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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./ 774 /AR-1/2010-11 12 July 2010 21 Ashadha 1932 (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 31 March 2010 alongwith a copy of the Auditors Report and Two copies of the Annual Report of the Board of Directors on the working of National Bank during the st year ended 31 March 2010.
st

ii.

Yours faithfully

Umesh Chandra Sarangi

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Board of Directors
Umesh Chandra Sarangi Chairman

Directors appointed under Section 6(1)(c) of the NABARD Act, 1981

Dr. K. C. Chakrabarty

Lakshmi Chand

Shashi Rekha Rajagopalan

Directors appointed under Section 6(1)(d) of the NABARD Act, 1981

P. K. Basu

B. K. Sinha

Alok Nigam

Directors appointed under Section 6(1)(e) of the NABARD Act, 1981

Roshan Lal

Letkhogin Haokip

L. C. Goyal

M. I. Khandey

Dr. K. G. Karmakar Managing Director

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Contents
Page No. NABARD at a Glance Key Data References Principal Officers Highlights .................................................................................................................................................................................. 1 I. Rural Economic Environment ...................................................................................................................................... 17 Global Economy ........................................................................................................................................................ 17 Indian Economy ......................................................................................................................................................... 18 II. Development Initiatives ................................................................................................................................................ 32 Farm Sector ................................................................................................................................................................ 32 Rural Non-Farm Sector .............................................................................................................................................. 41 Financial Inclusion ..................................................................................................................................................... 43 Micro-Finance ............................................................................................................................................................ 47 NABARD Consultancy Services ................................................................................................................................. 52 Research and Development Activities ........................................................................................................................ 53 Training Personnel of RFIs ......................................................................................................................................... 54 III. Business Operations ...................................................................................................................................................... 56 Production Credit ....................................................................................................................................................... 56 Investment Credit ....................................................................................................................................................... 60 Rural Infrastructure Development .............................................................................................................................. 66 IV. Capacity Building of Client Institutions .................................................................................................................... 77 Institutional Development .......................................................................................................................................... 77 Supervision over Banks ............................................................................................................................................. 90 V. Organisation and Management ................................................................................................................................... 94 Management .............................................................................................................................................................. 94 Human Resources Management ................................................................................................................................ 95 Administrative and Other Matters ............................................................................................................................... 97 VI. Financial Performance & Management of Resources ........................................................................................... 101 Sources of Funds ..................................................................................................................................................... 101 Uses of Funds .......................................................................................................................................................... 103 Investment of Surplus Funds .................................................................................................................................... 104 Auditors Report .................................................................................................................................................................... 106 Balance Sheet ....................................................................................................................................................................... 107 Profit and Loss Account 2009-10 ...................................................................................................................................... 108 Consolidated Financial Statements 2009-10 .................................................................................................................. 131 Regional Offices/Sub-Office/Training Establishments .................................................................................................... 137 Abbreviations ....................................................................................................................................................................... 139

Boxes
1.1 1.2 1.3 1.4 1.5 2.1 2.2 2.3 Food Inflation ....................................................... 20 Policy Recommendations on Agriculture & Rural Development ................................................. 23 Impact of Credit on Crop Yields .............................. 25 Yield Effect of Kisan Credit Card (KCC) ................... 29 Task Force to look into Issues of Private Moneylenders ........................................................ 31 Major findings of Mid-Course Evaluation of WDF Watershed Projects by CRIDA .......................... 32 Findings of a Quick Study in Distressed Districts ................................................. 33 Impact Evaluation Study of IGWDP Watersheds in Maharashtra by Action for Food Production (AFPRO) : Major Findings ...................... 39 2.7 2.8 2.9 4.1 5.1 2.4 2.5 2.6 German collaboration in Watershed Programmes ........................................... 39 UPNRM Projects - Initiatives ................................... 40 RIF Success Story - Solar Lanterns for Weavers .................................................................... 41 Projects Sanctioned under FIF during 2009 - 2010 ............................................... 45 Projects Sanctioned Under FITF during 2009 - 2010 ............................................... 46 Grant Assistance for MFI Ratings ............................. 49 Revised Licensing norms for Co-operative Banks ................................................ 91 Repositioning initiative of NABARD .......................... 95

