average cost of 5.35 per cent.
74
c. Corporate Borrowings
3.99 No fresh corporate borrowing was made
and no amount repaid during the year. The amount
outstanding under Corporate Borrowings aggregated
Rs.2,500 crore.
d. Borrowings in Foreign Currency
3.100 The borrowings in foreign currency from KfW,
Germany aggregated Rs.508.14 crore (Euro 95.99
million) as on 31 March 2008. The foreign exchange
risk on this loan as well as interest payment has been
effectively hedged.
Uses of Funds
A. Loans and Advances
a. Schematic Lending
3.101 The amount outstanding under schematic lending
including subscript ions to Special Development
Debentures to SCARDBs was Rs.32,401 crore as on 31
March 2008 as against Rs.31,682 crore as on
31 March 2007.
b. ST, MT and MT (Conversion) Loan
Assistance
3.102 The ST loans advanced for f inancing
SAO to the SCBs (Rs.14,373.92 crore) and RRBs
(Rs.2,831.31 crore) together with other ST loans
to SCBs (Rs.122.15 crore) and RRBs (Rs.54.12 crore)
increased to Rs.17,381.50 crore as on 31 March 2008
from Rs.14,757.56 crore as on 31 March 2007.
3.103 The amount outstanding under MT investment
non-project loans as on 31 March 2008 stood at
Rs.290.14 crore. The amount outstanding under MT
(conversion) loans as on 31 March 2008 stood at
Rs.118.20 crore compared to Rs.181.48 crore as on 31
March 2007. The amount outstanding under the
Liquidity Support Scheme for SCBs and RRBs
aggregated Rs.1,939.89 crore as on 31 March 2008 as
against Rs.2,490.60 crore as on 31 March 2007.
Table 3.19: Uses of Funds
(As on 31 March)
(Rs. crore)
Particulars 2007 2008
Cash and Bank Balance 7,315 10,314
(9.0) (10.4)
Government Securities and 2,076 2,582
other Investments (2.6) (2.6)
Production and 14,758 17,382
Marketing Credit (18.1) (17.6)
Conversion of Production 181 118
Credit into MT Loans (0.2) (0.1)
Liquidity Support 2,491 1,940
(3.1) (2.0)
MT & LT Project Loans 31,683 32,401
(39.0) (32.8)
LT Non Project Loans 335 290
(0.4) (0.3)
Loans out of RIDF 20,005 30,649
(24.6) (31.1)
Co Finance Loans 42 66
(0.1) (0.1)
Other Loans (including 13 27
MT Investment Credit) (0.0) (0.0)
Fixed Assets & Other Assets 2,321 2,937
(2.9) (3.0)
Total 81,220 98,706
(100.0) (100.0)
Figures in parentheses indicate percentages of outstanding market
borrowing to total working funds.
75
c. Loans to State Governments
i. Project Loans under RIDF
3.104 The pro jec t loans to S ta te Governments
under RIDF s tood at Rs.30,648.59 crore as on
31 March 2008, compared to Rs.20,004.83 crore as
on 31 March 2007.
ii. Non-Project Loans
3.105 The amount outstanding under the non-project
LT loans to State Governments for contribution to the
share capital of co-operat ive credit inst i tut ions,
amounted to Rs.290.14 crore as on 31 March 2008,
compared to Rs.335.14 crore as on 31 March 2007.
d. Other Loans
3.106 Other loans outstanding stood at Rs.26.61 crore
as on 31 March 2008, which included amounts
outstanding under various funds, viz., CDF, MFDEF,
WDF and TDF.
B. Investment of Surplus Funds
3.107 NABARD deployed its surplus funds in ST
deposits with commercial banks. During the year,
NABARD l iquidated i ts ST deposits and G-sec
investments to support its business operations. As on
31 March 2008, the total investments of the surplus
funds of the Bank in ST deposits, money market
instruments, Government securities, etc., aggregated
Rs.8,835.28 crore.
C. Co-Finance
3.108 The Bank has entered into agreements with
commercial banks to co-finance various projects. The
outstanding as on 31 March 2008 aggregated
Rs.66.39 crore.
Income and Expenditure
3.109 The total income of NABARD during the year
amounted to Rs.5,509.10 crore as against Rs.4,474.41
crore during the previous year. Out of this, a sum of
Rs.521.95 crore has been provisionally earmarked
towards payment of Income Tax and Fringe Benefit Tax
(net of deferred tax asset), and Rs.320 crore has been
contributed to Special Reserve 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 has been transferred to
the NRC (Stabilisation) Fund under Sections 42 and 43,
respectively, of the NABARD Act, 1981.
3.110 Out of the balance income amounting to
Rs.4,257.15 crore (Rs.3,710.88 crore in the previous
year), after meeting the total expenditure of Rs.3,761
crore (Rs.3,304.46 crore in the previous year), the surplus
amounted to Rs.496.15 crore, including withdrawals of
Rs.30.31 crore from funds against expenditure debited
to P&L account (Rs.72.94 crore during 2006-07). The
surplus has been transferred to CDF Rs.53.07 crore
(Rs.2.96 in the previous year); R&D Fund Rs.7.49 crore
(Rs.8.89 crore in the previous year); Reserve Fund
Rs.405.11 crore (Rs.453.89 crore in the previous year);
Foreign Currency Risk Fund- ‘Nil’ (Rs.13.62 crore in the
previous year) and Investment Fluctuation Reserve
Rs.25.78 crore (‘Nil’ in the previous year). The surplus
has also been transferred to the newly created Financial
Inclusion Fund Rs.5 crore, Financial Inclusion Technology
Fund Rs.5 crore and Farmers’ Technology Transfer Fund
Rs.25 crore.
76
IV
Table 4.1: Performance of PACS
(As on 31 March)
(Rs. crore)
Particulars 2004 2005 2006
Number (lakh) 1.06 1.09 1.06
Membership (lakh) 1,354 1,274 1,252
Borrowing Members (lakh) 513 451 461
Owned Funds 8,397 9,197 9,292
Deposits 18,143 18,976 19,561
Borrowings 34,257 40,249 41,018
Loans issued* 35,119 39,212 42,920
* : April-March. Source : NAFSCOB
Table 4.2: Performance of Short-Term Co-operative
Credit Strucutre
(As on 31 March)
(Rs. crore)
Particulars SCBs DCCBs
2006 2007** 2006 2007**
Number 31 31 366 369
Share Capital 1,135 1,246 4,753 5,458
Reserves 9,387 9,303 17,624 20,722
Deposits 45,860 48,560 88,397 94,329
Borrowings 17,071 22,256 24,352 29,912
Loans Issued* 48,203 52,777 73,864 82,963
Loans Outstanding 39,996 47,354 79,936 89,038
*: April – March ** : Data provisional.
Capacity Building of Client Institutions
The financial health and growth of rural credit institutions
has always been an area of concern to NABARD. The
Bank has, therefore, constantly strived towards improving
the health of these institutions through various initiatives.
In addition, NABARD also conducts inspection of co-
operatives and RRBs to assess the financial soundness
and managerial efficiency of these institutions and their
compliance with banking rules and regulations.
Institutional Development
4.2 This section discusses the performance of co-
operative banks and RRBs, various measures, initiatives
taken by NABARD during the year to faci l i tate
development and improve their 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. Total members of PACS as on 31 March
2006 aggregated 12.52 crore of which, borrowing
members at 4.61 crore constituted around 37 per cent.
The membership of PACS has shown a declining trend
over the period 2004-06. However, number of borrowing
members increased (2.2%) during 2005-06. Deposits and
borrowings of PACS increased by 3 and 2 per cent,
respectively, as on 31 March 2006 over the previous
year. The loans issued increased by 9 per cent over the
previous year (Table 4.1).
4.4 As on 31 March 2007, deposits of State Co-
operative Banks (SCBs) and District Central Co-
operative Banks (DCCBs) increased by 6 and 7 per cent,
respectively and borrowing by 30 and 23 per cent,
respectively. Loans issued and loans outstanding of SCBs
increased by 9 and 18 per cent, respectively, and of
DCCBs by 12 and 11 per cent, respectively, during
2006-07 over the previous year (Table 4.2).
4.5 In the case of long-term (LT) co-operative credit
structure, borrowings by State Co-operative and
Agriculture Rural Development Banks (SCARDBs) and
Pr imary Co-operat ive Agr icu l ture and Rura l
Development Banks (PCARDBs) decreased by 2 and
3 per cent, respectively, over the previous year. While
loans issued by SCARDBs and PCARDBs decreased
by 16 and 14 per cent, respectively, during 2006-07,
loans outstanding rose by 5 per cent and decreased by
5 per cent, respectively, as on 31 March 2007 compared
to previous year (Table 4.3).
77
b. Working Results
i. Profitability
4.6 Out of 31 SCBs, 27 were in prof i t during
2006-07 with overall profit at Rs.319 crore. At the
aggregate level, SCBs earned a net profit of Rs.275 crore.
While 271 (out of 369) DCCBs earned overall profit of
Rs.754 crore, at the aggregate level DCCBs earned net
profit of Rs.30 crore during 2006-07. Position of loss
making DCCBs increased during 2006-07. The profit
earned by profit-making SCBs and DCCBs declined by
21 and 33 per cent, respectively, during 2006-07 over
the previous year. While the losses of loss-making SCBs
increased by 38 per cent, those of DCCBs decreased by
22 per cent over the same period.
4.7 In the case of profit-making SCARDBs, profits
declined by 12 per cent, yet losses of loss making
SCARDBs increased by 188 per cent during 2006-07
over previous year. At the aggregate level SCARDBs
earned profit of Rs.90 crore. Profits of profit-making
PCARDBs (350) increased to Rs.419 crore during 2006-07
from Rs.336 crore during 2005-06 up by 25 per cent.
The losses of loss-making PCARDBs (342) increased by
9 per cent to Rs.566 crore during 2006-07 over the
previous year (Table 4.4). PCARDBs at the aggregate
level incurred a loss of Rs.147 crore during 2006-07.
4.8 As on 31 March 2007, the aggregate amount of
accumulated losses of SCBs, DCCBs, SCARDBs and
Table 4.3: Performance of Long-Term Co-operative
Credit Structure
(As on 31 March)
(Rs. crore)
Particulars SCARDBs PCARDBs
2006 2007** 2006 2007**
Number 20 20 696 696
Share Capital 798 794 921 918
Reserves 2,243 2,137 2,589 2,678
Deposits 651 605 378 341
Borrowings 17,029 16,662 13,167 12,751
Loans Issued* 2,907 2,436 2,296 1,970
Loans Outstanding 17,678 18,644 12,870 12,179
* : April – March. ** : Data provisional.
PCARDBs all witnessed an increase of 41, 8, 8 and 5
per cent, respectively, over the previous year (Table 4.5).
4.9 During 2006-07, profits of SCBs declined in all
regions except the western region that registered an
increase of 588 per cent. Losses of SCBs in the NER
declined by 71 per cent (Table 4.6). While the profits of
10 SCBs (Chandigarh, Gujarat, Maharashtra, Manipur,
Meghalaya, Mizoram, Rajasthan, Sikkim, Uttar Pradesh
and West Bengal) improved. As on 31 March 2007, 16
SCBs (Andaman & Nicobar, Andhra Pradesh, Assam,
Bihar, Delhi, Goa, Haryana, Himachal Pradesh, Jammu
& Kashmir, Karnataka, Madhya Pradesh, Orissa,
Pondicherry, Punjab, Tamil Nadu and Uttarakhand)
showed declining trend in profits as compared to the
previous year. While Chhattisgarh SCB, which was in
loss during 2005-06 earned profits during 2006-07,
Table 4.4: Working Results of Co-operative Banks
(Rs. crore)
Agency/ Total In Profit In Loss
Year (No.) No. Amount No. Amount
SCBs
2005-06 31 26 403 5 32
2006-07 31 27 319 4 44
DCCBs
2005-06 366 276 1,120 90 925
2006-07* 369 271 754 97 724
SCARDBs@
2005-06$ 20 11 316 7 66
2006-07$ 20 10 280 8 190
PCARDBs
2005-06# 696 370 336 329 519
2006-07^ 696 350 419 342 566
Data for 2006-07 is provisional
* : Data for Baran DCCB in Rajasthan not available.
@ : Manipur SCARDB under orders of liquidation.
$ : Profit/Loss data for Bihar SCARDB not received.
# : Data in respect of 3 liquidated PCARDBs in Orissa included
^ : Data in respect of 4 PCARDBS in Orissa not received.
Table 4.5: Accumulated Losses
(As on 31 March)
(Rs. crore)
Year SCBs DCCBs SCARDBs PCARDBs
2005 305 4,776 1,039 2,466
2006 276 5,298 876 2,725
2007 389 5,712 946 2,870
78
Tripura SCB reduced their losses substantially during
2006-07. However, the losses of loss making SCBs in
Arunachal Pradesh and Kerala increased considerably
during 2006-07 over the previous year.
4.10 In case of DCCBs, overall profit declined across
all regions during 2006-07. The losses of DCCBs in
northern region increased considerably, whereas their
losses in the southern region declined substantially
(Table 4.7). At the aggregate level, both the number of
DCCBs in profit and amount of profit reduced, the
amount of losses decreased despite an increase in the
number of DCCBs in loss. While the profit-making
DCCBs in Tamil Nadu improved their prof i ts
substantial ly, those in Bihar, Madhya Pradesh,
Rajasthan, Punjab and Uttar Pradesh witnessed
declining profits during 2006-07 over the previous year.
During the same period, losses of loss-making DCCBs
in Gujarat, Rajasthan and West Bengal showed
considerable increase.
4.11 During 2006-07, profits of SCARDBs in the
western region increased over five times and those in
the north-eastern and northern regions registered profits.
However, SCARDBs in central, eastern and southern
regions incurred losses during 2006-07 over 2005-06
(Table 4.8). The profits of SCARDBs at the aggregate
level witnessed a considerable decline (64%). The profits
of the profit-earning SCARDBs increased except in
Karnataka and Punjab while in the case of loss-making
SCARDBs, losses increased further in Orissa and reduced
in Chhattisgarh, Jammu & Kashmir, Haryana, Himachal
Pradesh, Pondicherry and Tripura. Tamil Nadu and Uttar
Pradesh SCARDBs, which were in profit earlier, incurred
a loss during 2006-07. PCARDBs in central, southern
and western regions earned profit, yet losses of PCARDBs
increased during 2006-07 (Table 4.9). At the aggregate
level , though profi ts of prof i t -making PCARDBs
increased, PCARDBs as a whole incurred a net loss of
Rs.147.44 crore. Number of profit-making PCARDBs
and their profitability increased in Chhattisgarh, Haryana,
Madhya Pradesh, Maharashtra, Tamil Nadu and West
Bengal while the number of loss-making PCARDBs
increased substantially in Karnataka and Punjab during
2006-07 over the previous year.
Table 4.6: Region-wise Working Results of SCBs
(As on 31 March)
(Rs. crore)
Region Profit /Loss NPAs NPA as % to loans Recovery (%)
(+)/(-) outstanding As on 30 June
2005-06 2006-07 2006 2007 2006 2007 2006 2007
Central 84.78 72.44 668.22 763.47 14.08 13.85 79.98 80.20
Northern 146.34 113.26 232.21 301.86 2.97 3.07 98.35 98.16
Eastern 86.05 30.94 386.56 501.11 9.06 10.82 78.74 70.64
Western 7.87 54.14 3,080.29 2,565.97 30.68 20.48 71.78 79.06
Southern 59.71 8.42 1,915.24 2,154.49 15.65 15.51 88.88 87.91
North-Eastern -13.73 -3.95 452.41 417.10 51.19 43.34 46.65 43.02
All-India 371.02 275.25 6,734.93 6,704.00 16.84 14.16 86.57 85.65
Data for 2007 provisional. Jharkhand SCB has not yet started functioning.
Recovery position for Karnataka SCB for 2007 repeated from the previous year.
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.
79
Table 4.7: Region-wise Working Results of DCCBs
(As on 31 March)
(Rs. crore)
2005-06 2006-07 NPA as % Recovery (%)
Region to loans As on
DCCBs Profit Loss DCCBs Profit Loss Total NPAs outstanding 30 June
(No.) No. Amt. No. Amt. (No.) No. Amt. No. Amt. 2006 2007 2006 2007 2006 2007
Central 104 74 158.91 30 174.01 104 71 121.16 33 186.00 2,719.06 3,118.04 29.13 30.16 60.27 61.57
Northern 69 64 213.64 5 19.45 72 55 119.39 16 44.01 1,063.81 1,128.32 7.53 7.14 72.94 82.92
Eastern 64 50 96.14 14 35.43 64 45 42.78 19 59.39 1,128.76 1,240.80 21.26 20.75 64.95 64.36
Western 49 34 244.23 15 245.81 49 37 166.99 12 241.63 5,834.28 6,248.30 23.54 22.18 62.47 60.34
Southern 80 54 406.60 26 450.00 80 63 304.09 17 192.91 4,963.03 4,759.42 18.63 16.56 77.29 77.60
All-India 366 276 1,119.52 90 924.70 369 271 754.41 97 723.94 15,708.94 16,494.88 19.65 18.53 69.16 71.08
Data for 2007 provisional. Data for DCCBs in J & K and Orissa for 2007 repeated from previous year.
Data for 1 DCCB in Rajasthan not available for 2007.
Profitability data for DCCBs in Haryana and Himachal Pradesh for 2007 repeated from previous year.
ii. Costs and Margins
4.12 For SCBs as a group, the overall return and cost
of funds as a percentage to working funds worked out
to 6.65 and 4.30 per cent, respectively, as a result of
which the financial margin was 2.35 per cent (excluding
miscellaneous income of 0.33%) during 2006-07. The
average transaction and risk costs of SCBs during 2006-07
worked out to 1.50 and 0.72 per cent, respectively. SCBs
as a group earned a positive net margin* of 0.46 per
Table 4.8: Region-wise Working Results of SCARDBs
(As on 31 March)
(Rs. crore)
Region No. of Profit /Loss Total NPAs NPA as % to loans Recovery (%)
Branches (+)/(-) outstanding As on 30 June
2007 2005-06 2006-07 2006 2007 2006 2007 2006 2007
Central 349 -1.04 -121.46 1,602.26 2,340.40 30.86 39.99 40.85 33.77
Eastern 158 -0.06 -1.61 266.28 374.56 29.51 40.70 25.01 31.33
North-Eastern 39 -0.40 0.98 18.57 17.45 64.11 58.73 23.99 22.92
Northern 85 -17.96 6.24 981.14 1,409.38 16.67 24.07 71.21 79.06
Southern 56 235.16 -12.88 1,438.89 687.41 36.74 16.91 57.69 48.82
Western 181 33.81 218.41 1,471.66 813.93 84.03 42.36 23.29 32.55
All-India 868 249.49 89.68 5,778.81 5,643.13 32.69 30.27 46.38 43.89
Data for 2007 provisional. Data for J & K SCARDB not received Manipur SCARDB is under order of liquidation
* Includes miscellaneous income
cent during 2006-07. In the case of DCCBs, the overall
return (yield on assets) to working funds and cost of
funds was 7.54 and 4.91 per cent, respectively. Thus
the financial margin available to DCCBs was 2.63 per
cent (excluding miscellaneous income of 1.09%). The
average transaction and risk costs, as percentage to
working funds was 1.87 and 1.51, respectively, during
2006-07. DCCBs as a group earned a net margin* of
0.34 per cent during 2006-07.
80
4.13 For SCBs the risk cost as a percentage to working
funds ranged between 0.04 (Mizoram) and 3.07 (Goa),
the average being 0.72 per cent. Similarly, for DCCBs
average risk cost worked out to 1.51 per cent, which
ranged between 0.14 (Haryana) and 10.18 per cent
(Jharkhand) during 2006-07.
4.14 During 2006-07, out of 19 reporting SCARDBs,
10 SCARDBs had posi t ive net margin and the
remaining 9 had negative net margins. Out of the 11
reporting PCARDBs, seven had negative and four had
positive net margins.
iii. Non-Performing Assets (gross) and
Recovery Performance
4.15 At the aggregate level for SCBs and DCCBs, the
percentage of non-performing assets (NPAs) to total
loans and advances outstanding decreased to 14.16 and
18.53 per cent as on 31 March 2007 from 16.84 and
19.65 per cent as on 31 March 2006, respectively
(Tables 4.6 and 4.7). In absolute terms, NPAs for SCBs
were estimated at Rs.6,704.00 crore registering a
marginal decline and for DCCBs at Rs.16,494.88 crore
showing an increase of 5 per cent as on 31 March 2007
as compared to the previous year.