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NABARD AT A GLANCE
(Rs. crore)

Sources of Fund

2010

2009

Net Accretion

Uses of Funds

2010

2009

Net Utilisation

Capital Reserve & Surplus NRC(LTO) Fund NRC (Stabilisation) Fund Deposits Bonds and Debentures Borrowings from GoI

2000 10674 14417 1566 505 20004 147

2000 9535 14016 1555 482 23704 354

0 1139 401 11 23 -3700 -207

Cash and Bank Balances Collateralised Borrowing and Lending Obligation Investment in a) GOI Securities b) ADFC Equity c) AFC Equity d) SIDBI Equity e) AICI Ltd. f) NCDEX Ltd. & MCX Ltd. g) Nabcons

9628

13975

-4347

1991 15 1 48 60 15 5 905 0 744

1555 15 1 48 60 6 5 1005 157 143

436 0 0 0 0 9 0 -100 -157 601

Borrowings from Commercial Banks Foreign Currency Loan Certificate of Deposits Commercial Paper Collateralised Borrowing and Lending Obligation Term Money Borrowings RIDF Deposits STCRC Fund Other Liabilities Other Funds Total 215 762 59869 9622 5685 6773 0 244 47023 4622 4279 7367 215 518 500 494 379 2680 500 498 1816 181 0 -4 -1437

h) Mutual Fund/VCF i) Treasury Bills j) Commercial Paper Loans and Advances a) Production & 2499 Marketing Credit b) Conversion of Production Credit into MT Loans c) Liquidity Support d) MT & LT Project Loans e) LT Non Project Loans 12846 5000 1406 Fixed Assets -594 18116 Others Assets Total f) Other Loans g) RIDF Loans h) Co-finance (Net of Provision)

24073

16896

7177

0 20 35742 199 131 60255 84

20 2591 33335 252 48 45616 94

-20 -2571 2407 -53 83 14639 -10

235 2141

247 2107

-12 34 18116

136292 118176

136292 118176

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KEY DATA REFERENCES


Page No. 18 18 19 21 21 24 25 25 25 25 28 Particulars Unit Numerical Value 2008-09 2009-10 6.7 1.6 15.6 QE -2 -31 18.6 234.46 27.72 285.03 22.28 8.59 38 14 74 12 9,989 8 65 2,083 1.5 9 10.81 109 12 20 76 5 12 85,527 122 7.4 P 0.2 P 14.6 R E -36 8 21.5 P 218.19 3rd AE 25.41 3rd AE 274.66 3rd AE 22.83 3rd AE 5.97 59 17 79 151 16,590 8 155 2,627 0.63 33 16.09 83 9 20 80 5 8 39,015 62 Amount (Rs. crore) 2008-09 2009-10 3,01,908 38,245 58 2 49 2 32 12 13 628 11,132 17 0.87 50,577 15,448 3,547 266 191 10,535 4,256 2,707 2,620 37 14,719 10,459 10 3,66,919 P 34,982 196 0.55 236 4.9 41 17.7 10.48 240 12,253 17.11 1.01 57,069 18,109 6,832 177 542 12,009 4,029 3,466 3,173 12 15,630 18,888 10.9

Economic Indicators % Growth Overall GDP1 % Growth Agri GDP1+ Share of Agri GDP in total GDP % South-west Monsoon % deviation from normal North-east Monsoon GLC % increase Foodgrains production million tonnes Oilseeds production million tonnes Sugarcane production million tonnes Cotton production million bales++ KCC Issued million Development Initiatives 32 Watersheds No. 34 FIPF- projects No. 34 Tribal development projects No. 35 FTTF No. of projects 35 Farmers Club No. of clubs 37 NABARD-KfW Projects No. 41 RIF- promotional programmes No. of projects 42 REDP No. 43 SCC Issued lakh 45 & 46 FITF & FIF No. of projects 47 SHG Credit Linked lakh 52 Consultancy Assignments - Contracted No. of projects 53 R&D Fund - Sanction No. of projects Business Operations 57 Financial Support by NABARD Refinance - ST Credit 58 ST (SAO) - SCB No. 59 - RRB No. 59 Weavers - SCB No. 60 ST (OSAO) - RRB 60 Refinance - Investment Credit 64 Farm Sector 64 NFS 64 SHG 64 Co-financing projects No. 69 RIDF Loans - Sanction No. of projects 69 & 70 - Disbursement 72 - Completed Performance of RFI ST Co-operatives 79 SCB in profit @ No. No. 79 DCCB in profit @ LT Co-operatives 79 SCARDB in profit @ No. 79 PCARDB in profit @ No. ST Co-operatives - NPA Position 80 SCB - NPA @ % to loan O/S % to loan O/S 80 DCCB - NPA @ LT Co-operatives - NPA Position 81 SCARDB - NPA@ % to loan O/S % to loan O/S 81 PCARDB - NPA @ RRB 89 RRB in profit No. 89 RRB - NPA Position % to loan O/S 91 Inspection of banks^@@ No. 91 Co-operative banks@@ No. No. 91 RRB@@ Financial Performance & Management of Resources 101 101 Market Borrowings Total Working Funds
RE : Revised Estimate ++ : Of 170 kgs each AE : Advanced Estimate.