Table 4.9: Region-wise Working Results of PCARDBs
(As on 31 March)
(Rs. crore)
2005-06 2006-07 NPA as % Recovery (%)
to loans As on
Region Profit Loss Profit Loss Total NPAs outsanding 30 June
No. Amt. No. Amt. No. Amt. No. Amt. 2006 2007 2006 2007 2006 2007
Central 11 1.68 39 108.87 20 4.04 30 53.39 475.73 555.77 29.72 37.51 44.94 56.71
Eastern 13 2.96 61 73.41 11 4.52 55 22.27 198.84 228.86 31.74 33.62 46.92 51.01
Northern 101 40.06 42 107.35 85 31.76 59 128.88 1,718.67 1,984.83 29.45 34.45 46.97 57.69
Southern 245 291.69 158 69.62 231 356.43 172 178.57 1,702.48 1,090.55 45.34 33.00 57.52 53.95
Western - - 29 159.70 3 22.19 26 183.28 490.46 456.02 46.58 48.00 10.04 23.75
All-India 370 336.39 329 518.95 350 418.94 342 566.39 4,586.18 4,316.03 35.64 35.44 47.62 52.22
Data for 2007 provisional. NPA and recovery data for Orissa repeated from last year’s Dossier.
Profit & Loss data for 3 PCARDBs in Orissa and 1 PCARDB in Tamil Nadu for 2005-06 and for 13 PCARDBs in Orissa for 2006-07 not available
4.16 As on 31 March 2007, NPAs to total loans and
advances outstanding in the case of SCARDBs decreased
from 32.69 to 30.27 per cent whereas in the case of
PCARDBs, it decreased marginally from 35.64 per cent
to 35.44 per cent (Table 4.8 and 4.9). NPAs were
est imated at Rs.5,643.13 crore for SCARDBs
(Rs.5,778.81 crore during 2005-06) and Rs.4,316.03
crore for PCARDBs (Rs.4,586.18 crore during 2005-06)
showing a decrease of 2 and 6 per cent for SCARDBs
and PCARDBs, respectively, as at end-March 2007
(Table 4.10).
Table 4.10: Composition of NPAs of Co-operative Banks
(As on 31 March 2007)*
(Rs. crore)
Asset SCBs DCCBs SCARDBs PCARDBs
Classification
Sub-Standard 2,957.05 6,375.13 4,315.42 2511.29
Doubtful 2,624.51 7,648.34 1,310.25 1,783.23
Loss Assets 1,122.44 2,471.41 17.46 21.51
Total NPAs 6,704.00 16,494.88 5,643.13 4,316.03
Provisions
required 2,819.57 10,221.93 1,286.59 799.13
Provisions
made 3,199.92 12,162.57 1,286.59 799.13
* : Data provisional.
81
4.17 In comparison to the all-India average, NPAs were
lower in northern (3%) eastern (11%) regions, at par in
central (14%) region whereas higher in southern, western
and north-eastern regions. SCBs in Arunachal Pradesh,
Assam, Manipur, Nagaland, Tripura, Bihar and
Chhattisgarh continued to exhibit high NPA levels.
In the case of DCCBs, NPAs decreased except for the
central region (30%). As compared to the all-India
average, they were low for DCCBs in northern (7%) and
southern (16%) regions (Table 4.7). DCCBs in Haryana,
Himachal Pradesh, Punjab and Rajasthan had low levels
of NPAs while they remained very high for DCCBs in
Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh and
Uttar Pradesh as on 31 March 2007.
`
4.18 The average loan recovery of SCBs decreased
marginally to 86 per cent while that of DCCBs increased
to 71 per cent as on 30 June 2007 (Table 4.11). In
absolute terms, the loan recovery of SCBs increased
to Rs.23,046 crore (by 8%) as on 30 June 2007 from
Rs.21,405 crore as on 30 June 2006. The loan
recovery of SCBs in Gujarat , Maharasht ra and
Mizoram increased considerably to 97, 73 and 72 per
cent, respectively, as on 30 June 2007. Northern
(except Jammu & Kashmir), central, western and
eastern (except Jharkhand) had high levels of recovery.
The recovery levels in the NER fell to 43 per cent.
4.19 As on 30 June 2007, out of 31 SCBs, 13 and 11
had a loan recovery of more than 80 per cent and
between 60 and 80 per cent, respectively (Table 4.12).
Out of 339 reporting DCCBs 132 had a recovery level
of less than 60 per cent and for 97 it was greater than
80 per cent as on 30 June 2007. Particularly, 5 (out of
22) DCCBs in Bihar, 21 (out of 50) in Uttar Pradesh, 8
(out of 31) in Maharashtra had a loan recovery of less
than 40 per cent (Table 4.13).
4.20 As on 30 June 2007, loan recovery performance
of DCCBs improved in Jammu & Kashmir, Haryana,
Kerala, Madhya Pradesh, Punjab, Rajasthan,
Uttarakhand, Uttar Pradesh, Tamil Nadu, West Bengal,
while it declined in Andhra Pradesh, Chhattisgarh,
Gujarat, Himachal Pradesh, Jharkhand, Karnataka,
Maharashtra and Orissa. DCCBs in Haryana, Himachal
Pradesh, Karnataka, Kerala, Punjab, Rajasthan, Tamil
Nadu, Uttarakhand and West Bengal had recoveries
above the national average (71%).
4.21 As on 31 March 2007, of the 10 profit-earning
SCARDBs, their NPAs as a percentage of loans outstanding
in Punjab (0.03%), Kerala (7%), Madhya Pradesh (14%)
and West Bengal (17%) were comparatively low.
Uttar Pradesh SCARDB, which had earlier been in profit,
incurred heavy losses during 2006-07, thus recording high
NPA (50.5%) and low recovery (31.8%) levels. NPA levels
were very high in the case of PCARDBs in Tamil Nadu
(58%), Orissa (62%), Maharashtra (48%) and Haryana
(46%) as on 31 March 2007.
Table 4.11: Percentage of Recovery of Loans to Demand
(As on 30 June)
Agency 2005 2006 2007*
SCBs 86 87 86
DCCBs 72 69 71
SCARDBs 44 46 44
PCARDBs 54 48 52
*: Data provisional
Note: Data for Karnataka SCB repeated from previous year.
Data for Rajasthan & 1 DCCB in Punjab not available.
Table 4.12: Frequency Distribution of Co-operative Banks
according to Range of Loan Recovery
(As on 30 June)
(Number)
Recovery (%) SCBs DCCBs SCARDBs PCARDBs
2006 2007 2006 2007 2006 2007 2006 2007
≤≤≤≤≤ 40 7 5 52 51 7 8 113 295
> 40 and ≤≤≤≤≤ 60 4 2 66 81 7 5 161 183
> 60 and ≤≤≤≤≤ 80 7 11 145 110 3 3 178 146
> 80 13 13 103 97 2 3 54 72
Total 31 31* 366 339** 19# 19# 506 696^
Data for 2007 provisional.
* : Data for Karnataka SCB repeated from previous year.
** : Data for DCCBs in Rajasthan and 1 DCCB in Punjab not available
# : Data for Manipur SCARDB not available.
82
Table 4.13: Frequency Distribution of States/ UTs according to Level of Loan Recovery of SCBs and DCCBs
(As on 30 June 2007)
Recovery (%) SCBs DCCBs
<40 Jammu & Kashmir, Bihar (5), Jammu & Kashmir (1), Jharkhand (8), Madhya Pradesh (1), Chhattisgarh (2),
Arunachal Pradesh, Manipur, Uttar Pradesh (21), Uttarakhand (1), Gujarat (1), Maharashtra (8), Karnataka (3)
Tripura, Bihar
>40 and Assam, Meghalaya Bihar (10), Jammu & Kashmir (1), West Bengal (3), Madhya Pradesh (9),
< 60 Chhattisgarh (2), Uttar Pradesh (16), Uttarakhand (2), Gujarat (4), Maharashtra (12),
Andhra Pradesh (10), Karnataka (3), Tamil Nadu (2), Orissa (7)
>60 and Chandigarh, Himachal Pradesh, Haryana (15), Himachal Pradesh (1), Jammu & Kashmir (1), Punjab (2), Bihar (6),
< 80 Mizoram, Nagaland, Orissa, Sikkim, Orissa (8), West Bengal (7), Madhya Pradesh (19), Chhattisgarh (2), Uttar Pradesh (7),
Uttar Pradesh, Goa, Maharashtra, Uttarakhand (1), Gujarat (7), Maharashtra (10), Andhra Pradesh (9), Karnataka (6),
Pondicherry, Andhra Pradesh Kerala (3), Tamil Nadu (6)
>80 Delhi, Haryana, Punjab, Rajasthan, Haryana (4), Himachal Pradesh (1), Punjab (16), Bihar (1), Orissa (2),
Andaman & Nicobar, West Bengal, West Bengal (7), Madhya Pradesh (9), Uttar Pradesh (6), Uttarakhand (6),
Chhattisgarh, Madhya Pradesh, Gujarat (6) , Maharashtra (1), Andhra Pradesh (3), Karnataka (9), Kerala (11),
Uttarakhand, Gujarat, Karnataka, Tamil Nadu (15)
Kerala, Tamil Nadu
Total 31 339
4.22 While the recovery performance of SCARDBs
declined by 2 percentage points that of PCARDBs
increased by 4 per centage points (Table 4.11) as on 30
June 2007. Out of 19 reporting SCARDBs and 696
reporting PCARDBs, 3 SCARDBs and 72 PCARDBs had
recovery above 80 per cent, while 8 SCARDBs and 295
PCARDBs had recovery of below 40 per cent as on 30
June 2007 (Table 4.14). Recovery was less than 40 per
cent in 24 PCARDBs (out of 29) in Maharashtra, 44
(out of 177) in Karnataka, 7 (out of 24) in West Bengal,
4 (out of 38) in Madhya Pradesh and 2 (out of 12) in
Chhattisgarh. The average recovery of PCARDBs was
more than 60 per cent in the states of Haryana, Himachal
Pradesh and Kerala.
4.23 Though NABARD, as a matter of pol icy,
continues to insist on the need for co-operative banks
to be managed by duly elected Boards of Management,
the phenomenon of superceding elected Boards
continued in some of the co-operative banks. As on 31
March 2007, Boards were superceded in 11 SCBs (out
of reporting 28) and 143 DCCBs (out of reporting 349)
in the ST structure, and in 7 SCARDBs (out of reporting
17) and in 333 PCARDBs (out of reporting 670) in the
LT structure (Table 4.15).
c. Areas of Concern
4.24 Co-operative credit institutions suffered from low
resource base, high dependence on financing agencies,
imbalances, poor business diversification and recoveries,
huge accumulated losses, lack of professionalism and
skilled staff, weak MIS, poor internal check and control
systems, etc. As on 31 March 2007, 4 out of 31 reporting
Table 4.15: Elected Boards under Supersession
(As on 31 March 2007)
Particulars SCBs DCCBs SCARDBs PCARDBs
Total Institutions (No.) 31 369 20 696
Institutions where
Boards are under
Supersession* (No.) 11 143 7 333
Boards under
Supersession* (%) 39 41 41 50
Data for 2007 provisional.
* : In respect of reporting Banks only (28 SCBs, 349 DCCBs, 17 SCARDBS &
670 PCARDBS).
83
SCBs, 97 of 369 DCCBs, 53,050 out of 1,06,384
PACS#, 8 out of 17 reporting SCARDBs and 342 out of
692 repor t ing PCARDBs incur red losses. Total
accumulated losses of the co-operative credit structure
(excluding PACS) amounted to Rs.9,917 crore as on
31 March 2007.
d. Development Action Plans /
Memorandum of Understanding
4.25 The process of preparing institution specific
Development Action Plans (DAPs) and execution of
Memorandum of Understanding (MoU) was initiated
during 1994-95. It 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). PACS
were also brought into the development planning process
during the third phase and for the first time were advised
to prepare viability action plans under the guidance of
DCCBs and enter into MoUs with the respective DCCBs.
The fourth phase of DAP/MoU for both ST and LT
structures was launched to cover the period April 2007
to March 2012 with revision/modifications for making
the said exercise more inst i tut ion specif ic and
participative. The policy changes proposed for Phase
IV aim at repositioning the role of NABARD to that of a
facilitator by transferring the task of driving DAPs,
Table 4.14: Frequency Distribution of States/UTs according to levels of Loan Recovery of SCARDBs and PCARDBs
(As on 30 June 2007)
Recovery (%) SCARDBs PCARDBs
< 40 Assam, Bihar, Orissa, Uttar Pradesh, Chhattisgarh (2), West Bengal (7), Madhya Pradesh (4), Maharashtra (24),
Maharashtra, Karnataka, Karnataka (44), Punjab (20), Rajasthan (13), Orissa (28), Tamil Nadu (153)
Tamil Nadu, Jammu & Kashmir
> 40 and Chhattisgarh, Himachal Pradesh, Haryana (4), West Bengal (9), Chhattisgarh (6), Madhya Pradesh (15),
< 60 Rajasthan, Madhya Pradesh, Karnataka (57), Kerala (18), Punjab (16), Rajasthan (17), Orissa (18),
Gujarat Tamil Nadu (23)
> 60 and West Bengal, Pondicherry, Haryana (10), Himachal Pradesh (1), West Bengal (7), Chhattisgarh (4),
< 80 Tripura Madhya Pradesh (19), Karnataka (59), Kerala (22), Punjab (16),
Rajasthan (6), Tamil Nadu (2)
> 80 Haryana, Punjab, Kerala Haryana (5), West Bengal (1), Karnataka (17), Kerala (6), Punjab (36),
Maharashtra (5), Tamil Nadu (2)
Total 19* 696
*: Data in respect of Manipur SCARDB not available.
promoting bottom-up planning, implementing and
monitoring systems starting from field units, close
involvement of Board of Directors and external
facilitation by NABARD, RBI and RCS.
4.26 Considering the need for having a common and
more effective forum in short term co-operative credit
structure (STCCS) in place of present multiple ones and
to ensure effective monitoring, it was decided to have a
single high-powered forum viz., the ‘State Level Task
Force’. As on 31 March 2008, 10 SCBs and 6 SCARDBs
have executed DAP/MoU 2007-12 (Phase IV) with State
Government and NABARD.
e. Co-operative Development Fund
4.27 The Co-operative Development Fund (CDF)
established in 1992-93 is replenished every year through
contributions from NABARD’s surplus. During the year,
Rs.5.68 crore was sanctioned and Rs.6.27 crore
disbursed including drawals of sanctions in the previous
years. As on 31 March 2008, sanct ions and
disbursements aggregated Rs.82.03 crore and Rs.73.92
crore, respectively. The support provided through the
Fund resulted in increase in deposit mobilisation in the
primary societies, improved MIS and availability of
trained manpower in co-operative banks contributing
to overall efficiency of the structure.
#As on 31 March 2006
84
f. Organisation Development Initiatives
4.28 Organisation Development Initiatives (ODI), being
conducted by NABARD since 1994-95 is a re-engineering
process which facilitates and achieves change in the
organisation structures, staff composition, skill, strategic
planning and shared values, taking into account the
wider external environment to improve the effectiveness
and efficiency with which the organisation fulfils its
mission. Keeping in view the changing environment for
RRBs (amalgamation) and co-operative banks (adoption
of revival package for STCCS), the design, methodology
and objective of ODIs would now be more focused
towards enabling financial inclusion and sustainable
viability. As RRBs and co-operative banks face different
kind of problems and opportunities, separate approaches
were worked out for the Institutions. In the case of
co-operative banks, ODIs would now be known as
‘Business Revital isat ion and Managing Human
Aspirations’ (BRAMHA). During 2007-08, the revised
methodology was implemented during a pilot ODI,
conducted jointly by NBSC, BIRD and NABARD HO in
Karnataka Vikas Grameena Bank, an amalgamated
RRB. In addition, ODI (Phase I) for Triveni Gramin Bank
and BRAMHA (Phase I) for Baharaich DCCB in Uttar
Pradesh were conducted.
g. Revival of Short-Term Rural
Co-operative Credit Structure
4.29 The Revival Package announced by GoI based
on repor t of Task Force for Shor t-Term Rural
Co-operative Credit Structure (STCCS) had estimated
outlay of Rs.13,596 crore. Financial assistance was to
be provided for cleansing of balance sheets of STCCS
(as on 31 March 2004), capital infusion to ensure CRAR
of 7 per cent, technical support for capacity building
training, development and introduction of Common
Accounting and Management Information Systems and
their computerisation. Release of financial assistance
was contingent upon certain legal and institutional
reforms, viz., amendments to Co-operative Societies
Acts, introduction of professionals on Boards of
co-operatives, introduction of Common Accounting
System (CAS) and MIS, etc. During the year, eight states,
viz., Arunachal Pradesh, Chhattisgarh, Karnataka,
Nagaland, Punjab, Tripura, Tamil Nadu and West
Bengal have executed MoUs with GoI and NABARD
taking the total number to 18 as on 31 March 2008,
covering 95 and 93 per cent of the PACS and DCCBs,
respectively.
i. Special Audit
4.30 The special audit of PACS as on 31 March 2004
was completed in six States, viz., Andhra Pradesh,
Gujarat, Haryana, Maharashtra, Rajasthan and Orissa.
It is in progress in the remaining States implementing
the package. In all, 59294 PACS affiliated to 279
DCCBs have been covered by 31 March 2008.
ii. Monitoring of the Implementation Process
4.31 Implementation of the Package is guided and
monitored by Implementing and Monitoring Committees
at the national (NIMC), state (SLIC) and district (DLIC)
levels. The National level Committee is headed by
Secretary, Financial Sector, GoI. Other members are
RBI, NABARD and the participating State Governments.
SLICs & DLICs have been consti tuted in al l the
implementing States. NABARD also arranged for placing
a three member dedicated support team in each DCCB
as supporting arm to DLICs.
iii. State Level Task Force
4.32 State Level Task Force comprising of State
Government, RCS, RBI, NABARD and SCB have been
constituted in the implmenting States to review regulatory
issues concerning co-operative banks. The Task Force
reviews (i) the performance of SCB and DCCBs,
(ii) aspects relating to good governance, (iii) compliance
to statutory requirements and to actions suggested by
RBI/NABARD, and suggests, (a) improvements in the
functioning of SCB and DCCBs and (b) measures needed
for improving the efficiency and viability of SCB and
DCCBs.
85
iv. Co-operative Reforms
4.33 The Co-operative Societies Acts (CSA) are
being amended to ensure (i) equity in financial services
of co-operat ive inst i tut ions, ( i i ) removing State
intervention in financial and administrative matters,
(iii) full operational freedom, (iv) timely elections,
(v) regulatory control by RBI, etc. While six States,
viz., Andhra Pradesh, Gujarat, Haryana, Madhya
Pradesh, Orissa and Uttar Pradesh have passed bills to
amend their CSAs, Maharashtra has promulgated an
ordinance. In five other states the process of amending
the CSA is underway with Bihar expected to pass
the bill shortly. Amendments will also be made in
B.R. Act, NABARD Act, and DICGC Act, wherever
necessary (Box 4.1).
v. Common Accounting and Management
Information Systems
4.34 The CAS and MIS for PACS, developed by
NABARD, has been circulated to all RCS for immediate
adoption. A manual on CAS and a Handbook on MIS
has also been issued for reference of STCCS. The
standardised set is intended to aid decision making at
PACS, higher financing agencies, regulators and other
agencies. The CAS and MIS are to be operationalised
in all implementing states with effect from 1 April 2008.
vi. HRD Initiatives
4.35 The Working Group internally set up by NABARD
prepared two separate training modules, designed
training material and trainers’ guides for Secretaries and
staff of PACS and the Elected Board. The same were
made available in local languages wherever required.
Training was imparted to 206 Master Trainers from eleven
implementing states. These Master Trainers, in turn, have
trained 1,059 District Level Trainers for conducting
actual field level programmes. Training of Secretaries
and elected members of PACS has been initiated in ten
states and so far 40,391 secretaries/staff and 42,730
elected members of PACS have been trained along with
491 DCCB personnel. A Training module was also
designed for auditors of Co-operative Department and
supervisors and inspectors of DCCBs on CAS and MIS
to equip them to provide hand-holding support to staff
of PACS wherever necessary. Four programmes were
held at national level for training Trainers. The second
phase of training module has also been developed for
PACS’ Secretar ies focusing on CAS, business
diversif ication/development and best practices in
governance and management.
vii. Computerisation
4.36 A Committee headed by MD, NABARD finalised
guidelines on computerisation of CAS and MIS of PACS
and were issued with respect to, (a) development,
procurement and deployment of software and (b)
procurement and installation of hardware for use of
SLICs.
viii. Release of Funds to PACS
4.37 Out of GoI funds received till 31 March 2008,
NABARD released Rs.1307.04 crore as GoI
share towards recapitalisation of eligible PACS in
Box 4.1
Legal and Institutional Reforms
The Revival package for STCCS acknowledged that the root
cause of poor financial state of co-operative lies in their poor
management and governance, calls for amendments in relevant
Acts particularly the State Co-operative Societies Act to bring
improvement. The major reforms are:
• Ensuring voting rights to depositor members of PACS
• Removing State intervent ion in f inancial and
administrative matters.
• Restricting State Government equity upto 25 per cent of
the paid-up share capital.
• Restricting State Government powers to supersede the
Board ensuring timely elections.
• Freedom to co-operatives to migrate to Parallel Act
wherever enacted and vice-versa.
• Freedom to take loans/keep deposits with any financial
institution regulated by RBI.
• Facilitating regulatory powers for RBI in respect of
co-operative banks.
• Specifying eligibility criteria for election to the Boards as
well as for co-option of professionals on the Boards of
co-operative banks
• Co-operatives to be brought on par with the commercial
banks as regards regulatory norms.
86
Andhra Pradesh, Gujarat, Haryana, Madhya Pradesh,
and Orissa. With this the total recapital isat ion
assistance released to PACS in these States stood at
Rs.1,467.36 crore including State Governments’ share
Rs.160.32 crore. Release of funds in other States would
take place only after the concerned Governments
promulgate the Ordinance or pass the Bill for amending
their CSAs and release their share.
h. Task Force on Revival of Long-Term
Rural Co-operative Credit Structure
4.38 The report of the Task Force (Chairman: Prof.
A. Vaidyanathan) appointed by the GoI for the revival
of Long-Term Co-operative Credit Structure (LTCCS)
submitted in August 2006 was circulated to all States
and UTs inviting their observations and suggestions. After
discussions and consultations with all concerned, a draft
package was formulated by GoI and sent to all the state
governments for their concurrence. The Hon’ble Union
Finance Minister, while presenting the budget for
2008-09, had announced that the GoI and the State
Governments have reached an agreement on the
contents of the package to implement Vaidyanathan
Committee Report on revival of LTCCS.
B. Regional Rural Banks
a. Financial Performance
4.39 Following the amalgamation of RRBs (2005-06
onwards), the number of RRBs has been reduced from
196 to 96 with an operating network of 14,520 branches
covering 534 districts in 26 States as on 31 March 2007.
Over a period of three years (2005-07), aggregate reserves
of RRBs increased significantly (28%), while the deposits
and investments increased by 34 and 24 per cent,
respectively. During the same period, loans and advances
outstanding increased by 47 per cent while loans issued
increased by 57 per cent (Table 4.16).
4.40 During the year, 81 of 96 RRBs attained current
viability and showed improvement by way of increase
in profits, reduction in losses or by transcending from
loss to profit by end-March 2007. The remaining 15
RRBs continued to be loss-making entities. The amount
of net profit posted by RRBs as a group increased to
Rs.625.15 crore during 2006-07 as against Rs.617.13
crore in 2005-06. The aggregated reserves of 56 RRBs
that had wiped off their accumulated losses and attained
sustainable viability was Rs.4,901.54 crore at end-March
2007. Net worth of RRBs as a whole stood at Rs.4,526.48
crore as on 31 March 2007. The accumulated losses of
RRBs increased by 5 per cent over the previous year
(Table 4.16). The performance of RRBs varied widely
across the regions. While all RRBs were in profit in the
southern region, 29 (out of 31), 14 (out of 16), 9 (out
of 10), 9 (out of 16) and 5 (out of 8) RRBs in the central,
northern, western, eastern and north-eastern regions,
respectively, were in profit (Table 4.17).
Table 4.16: Indicators of Performance
(As on 31 March)
(Rs. crore)
Particulars 2005 2006 2007P
No. of RRBs 196 133* 96*
Branch Network (No.) 14,484 14,494 14,520
Share Capital 195.93 196.00 196.00
Share Capital deposit 2,166.82 2,180.03 2,188.43
Reserves 3,818.52 4,270.56 4,901.54
Deposits 62,143.00 71,328.83 83,143.55
Borrowings 5,524.32 7,302.59 9,775.80
Investments 36,767.66 41,182.45 45,666.14
Loans & Advances
Outstanding 32,870.03 39,712.57 48,492.59
Loans Issued 21,082.47 25,426.97 33,043.49
RRBs earning
Profit (No.) 166 111 81
Amount of Profit (A)$ 902.60 807.79 926.40
RRBs incurring
Losses (No.) 30 22 15
Amount of Losses (B) 154.49 190.66 301.25
Net Profit (A – B)$ 748.11 617.13 625.15
Accumulated Losses 2,715.01 2,636.85 2,759.49
RRBs with accumulated
losses (No.) 83 58 39
Recovery (%) 79.85 79.80 80.49
NPAs to loans
outstanding (%) 8.53 7.28 6.55
Net Worth 3,466.26 4,009.74 4,526.48
* : After amalgamation. $ : Before Tax
P : Provisional
87
b. Recovery Performance
4.41 As on 30 June 2007, the recovery performance
of RRBs (96) was 80.49 per cent that has improved
from 79.80 per cent as on 30 June 2006 (Table 4.18).
The RRBs in the northern (89.63%) and southern
(83.30%) region improved their recovery performance
above national average while those in the NER, had
recovery of 64.73 per cent as at end-June 2007
(Table 4.17). RRBs in Punjab registered the highest
recovery (94.93%), followed by Tamil Nadu (91.82%),
Haryana (89.77%) and Himachal Pradesh (89.27%).
Out of 96 RRBs as at end-June 2007, 45 had recovery
above 80 per cent and two had recovery levels of below
40 per cent (Table 4.19).
4.42 All RRBs in Haryana, Himachal Pradesh, Punjab,
Kerala, Tamil Nadu and Uttarakhand 2 (out of 5) each
in Andhra Pradesh and Bihar, 1 (out of 2) in Assam,
2 (out of 3) in Gujarat, 1 (out of 3) in Jammu & Kashmir,
3 (out of 6) in Karnataka, 4 (out of 10) in Madhya
Pradesh, 2 (out of 7) in Maharashtra, 1 (out of 6) in
Table 4.18: Recovery Performance of RRBs
(As on 30 June)
(Rs. crore)
Year Demand Collection Balance Recovery (%)
2005 19,730.17 15755.18 3974.99 79.85
2006 24,071.58 19209.67 4861.91 79.80
2007 29,527.04 23,765.79 5761.25 80.49
Table 4.17: Region-wise Working Results of RRBs
(As on 31 March 2007)*
(Rs. crore)
Profit Loss Recovery (%)
Earning* Incurring* Accumal- Loans & NPAs As on 30 June
Region RRBs Net ated Advances
(No.) No. Amt No. Amt. Profit* Losses Oustanding Amount % 2006 2007
North-Eastern 8 5 13.82 3 7.55 6.27 255.44 1,873.99 228.89 12.21 67.13 64.73
Eastern 16 9 58.68 7 266.48 -207.80 1,787.08 8,663.94 978.98 11.30 69.92 70.65
Northern 16 14 193.16 2 16.90 176.26 272.67 6,351.09 247.75 3.90 88.42 89.63
Central 31 29 251.88 2 7.60 244.28 312.30 12,652.74 1,012.63 8.00 77.65 78.17
Western 10 9 39.44 1 2.72 36.72 132.00 2,527.83 177.74 7.03 78.58 77.57
Southern 15 15 369.42 - - 369.42 - 16,423.00 532.04 3.24 82.25 83.30
All India 96 81 926.40 15 301.25 625.15 2,759.49 48,492.59 3,178.03 6.55 79.80 80.49
* : Data provisional
Table 4.19: Frequency Distribution of States according to Levels of Recovery of RRBs
(As on 30 June 2007)
Recovery (%) States
< 40 Arunachal Pradesh (1), Bihar (1)
> 40 and ≤≤≤≤≤ 60 Jharkhand (1), Maharashtra (1), Manipur (1), Nagaland (1), Orissa (1)
> 60 and ≤≤≤≤≤ 80 Andhra Pradesh (3), Assam (1), Bihar (2), Chhattisgarh (3), Gujarat (1), Jammu & Kashmir (2), Jharkhand (1),
Karnataka (3), Madhya Pradesh (6), Maharashtra (4), Meghalaya (1), Mizoram (1), Orissa (4), Rajasthan (1),
Tripura (1), Uttar Pradesh (7), West Bengal (3)
> 80 Andhra Pradesh (2), Assam (1), Bihar (2), Gujarat (2), Haryana (2), Himachal Pradesh (2),
Jammu and Kashmir (1), Karnataka (3), Kerala (2), Madhya Pradesh (4), Maharashtra (2), Orissa (1),
Punjab (3), Rajasthan (5), Tamil Nadu (2), Uttar Pradesh (9), Uttarakhand (2).
Figures given in parentheses indicate number of RRBs. Total number of RRBs as on 30 June 2007 was 96
88
Orissa, 5 (out of 6) in Rajasthan and 9 (out of 16) in
Uttar Pradesh had recovery performance above 80 per
cent (Table 4.19).
c. Non-Performing Assets
4.43 There was a decline in gross NPA of all RRBs put
together from 7.28 per cent as at end-March 2006 to
6.55 per cent as at end-March 2007. However, 51 RRBs
recorded NPA levels below the national average of 6.55
per cent, and only 6 RRBs registered high NPA level
(>20%). Lowest level of NPAs was observed in the case
of RRBs in southern (3.24%), followed by northern
(3.9%), western (7.03%) and central (8%) regions, while
RRBs in eastern and north-eastern regions had NPA levels
of 11.3 and 12.2 per cent, respectively, as at end-March
2007 (Table 4.17).
d. Other Developments
i. Amalgamation of RRBs
4.44 As per GoI instruct ions, the process of
amalgamation of RRBs (started in 2005) in consultation
with State Governments and sponsor banks continued
during the year. As on 31 March 2008, the total number
of RRBs after amalgamation stood at 91 including 45
stand-alone RRBs.
ii. Recapitalisation Support
4.45 The Hon’ble Finance Minister in the Union Budget
2007-08 had announced for recapitalisation support in a
phased manner to RRBs with negative net worth. The
performance review of all RRBs undertaken in July 2007
revealed that, out of 96 RRBs (46 amalgamated and 50
stand-alone), 29 (11 amalgamated and 18 stand-alone)
had negative net worth amounting to Rs.1,857 crore
(including the then existing level of share capital) as on 31
March 2007. After July 2007, four RRBs (two with negative
net worth) from the same State and sponsored by same
sponsor bank were merged, thus, resulting in formation of
two new entities with no negative net worth. This reduced
the number of RRBs with negative net worth to 27 and the
amount required for recapitalisation to Rs.1,795.97 crore
with the GoI, sponsor banks and State Governments
contributing in the ratio of 50:35:15. As on 31 March
2008, six State Governments had contributed their share
to 12 RRBs of which, 7 RRBs received full share from the
shareholders and 5 RRBs received partial contribution. The
rest of the RRBs are expected to receive recapitalisation
support during 2008-09.
iii. Branch Expansion
4.46 In accordance to the announcement made by
Hon’ble Finance Minister in Union Budget 2007-08 for
covering hitherto uncovered districts and taking up
aggressive branch expansion programmes by RRBs, 49
uncovered districts will be covered by RRBs as notified by
GoI and 11 districts are under consideration for notification.
A new RRB “Puduvai Bharathiar Grama Bank” was set
up in Puducherry to cater to needs of the UT. Of the 678
proposed branches, 268 branches vis-à-vis 554 licenses
issued by RBI, were opened as at end-March 2008.
iv. SARFAESI Act
4.47 In accordance to the notification issued by GoI
in May 2007, the Securitization and Reconstruction of
Financial Assets and Enforcement of Securitization of
Interest (SARFAESI) Act was extended for loans
advanced by RRBs. All sponsor banks and RRBs were
advised accordingly.
v. Review of Performance of RRBs
4.48 To review the per formance of RRBs as on
31 March 2007 GoI had convened the second half yearly
meeting on 16 July 2007 of RBI, NABARD, sponsor
banks and RRBs (96). The third half yearly meeting to
review the position as on 30 September 2007 was held
on 7 February 2008.
vi. Publications of Institutional Development
4.49 NABARD continued to collect and publish data
on co-operative banks, RRBs and other institutions.
During the year, publications on (i) Statistical Statements
relating to Co-operative Movement in India- Credit
Societies and Non-Credit Societies for 2001-02, (ii) Key
Statistics on Co-operative Banks/RRBs for 2006-07, (iii)
Dossier/Overviews on Co-operative Banks indicating
performance parameters for 2005-06, (iv) Financial
Statements on RRBs for 2006-07, (v) Ratio Analysis of
89
Co-operative Banks with reference to their profitability
position for 2005-06, (vi) Review of Performance of
RRBs for 2005-06, were brought out.
vii. HRD Initiatives
4.50 To sensitise NABARD officers on current status
of the functioning of co-operative credit institutions/
RRBs, initiatives taken in the execution of DAP/MoU,
conduct of ODIs, audit of RRBs and issues relating to
amalgamation of RRBs, three zonal workshops were
conducted. NABARD also organised a workshop for
senior officials of all sponsor banks of RRBs to review
issues pending with sponsor banks. NABARD
participated in workshops, organised on zonal basis, by
Institute of Chartered Accountants of India (ICAI) for
the auditors who undertake statutory audit of RRBs.
GoI had const i tuted a Committee under the
Chairmanship of Dr. Y.S.P. Thorat, the then Chairman,
NABARD in May 2007 for reviewing and formulating a
comprehensive HR Pol icy addressing manpower
requirements and other HR related issues of RRBs. The
Committee Report is under consideration by GoI.
Recognising the inadequacy of the training facilities
currently available for RRB staff, especially for the
clerical and the subordinate staff, NABARD constituted
a Working Group (Chairman: Shri Amaresh Kumar,
Executive Director), to suggest solutions to satisfy dire
need of training and capacity building of RRB staff.
viii. Computerisation in RRBs
4.51 The level of computerisation in the RRBs varies
in terms of quantum and technology. Recognising this,
Hon’ble Union Finance Minister, Shri P. Chidambaram
highlighted the need for bringing the RRBs on a common
platform and to graduate them to Core Banking
Solutions within the next 3 years. Thereby, RBI
constituted two Working Groups: (i) on technology
upgradation for RRBs to work out road map for Core
Banking Solutions and (ii) to recommend modalities for
providing financial assistance to RRBs for defraying part
of their cost in implementing Information and
Communication Technology based solutions. NABARD
is a member of both the Groups.
ix. Rajya Sabha Committee on Subordinate
Legislation
4.52 The Rajya Sabha Committee on subordinate
legislation visited Mumbai and Chennai and reviewed
the Service Regulation of RRBs sponsored by Bank of
India, Bank of Baroda, Dena Bank, Bank of
Maharashtra, Indian Overseas Bank and Indian Bank.
NABARD also participated in the review meetings.
4.53 In terms of powers vested under Section 35(6) of
the B.R. Act, 1949 (AACS), NABARD inspects SCBs,
DCCBs and also inspects RRBs under Section 35(6) of
the B.R. Act, 1949. It conducts voluntary inspections
of SCARDBs, Apex Weavers’ Co-operative Societies,
State Co-operative Marketing Federations, etc. The
objective of NABARD’s supervision is to assess the
financial strength, operational soundness and managerial
efficiency of the co-operative banks and RRBs. These
inspections aim to ensure that the operations of banks
are in conformity with the banking regulations and
interests of their depositors are protected. The inspections
are now more focused on core areas like Capital
Adequacy, Asset Quality, Management, Earnings,
Liquidity, Systems and Compliance (CAMELSC).
Co-operative banks and RRBs have been advised to
indicate Notes on accounts in their Balance Sheets about
Capital Adequacy. NABARD through its supervision
strategy has been facilitating these banks to internalise
the stipulation of prudential norms.
4.54 Statutory inspections of all SCBs, DCCBs and
RRBs not complying with minimum capital requirements
and voluntary inspections of all SCARDBs continued to
be conducted annually as hitherto. The statutory
inspections of DCCBs and RRBs with positive net worth
as also voluntary inspections of Apex Co-operative
Societies/Federations continue to be conducted once in
two years. Inspection of 35 amalgamated RRBs were
conducted during 2007-08 as per the revised Inspection
Guidelines approved for amalgamated banks. The
returns/software used for OSS are being revised/broad-
based to make it more effective, analytical and user-
friendly. With a view to implementing OSS project in a
Supervision over Banks
90
time-bound manner, a Working Group headed by
Shri S.K. Mitra, Executive Director has been constituted.
Revised OSS returns have been issued to RRBs. The
work relating to Credit Monitoring Arrangements (CMA)
was integrated with inspection. It was decided to link
the exposure norms with the inspection rating of the
banks, based on CAMELSC.
4.55 Considering the inability of sugar mills in finding
resources to meet the pre-seasonal expenses due to the
low price of sugar, co-operative banks were permitted to
sanction pre-seasonal clean limits on the condition that
the pre-seasonal limit should be liquidated before the end
of next crushing season in addition to other conditions.
A. Operational Matters
a. Inspection of banks
4.56 Statutory inspections of 366 banks (31 SCBs, 261
DCCBs and 74 RRBs) and voluntary inspections of 18
SCARDBs and 1 apex institution were conducted during
2007-08. The concerns brought out through inspections
were, (i) improper application of IRAC norms resulting
in inflated profit/reduced losses, (ii) high level of NPAs/
erosion of assets, ( i i i ) def ic iencies in sanct ion,
disbursement of loans and advances and follow-up,
( iv) inadequate f inancial margin/high cost of
management/adverse working results, (v) ineffective funds
management, (vi) inadequate risk management systems,
(vii) delay in submission of satisfactory compliance to
inspection observations, (viii) lack of appropriate
‘corporate governance’ system, (ix) not following internal
checks and control system, (x) improper valuation of
investment portfolio, (xi) insufficient provision for
depreciation, (xii) violation of CMA norms, etc. These
were communicated to the concerned banks, RCS, State
Governments and sponsor banks. NABARD continued
to hold discussions with Board of Directors of
SCBs/DCCBs/RRBs, carrying out core area compliance
discussion, rating of compliance, etc.
b. Board of Supervision
4.57 The Board of Supervision (for SCBs, DCCBs and
RRBs) [BoS] met four times during the year. BoS
reviewed; (i) the functioning of SCBs and SCARDBs,
( i i ) s tate-wise funct ioning (Orissa, Maharashtra,
Karnataka and Gujarat) of the co-operative credit
institutions and RRBs, (iii) functioning of insolvent SCBs
and DCCBs, (iv) trigger point policy for supervisory
prescription and regulatory action for co-operative
credit institutions, (v) impact of amalgamation of RRBs,
(vi) policy, procedure and status of complaints, grievance
redressal and costomer service, (vi i ) f rauds,
misappropriation, embezzlements, defalcations, etc.,
(viii) implementation of DAPs by co-operative banks,
(ix) implementation of reforms under GoI package for
STCCS, (x) the revised inspection strategy, (xi) revision
of exposure norms and CMA guidelines, (xii) review
of investment port fol io management based on
special studies (xii) audit system in co-operative banks,
(xiv) internal checks and controls in RRBs, etc.
4.58 RBI has been requested for regulatory forbearance
for non-compliant co-operative banks in States where
MoU has been executed for implementation of GoI
package for STCCS.