26 261 9 283 12.3 18.5 35 43.5 80 4.14 343 292 51


P : Provisional

26 320 11 326 11.9 17.9 30.3 39.1 78 3.66 360 299 61

286 868 150 210 6,190 18,753 6,435 5,117 1,824 27,779 1,18,176

395 1,611 405 206 5,763 17,929 4,938 4,393 2,551 25,254 1,36,656

QE : Quick Estimate + : Includes agriculture, forestry and fishing @ : Data pertains to financial years 2007-08 & 2008-09

1 : At Factor Cost at 2004-2005 prices @@ : Statutory Inspections

^ : Voluntary inspections

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PRINCIPAL OFFICERS
(31 March 2010) EXECUTIVE DIRECTORS

S. K. Mitra

Amaresh Kumar

P . L. Behera

Dr. Prakash Bakshi

CHIEF GENERAL MANAGERS (Rural Development Banking Service)

D. B. Gore

K. V. Raghavulu (Andhra Pradesh)

V. Ramakrishna Rao

B.B.Mohanty

A. K. Mathur

C. R. Patnaik (Orissa)

B. S. Shekhawat

S. G. Rathod

R. Narayan (Tamil Nadu)

A. K. Jain (Assam)

S. Mohapatra (Madhya Pradesh)

C. K. Gopalakrishna

P . Satish (Maharashtra)

K. C. Shashidhar (Kerala)

Pankaj Pandit

Dr. Venkatesh Tagat (Karnataka)

S. C. Kaushik (Punjab)

P . Mohanaiah (West Bengal)

S. T. Raghuraman (Himachal Pradesh)

P . Das (Uttaranchal)

Suraj Bhan

J. C. Mishra

J. K. Kanojia

D. P . Mishra (Uttar Pradesh)

M. V. Ashok (Jharkhand)

V. Sreenarayanan (NBSC)

G. C. Panigrahi

S. G. Siddesh (Gujarat)

K. K. Gupta

T. Moharana (Chhattisgarh)

S. Akbar

A. K. Srivastava

B. B. Nayak

S. Balan

H. K. Talreja (Haryana)

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M. L. Sukhdeve (Jammu & Kashmir)

K. Muralidhara Rao (Rajasthan)

M. M. Mishra (Bihar)

D. P . Panda

CHIEF GENERAL MANAGERS (Economic / Legal / Technical Service)

Dr. A. K. Bandyopadhyay (Economic)

U. N. Srivastava (Legal)

Dr. Sandip Ghosh (Technical)

V. Kameswara Rao (Technical)

GENERAL MANAGERS IN-CHARGE OF REGIONAL OFFICES/ TRAINING INSTITUTIONS

S. Chakrabarty (RTC, Bolpur)

P . C. Sahoo (Mizoram)

K. Jindal (Tripura)

H. R. Dave (New Delhi)

A. P . Sandilya (Goa)

B. G. Mukhopadhyay (Arunachal Pradesh)

G. Chintala (Andaman & Nicobar)

K. C. Panda (Nagaland)

B. K. Dey (Sikkim)

M. M. Baheti (RTC, Mangalore)

DEPUTY GENERAL MANAGERS IN-CHARGE OF REGIONAL OFFICES/SUB-OFFICE

A. B. Das (Manipur)

N. J. Mupid (Meghalaya)

ASST. GENERAL MANAGER IN-CHARGE OF SRINAGAR CELL

P . L. Negi

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Highlights
Rural Economic Environment
1. The Indian economy is estimated to have kharif and rabi seasons, the crop coverage during 2009-10 at 157.6 million hectares was 3.2 per cent lower than that during 2008-09. The major changes in cropping pattern during 2009-10 over 2008-09 were in rice [(-) 14.3 per cent], cotton (13.4 per cent), pulses (5.7 per cent) and oilseeds [(-) 4.6 per cent]. 6. As against the target of Rs.3,25,000 crore of

registered a growth rate of 7.4 per cent in 2009-10 as against 6.7 per cent witnessed in 2008-09, while the global economy is expected to dip from 3.0 per cent in 2008 to (-) 0.6 per cent in 2009. At the sectoral level, the growth rates during 2009-10 over 2008-09 are expected to be 8.5 per cent (56.9 per cent of GDP) for services, 9.3 per cent (28.5 per cent of GDP) for industry and 0.2 per cent (14.6 per cent of GDP) for agriculture. 2. The Gross Domestic Savings as a proportion to

credit flow to agriculture for 2009-10, the banking system disbursed Rs.3,66,919 crore (provisional) as on 31 March 2010, achieving 12.9 per cent more than the target. Commercial banks, Co-operative banks and Regional Rural Banks disbursed Rs.2,74,963 crore, Rs.57,500 crore and Rs.34,456 crore, respectively. Their corresponding shares in credit flow were 84.6 per cent, 17.7 per cent and 10.6 per cent, respectively. 7. The Gross Capital Formation in agriculture and

GDP declined from 36.4 per cent during 2007-08 to 32.5 per cent during 2008-09 and this is estimated to increase to 34.0 per cent during 2009-10. It is estimated that the Gross Domestic Investment as a proportion to GDP marginally decelerated from 35.6 per cent during 2008-09 to 35.0 per cent during 2009-10. The overall share of consumption expenditure, both private and public, in GDP , is estimated to decline marginally from 70.9 per cent in 2008-09 to 69.4 per cent in 2009-10. 3. the The inflation rate as measured by variations in wholesale price index on a monthly The basis overall volatile during 2009-10.

allied sectors in real terms increased from Rs.78,848 crore in 2004-05 to Rs.1,38,597 crore in 2008-09 an increase of 76 per cent in four years. The GCF in agriculture and allied sectors as a proportion of total GDP stood at 2.7 per cent in 2004-05 and improved to 3.3 per cent in 2008-09. 8. During 2009-10, 5.97 million Kisan Credit

remained

inflation rate decreased from 8.4 per cent during fiscal 2008-09 to 3.8 per cent during fiscal 2009-10, but during the same period, the food inflation increased from 8.0 per cent to 14.6 per cent. 4. Long During South-West monsoon (June-September) Period Average (LPA) rainfall and during Cards were issued by banks with credit limits of Rs.17,411 crore. Of the total 90.64 million credit cards issued by February 2010, 39.80 million cards (43.9 per cent) were issued by commercial banks, followed by 37.76 million cards (41.7 per cent) by co-operative banks and 13.08 million cards (14.4 per cent) by regional rural banks. 9. 5. The impact of the delayed and sub-normal According to the 3 rd advance estimates, the

2009, the country received 36 per cent less than the post-monsoon season (October-December), the rainfall received was 8 per cent above the LPA.

countrys foodgrain production during 2009-10 has been pegged at 218.19 million tonnes as compared to 234.46 million tonnes during 2008-09.

monsoon was reflected in reduced area under crop cultivation during kharif season. Taken together for 1

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10.