B. Other Developments
a. Compliance to Minimum Share
Capital Requirement
4.59 The number of SCBs and DCCBs not complying
with the provisions of Section 11(1) of the B.R. Act,
1949 (AACS), decreased from 7 to 6 and 127 to 121
respectively during the year. As on 31 March 2008, the
total erosion in the value of assets of 127 non complaint
co-operative banks aggregated Rs.14,998.10 crore,
which had affected deposits to the extent of Rs.4,244.31
crore in addition to their entire share capital. The erosion
of entire deposits of 4 DCCBs was a matter of serious
concern. Of the 127 non-complaint co-operative banks,
23 DCCBs 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
11 banks (3 SCBs and 8 DCCBs) were under
consideration by RBI/GoI.
b. Grant of Licence
4.60 No new licence was granted during the year and
licensed co-operative banks, thus remained unchanged
at 89 (14 SCBs and 75 DCCBs) as on 31 March 2008.
c. Scheduling of State Co-operative banks
4.61 During the year, no SCB was included in the
second schedule to the RBI Act, 1934. Thus, the number
of scheduled SCBs remained unchanged at 16.
91
d. Compliance with various Sections
of Acts
4.62 As on 31 March 2008, 6 SCBs and 121 DCCBs
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 SCBs and 342 DCCBs 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. Out of
16 scheduled SCBs, one SCB was not complying with
Section 42(6)(a)(i) of RBI Act, 1934 (minimum capital
requirements of Rs.5 lakh) and 14 SCBs were not
complying with Section 42(6)(a)(ii) of the Act, ibid., as
the affairs of these banks were being conducted in a
manner detrimental to the interests of depositors.
4.63 A new RRB, viz., Puduvai Bharathiar Grama
Bank sponsored by Indian Bank was established in the
UT of Puducherry on 26 March 2008. With this the total
number of RRBs stood at 91 (46 amalgamated and
45 stand alone). As on 31 March 2008, out of
86 inspected RRBs, 56 RRBs complied with
Section 42(6)(a)(i) of the RBI Act, 1934 and 30 RRBs
did not comply with the Act ibid, while 38 RRBs complied
with Section 42(6)(a)(ii) of the Act, ibid.
4.64 The erosion in the value of assets of all the RRBs
not complying with 42 (6)(a)(i) as on 31 March 2008
was at Rs.3,020.84 crore and their deposits eroded were
to the extent of Rs.1,597.85 crore forming 7.4 per cent
of the total deposits.
C. Policy Decisions
4.65 NABARD revised the inspection guidelines for
onsite inspection of all banks keeping in view the latest
developments and policy environment. The Bank had
conducted inspections of 20 select banks on pilot basis
before implementing the revised guidelines: The following
major policy decisions were taken during the year:
i. Delegation of power for finalisation and issue of
recommendatory note to ROs extended for select
banks, conforming to certain norms.
ii. Trigger point policy for supervisory prescriptions/
regulatory actions of co-operative banks on account
of GoI’s Revival Package for STCCS revised.
iii. Audit classification/rating norms for the audit of
co-operative banks revised.
iv. Supervisory ratings of RRBs and co-operative banks
being communicated to their top management.
v. Detailed guidelines on Asset-Liability Management
issued to 5 SCBs and 12 RRBs to introduce ALM
in these banks, on pilot basis.
vi. Detailed guidelines on Customer Service and
Grievance Redressal Mechanism in co-operative
banks issued.
vii. Detailed circular issued to RRBs for strengthening
the internal control system.
viii. Circular on safeguards in investment transaction
by co-operative banks.
ix. Instructions on know-your customer and anti-money
laundering standards.
D. Other Developments
4.66 NABARD constituted a Central Fraud Monitoring
Cell (CFMC) to monitor and investigate frauds above
Rs.10 lakh. To improve the quality and effectiveness of
inspection, three regional supervision seminars were
conducted. The Bank also convened a conference of
the Chief Auditors of State Governments and select
Chartered Accountants for improvement in the quality
and effectiveness of audit, regional seminars for Chief
of Audit/Internal Inspection Departments of RRBs a
national workshop on investment management for
Apex Bank were held. Workshops for RRBs / SCBs
implementing ALM system on pilot basis were held. In
addition, the Bank also issued; (i) guidelines on
Memorandum of Procedures (MOP) for deceased
depositors to co-operatives and RRBs (ii) Model
Operational Procedure for SCB/DCCBs on safe deposit
lockers and safe custody of articles, (iii) a Manual on
Internal Checks and Control system to all RRBs and (iv)
guidelines on fraud monitoring and reporting to
supervised banks after rationalising it.
4.67 Special portfolio studies on internal control
system in select RRBs, investment management, NPA
management, CMA, in select co-operative banks, etc.,
were also undertaken. Further, all SCBs/DCCBs were
advised to display certain basic data about the balance
sheets in all their branches for information of the public.
92
Organisation and Management
NABARD continued to lay emphasis on the capacity building,
development of skills and technical expertise of its staff. To
this end, the Bank refined its existing training modules,
designed new programmes and enhanced the exposure of
its staff through visits to various institutions within the country
and abroad. This Chapter attempts to capture the
developments during the year vis-à-vis the management,
administration and human resources of the Bank.
General
A. Board of Directors
5.2 The Board of Directors met five times during the
year. The Executive Committee and the Risk
Management Committee met four and three times,
respectively. The Sanctioning Committee for loans under
RIDF and the Audit Committee of the Board met six
and five times, respectively.
5.3 The fol lowing changes took place in the
composition of the Board and committees of the Board
during the year:
a. Shri Umesh Chandra Sarangi, IAS, was appointed
Chairman with effect from 3 December 2007 vice
Dr. Y.S.P. Thorat who demitted off ice on 30
November 2007.
b. Dr. Rita Sharma, IAS, Secretary, Ministry of Rural
Development, GoI was appointed as Director with
effect from 2 January 2008 vice Dr. Subas Pani.
She was also nominated as member of Sanctioning
Committee for Loans under RIDF.
c. Shri Satya Prakash Nanda, IAS, Agricul ture
Production Commissioner, Government of Orissa,
was appointed as a Director with effect from 20
April 2007 vice Dr. R. N. Bohidar, IAS.
d. Shri Letkhogin Haokip, IAS, Commissioner
(Agriculture), Government of Manipur and Shri S.P.
Sharma, IAS, Financial Commissioner and
Principal Secretary, Government of Haryana were
nominated as Directors with effect from 28 May
2007 vice Shri Om Prakash, IAS, and Shri Satya
Prakash Nanda, IAS, officials from the States of
Uttarakhand and Orissa, respect ively. Shri
Letkhogin Haokip was also nominated as a member
of the Sanctioning Committee for loans under RIDF.
e. Shri Rajkumar, IAS, Financial Commissioner and
Principal Secretary, Government of Haryana was
appointed as Director with effect from 27 June 2007
vice Shri S.P. Sharma and was also nominated as
member of Executive Committee of Board.
f. Shri A. K. Sarkar was nominated as a member of
Audit Committee of the Board and Risk Management
Committee of Board with effect from 17 May 2007.
B. Other Senior Executives
5.4 S/Shri S.K. Mitra, S.S. Acharya,
Dr. R. Balakrishnan and Shri Amresh Kumar continued
to shoulder the responsibility as Executive Directors
of the Bank and guided the ROs and HO Departments
for ef fect ive funct ioning of the organisat ion.
Shri S.S. Acharya demitted the office on 31 January
2008 on account of superannuation.
C. Inspection of NABARD
5.5 Reserve Bank of India conducted f inancial
inspection of NABARD from 21 January to 11 March
2008 with reference to the financial position as on
31 March 2007.
D. Regional/DDM Offices
5.6 Besides the head office at Mumbai, NABARD has
28 ROs, a sub-office in Port Blair, a cell at Srinagar and
Training Establishments at Bolpur, Hyderabad, Lucknow
and Mangalore. During the year, one Distr ict
Development Manager’s (DDM) office was opened taking
the total number of offices to 392 covering 484 districts
including 92 tagged districts. The remaining districts are
managed by the District Development Officers (DDOs)
functioning from their respective ROs.
V
93
Human Resource Development
competence at all levels’ in June 2007 held at GTZ,
Germany. Subsequently, he visited Peru and Bolivia in
August 2007 in connection with exchange of experience
in the areas of financial inclusion.
5.10 Shri U.C. Sarangi, Chairman, visited Beijing,
China as part of the delegation accompanying the
Hon’ble Prime Minister Shri Manmohan Singh on his
state vis i t to China and signed a MoU with the
Agricul tural Development Bank, China on
14 January 2008.
5.11 Dr. K.G. Karmakar, Managing Director, visited
Vietnam in March 2008 to attend the 16th General
Assembly, 54th EXCOM and 2nd Fin Power Meet of
APRACA. He presented papers on ‘Financial Inclusion
through the SHG-Bank Linkage Programme in India’
and ‘Strengthening grassroots level participation in policy
and decision making process- NABARD experience’. He
also visited the Global Conference at Fort Lauderdale,
Florida in April 2007 to attend the 30th Anniversary of
Human Resource Planning Society. Dr. Karmakar
attended a World Bank meeting to negotiate a loan for
Revival Package on STCCS at Washington in May 2007.
He also visited University of Western Sydney, Australia
in December 2007.
b. Other Employees
5.12 Training is imparted to employees (Group ‘B’ and
‘C’) at National Bank Training Centre (NBTC), Lucknow
and Zonal Training Centre (ZTC), Hyderabad.
During 2007-08, 63 training programmes covering 860
participants were conducted. Pre-promotional training
programmes were also conducted for 41 and 112 Group
‘B’ and ‘C’ staff, respectively. Further, a programme on
Behavioural Skills for the Group ‘C’ staff posted at HO
was conducted through ‘Aavishkar’ a Mumbai-based
behavioural consultant. A feedback assessment and a
day-long refresher session on the previous programme
were also conducted.
A. Training and Skill Upgradation
a. Officers and Executives
5.7 During 2007-08, National Bank Staff College
(NBSC), Lucknow conducted 91 programmes on various
subjects covering 1,546 officers. Further, 18 new
programmes, an exposure visit on Natural Resource
Management exclusively for senior officers, on-site
programmes on presentation skills of DDMs, sensitisation
of officers posted in the NER were introduced during
the year. In addition, 59 officers were deputed for tailor-
made programmes on Appraisal and Scrutiny of RIDF
Projects, Commodity Futures and Derivatives and
Capacity Building of Private Secretaries, conducted with
faculty support from IIT, Roorkee; MCX, Mumbai and
NPC, Hyderabad. Further, 177 officers were deputed
for 103 off-the-shelf programmes, workshops, seminars
and conferences organised by various institutions of
repute. Some of the areas covered in these programmes
were strategic HRM, information systems audit, risk
management, t reasury 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, 103 officers were deputed for
various overseas training programmes, exposure visits,
seminars, etc. Among these were 29 officers deputed in
two batches to De Chazal Du Mee (DCDM), Mauritius
for their capacity building in consultancy assignments.
Besides this, officers were also deputed for programmes
organised by APRACA-CENTRAB, World Bank,
CICTAB, etc.
ii. Visits by Senior Management
5.9 Dr. Y.S.P. Thorat, the then Chairman, attended
the APRACA Regional Dialogue Forum Meet in
April 2007 in China. He also attended a symposium on
‘Money is not everything–Financing demands
94
c. Incentive Scheme
5.13 The revised incentive scheme for professional
studies in part-time and distance learning courses was
introduced in April 2007. During the year, 50 employees
availed of the facility.
d. Scheme of Grant of Sabbatical to
officers
5.14 Scheme of Sabbatical to off icers has been
introduced from April 2007 to encourage officers to
pursue research programme/project re lated to
professional growth and enhance professional
effectiveness in subjects relevant to the Bank. One officer
has been granted permission to pursue the research
project on ‘Cost allocation in multi-functional NGOs
par tnering in NABARD’s SHG-Bank Linkage
Programme’ under this Scheme.
e. Visits to NABARD
5.15 During the year, students, as a part of their
orientation study, visited NABARD HO and were apprised
on the funct ions of the Bank. They were from
Agricultural Universities and Institutes like Nirmala
Niketan, Bhavan’s College, Mumbai University, etc.
Delegation of officials from (i) Agricultural Development
Bank of China, China, ( i i ) banks, government
departments, financial institutions, etc., from South
Africa and (iii) the State Bank of Pakistan visited
Administrative and Other Matters
NABARD. The delegates were properly apprised of the
functions and activities of the Bank.
B. Recruitment, Promotion and Staff
Strength
a. Recruitment and Promotions
5.16 The process of recruiting 120 officers in Grade
‘A’ of the Rural Development Banking Service and the
Rajbhasha Service and Grade ‘B’ of Legal Service was
initiated. During the year 6, 9 and 27 promotions were
effected from Grade ‘E’ to ‘F’, ‘`D’ to ‘E’ and Grade ‘C’
to ‘D’, respectively. The other promotions effected upto
Grade `C’ during the year are given in Table 5.1.
A. Industrial Relations
5.18 During the year, the approach adopted by the
Bank continued to be aimed at development through
skill upgradation, career progression as also maintaining
cordial relations. Industrial relations with staff continued
to be cordial. Periodic discussions were held between
the Management and the National Bank Officers’
Association and the All India NABARD Employees’
Association. The Associations submitted their Charter
of Demands for revision of pay and allowance and service
conditions, etc., with effect from 1 November 2007. The
Bank set up an in-house Committee under the
Chairmanship of Shri Amaresh Kumar, Executive
Director, to ensure periodic review and upgradation of
HR pol ic ies, explore the possibi l i t ies of various
professional products and services, review the critical
factors in HR management for developing an
implementable time bound action plan.
5.19 The revised package for compassionate
appointments is awaiting clearance from GoI. With a
Table 5.1: Promotions effected during the Year
Particulars Total Of which
SC ST
Officers in Grade ‘B’ to ‘C’ 48 5 -
Officers in Grade ‘A’ to ‘B’ 73 14 5
Group ‘C’ to Group ‘B’ 44 14 3
Total 165 33 8
b. Staff Strength
5.17 The total staff strength of the Bank stood at 4,924
of which 1,269 belonged to SC (17.6%) and ST (8.2%)
categories. The staff strength of ex-servicemen and
physically handicapped employees stood at 101 and 97,
respectively, each constituting 2 per cent of the total staff.
95
view to simplifying the procedure of confirmation at
various grades within the Groups, the Bank introduced
the system of ‘One-Time Confirmation’ according to
which an employee will be confirmed in the respective
Group only once.
5.20 The Central Compliance Committee at HO and
23 Committees at the ROs have been functioning
effectively for prevention of sexual harassment of women
at work place. No complaint was received during the year.
B. Welfare Measures for SC/ST employees
5.21 The Bank continued to adhere to instructions
issued by GoI regarding reservations for SCs/STs in
recruitment and promotions. Quarterly meetings of the
Senior Executives and Chief Liaison Officer with the
representatives of the Welfare Association of SC/ST were
held regularly at HO and ROs. Pre-promotional training
programmes were conducted for 122 SC/ST staff
members (43 officers and 79 employees) and pre-
recruitment training for 4,500 SC/ST candidates at 21
centres.
C. Other Staff Benefits
5.22 During the year, housing loan aggregating
Rs.3,052.19 lakh was sanctioned to 421 employees. The
disbursements against the sanctions, including sanctions
of previous years, amounted to Rs.2,513.11 lakh.
D. Library
5.23 The Bank maintains a Central Library at HO,
Mumbai besides its units at ROs. The Library Committee
supervises the functioning of these libraries. The Central
Library houses 30,000 books in English and Hindi and
subscribes to 90 journals and magazines, working papers,
reports, etc., on various topics. The Library also
subscribes to institutional memberships of British Library
and the NIRD, Hyderabad and has also networked with
major libraries located in Mumbai. In addition to
enabling on-line access to information, bar-coding of
books was also done to enable automation of library
functions. The ‘Francis Kanoi Database on Indian
Agriculture’ was purchased for the staff. To provide a
wider choice to the staff and broad base the selection
of books, three exhibi t ions were arranged
in the Bank.
E. Data Management
5.24 During 2007-08, a review of existing system of
data col lect ion and compilat ion in various
HO Departments was undertaken to rationalise the
system of statistical returns designed to collect data. To
put into place a unified system of data flow by various
banks to RBI and NABARD, a ‘Working Group on
Rationalisation of Returns submitted by banks’ was
constituted. The Group suggested standardisation of
formats and codes, integration of various returns, etc.,
so as to reduce the load on banks and improve accuracy
of data. District database covering 547 districts on
various parameters, viz., physical-geographical elements,
workers profile, land holding and utilisation, crop
production, handloom and handicrafts, agricultural and
banking, etc., was prepared. NABARD also designed (i)
a District Agricultural Development Index and (ii) a
Financial Inclusion Index to measure the status of
financial inclusion in the districts. An e-journal on ‘Issues
in Agriculture and Rural Development’ was made
available on the NABNET. A new quarterly bulletin
‘NABSTATS’ covering information on business
parameters of the bank was also launched.
F. Information Technology
5.25 During the year, corporate e-mai l system,
‘NABARD mail’ was provided to all officers in the Bank
including the DDMs/DDOs, which was found to be very
effective, and user friendly. Internet connectivity was also
extended to all officers for facilitating access to latest
information/data. LAN was set up in 26 ROs and 2 TEs.
An inter-office portal, www.nabnet.in was developed
which can be accessed from any location in India
through the Internet. Many modules were developed in-
house to meet the MIS requirements of departments and
efforts to develop Centralised Salary Accounting
Software have been ini t iated. To implement the
recommendations of the Vaidyanathan Committee for
96
computerisation of PACS, technical parameters for
software/hardware requirements, guidelines for their
procurement and cost estimates were prepared and
circulated among the SLICs.
G. Office Premises/ Residential
Quarters
5.26 The construct ion of Natural Resource
Management Centre (NRMC) at Kolkata and RO
buildings at Bangalore, Jammu, Itanagar and a Sub-
Office in Andaman & Nicobar Islands is in progress.
Works relating to air-conditioning at Punjab & Haryana
RO and office interiors at Assam RO are nearing
completion. Renovation of staff quarters at Chennai
was taken up.
H. Vigilance
5.27 With a view to maintaining transparency in
decision-making and continuing to emphasise on
vigi lance surveil lance, the Bank conducted eight
Preventive Vigilance Inspections of ROs. In addition,
one Chief Technical Examiner type inspection of air-
conditioning work at Assam RO was carried out. The
Bank also observed the ‘Vigilance Awareness Week’
from 12 to 16 November 2007.
I. Inspections
5.28 During the year, inspections of 18 ROs, one TE
and 17 HO Departments were carried out in accordance
with the Inspection Manual approved by the Audit
Committee of the Board (ACB). Major findings of the
inspections were placed before the Management
Committee and the ACB.
5.29 The concurrent audit of all ROs/TEs continued
to be undertaken by the Concurrent Audit Cells (CACs)
in the respective ROs/TEs, while that of select HO
depar tments, viz. , RMD, GAD, FAD, Premises
Department and Co-Financing Cell of ICD continued to
be conducted by external auditors. Off-site monitoring
of CACs at ROs/TEs was undertaken through monthly
audit returns. It was decided to establish a Zonal Audit
Cell (ZAC) at Guwahati to take care of the concurrent
audit work of seven smaller ROs in the NER (including
Sikkim but excluding Assam). To improve the efficiency
and effectiveness of the staff in CACs, two workshops
were organised. Pursuant to the decision of ACB, a firm
of Chartered Accountants was appointed by NABARD
to conduct Special Audit of Treasury Operations in
NABARD for a period of one year commencing from
the quarter ending 31 December 2006.
J. Public Relations
5.30 NABARD completed 25 years of its service to the
Nation in 2007. To mark its Silver Jubilee, a function
was organised at i ts HO which was attended by
many dignitaries including Union Finance Minister,
Shri P. Chidambaram, Union Agriculture Minister,
Shri Sharad Pawar and Maharashtra Chief Minister,
Shri Vilasrao Deshmukh. During the year, the Chancellor
of Germany, Ms. Angela Merkel paid a visit to the Bank
and interacted with the women members of SHGs
promoted by NABARD.
5.31 In its endeavour to build strong corporate image
and disseminate information on rural development
programmes, NABARD initiated measures to widen its
media coverage. The Bank continued to publicise the
‘Bhavishya Nirman Bonds’ and the ‘Co-financing and
Innovation Fund’. To publicise the eligibility of NABARD
Rural Bonds for deductions under Section 80 C of the
Income Taxt Act, 1961, an advertisement compaingn
was launched in January 2008.
5.32 During the year, NABARD in association with
APRACA brought out the ‘Country Book’ for India and
provided editorial assistance in consultation with
Nabcons for preparation of country books for 12 other
APRACA Asian members. The ‘Country Book’ deals
with issues relating to Indian Agriculture and Rural
Development, focusing on ways and means adopted to
face the challenges continuously. The book was brought
97
out on the occasion of the Second World Congress on
Rural Finance where the member countries shared their
experiences and challenges faced by them and discussed
pragmatic and cost effective solutions to the issues of
rural development. In addition, the Bank continued its
monthly and quarterly publications, NABARD Newsletter
and NABARD Parivar, respectively. NABARD Newsletter
was also made available in electronic format for internal
and external circulation.
K. Visit of Parliamentary Committees
5.33 Ten Parliamentary Committees held discussions
with NABARD on various aspects concerning working
of NABARD, credit facilities for women by public sector
banks and NABARD, performance of SGSY and SHGs,
credit needs of the SSI and KVI sectors and related
issues, RRBs’ officers and employees service regulations,
implementation of the Official Language Policy, etc.
These were: (i) Drafting and Evidence Sub-Committee
of the Committee of Parliament on Official Language,
(ii) Parliamentary Standing Committee on Industry,
( i i i ) Third Sub-Committee of the Committee of
Parl iament on Off ic ial Language of the Central
Government Offices, (iv) Town Official Language
Implementat ion Committee (banks), (v) Off ic ial
Language Implementation Committee, (vi) Standing
Committee on Rural Development, (vii) Parliamentary
Standing Committee on Finance, (viii) Committee on
Subordinate Legislation, (ix) Parliamentary Committee
on Empowerment of Women and (x) Depar tment
Related Parliamentary Standing Committee on Industry.
L. Promotion of Hindi
5.34 NABARD continued to promote use of Hindi in
its day-to-day functioning. To enable staff members to
do their work originally in Hindi, 46 customised
workshops were conducted. The employees and officers
were provided on-desk and classroom training for the
bilingual software: APS 2000++ for word processing and
data management. To sensitise senior officers to the
official language policy of GoI, a three day workshop
was organised. The Official Language Implementation
Committees at HO/ROs/TEs carried out quarterly reviews
on progress of Hindi vis-à-vis the GoI policy. On-site
inspection of eight ROs and one TE was undertaken.
The members of the Drafting and Evidence Sub-
Committee of the Parliamentary Committee on Official
Language reviewed the progress in use of Hindi in
Orissa, West Bengal ROs and HO. Members of the Third
Sub-Committee of the Parliamentary Committee on
Official Language inspected New Delhi RO. The
Committees found the performance of these offices
satisfactory.
5.35 The Bank conducted various competitions to
encourage and orient its staff to work in Hindi. Cash
Award Scheme to encourage staff to work originally in
Hindi continued to be implemented and staff members
were deputed for inter-bank competitions. For excellent
performance in the progressive use of Hindi,
Rajbhasha Shield was awarded to Madhya Pradesh,
Gujarat and Jammu and Kashmir ROs in Regions ‘A’,
‘B’ and ‘C’, respectively. From 2007-08, a separate
Rajbhasha Shield for TEs was introduced and was
awarded to NBSC, Lucknow. At the HO level ,
departments were categorised into two groups based on
their staff strength and/or number of letters issued.
Secretary’s Department and Project Monitoring
Department were awarded the Shield in their respective
groups. Gujarat and Andhra Pradesh ROs were awarded
Rajbhasha Shield by their respective TOLICs for their
excellent performance during 2006-07.
5.36 Hindi journal ‘Rashtriya Bank Srijana’ was made
available on the intranet. The ‘India Infrastructure
Report 2007 - Rural Infrastructure’, prepared by 3i
Network was translated into Hindi for dissemination to
various government departments/agencies/individuals,
etc. A translation archive ‘Anuwad Library’ was created
at HO. During the year, Gujarat RO produced a play in
Gujarati and Hindi on the SHG concept, while
Madhya Pradesh RO prepared PLPs of all districts in Hindi.
98
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, 2008 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 20, 2008 issued by
Ministry of Finance, Department of Economic Affairs (Banking Division). Also incorporated in the Balance Sheet and Profit and Loss
Account 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 17.99% of advances, 0.0036% of deposits, 14.28% of interest income and 0.0010% of interest
expense. 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 Centres 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, 2008; 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 for the year ended on that date.
Place: Mumbai
Dated: June 16, 2008
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants
Ketan S. Vikamsey
Partner (F-44000)
Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.
Telephones: +91 22 22662550, 22661270, 22662011 ••••• Facsimile: +91 22 22664045
E-mail: [email protected] ••••• Website: www.khimjikunverji.com
Balance Sheet english.p65 7/29/2008, 12:19 PM98
99
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENTBALANCE SHEET AS ON 31 MARCH 2008 (Rupees)
Sr. No. FUNDS AND LIABILITIES SCHEDULE As on 31.03.2008 As on 31.03.2007
1. Capital 2000,00,00,000 2000,00,00,000(Under Section 4 of the NABARD Act, 1981)
2. Reserve Fund and Other Reserves 1 8602,84,75,385 7802,41,16,398
3. National Rural Credit Funds 2 15159,00,00,000 14747,00,00,000
4. Funds out of grants received from International Agencies 3 170,38,44,460 182,63,92,591
5. Gifts, Grants, Donations and Benefactions 4 3967,49,29,810 711,81,48,778
6. Other Funds 5 1518,00,64,973 1112,28,92,249
7. Deposits 6 30698,81,85,462 20236,85,79,506
8. Bonds and Debentures 7 28700,12,30,600 28891,89,75,750
9. Borrowings 8 4800,26,56,118 3171,69,84,829
10. Current Liabilities and Provisions 9 3089,53,14,729 2363,69,38,167
Total 98706,47,01,537 81220,30,28,268
Forward Foreign Exchange Contracts (Hedging) as per contra 605,58,18,093 371,65,47,961
Sr.No. PROPERTY AND ASSETS SCHEDULE As on 31.03.2008 As on 31.03.2007
1. Cash and Bank Balances 10 10314,24,14,644 7314,93,93,485
2. Investments 11 2582,05,89,335 2076,39,79,151
3. Advances 12 82872,42,54,280 69507,89,75,674
4. Fixed Assets 13 257,28,88,784 238,68,73,841
5. Other Assets 14 2680,45,54,494 2082,38,06,117
Total 98706,47,01,537 81220,30,28,268
Forward Foreign Exchange Contracts (Hedging) as per contra 605,58,18,093 371,65,47,961
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 dateKhimji Kunverji & Co.Chartered Accountants
Ketan S. Vikamsey P. SatishPartner Chief General ManagerMumbai Accounts DepartmentDate : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. SarkarChairman Managing Director Director Director
Balance Sheet english.p65 7/29/2008, 12:19 PM99
100
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENTPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008 (Rupees)
Sr.No. INCOME SCHEDULE 2007-08 2006-07
1. Interest received on Loans and Advances 4518,08,36,863 3893,54,29,6392. Income from Investment Operations 903,34,71,377 538,24,04,1173. Discount and Commission 51,71,40,176 18,57,92,3924. Other Receipts (Refer Note B-4 of Schedule 18) 35,95,18,391 24,04,83,532
Total "A" 5509,09,66,807 4474,41,09,680
Sr.No. EXPENDITURE SCHEDULE 2007-08 2006-07
1. Interest and Financial Charges 15 3152,67,27,689 2620,40,50,8502. Establishment and Other Expenses 16 A 480,78,54,626 590,52,68,0823. Provisions 16 B 105,91,02,349 70,86,23,5644. Depreciation (Refer Note B-16 of Schedule 18) 21,63,06,861 22,66,32,925
Total "B" 3760,99,91,525 3304,45,75,4215. Profit before Tax (A - B) 1748,09,75,282 1169,95,34,2596. a) Provision for Income Tax 560,00,00,000 349,00,00,000
b) Deferred Tax - Asset (Adjustment) (Refer Note B-12 of Schedule 18) -41,45,00,000 -38,17,00,000c) Provision for Fringe Benefit Tax 3,40,00,000 2,70,00,000
7. Profit after Tax 1226,14,75,282 856,42,34,259Significant 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 2007-08 2006-07
1. Profit for the year brought down 1226,14,75,282 856,42,34,259Add: Withdrawals from Funds against
expenditure debited to Profit & Loss A/ca) Co-operative Development Fund (Refer Schedule 1) 3,06,99,557 2,96,13,765b) Research and Development Fund (Refer Schedule 1) 7,48,95,872 8,88,91,192c) Watershed Development Fund (Refer Schedule 5) 11,90,51,701 5,15,54,239d) Micro Finance Development and Equity Fund (Refer Schedule 5) 7,38,32,004 6,36,02,984e) Investment Fluctuation Reserve (Refer Schedule 1) 0 49,21,20,000f) Farm Innovation & Promotion Fund (Refer Schedule 1) 46,08,634 36,08,782
2. Profit available for Appropriation 1256,45,63,050 929,36,25,221
Less: Transferred to:a) Special Reserve u/s 36(1) (viii) of IT Act, 1961 320,00,00,000 410,00,00,000b) National Rural Credit (Long Term Operations) Fund 400,00,00,000 30,00,00,000c) National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000d) Co-operative Development Fund 53,06,99,557 2,96,13,765e) Research and Development Fund 7,48,95,872 8,88,91,192f) Investment Fluctuation Reserve (Refer Schedule 1) 25,78,45,000 0g) Foreign Currency Risk Fund 0 13,62,29,603h) Financial Inclusion Fund 5,00,00,000 0i) Financial Inclusion Technology Fund 5,00,00,000 0j) Farmers Technology Transfer Fund 25,00,00,000 0k) Reserve Fund 405,11,22,621 453,88,90,661
Total 1256,45,63,050 929,36,25,221
Refer Schedule 18 for Significant Accounting Policies and Notes on Accounts.
As per our attached report of even dateKhimji Kunverji & Co.Chartered Accountants
Ketan S. Vikamsey P. SatishPartner Chief General ManagerMumbai Accounts DepartmentDate : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. SarkarChairman Managing Director Director Director
Balance Sheet english.p65 7/29/2008, 12:19 PM100
101
SCHEDULES TO BALANCE SHEET
Schedule 1 - Reserve Fund and Other Reserves
(Rupees)
Sr. Particulars Opening Additions/ Transferred Transferred Balance as onNo. Balance adjustments From P&L to P&L 31.03.2008
as on 01.04.2007 during the year Appropriation Appropriation
1. Reserve Fund 4313,69,13,036 0 405,11,22,621 0 4718,80,35,657
2. Research and Development Fund 50,00,00,000 0 7,48,95,872 7,48,95,872 50,00,00,000
3. Capital Reserve 74,80,53,208 0 0 0 74,80,53,208
4. Investment Fluctuation Reserve 47,21,55,000 0 25,78,45,000 0 73,00,00,000
5. Co-operative Development Fund 75,00,00,000 0 53,06,99,557 3,06,99,557 125,00,00,000
6. Soft Loan Assistance Fund forMargin Money 10,00,00,000 0 0 0 10,00,00,000
7. Agriculture & Rural EnterpriseIncubation Fund 5,00,00,000 0 0 0 5,00,00,000
8. Foreign Currency Risk Fund 147,06,03,936 0 0 0 147,06,03,936
9. Special Reserve Created &Maintained u/s 36(1)(viii) ofIncome Tax Act, 1961 3075,00,00,000 0 320,00,00,000 0 3395,00,00,000
10. Farm Innovation and Promotion Fund 4,63,91,218 0 0 46,08,634 4,17,82,584
Total 7802,41,16,398 0 811,45,63,050 11,02,04,063 8602,84,75,385
Previous year 6974,47,24,916 0 889,36,25,221 61,42,33,739 7802,41,16,398
Schedule 2 - National Rural Credit Funds(Rupees)
Sr. Particulars Opening Balance Contribution by Transferred from Balance as onNo. as on 01.04.2007 RBI P&L 31.03.2008
Appropriation
1. National Rural Credit (Long Term Operations) Fund 13214,00,00,000 1,00,00,000 400,00,00,000 13615,00,00,000
2. National Rural Credit (Stabilisation) Fund 1533,00,00,000 1,00,00,000 10,00,00,000 1544,00,00,000
Total 14747,00,00,000 2,00,00,000 410,00,00,000 15159,00,00,000
Previous year 14705,00,00,000 2,00,00,000 40,00,00,000 14747,00,00,000
Schedule 3 - Funds Out of Grants received from International Agencies
(Rupees)
Sr. Particulars Opening Grants received/ Interest Exp./Disb./ adjust. BalanceNo. Balance as on adjusted during credited to during the as on
01.04.2007 the year the Fund year 31.03.2008
1. National Bank - SwissDevelopment Coop. Project 53,26,72,600 1,44,27,574 0 0 54,71,00,174
2. Rural Innovation Fund(Refer Note B-9 of Schedule 18) 125,22,35,143 0 6,21,16,899 21,69,53,493 109,73,98,549
3. Rural Promotion Fund(Refer Note B-8 of Schedule 18) 3,26,80,706 2,22,24,477 0 0 5,49,05,183
4. KfW - Fund for Watershed Development 15,43,605 0 0 15,43,605 0
5. KfW - NABARD V Fund for Adivasi Programme 72,60,537 2,50,23,648 0 2,78,43,631 44,40,554
Total 182,63,92,591 6,16,75,699 6,21,16,899 24,63,40,729 170,38,44,460
Previous year 187,12,23,936 13,31,12,817 7,24,24,840 25,03,69,002 182,63,92,591
Balance Sheet english.p65 7/29/2008, 12:19 PM101
102
Schedule 4 - Gifts, Grants, Donations and Benefactions (Rupees)
Sr. Particulars Opening Grant received Interest Adjusted ClosingNo. Balance as on during Credited to against the Balance as on
01.04.2007 the year the Fund expenditure 31.03.2008
A.
1. KfW - NB - IX Adivasi Development Programme(Refer Note B-9 of Schedule 18) 45,67,863 7,10,17,703 2,11,824 7,46,51,492 11,45,898
2. KfW-NB-Indo German Watershed DevelopmentProgramme - Phase III - Maharashtra(Refer Note B-9 of Schedule 18) 4,05,12,503 1,27,72,420 12,31,130 5,45,16,053 0
3. Indo German Watershed DevelopmentProgramme - Andhra Pradesh(Refer Note B-9 of Schedule 18) 33,41,681 1,41,52,899 2,17,699 1,24,27,821 52,84,458
4. Indo German Watershed DevelopmentProgramme - Gujarat(Refer Note B-9 of Schedule 18) 24,14,727 92,63,072 1,09,631 43,47,849 74,39,581
5. Indo German Watershed DevelopmentProgramme - Rajasthan(Refer Note B-9 of Schedule 18) 0 90,22,019 1,67,216 49,51,482 42,37,753
6. KfW Umbrella Programme onNatural Resource Management(Refer Note B-9 of Schedule 18) 0 9,84,01,698 10,626 19,00,000 9,65,12,324
7. NABARD Grant for Fixed Assetsunder NB-SDC HID Project 8,30,246 0 0 1,27,677 7,02,569
8. GTZ-NABARD RFP - Financial Component 0 83,53,500 0 83,53,500 0
9. NE Council Fund forMiscellaneous Training Programme 0 50,00,000 0 45,01,643 4,98,357
10. KfW NB SEWA Bank Capitalisation of RFIs 0 1,00,52,525 0 1,00,52,525 0
B.
1. Capital Investment Subsidy forCold Storage Projects - NHB -14,93,930 11,80,63,410 0 11,44,86,770 20,82,710
2. Capital Subsidy for Cold Storage NHM 22,44,79,990 0 0 22,40,53,100 4,26,890
3. Capital Subsidy forCold Storage TM North East 0 10,30,39,400 0 10,30,39,400 0
4. Credit Linked Capital Subsidy forTechnology Upgradation of SSIs 2,37,873 7,83,20,000 0 77,18,393 7,08,39,480
5. Capital Investment Subsidy forRural Godowns 33,88,51,631 66,40,00,000 0 95,33,99,981 4,94,51,650
6. On-farm Water Management forCrop Production 80,29,916 0 0 -9,32,722 89,62,638
7. Million Shallow Tubewell Programme 195,56,22,192 0 0 -33,39,26,250 228,95,48,442
8. Cattle Development Programme - Uttar Pradesh(Refer Note B-9 of Schedule 18) 95,37,235 5,44,40,000 7,16,150 2,71,95,000 3,74,98,385
9. Cattle Development Programme - Bihar(Refer Note B-9 of Schedule 18) 1,03,35,762 5,44,40,000 7,74,450 2,54,10,000 4,01,40,212
10. National Project on Organic Farming 6,25,86,647 0 0 2,73,54,849 3,52,31,798
11. Integrated Watershed Development Programme -Rashtriya Sam Vikas Yojana 9,52,47,088 0 0 1,59,11,636 7,93,35,452
(Contd.)