During 2008-09, while the area under various

fixed the Fair & Remunerative Price (FRP) of sugarcane at Rs.129.84 per quintal during 2009-10, which was over 51 per cent higher than the Statutory Minimum Price for the year 2008-09. For the year 2010-11 seasons, the Government has hiked the FRP of sugarcane by 7 per cent at Rs.139.12 per quintal. 13. The stock of foodgrains (rice and wheat) held

horticulture crops increased by 2.5 per cent from 20.2 million hectares during 2007-08, production increased by 3.6 per cent from 212.8 million tonnes during 2007-08. 11. During 2008-09, the livestock and fisheries

sector contributed over 4.0 per cent of the total GDP and about 33.34 per cent value of output from agriculture and allied activities. As a result of the increase in milk production in the country by 3.5 per cent during the period between 2007-08 and 2008-09, the per capita availability of milk increased from 252 grams per day to 258 grams per day. Similarly, fish production increased by 7.0 per cent between 2007-08 and 2008-09. 12. The rise in the MSP for common paddy, 14. NABARD disbursed Rs.25,485 crore against by Food Corporation of India as on April 1, 2010 at 42.84 million tonnes was higher by 22.30 per cent over the level of 35.03 million tonnes as on April 1, 2009. The off-take of foodgrains (rice and wheat) under Targeted Public Distribution System (TPDS) and other Schemes at 48.86 million tonnes during 2009-10 was 23.70 per cent higher than that at 39.50 million tonnes during 2008-09.

moong and wheat during 2009-10 over the year 2008-09 were 11.8 per cent, 9.5 per cent and 1.8 per cent, respectively. Giving due consideration for margins to farmers on account of risk as well as profit on the cost of production including the cost of transportation, the Government of India has

the claims of Rs.25,858 crore under the Agricultural Debt Waiver and Debt Relief Scheme, 2008. The share of SCB, SCARDB and RRB stood at Rs.15,681 crore, Rs.3,513 crore and Rs.6,291 crore, respectively.

Development Initiatives
Farm sector
15. During the year, 59 watershed projects were sanctioned taking the cumulative number to 513, spread over 94 districts in 14 States. Under the Prime Ministers Relief Package for 31 districts in four States, area to 2.83 8.71 to lakh lakh ha. ha. was and crore. taken aggregate During up for implementation during the year, taking the cumulative financial 2009-10, commitment Rs.958 16. States, The Village Development Programme had been as on 31 March 2010. Under the Tribal implemented in 953 villages of 437 districts across 25 Development Fund, financial assistance of Rs.236.19 crore was sanctioned during the year for 79 projects, benefiting 63,113 tribal families. As on 31 March 2010, Rs.543.62 crore had been sanctioned for 191 projects benefiting 1,56,330 families. 17. The corpus of the Farm Innovation and in eight districts in South Bihar. The amount

disbursed during the year was Rs.8.37 crore while the cumulative figure was Rs.13.99 crore.

Rs.89.41 crore and Rs.14.79 crore were disbursed as grant and loan, respectively, taking such cumulative disbursements to Rs.197.77 crore and Rs.30.00 crore, respectively. component Under of the Special Sam Plan for Yojana, Bihar the Rashtriya Vikas

number of watershed projects sanctioned rose to 79 by the end of the year, covering an area of 83,593 ha. 2

Promotion Fund was enhanced from Rs.5 crore to Rs.50 crore and 17 proposals in 11 states with

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financial

assistance

of

Rs.155.37

lakh

were

Rs.11.11 crore. In all, 45,701 units were set up generating employment for 1.42 lakh persons. Since inception, GLC flow aggregated Rs.24,295.11 crore, facilitating establishment of 19.50 lakh units and generating employment opportunities for 44.48 lakh persons. The cumulative refinance availed amounted to Rs.3,658.46 crore as on 31 March 2010. 21. The Scheme for Strengthening of Rural Haats

sanctioned during the year. Cumulatively, 78 projects with financial support of Rs.618 lakh have been sanctioned, of which 25 projects with financial assistance of Rs.104 lakh have been completed. The corpus of Farmers Technology Transfer Fund was also enhanced during the year from Rs.25 crore to Rs.50 crore for and 151 diverse of and innovative were proposals transfer technologies

sanctioned a grant assistance of Rs.488 lakh in 22 states. During the year, 16,590 Farmers clubs were launched taking the total number of clubs to 54,805 covering 1,04,648 villages in 587 districts. Under the scheme taken of on Capacity 261 Building visits for by Adoption NABARD, of in Technology, during the year, 6,516 farmers were exposure collaboration with select research institutes, KVKs and SAUs.

introduced in 1999 in DRIP districts was extended to all districts, village bazaar boards, SHGs, NGOs and to PRIs/PACS, during the year. The quantum of assistance was increased to Rs.5 lakh from Rs.3 lakh and coverage extended to include permanent structure/s as per local requirements. During 2009-10, grant support of Rs.298.72 lakh was sanctioned to 87 rural haats. 22. During 2009-10, 15 participatory clusters,

18.