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103
Schedule 4 - Gifts, Grants, Donations and Benefactions – (Contd.) (Rupees)
Sr. Particulars Opening Grant received Interest Adjusted ClosingNo. Balance as on during Credited to against the Balance as on
01.04.2007 the year the Fund expenditure 31.03.2008
12. Capital Investment Subsidy Scheme -Horticulture Development - Bihar 11,67,09,497 0 0 -2,74,83,847 14,41,93,344
13. Rain Water Harvesting Scheme 3,42,44,370 13,00,00,000 0 15,84,51,057 57,93,313
14. Kutch Drought Proofing Project 1,52,56,573 0 0 83,66,018 68,90,555
15. Dairy and Poultry Venture Capital Fund 3,55,14,892 49,99,00,000 0 29,47,62,118 24,06,52,774
16. Capital Subsidy for Agriculture MarketingInfrastructure, Grading and Standardisation 14,34,09,060 35,10,07,000 0 48,90,94,070 53,21,990
17. Vidharbha Package 0 83,47,88,477 0 82,84,62,247 63,26,230
18. Livelihood Advancement Business School -Sultanpur, Uttar Pradesh(Refer Note B-9 of Schedule 18) 65,73,150 0 4,95,616 0 70,68,766
19. Livelihood Advancement Business School -Rae - Bareli , Uttar Pradesh(Refer Note B-9 of Schedule 18) 1,22,21,974 0 8,81,983 30,00,000 1,01,03,957
20. Multi Activity Approach for Poverty Alleviation -Sultanpur, Uttar Pradesh(Refer Note B-9 of Schedule 18) 3,42,50,334 0 17,64,718 2,73,70,100 86,44,952
21. Multi Activity Approach for Poverty Alleviation -BAIF - Rae Bareli, Uttar Pradesh(Refer Note B-9 of Schedule 18) 2,09,14,452 0 15,76,950 0 2,24,91,402
22. Capital Subsidy Scheme -Agri Clinics Agri Business Centres 3,00,00,000 0 0 68,53,640 2,31,46,360
23. Interest Subvention Scheme to Poultry UnitsAffected for Avian Flu 38,46,714 3,93,95,058 0 4,32,41,772 0
24. Artificial Recharge of Groundwater in Hard Rock Area 0 1536,75,00,000 0 0 1536,75,00,000
C.Revival Package of Short Term Cooperative Credit Structure
1. Cost of Special Audit 37,67,51,167 0 0 11,57,57,688 26,09,93,479
2. Recapitalisation Assistance toCredit Cooperative Societies 300,00,00,000 3055,37,00,000 0 1307,04,87,234 2048,32,12,766
3. Technical Assistance 15,00,00,000 0 0 3,24,816 14,96,75,184
4. Human Resources Development 24,73,82,963 0 0 10,64,71,145 14,09,11,818
5. Implementation Cost 13,59,72,208 15,00,00,000 0 22,33,07,885 6,26,64,323
Total 711,81,48,778 4923,66,29,181 81,57,993 1668,80,06,142 3967,49,29,810
Previous year 145,70,11,072 838,78,70,686 64,50,515 273,31,83,495 711,81,48,778
D. As on 31.03.2008 As on 31.03.2007
Grants to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937
Less : Grants Released to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 2695,37,95,937 2695,37,95,937
0 0
Balance Sheet english.p65 7/29/2008, 12:19 PM103
104
Schedule 6 - Deposits(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. State Governments 0 77,43,3502. Tea / Rubber / Coffee Deposits 106,08,44,199 81,38,40,3733. Commercial Banks (Deposits under RIDF) 30592,73,41,263 20154,69,95,783
Total 30698,81,85,462 20236,85,79,506
Schedule 5 - Other Funds
(Rupees)
Sr. Particulars Opening Additions/ Transferred Interest Expenditure/ Transferred Balance as onNo. Balance as on Adjustments from P & L Credited Disb.during to P&L 31.03.2008
01.04.2007 during the year Appropriation the year Appropriation
1. Watershed DevelopmentFund (Refer Note B-9 ofSchedule 18) 602,75,83,256 0 0 34,73,68,791 11,90,51,701 11,90,51,701 613,68,48,645
2. Micro FinanceDevelopment and EquityFund (Refer Note B-9 ofSchedule 18) 131,99,00,128 0 0 7,94,09,203 5,93,90,666 7,38,32,003 126,60,86,662
3. Interest Differential Fund -(Forex Risk) 103,21,64,210 14,45,95,461 0 0 0 0 117,67,59,671
4. Interest Differential Fund -(Tawa) (Refer Note B-1of Schedule 18) 5,64,78,771 1,41,518 0 0 5,54,78,771 0 11,41,518
5. Medical Assistance Fund 6,75,542 -6,75,542 0 0 0 0 06. Adivasi Development
Fund 4,39,22,927 1,83,60,592 0 0 4,29,22,927 0 1,93,60,5927. Tribal Development
Fund 264,21,67,415 349,42,87,490 0 0 10,65,87,020 0 602,98,67,8858. Financial Inclusion Fund 0 10,00,00,000 5,00,00,000 0 0 0 15,00,00,0009. Financial Inclusion
Technology Fund 0 10,00,00,000 5,00,00,000 0 0 0 15,00,00,00010. Farmers Technology
Transfer Fund 0 0 25,00,00,000 0 0 0 25,00,00,000
Total 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
Previous year 860,22,46,840 236,78,07,206 0 41,95,94,676 15,15,99,250 11,51,57,223 1112,28,92,249
Schedule 7 - Bonds and Debentures(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. SLR Bonds 394,21,11,000 592,84,11,0002. Tax Free Bonds 535,15,00,000 1000,00,00,0003. Priority Sector Taxable Bonds 325,00,00,000 5150,50,00,0004. Non Priority Sector Bonds 20877,50,00,000 13953,80,00,0005. Capital Gains Bonds 4777,45,10,000 8190,76,70,0006. Bhavishya Nirman Bonds 1787,45,72,600 3,98,94,7507. NABARD Rural Bond 3,35,37,000 0
Total 28700,12,30,600 28891,89,75,750
Schedule 8 - Borrowings(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. From Central Government 370,20,89,182 382,00,48,9492. Certificate of Deposits 1421,92,03,300 03. From Others :
a) In India From Commercial Banks 2500,00,00,000 2500,00,00,000b) Outside India From International Agencies 508,13,63,636 289,69,35,880
Total 4800,26,56,118 3171,69,84,829
Balance Sheet english.p65 7/29/2008, 12:19 PM104
105
Schedule 9 - Current Liabilities and Provisions(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. Interest Accrued but not due on
a) Loans from Central Government 19,53,01,803 19,82,76,567
b) Bonds and Debentures 1285,89,91,223 955,80,54,653
c) Tea / Rubber / Coffee Deposits 3,81,10,506 3,41,34,965
d) Deposits from State Governments (Special Loan Account) 0 1,33,645
e) Borrowings from International Agencies 2,63,41,218 54,92,090
f) Deposits under RIDF 300,59,05,913 212,50,43,543
g) Commercial Bank Borrowings 11,15,068 21,17,808
h) Certificate of Deposits 61,49,39,574 0
Sub - Total 1674,07,05,305 1192,32,53,271
2. Sundry Creditors 67,63,27,343 62,43,50,412
3. Provision for Gratuity (Refer Note B-17 of Schedule 18) 232,66,17,081 195,07,34,007
4. Provision for Pension (Refer Note B-10 and B-17 of Schedule 18) 466,91,98,168 409,45,43,069
5. Provision for Encashment of Ordinary Leave (Refer Note B-17 of Schedule 18) 19,30,26,212 72,87,86,145
6. Unclaimed Interest on Bonds with RBI 11,56,586 18,31,586
7. Unclaimed Interest on Bonds 6,29,04,755 1,64,97,227
8. Bonds matured but not claimed (Refer Note B-11 of Schedule 18) 81,87,70,000 8,66,60,000
9. Provisions and Contingencies
a) Depreciation in Value of Investment a/c - G. Sec. (Refer Note B-7 of Schedule 18) 35,73,98,880 0
b) Amortisation of G. Sec. - HTM 54,54,47,856 36,36,31,904
c) For Standard Assets 419,37,00,000 356,85,00,000
d) Depreciation in value of investments 1,66,08,000 2,02,20,000
e) Sacrifice in interest element of restructured loans 13,16,00,000 25,51,00,000
f) Provision for Other Assets & Receivables 37,97,358 28,30,546
g) Provision for Income Tax [Net of Advance Tax] 15,80,57,185 0
Total 3089,53,14,729 2363,69,38,167
Schedule 10 - Cash and Bank Balances
(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. Cash in hand 21,531 22,930
2. Balance with Reserve Bank of India 3795,85,77,121 77,61,79,667
3. Balances with other Banks in India
a) On Current Account 107,56,48,175 12,34,57,820
b) Deposit with Banks 5789,00,00,000 6822,50,00,000
4. Remittances in Transit 157,59,35,668 98,23,52,467
5. Collateralised Borrowing and Lending Obligations 464,22,32,149 304,23,80,601
Total 10314,24,14,644 7314,93,93,485
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106
Schedule 11 - Investments(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.2007
1. Government SecuritiesSecurities of Central Government 1422,29,02,151 1438,04,79,151
Face Value Rs.1380,30,50,000 (Previous year - Rs. 1395,30,50,000) Market Value Rs.1406,58,19,973 (Previous year - Rs. 1423,54,00,587)
(Refer Note B-5 of Schedule 18)2. Other Approved Securities 0 03. Equity Shares in :
a) Agri-Development Finance Company Ltd.i) NABARD Financial Services Ltd. - Rs. 5,20,00,000
Face Value Rs. 5,20,00,000(Previous year - Rs. 5,20,00,000)
ii) Agri-Business Finance (Andhra Pradesh) Ltd. - Rs. 5,20,00,000Face Value Rs. 5,20,00,000(Previous year - Rs. 5,20,00,000)
iii) Agri Development Finance (Tamil Nadu) Ltd. - Rs. 5,20,00,000 15,60,00,000 15,60,00,000Face Value Rs. 5,20,00,000(Previous year - Rs. 5,20,00,000)
b) Agricultural Finance Corporation Ltd. 1,00,00,000 1,00,00,000Face Value Rs. 1,00,00,000(Previous year - Rs. 1,00,00,000)
c) Small Industries Development Bank of India 48,00,00,000 48,00,00,000Face Value Rs.16,00,00,000(Previous year - Rs.16,00,00,000)
d) Agriculture Insurance Company of India Ltd. 60,00,00,000 60,00,00,000Face Value Rs. 60,00,00,000(Previous year - Rs. 60,00,00,000)
e) NABARD Consultancy Services Pvt. Ltd. 5,00,00,000 5,00,00,000Face Value Rs. 5,00,00,000(Previous year - Rs. 5,00,00,000)
f) National Commodity and Derivatives Exchange Ltd. 4,50,00,000 4,50,00,000Face Value Rs. 4,50,00,000(Previous year - Rs. 4,50,00,000)
g) Multi Commodity Exchange of India Ltd. 1,25,00,000 1,25,00,000Face Value Rs. 1,25,00,000(Previous year - Rs. 1,25,00,000)
4. Othersa) Units of Mutual Funds 760,00,00,000 500,00,00,000
Face Value Rs. 760,00,00,000(Previous year - Rs. 500,00,00,000 )
b) APIDC - Venture Capital Ltd. - BVF 4,00,00,000 3,00,00,000 (Refer Note B-6 of Schedule 18)c) Treasury Bills 260,41,87,184 0
Total 2582,05,89,335 2076,39,79,151
Schedule 12 - Advances(Rupees)
Sr. Particulars Balance as on Balance as onNo. 31.03.2008 31.03.20071. Refinance Loans
a) Production & Marketing Credit 17381,49,72,000 14650,66,09,349b) NABARD Line of Credit 0 106,90,00,000c) Conversion Loans for Production Credit 118,20,43,000 181,48,44,100d) Medium Term Investment Credit- Non-Project Loans 9,60,000 19,20,000e) Liquidity Support 1939,88,56,605 2490,59,90,000f) Other Investment Credit :
i) Medium Term and Long Term Project Loans (Refer Note B-15 of Schedule 18) 32401,00,02,486 31682,46,00,425ii) Long Term Non-Project Loans 290,14,34,014 335,13,94,411
2. Direct Loans
a) Loans under Rural Infrastructure Development Fund 30648,59,05,219 20004,83,05,133b) Other Loans:
i) Co -operative Development Fund 3,51,05,480 65,44,466ii) Micro Finance Development Equity Fund 16,41,99,746 5,84,85,250iii) Watershed Development Fund 6,64,64,900 6,69,77,950iv) Tribal Development Fund 3,68,000 0
c) Co-Finance Loans 66,39,42,830 42,43,04,590
Total 82872,42,54,280 69507,89,75,674
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107
Schedule 13 - Fixed Assets
(Rupees)
Sr. Particulars Balance as on Balance as on
No. 31.03.2008 31.03.2007
1. LAND : Freehold & Leasehold
(Refer Note B-14 of Schedule 18)
Opening Balance 118,43,09,971 118,01,17,213
Additions/adjustments during the year 25,73,52,142 41,92,758
Closing Balance (at cost) 144,16,62,113 118,43,09,971
Less: Amortisation of Lease Premia 30,07,14,152 27,64,43,124
Book Value 114,09,47,961 90,78,66,847
2. PREMISES
(Refer Note B-14 of Schedule 18)
Opening Balance 244,58,60,686 219,41,01,904
Additions/adjustments during the year 11,47,01,985 25,17,58,782
Closing Balance (at cost) 256,05,62,671 244,58,60,686
Less: Depreciation to date 125,56,08,556 115,10,02,648
Book Value 130,49,54,115 129,48,58,038
3. FURNITURE & FIXTURES
Opening Balance 56,90,90,253 55,02,01,497
Additions/adjustments during the year 1,24,47,228 3,12,93,109
Sub-Total 58,15,37,481 58,14,94,606
Less: Cost of assets sold/written off 3,29,88,932 1,24,04,353
Closing Balance (at cost) 54,85,48,549 56,90,90,253
Less: Depreciation to date 50,01,79,543 48,99,49,909
Book Value 4,83,69,006 7,91,40,344
4. COMPUTER INSTALLATIONS & OFFICE EQUIPMENTS
Opening Balance 63,23,32,978 61,19,88,662
Additions/adjustments during the year 3,62,81,283 5,40,00,453
Sub-Total 66,86,14,261 66,59,89,115
Less: Cost of assets sold/written off 4,98,54,650 3,36,56,137
Closing Balance (at cost) 61,87,59,611 63,23,32,978
Less: Depreciation to date 55,82,35,788 54,84,53,125
Book Value 6,05,23,823 8,38,79,853
5. VEHICLES
Opening Balance 3,92,01,244 2,34,67,190
Additions/adjustments during the year 51,79,072 2,51,94,335
Sub-Total 4,43,80,316 4,86,61,525
Less: Cost of assets sold/written off 24,12,057 94,60,281
Closing Balance (at cost) 4,19,68,259 3,92,01,244
Less: Depreciation to date 2,38,74,380 1,80,72,485
Book Value 1,80,93,879 2,11,28,759
Total 257,28,88,784 238,68,73,841
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108
Schedule 14 - Other Assets
(Rupees)
Sr. Particulars Balance as on Balance as on
No. 31.03.2008 31.03.2007
1. Accrued Interest 2173,62,53,466 1527,63,51,1042. Deposits with Landlords 1,00,90,952 1,00,78,0203. Deposits with Government Departments and Other Institutions 2,16,00,208 1,97,71,9664. Housing loan to staff 151,10,84,290 88,82,20,8795. Other Advances to staff 25,59,44,787 52,91,17,2996. Advances to Landlords 2,73,433 15,4107. Capital Work in Progress [Purchase of Staff Quarters & Office Premises] 4,96,86,759 32,20,81,2428. Sundry Advances 6,41,26,387 25,46,75,7709. Advance Tax (Net of Provision for Income Tax) 0 87,80,45,74410. Deferred Tax Assets [Refer Note B-12 of Schedule 18] 304,79,00,000 263,34,00,00011. Expenditure recoverable from Government of India/International Agencies. 1,64,48,340 1,20,48,683
12. Discount Receivable 9,11,45,872 0
Total 2680,45,54,494 2082,38,06,117
Schedule 15 - Interest and Financial Charges(Rupees)
Sr. Particulars 2007-08 2006-07
No.
1. Interest Paid ona) Loans from Central Government 27,02,49,958 28,15,97,902b) Borrowings from Reserve Bank of India 0 95,54,79,433c) Bonds (Refer Note B-3 of Schedule 18) 1361,55,15,697 1261,88,09,349d) Special Loan Deposits from State Governments 6,690 6,49,908e) Tea / Coffee / Rubber Deposits 4,76,68,588 4,32,76,102f) Gratuity & Medical Fund 15,18,43,225 12,75,93,425g) Borrowings from International Agencies 24,32,59,546 20,52,63,166h) Deposits under RIDF 1400,62,85,028 968,60,78,211i) Cattle Development Programme (UP & Bihar) 14,90,600 19,43,236j) Watershed Development Fund 34,73,68,791 34,11,83,958k) Micro Finance Development and Equity Fund 7,94,09,203 7,83,42,299l) Indo German Watershed Development Programme - Andhra Pradesh 2,17,699 1,337m) Indo German Watershed Development Programme - Rajasthan 1,67,216 0n) KfW - NB Indo German Watershed Development Programme -
Phase III - Maharashtra 12,31,130 11,53,835o) KfW - NB - IX Adivasi Development Programme 2,11,824 1,85,057p) KfW fund for Watershed Development (IGWDP) 0 15,43,604q) Indo German Watershed Development Programme - Gujarat 1,09,631 1,06,478r) Corporate Borrowings from Banks and FIs in India 187,90,01,244 169,00,08,018s) Rural Innovation Fund 6,21,16,899 7,08,81,235t) Livelihood Advancement Business School RF Project - Sultanpur, Uttar Pradesh 4,95,616 4,23,150u) Multi Activity Approach for Poverty Alleviation BAIF Project -
Sultanpur, Uttar Pradesh 17,64,718 16,97,996v) Deposits / Borrowings 0 37,20,121w) Livelihood Advancement Business School RF Project - Rae Bareli, Uttar Pradesh 8,81,983 2,21,974x) Multi Activity Approach for Poverty Alleviation BAIF Project -
Rae Bareli, Uttar Pradesh 15,76,950 7,17,452y) Certificate of Deposits 61,49,39,574 0z) Tribal Development Fund - Wadi [West Bengal] 29,824 0
2. Discount on Collateralised Borrowing and Lending Obligations 3,91,67,660 66,29,285
3. Swap Charges 3,28,30,183 3,32,55,072
4. Discount, Brokerage, Commission & issue exp. on Bonds and Securities 12,64,14,035 5,32,89,247
5. Repo Interest Expenditure 24,74,177 0
Total 3152,67,27,689 2620,40,50,850
Balance Sheet english.p65 7/29/2008, 12:19 PM108
109
Schedule 16 A - Establishment and Other Expenses
(Rupees)
Sr. Particulars 2007-08 2006-07No.
1. Salaries and Allowances * 233,08,89,082 319,29,90,817
2. Contribution to Staff Superannuation Funds 108,20,97,145 151,36,16,340
3. Travelling & Other allowances in connection with Directors' &Committee Members' Meetings 16,47,887 8,44,879
4. Directors' & Committee Members' Fees 1,58,250 50,000
5. Rent, Rates, Insurance, Lighting, etc. 19,11,04,599 17,51,75,766
6. Travelling Expenses 19,68,77,252 16,22,41,014
7. Printing & Stationery 2,76,11,644 2,44,63,263
8. Postage, Telegrams & Telephones 7,07,32,640 6,56,82,409
9. Repairs 3,89,31,822 3,83,38,993
10. Auditors' Fees (includes Rs. 2,03,136 paid to erstwhile auditor) 7,11,466 7,34,053
11. Legal Charges 15,81,688 14,17,696
12. Service Tax Paid 0 64,962
13. Miscellaneous Expenses 40,98,63,595 35,84,33,218
14. Expenditure on Miscellaneous Assets 67,10,778 84,54,828
15. Expenditure on Study & Training 19,77,01,338 20,23,63,077[Including Rs. 4,77,77,782 (Rs. 5,13,91,525) pertaining toEstablishment Expenses of Regional Training Colleges]
16. Expenditure on Promotional Activities under
a) Cooperative Development Fund 3,06,99,557 2,96,13,765
b) Micro Finance Development and Equity Fund 7,38,32,004 6,36,02,984
c) Watershed Development Fund 11,90,51,701 5,15,54,239
d) Farm Innovation and Promotion Fund 46,08,634 36,08,78217. Wealth Tax 2,30,43,544 1,20,16,997
Total 480,78,54,626 590,52,68,082
* Salary and Allowances include Rs. Nil (Rs. 120.82 crore), pertaining to period from November 2002 to March 2006.
Schedule 16 B - Provisions
(Rupees)
Sr. Particulars 2007-08 2006-07No.
1. Amortisation of G. Sec 18,18,15,952 18,18,15,952
2. Standard Assets 62,52,00,000 86,15,00,000
3. Non Performing Assets 2,22,76,786 3,06,72,109
4. NB General Advices -14,44,081 -17,31,052
5. Depreciation in Investments G.Sec [Refer Note B-7 of Schedule 18] 35,73,98,880 -31,27,81,991
6 Depreciation in Value of Investment Account - Equity -36,12,000 20,18,000
7. Sacrifice in interest element of Restructured Accounts -12,35,00,000 -5,57,00,000
8. Other Assets / Receivables 9,66,812 28,30,546
Total 105,91,02,349 70,86,23,564
Schedule 17- Commitments and Contingent Liabilities(Rupees)
Sr. Particulars As on As onNo. 31.03.2008 31.03.2007
1. Commitments on account of capital contracts remaining to be executed 4,51,19,000 8,21,00,000
4,51,19,000 8,21,00,0002. Contingent Liabilites
(i) Disputed claims for additional payments towards construction of premises 9,11,29,000 18,87,64,000(ii) Income Tax matters in appeal 0 39,90,00,000
9,11,29,000 58,77,64,000
Balance Sheet english.p65 7/29/2008, 12:19 PM109
110
Schedule -18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR
THE YEAR ENDED MARCH 31, 2008
A. Significant Accounting Policies
1. Basis of Preparation
The accounts are prepared on the historical cost convention
and comply with all material aspects contained in 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.
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 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 Finance
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.
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 office,
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 premises situated on leasehold land
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%
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 as per the criteria specified
in AS 26 "Intangible Assets" issued by ICAI.
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.
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111
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 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".
5.6 Treasury Bills are valued at carrying cost.
5.7 Unquoted Shares are valued at breakup value based
on the latest Audited Accounts of the investee companies.
5.8 Brokerage, commission, etc. paid at the time of
acquisition, are charged to revenue.
5.9 Broken period interest on debt investment is treated
as a revenue item.
5.10 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 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 stated at contract price.
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.
8. Retirement Benefits
8.1 The Bank has a Provident Fund Scheme managed
by RBI. Contribution to the Fund are 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 recognised, 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.
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112
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 realised.
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 realised.
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 as
sets 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 deter mine:
a) the provision for impairment loss, if any required;
or
b) the reversal, if any, required for impairment
loss recognised in the previous periods.
11.2 Impairment loss is recognised 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.
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 recognised, 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% per annum
has been accounted to the extent of 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.37.36 crore (Rs.37.40 crore) representing Interest
Subvention received from GoI for providing assistance under
Liquidity Support to State Co-operative Banks (SCBs) /
Regional Rural Banks (RRBs).
3. Subvention received / receivable from GOI
amounting to Rs.879.74 crore (Rs.272.97 crore) being the
difference between the cost of borrowing by NABARD and
the refinance rate, has been reduced from interest paid on
bonds.
4. Other receipts includes Rs.28.87 crore (Rs.10.06
crore) received / receivable from GoI towards administration
charges on providing refinance to SCBs and RRBs for
financing Seasonal Agricultural Operations.
Balance Sheet english.p65 7/29/2008, 12:19 PM112
113
5. 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 BusinessSegment (Securities) 10.00 (10.00) 11.19 (11.19)
Pledged forBusiness Segment(Collateralised Borrowingand Lending Obligation) 1,212.00 (830.00) 1,256.67 (912.34)
6. As on 31 March 2008, there was uncalled money
@ Rs.200 (@Rs.400) per unit on 50,000 (50,000) Class A
units with face value of Rs.1000 each in respect of APIDC
- Venture Capital Limited - BVF aggregating to Rs.1 crore
(Rs.2 crore).
7. Investments under HTM category excluding
investments in subsidiaries are 43.43 % as at 31 March
2008. As per directive of RBI, the bank has shifted
investments amounting to Rs.480.65 crore (Book Value
Rs.432.30 crore) from HTM to AFS category as per the
decision taken by the Board of Directors in its first meeting
for the financial year 2008-09 held on 25 April 2008. The
resultant diminution in the value of the shifted investments
amounting to Rs.35.74 crore has been provided for as at
31 March 2008.
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 @ 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 @ 7.54% 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) has been
credited to the respective funds based on the respective
agreements.
10. The Bank has not received confirmation of balance
of Provident Fund Account as on March 31, 2008
maintained with RBI. Pending receipt of such confirmation,
provision for pension is made after considering the
balance of PF maintained with RBI as per the books of the
Bank.
11. Outstanding balance payable on account of 'bonds
matured but not claimed' amounting to Rs.81.88 crore
(Rs.8.67 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" issued by ICAI,
recognised in the Profit and Loss account the difference of
Rs.41.45 crore between net deferred tax assets of Rs.304.79
crore and Rs.263.34 crore as at March 31, 2008 and March
31, 2007 respectively; as detailed below:
(Rs. in crore)
Sr. Deferred Tax Assets 31 March 31 MarchNo. 2008 2007
1. Provision for Retirement Benefitsmade in the books but allowable fortax purposes on payment basis 267.83 230.25
2. Depreciation on Fixed Assets 24.59 24.85
3. Amortisation of G Sec 12.36 8.24
Total 304.79 263.34
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.35.94 crore
(Rs.37.33 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 on date, aggregates to Rs.14.42 crore
(Rs.4.99 crore).
16. Depreciation charged in Profit & Loss Account is
net of SDC's share of depreciation amounting to Rs.0.0128
crore (Rs.0.0657 crore) on assets purchased under SDC-
HID project.
Balance Sheet english.p65 7/29/2008, 12:19 PM113
114
d. Actuarial assumptions:
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. The above information
is certified by the actuary.
e. This being the first year of implementation of
revised AS 15, previous year figures have not been given.
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 2007-08 2006-07
Opening Balance 58.78 67.21
Provided during the year 0.00 0.00
Reversed during the year 49.67 8.43
Closing Balance 9.11 58.78
c. Expenses recognised in the Profit and Loss Account
during 2007-08:
17. Disclosure required under AS15 (Revised)
"Employee Benefits" issued by ICAI is as under:
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
Defined benefitobligation at thebeginning of year 632.97 195.05 72.88
Current Service Cost 18.67 14.08 5.64
Interest Cost 50.64 15.60 5.83
Actuarial (gain)/ loss 17.34 12.12 15.66
Benefits paid (14.51) (4.19) (7.83)
Defined Benefitsobligations at theyear end 705.11 # 232.66 92.18
# include Rs.238.19 crore being the contribution made towards
PF for the pension optees maintained with RBI.
b. Amount recognised in the balance sheet as on
31 March 2008:
(Rs. crore)
Particulars Pension Gratuity Leave(Partly (Unfunded) Encashment
Funded) (Funded)
Present value ofdefined benefitsobligations as on31 March 2008 705.11 232.66 92.18
Fair value of planassets as on31 March 2008 238.19 @ 0.00 72.88 $
Liability recognisedin the Balance sheetas on 31 March 2008 466.92 232.66 19.30
@ 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.
(Rs. crore)
Particulars Pension Gratuity LeaveEncashment
Current Service Cost 18.67 14.08 5.64
Interest Cost 50.64 15.60 5.83
Actuarial (gain)/ loss 17.34 12.12 15.66
Expected return onPlan Assets (18.55) 0.00 0.00
Expense recognisedin the statement ofProfit & Loss 68.10 41.80 27.13
Particulars Pension Gratuity LeaveEncashment
Mortality Table (LIC) 1994-96 1994-96 1994-96(Ultimate) (Ultimate) (Ultimate)
Discount rate (per annum) 8% 8% 8%
Salary growth (per annum) 4% 6% 6%
Withdrawal rate 1% 1% 1%
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115
21. Capital adequacy ratio of the Bank as on 31 March
2008 is 26.61 % (26.97%) as against a minimum of 9% as
stipulated by RBI.
22. Previous year's figures have been regrouped/
rearranged wherever necessary.
23. Figures in brackets pertain to previous year.
24. The following additional information is disclosed in
terms of RBI circular No.RBI/2007-2008/48
(Ref.No.DBOD.FID.FIC.2/01.02.00/2007-08) dated
02 July 2007.
24.1 Capital
(a) Capital to Risk-weighted Assets Ratio
(CRAR)
(Rs. crore)
Sr. No. Particulars 2007-08 2006-07
1. Depreciation 0.000 0.054
2. Other Expenses 0.000 0.135
3. Dividend Income 0.625 0.000
(Per cent)
Particulars 31 March 2008 31 March 2007
CRAR 26.61 26.97
Core CRAR 25.34 25.83
Supplementary CRAR 1.27 1.14
(Rs. crore)
Particulars 31 March 2008 31 March 2007
Amount of subordinated debtraised and outstanding Nil Nil
(b) Subordinated Debt
(Rs. crore)
Particulars 31 March 2008 31 March 2007
On - Balance Sheet Items 38,880.81 35,457.59
Off - Balance Sheet Items 36.47 78.10
(c) Risk weighted assets
(Rs. crore)
Contributor 31 March 2008 31 March 2007
Reserve Bank of India 1,450 1,450
Government of India 550 550
Total 2,000 2,000
24.2 Asset Quality and Credit Concentration
(e) Net NPA position
(f) Asset classification
(g) Provisions made during the year
(h) Movement in Net NPAs
(i) Credit exposure as percentage to Capital
Funds and as percentage to Total Assets
Particulars 31 March 2008 31 March 2007
Percentage of Net NPAs toNet Loans & Advances 0.0232661 0.0330297
(Rs. crore)
Classification 2007-08 2006-07
Amount (%) Amount (%)
Standard 82,853.14 99.977 69,484.94 99.967Sub-standard 2.40 0.003 18.42 0.027Doubtfull 16.88 0.020 4.54 0.006Loss 0.00 0.000 0.00 0.000
Total 82872.42 100.00 69,507.90 100.00
(Rs. crore)
Provisions against 2007-08 2006-07
Standard Assets 62.52 86.15Non Performing Assets @ 2.23 3.07Investments # 35.38 (31.08)Income Tax(including Fringe Benefit Tax) 563.40 351.70
Total 663.53 409.84
@ Net of Rs. 0.11 crore reversed against Staff NPA.
# Net of Rs. 0.42 crore written back in respect of excess provision
(Rs. crore)
2007-08 2006-07Category Credit Exposure Credit Exposure
as % to as % to
Capital Total Capital TotalFunds Assets Funds Assets
I Largest SingleBorrower 43.25 4.56 36.25 4.28
II Largest Borrower Not Applicable Not ApplicableGroup
III Ten LargestSingle Borrowersfor the year 270.19 28.48 250.20 29.53
IV Ten LargestBorrower Groups Not Applicable Not Applicable
(Rs. crore)
Particulars 2007-08 2006-07
(A) Net NPAs as at beginning of the year 22.96 0(B) Add: Additions during the year 7.16 22.96(C) Sub-total (A+B) 30.12 22.96(D) Less: Reductions during the year 10.84 0(E) Net NPAs as at the end of the year (C-D) 19.28 22.96
20. Prior period items included in the Profit and Loss
account are as follows:
(d) Pattern of Capital contribution as on
the date of the balance sheet
(j) Credit exposure to the five largest industrial
sectors as percentage to total loan assets:
Not Applicable
Balance Sheet english.p65 7/29/2008, 12:19 PM115
116
24.3 Liquidity
(k) Maturity pattern of Rupee 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 43,339.36 21,629.83 17,758.77 11,714.26 3,843.23 98,285.44
(33,529.02) (20,634.71) (13,793.73) (8,648.59) (4,254.12) (80,860.18)
2. Rupee liabilities 19,155.78 15,913.71 17,067.14 11,389.93 34,250.74 97,777.30
(16,440.75) (16,748.27) (8,768.93) (7,053.42) (31,559.12) (80,570.49)
# : Net of provision made as per RBI directives on Standard Assets, NPA as well as for diminution in value of Investments totalling to
Rs.421.03 crore (Rs.358.87 crore).
(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. Foreign currency
assets 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00) 0.00(0.00)
2. Foreign currency
liabilities 9.96(6.88) 64.32(19.69) 108.68(19.69) 108.69(19.69) 216.50(223.73) 508.14(289.69)
24.4 Operating results
Sr. No. Particulars 2007-08 2006-07
1. Interest income as a percentage to average working funds 6.13 6.84
2. Non interest income as a percentage to average working funds 0.08 -0.15
3. Operating profit as a percentage to average working funds 1.97 1.75
4. Return on average Assets (%) 1.38 1.58
5. Net Profit per Employee (Rs. crore) 0.25 0.17
24.5 Movement in the provisions
(a) Provision for Non Performing Assets (Loan Assets) (Rs. crore)
Sr. No. Particulars 2007-08 2006-07
1. Opening balance as at the beginning of financial year 3.18 0.00
2. Add: Provision made during the year 2.34 3.18
3. Less: Write off, write back of excess provision 0.00 0.00
4. Closing balance at the close of financial year 5.52 3.18
Balance Sheet english.p65 7/29/2008, 12:19 PM116
117
24.6 Restructured accounts
During the current financial year two loan accounts
outstanding to the extent of Rs.15.13 crore have been
rescheduled. Out of the above, one loan account
outstanding of Rs.9.44 crore is classified as Standard
asset and another loan account outstanding of 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.12.35 crore
(Rs.5.57 crore) was written back during the year.
24.7 Assets sold to securitisation
company/reconstruction company : NIL
24.8 Forward Rate Agreements and
Interest Rate Swaps : NIL
24.9 Interest Rate Derivatives : NIL
24.10 Investments in Non Government
Debt Securities : NIL
24.11 Corporate Debt Restructuring (CDR) : NIL
24.12 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 value of outstanding principal amount of hedge contract
at the year-end exchange rate stood at Rs.605.58 crore and
the value of outstanding principal liability in the books of
account stood at contracted value, i.e., Rs.508.14 crore.
The quantitative disclosure in this regard is as under:
(Rs. crore)
Sr. Particulars Currency Interest RateNo. Derivatives Derivatives
1. Derivatives (Notional Principal amount)A) For Hedging 508.14 NAB) For Trading 0.00 NA
2. Marked to Market Positions [1]a) Asset (+) 97.44 NAb) Liability (-) NA NA
3. Credit Exposure [2] NA NA
4. Likely impact of one percentage change in interest rate (100*PV01) NA NAa) on hedging derivatives NA NAb) on trading derivatives NA NA
5. Maximum and Minimum of 100*PV01 observed during the year NA NAa) on hedging NA NAb) on trading NA NA
(b) Provision for depreciation in investments(Rs. crore)
Particulars 2007-08
A. Opening balance as at the beginning of the financial year 2.02(33.09)
B. Add
(i) Provisions made during the year 35.80(0.84)
(ii) Appropriation, if any, from Investment Fluctuation Reserve Account during the year 0.00 (0.00)
C. Sub Total [A+B(i)+B(ii)] 37.82(33.93)
D. Less
(i) Write off, Write Backs of excess provision 0.42(31.91)
(ii) Transfer, if any, to Investment Fluctuation Reserve Account 0.00(0.00)
0.42(31.91)
E. Closing balance as at the close of financial year (C-D) 37.40 (2.02)
Balance Sheet english.p65 7/29/2008, 12:19 PM117
118
24.13 Exposures where the FI had exceeded prudential exposure limits during the year: NIL
24.14 Related Party Transactions
(Rs. crore)
Name of the Party Nature of Relationship Nature of Amt. of transaction OutstandingTransaction during the year as on
2007-08 31.03.2008
Reserve Bank of India Holding 72.50% of Borrowings (net of 0.00 0.00NABARD Capital repayments) (-2,997.95) (0.00)
Interest on 0.00 -Borrowings (95.55)Contribution Recd. in NRC Funds 2.00 -maintained by NABARD (2.00)
Government of India Holding - 27.50% of Borrowings (net of -11.80 370.21NABARD Capital repayments) (-18.00) (382.00)
Interest on 27.02 19.53Borrowings (28.22) (19.83)Guarantee Fee 5.11
(1.36) -
NABARD Consultancy Wholly Owned Expenses receivable by 0.42 1.94Services Pvt. Ltd. Subsidiary NABARD (0.28) (2.29)
Dr. Y.S.P. Thorat Key Management Remuneration including 0.07 -Personnel - Chairman perquisites (0.07)
Shri U. C. Sarangi Key Management Remuneration including 0.02 -Personnel - Chairman perquisites
Dr. K.G. Karmakar Key Management Remuneration including 0.08 -Personnel - Managing Director perquisites (0.07)
24.15. Issuer categories in respect of investments made(Rs. crore)
Sr. No. Issuer AmountInvestment 'Below 'Unrated' 'Unlisted'
made through invest-ment grade' Securities held Securitiesprivate placement Securities held
(1) (2) (3) (4) (5) (6) (7)
1. PSUs 60.00 60.00 0.00 0.00 60.002. FIs 48.00 48.00 0.00 0.00 48.003. Banks - - - - -4. Private Corporates - - - - -5. Subsidiaries/Joint ventures 20.60 20.60 0.00 20.60 20.606. Others (Net of Provision)
including Mutual Funds 769.09 0.00 0.00 0.00 769.09
7. Provision held towards depreciation 1.66 0.00 0.00 0.00 1.66
Total 899.35 128.60 0.00 20.60 899.35
24.16 Non performing investments : NIL
24.17 Disclosure on Repo transactions(Rs. crore)
Particulars Minimum Maximum Daily average Outstandingoutstanding outstanding outstanding as on
during the year during the year during the year 31 March 2008
Securities sold under Repo 206.42 206.42 0.56 0.00Securities purchased under reverse Repo 0.00 0.00 0.00 0.00
Balance Sheet english.p65 7/29/2008, 12:19 PM118
119
24.18 Information on Business Segment
(a) Brief Background
The Bank has recognised 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 under
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 1535.65 3007.63 955.06 10.76 5509.10
Results 81.54 1182.00 894.36 -409.81 1748.10
Assets 30822.03 54058.31 8950.55 4875.58 98706.47
Liabilities 30968.32 50559.70 73.00 17105.45 98706.47
Other Items :
Amortization & Depreciation 0.00 0.00 18.18 21.63 39.81
Non Cash Expenses (other than above) 23.23 93.33 35.38 -0.05 151.89
(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 date
Khimji Kunverji & Co.
Chartered Accountants
Ketan S. Vikamsey
P. Satish
Partner Chief General Manager
Mumbai Accounts Department
Date : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. Sarkar
Chairman Managing Director Director Director
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120
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENTCASH FLOW FOR THE YEAR ENDED 31 MARCH 2008
(Rupees)
Particulars 2007-08 2006-07
(a) Cash flow from Operating activities
Net Profit as per Profit and Loss a/c before tax 1748,09,75,282 1169,95,34,260Adjustment for:Depreciation 21,63,06,861 22,66,32,925Provisions and Amortisations 53,51,25,563 -12,78,48,545Provision for Non Performing Assets 2,22,76,786 3,06,72,109Provision for Standard Assets 62,52,00,000 86,15,00,000Provision for sacrifice in interest element of Restructured Loan -12,35,00,000 -5,57,00,000Profit / Loss on sale of Fixed Assets 2,05,11,318 -14,28,657Interest credited to various Funds 64,16,48,347 64,79,25,885Other Expenses 0 23,72,70,962Income from Investment -903,34,71,377 -538,24,04,117Expenditure from various Funds -1731,84,53,497 -337,15,95,820
Operating profit before changes in operating assets -693,33,80,717 476,45,59,002
Adjustment for net change in:Current Assets 402,13,61,457 -3087,58,73,102Current Liabilities 710,03,19,377 687,86,35,524Proceeds of Bonds -191,77,45,150 8078,93,84,750Increase / Decrease in Borrowings 1628,56,71,289 -3020,50,03,181Increase / Decrease in Deposits 10461,96,05,956 6185,13,93,503Increase in Loans and Advances -13429,94,33,700 -11532,16,29,859
Cash generated from operating activities -1112,36,01,489 -2211,85,33,363
Payment of Income Tax -459,78,97,070 -287,26,40,015
Net cash flow from operating activities (A) -1572,14,98,559 -2499,11,73,378
(b) Cash flow from investing activities
Income from Investment 903,34,71,377 538,24,04,117Increase / Decrease in Fixed Asset -42,28,33,123 -36,00,47,444Investments in Government Securities -522,84,26,136 1213,65,62,543Purchase of shares -36,37,86,880 -1,00,00,000
Net cash used / generated from investing activities (B) 301,84,25,238 1714,89,19,216
(c) Cash flow from financing activities
Grants / contributions received 5303,10,94,480 1075,85,07,965
Net cash raised from financing activities (C) 5303,10,94,480 1075,85,07,965
Net increase in cash and cash equivalent (A)+(B)+(C ) 4032,80,21,159 291,62,53,803
Cash and Cash equivalent at the beginning of the period 492,43,93,485 200,81,39,682
Cash and cash equivalent at the end of the period 4525,24,14,644 492,43,93,485
Note: Cash and Cash equivalent includes Cash on Hand, Balance with RBI, Balances with other banks in India on Current Account andRemittance in transit and Collateralised Borrowing and Lending Obligations.
As per our attached report of even dateKhimji Kunverji & Co.Chartered Accountants
Ketan S. Vikamsey P. SatishPartner Chief General ManagerMumbai Accounts DepartmentDate : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. SarkarChairman Managing Director Director Director
Balance Sheet english.p65 7/29/2008, 12:19 PM120
121
Consolidated Balance Sheet
Profit & Loss Account
&
Cash Flow
of
National Bank for Agriculture and Rural Development
&
Its Subsidiaries
2007-08
Balance Sheet english.p65 7/29/2008, 12:19 PM121
122
Khimji Kunverji & Co. Chartered Accountants
Auditors' Report on Consolidated Financial Statements
To the Board of Directors
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
1. We have examined the attached Consolidated Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVEL-
OPMENT ('The Bank') and its Subsidiaries as at March 31, 2008, 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.48.53 crore and Rs.12.51 crore respectively. The financial statements of 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, 2008;
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 16, 2008
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants
Ketan S. Vikamsey
Partner (F-44000)
Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India.
Telephones: +91 22 22662550, 22661270, 22662011 ••••• Facsimile: +91 22 22664045
E-mail: [email protected] ••••• Website: www.khimjikunverji.com
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123
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENTCONSOLIDATED BALANCE SHEET AS ON 31 MARCH 2008
(Rupees)
Particulars As on 31.03.2008 As on 31.03.2007
LIABILITIES
Capital 2000,00,00,000 2000,00,00,000
Reserve Fund and Other Reserves 8614,18,37,839 7810,73,39,264
National Rural Credit Funds 15159,00,00,000 14747,00,00,000
Funds Out of Grants received from International Agencies 170,38,44,460 182,63,92,591
Gifts, Grants, Donation and Benefactions 3967,49,29,810 711,81,48,778
Other Funds 1518,00,64,973 1112,28,92,249
Minority Interest 11,96,69,848 12,16,67,398
Deposits 30698,81,85,462 20236,85,79,506
Bonds and Debentures 30122,04,33,900 28891,89,75,750
Borrowings 3378,34,52,818 3171,69,84,829
Current Liabilities and Provisions 3092,22,07,877 2377,44,95,135
TOTAL 98732,46,26,987 81254,54,75,500
ASSETS
Cash and Bank Balances 10352,51,52,981 7347,81,93,806
Investments 2561,45,89,335 2055,79,79,151
Advances 82878,81,34,744 69524,51,62,159
Fixed Assets 257,42,30,724 238,84,67,008
Other Assets 2682,25,19,203 2087,52,89,743
Miscellaneous Expenses not Written off 0 3,83,633
TOTAL 98732,46,26,987 81254,54,75,500
As per our attached report of even dateKhimji Kunverji & Co.Chartered Accountants
Ketan S. Vikamsey P. SatishPartner Chief General ManagerMumbai Accounts DepartmentDate : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. SarkarChairman Managing Director Director Director
Balance Sheet english.p65 7/29/2008, 12:19 PM123
124
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENTCONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008
(Rupees)
Particulars 2007-08 2006-07
Income:
Interest Received on Loans and Advances 4518,31,32,065 3893,83,79,929
Income from Investment operations 906,66,95,489 540,45,06,642
Discount Received 51,71,40,175 18,57,92,392
Other Receipts 44,91,27,953 32,50,87,378
TOTAL INCOME 5521,60,95,682 4485,37,66,341
Expenditure:
Interest and Financial Charges 3152,68,04,735 2620,42,21,082Establishment and Other Expenses 486,19,42,059 595,66,67,065
Depreciation 21,65,89,205 22,68,90,093
Provision for Bad and Doubtful Debts 52,12,33,322 83,34,66,232
Depreciation in Investment 35,37,86,880 -31,27,81,991
Amortisation of G.Sec. 18,18,15,952 18,18,15,952
Preliminary expenses written off 3,83,633 6,38,150
TOTAL EXPENDITURE 3766,25,55,786 3309,09,16,583
Profit before Income Tax 1755,35,39,896 1176,28,49,758
Provision for Taxation 565,86,54,723 353,86,28,210
Deferred Tax Asset Adjustment -41,42,86,923 -38,32,91,142
Short / (Excess) provision for Income Tax in earlier years 1,43,06,538 0
Profit after Tax 1229,48,65,558 860,75,12,690
Share of Profit / Loss in Subsidiaries attributable to Minority Interest -18,93,517 -57,69,385
Profit available for Appropriation 1229,67,59,075 861,32,82,075
Appropriations:
Profit as above 1229,67,59,075 861,32,82,075
Add: Withdrawals from various Funds against expenditure
debited to Profit and Loss Account 30,30,87,768 72,93,90,962
Total Profit Available for Appropriation 1259,98,46,843 934,26,73,037
Transferred to:
Special Reserve u/s 36(I)(viii) of the Income Tax Act, 1961 320,00,00,000 410,00,00,000
National Rural Credit (Long Term Operations) Fund 400,00,00,000 30,00,00,000
National Rural Credit (Stabilisation) Fund 10,00,00,000 10,00,00,000
Co-operative Development Fund 53,06,99,557 2,96,13,765
Research & Development Fund 7,48,95,872 8,88,91,192
Investment Fluctuation Reserve 25,78,45,000 0
Foreign Currency Risk Fund 0 13,62,29,603
Financial Inclusion Fund 5,00,00,000 0
Financial Inclusion Technology Fund 5,00,00,000 0
Farmers Technology Transfer Fund 25,00,00,000 0
Reserve Fund 408,64,06,414 458,79,38,477
Total 1259,98,46,843 934,26,73,037
Balance Sheet english.p65 7/29/2008, 12:19 PM124
125
Additional Notes to Consolidated Accounts
1. Consolidation has been done pursuant to the listing agreement with Stock Exchange.
2. Financial Statements in respect of all the subsidiaries are unaudited.
3. Details of the subsidiaries :
Name of the Subsidiary Country of Incorporation Proportion of Ownership
Agri Development Finance (Tamil Nadu) Ltd. India 52.10
Agri Business Finance (Andhra Pradesh) Ltd. India 47.82*
NABARD Financial Services Limited(Earlier Karnataka Agri-Development Finance Company Ltd.) India 82.40
NABARD Consultancy Pvt. Ltd. India 100.00
* NABARD controls the Board of Directors of Agri Business Finance (Andhra Pradesh) 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 intra-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 (Andhra Pradesh) Ltd.
Whereas NABARD Financial Services Ltd. 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. 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.21.66 crore (Rs 22.69 crore)
included in the Consolidated Financial Statement, 0.13% (0.11%) 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 Disclosures as required under AS - 17 "Segment Reporting" in consolidated financial statement are as under :
(Rs. crore)
Direct Finance Refinance Treasury Unallocated Total
Revenue 1,537.97 3,007.63 955.06 20.95 5,521.61
Results 82.90 1,182.00 894.36 -403.91 1,755.35
Assets 30,837.30 54,058.31 89,50.55 4,886.31 98,732.46
Liabilities 30,983.59 50,559.70 73.00 17,116.18 98,732.46
Other Items :
Amortisation & Depreciation 0.00 0.00 18.18 21.66 39.84
Non Cash Expenses (other than above) 23.23 93.33 35.38 -0.01 151.93
As per our attached report of even date
Khimji Kunverji & Co.
Chartered Accountants
Ketan S. Vikamsey P. Satish
Partner Chief General Manager
Mumbai Accounts Department
Date : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. Sarkar
Chairman Managing Director Director Director
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126
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008(Rupees)
Particulars 2007-08 2006-07
(a) Cash flow from Operating activitiesNet profit as per Profit and Loss a/c before tax 1755,35,39,896 1176,28,49,758
Depreciation 21,65,89,206 22,68,90,093Amortisation and Provision for investment 53,51,25,563 -12,78,48,545Provision for Non performing Assets 2,22,76,786 3,06,72,109Provision for Standard Assets 62,52,00,000 86,15,00,000Provision for sacrifice in interest element of Restructured Loan -12,35,00,000 -5,57,00,000Interest credited to various funds 64,16,48,347 64,79,25,885Other Expenses 3,83,633 23,79,09,112Income from Investment -903,34,71,377 -538,24,04,117Profit / Loss on sale of Fixed Asset 2,05,11,318 -14,28,658Expenditure from various Funds -17,31,84,53,498 -337,15,95,820
Operating profit before working capital changes -686,01,50,126 482,87,69,817Adjustment for net change in:Current Assets 398,47,17,891 -3092,60,31,247Current Liabilities 708,28,46,611 688,66,58,587Proceeds of Bonds -191,77,45,150 8078,93,84,750Increase / Decrease in Borrowings 1628,56,71,289 -3020,50,03,181Increase / Decrease in Deposits 10461,02,50,436 6185,13,93,503Increase / Decrease in Loans and Advances -13425,10,46,317 -11530,48,39,597Cash generated from operating activities -1106,54,55,366 -2207,96,67,368Payment towards Income tax -463,77,13,257 -290,08,68,036
Net cash flow from operating activities (A) -1570,31,68,623 -2498,05,35,404
(b) Cash flow from investing activities
Dividend paid -32,93,101 -1,00,00,000Income from Investment 903,34,71,377 538,24,04,117Increase / Decrease of Fixed Assets -42,28,66,375 -36,02,87,748Investments in Government Securities -522,84,26,136 1213,65,62,543Investments in Shares / Others -36,37,86,880 -1,00,00,000
Net cash used in investing activities (B) 301,50,98,885 1713,86,78,912
(c) Cash flow from financing activities
Grants / contributions received 5303,10,94,480 1075,85,07,965Net cash raised from financing activities (C) 5303,10,94,480 1075,85,07,965Net increase in cash and cash equivalent (A)+(B)+(C) 4034,30,24,742 291,66,51,473Cash and cash equivalent at the beginning of the period 492,81,26,746 201,14,75,273
Cash and cash equivalent at the end of the period 4527,11,51,488 492,81,26,746
Note : Cash and Cash equivalent includes Cash on Hand, Balance with RBI, Balances with other banks in India on current Account, Remittancein transit and Collateralised Borrowing and Lending Obligations.
As per our attached report of even date
Khimji Kunverji & Co.
Chartered Accountants
Ketan S. Vikamsey P. Satish
Partner Chief General Manager
Mumbai Accounts Department
Date : 16 June 2008 Mumbai : 16 June 2008
Umesh Chandra Sarangi Dr. K. G. Karmakar Usha Thorat A. K. Sarkar
Chairman Managing Director Director Director
Balance Sheet english.p65 7/29/2008, 12:19 PM126
127
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]
ARUNACHAL PRADESH
Bank Tinali, VIP Road,
P.B. No. 133,
Itanagar – 791 111
Arunachal Pradesh
Tel No. : (0360) 2212675, 215967
Fax No.: (0360) 2212675
E-mail : [email protected]
ASSAM
G.S.Road,Opp.Assam Secretaiat
Dispur, Post Box No.1,
Guwahati – 781 006
Tel No. : (0361) 2235661
Fax No.: (0361) 2235657
E-mail : [email protected]
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
E-mail : [email protected]
CHHATTISGARH
1st & 2nd Floor, Pithalia Complex
Opp. Telephone Exchange,
Fafadih Chowk, K.K. Road,
Raipur – 492 009
Tel No. : (0771) 2888499, 2888496
Fax No.: (0771) 2884992
E-mail : [email protected]
GOA
301, Nizari Bhavan,
Menezes Braganza Road,
Panaji – 403 001.
Tel No. : (0832) 2220490,
2432967, 2420504
Fax No.: (0832) 2223429
E-mail : [email protected]
GUJARAT
Usmanpura Garden,
Opp. Ashram Road,
Ahmedabad – 380 013
Tel No. : (079) 27552257-58-59
Fax No.: (079) 27551584
E-mail : [email protected]
HIMACHAL PRADESH
NABARD Bhavan,
S.D.A. Commercial Complex,
Dev Nagar, Kasumpati,
Shimla – 171 009
Tel No. : (0177) 2624160, 2622258
Fax No.: (0177) 2622271
E-mail : [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
E-mail : [email protected]
JHARKHAND
Gautam House,
Kalibabu Street, Upper Bazar,
Behind Civil Court
Ranchi – 834 001
Tel No. : (0651) 2208647
Fax No.: (0651) 2209107
E-mail : [email protected]
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
E-mail : [email protected]
KERALA
Punnen Road, Statue,
P. B. No. 5613,
Thiruvananthapuram – 695 039
Tel No. : (0471) 2323846,
2323590, 2323859
Fax No.: (0471) 2324358
E-mail : [email protected]
MADHYA PRADESH
E-5, Arera Colony,
P.O. Ravishankar Nagar,
Post Box No. 513,
Bhopal – 462 016
Tel No. : (0755) 2464775, 2463341,
2461780, 2466695
Fax No.: (0755) 2466188
E-mail : [email protected]
MAHARASHTRA
54, Wellesley Road,
Shivaji Nagar,
Pune – 411 005
Tel No. : (020) 25541439,
25542090
Fax No.: (020) 25542250
E-mail : [email protected]
MANIPUR
89/686, Lalambung,
RIMS Road, Lamphelpat,
Imphal – 795 004, Manipur
Tel No. : (0385) 2416192,
2410706
Fax No. : (0385) 2416191,
E-mail : [email protected]
MEGHALAYA
Dipu Cottage,
Upper Lachumiere,
Shillong – 793 001
Tel No. : (0364) 2501518
Fax No.: (0364) 2227463
E-mail : [email protected]
MIZORAM
Ramhlun Road, Bawngkawan,
Aizwal – 796 014
Tel No. : (0389) 2346119
2343428
Fax No.: (0389) 2340815
E-mail : [email protected]
NAGALAND
4th Floor, West Wing,
Administrative NSCB Bldg.,
Khermahal, Circular Road,
Dimapur – 797 112
Tel No. : (03862) 227040,
235600, 235601
Fax No.: (03862) 227040
E-mail : [email protected]
NEW DELHI
24, Rajendra Place ,
New Delhi – 110 018
Tel No. : (011) 41022058/59,
25818707
Fax No.: (011) 41539187,
41539185
E-mail : [email protected]
ORISSA
‘Ankur’, 2/1,
Nayapalli Civic Centre,
P. B. No. 179,
Bhubaneshwar – 751 015
Tel No. : (0674) 2553884
Fax No.: (0674) 2552019
E-mail : [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
E-mail : [email protected]
RAJASTHAN
3, Nehru Place,
Tonk Road,
Post Bag No.104,
Jaipur – 302 015
Tel No. : (0141) 2740821
Fax No.: (0141) 2742161
E-mail : [email protected]
SIKKIM
Om Nivas, Church Road,
Post Box No.46,
Gangtok –737 101
Tel No. : (03592) 204173
Fax No.: (03592) 203015
E-mail : [email protected]
TAMIL NADU
48, Mahatma Gandhi Road,
Post Box No.6074,
Nungambakkam,
Chennai – 600 034
Tel No. : (044) 28304444
Fax No.: (044) 28275732
E-mail : [email protected]
128
TRIPURA
Palace Compound (East),
Uzirbari Road, Post Box No.9,
Agartala - 799 001
Tel No. : (0381) 2224125,
2229633,2229644
Fax No.: (0381) 2224125
E-mail : [email protected]
UTTARAKHAND
113/2, Hotel Sunrise Building,
2nd & 3rd Floor,
Post Bag No.139, Rajpur Road,
Dehradun – 248001
Tel No. : (0135) 2740230-31
Fax No.: (0135) 2748610
E-mail : [email protected]
UTTAR PRADESH
11, Vipin Khand,
Gomti Nagar,
Lucknow - 226 010
Tel No. : (0522) 2304530,
Fax No.: (0522) 2304531
E-mail : [email protected]
WEST BENGAL
‘Abhilasha’, 2nd floor,
6, Royd Street, Post Box No. 9083,
Kolkata - 700 016
Tel No. : (033) 22294672
Fax No.: (033) 22494507
E-mail : [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
Near J&K,
Handloom Showroom,
Gate No.1,Opp.Amar Singh College
Wazir Bagh,
Srinagar
Tel No.: (0194) 2310280
Fax No.: (0194) 2310280
TRAINING ESTABLISHMENTS
BOLPUR
Bolpur Lodge,
Regional Training College,
Bolpur – 731 204,
Birbhum (West Bengal)
Tel No. : (03463) 252812, 254065
Fax No.: (03463) 252295
E-mail : [email protected]
HYDERABAD
Zonal Training Centre,
10-1-128, Masab Tank,
Hyderabad – 500 028
Tel No. : (040) 23375007
E-mail : [email protected]
LUCKNOW
National Bank Staff College,
Sector ‘H’, LDA Colony,
Kanpur Road,
Lucknow – 226 012
Tel No. : (0522) 2421072
Fax No.: (0522) 2421035
E-mail : [email protected]
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
E-mail : [email protected]
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
E-mail : [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
E-mail : [email protected]
129
LIST OF ABBREVIATIONS
AACS As Applicable to Co-operativeSocieties
ACSTI/s Agricultural Co-operative Staff TrainingInstitute/s
APEDA Agricultural and Processed Food ProductsExport Development Authority
APMC Agriculture Produce MarketingCommittee
ARF Automatic Refinance Facility
BAIF Bharti Agro Industries Foundation
BLBC Block Level Bankers’ Committee
B.R. Act Banking Regulation Act
BIRD Bankers Institute of RuralDevelopment
CAB College for Agriculture Banking
CAS Common Accounting System
CAT Capacity Building for Adoption ofTechnology
CBP Capacity Building Phase
CDF Co-operative Development Fund
CEO Chief Executive Officer
CISS Capital Investment Subsidy Scheme
CoD/s Certificate of Deposits/s
CSO Central Statistical Organisation
DAP/s Development Action Plan/s
DCCB/s District Central Co-operative Bank/s
DCP/s District Credit Plan/s
DDM District Development Manager
DRIP District Rural Industries Project
ERR Economic Rate of Return
FC Farmers’ Club
FIP Full Implementation Phase
FIPF Farm Innovation and Promotion Fund
FRR Financial Rate of Return
GCF Gross Capital Formation
GCFA Gross Capital Formation in Agriculture
GDCF Gross Domestic Capital Formation
GDP Gross Domestic Product
GFCF Gross Fixed Capital Formation
GLC General Line of Credit/GroundLevel Credit
GoI Government of India
GTZ Deutsche Gesellschaft fur TechnischeZusammenarbeit
ha. Hectares
HRD Human Resource Development
HO Head Office
HWG/s Handloom Weavers Group/s
ICAR Indian Council of Agriculture Research
IGWDP Indo-German Watershed DevelopmentProgramme
ILR Internal Lendable Resources
IRV/s Individual Rural Volunteer/s
IT Information Technology
JLG/s Joint Liability Group/s
JLTC/s Junior Level Training Centre/s
KCC/s Kisan Credit Card/s
KfW Kreditanstalt fur Wiederaufbau(German Development Bank)
KVK/s Krishi Vigyan Kendra/s
LT Long-term
LTCCS Long-Term Co-operative CreditStructure
MEDP Micro-Enterprise DevelopmentProgramme
MEPA/s Micro-Enterprise Promotion Agency/ies
MF Micro-Finance
MFDEF Micro-Finance Development andEquity Fund
MFI/s Micro-Finance Institution/s
MI Minimum Involvement/Minor Irrigation
MIS Management Information System
MITTRA Maharashtra Institute of TechnologyTransfer for Rural Areas
MoA Ministry of Agriculture
MoFPI Ministry of Food Processing Industries
MoRD Ministry of Rural Development
MoU Memorandum of Understanding
MSP/s Minimum Support Price/s
MT Medium-term/Metric Tonne
130
NABARD National Bank for Agriculture andRural Development
Nabcons NABARD Consultancy Services
NBSC National Bank Staff College
NBTC National Bank Training Centre
NER North-Eastern Region
NGO/s Non-Governmental Organisation/s
NIMC National Implemcating and MonitoringCommitee
NPA/s Non-Performing Asset/s
NPK Nitrogen Phosphorous Potash
NRC (LTO) National Rural Credit (Long-TermOperations)
NRRDA National Rural Roads DevelopmentAgency
NSSO National Sample Survey Organisation
ODI Organisation DevelopmentIntervention
OSAO Other than Seasonal AgriculturalOperations
OTS One Time Settlement
p.a. Per Annum
PACS Primary Agriculture Credit Society/ies
PCARDB/s Primary Co-operative Agriculture andRural Development Bank/s
PWCS Primary Weaver’s Co-operative Society
PLP/s Potential Linked Credit Plan/s
PLI/s Primary Lending Institution/s
PLR Prime Lending Rate
PPID Pilot Project for IntegratedDevelopment
PRIs Panchayati Raj Institution/s
PUCB/s Primary Urban Co-operative Bank/s
R&D Research and Development
RBI Reserve Bank of India
REDP/s Rural Entrepreneurship DevelopmentProgramme/s
RFA Revolving Fund Assistance
RFI/s Rural Financial Institution/s
RIDF Rural Infrastructure Development Fund
RNFS Rural Non-Farm Sector
RO/s Regional Office/s
RIF Rural Innovation Fund
RPF Rural Promotion Fund
RRB/s Regional Rural Bank/s
RTC/s Regional Training Centre/s
RUDSETI/s Rural Development andSelf-Employment Training Institute/s
SAA Service Area Approach
SAMIS Service Area Monitoring andInformation System
SAO Seasonal Agricultural Operations
SC/ST Schedule Caste/Schedule Tribe
SCARDB/s State Co-operative Agriculture andRural Development Bank/s
SCB/s State Co-operative Bank/s
SCC Swarozgar Credit Card
SDC Swiss Agency for Development andCooperation
SDP/s Skill Development Programme
SEWA Self-Employed Women’s Association
SF/MF Small Farmers/Marginal Farmers
SFP State Focus Paper
SGSY Swarnjayanti Gram Swarozgar Yojana
SHG/s Self-Help Group/s
SHPI/s Self-Help Promoting Institution/s
SLBC/s State Level Bankers’ Committee/s
SLR Statutory Liquidity Ratio
SME/s Small and Medium Entreprise/s
SO Sub-office
SSI/s Small Scale Industry/ies
ST Short-term
STCCS Short-Term Co-operative CreditStructure
TDF Tribal Development Fund
TE/s Training Establishment/s
TFO Total Financial Outlay
UT/s Union Territory/ies
VDP Village Development Programme
VWC/s Village Watershed Committee/s
WDC/s Women Development Cell/s
WDF Watershed Development Fund
WPI Wholesale Price Index
WTO World Trade Organisation
WUA Water Users’ Association
131
NOTES
132
NOTES