During the year, a Pilot project for augmenting

including two rural tourism, were sanctioned with a total grant support of Rs.225 lakh and five on-location cluster workshops were conducted, taking the total number of such programmes to 25. 23. As on 31 banks credit to March and and 2010, three support 116 Women with Under

productivity of lead crops/activities through adoption of sustainable agricultural practices was launched in 900 villages at the national level with the aim of augmenting income of the farmers through enhanced production and productivity of lead crops/activities.

Development Cells were supported in 58 RRBs, 55

Rural Non-Farm Sector


19. the During 2009-10, 155 innovative projects were cumulative number to 252. An amount of sanctioned under the Rural Innovation Fund, taking Rs.17.70 crore was sanctioned taking the cumulative commitment to Rs.38.37 crore, as on 31 March 2010. An amount of Rs.10.69 crore was disbursed during the year for 252 projects taking the cumulative disbursements to Rs.17.99 crore. 20. them districts Rs.675.99 The District out Rural by Industries 2007-08, various refinance Project on phases availed was

Co-operative issues and in

SCARDBs, services. in

disbursement of Rs.40.39 lakh to address gender Marketing of Non-Farm Products of Rural Women Assistance Rural Women Non-Farm Development schemes, grant support of Rs.6.92

lakh and Rs.17.56 lakh, respectively, were released as on 31 March 2010. 24. During 2009-10, 263 marketing events/

exhibitions, were supported with grant assistance of Rs.146.13 lakh. To enable rural artisans/craftsmen realise remunerative prices and to establish marketing linkages, 119 rural marts in 22 States were sanctioned grant assistance of Rs.133.91 lakh, during 2009-10. Cumulative grant support of Rs.332.52 lakh had been provided to 321 rural marts across 22 States. 3 extended to 106 districts by March 2007 and 43 of phased successful reached of was implementation. During 2009-10, GLC flow in 42 covered crore under and

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25.

During the year, 1.02 lakh Swarojgar Credit

activities and Rs.60.42 crore to MFIs for capital support/Revolving Fund Assistance (RFA) as against Rs.18.73 crore and Rs.15.93 crore in the previous year, respectively. During 2009-10, grant assistance of Rs.28.78 crore was sanctioned to various agencies for promoting groups as 71,268 on 31 SHGs, March taking 2010. the The cumulative cumulative assistance sanctioned to Rs.107.66 crore for 4,92,746 disbursement was Rs.40.38 crore for 2,36,683 SHGs. An expenditure of Rs.9.93 crore was incurred for capacity building initiatives for all stakeholders in the SHG segment.

Cards (SCC) with credit limits of Rs.411.05 crore were issued for facilitating hassle-free availability of credit for investment and working capital requirements of small/micro-entrepreneurs. The cumulative number of SCC was 10.86 lakh involving credit limit of Rs.4,418.38 crore.

Financial Inclusion
26. The total contribution under Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) stood at Rs.50 crore each as on 31 March 2010. As on 31 March 2010, 50,225 villages have been covered under Financial Inclusion through FIF & FITF with a sanction amount of Rs.19.47 and Rs.21.83 crore, respectively. NABARD and UNDP have entered into collaboration for financial inclusion in seven states with focus on SCs/STs/minorities. NABARD has also collaborated with Indian Institute of Banking & Finance (IIBF), Post Offices & Farmers Clubs in providing financial support for SCs/STs and Women.

29.

During the year, grant support of Rs.6.76 lakh

was given for the rating of five MFIs. During the year, capital support of Rs.6.87 crore was sanctioned to 10 agencies taking the cumulative support to Rs.27.87 crore for 33 agencies and RFA amounting to Rs.23 crore was sanctioned to 13 agencies, taking the cumulative credit sanctioned to Rs.74.02 crore to 42 agencies.

Microfinance
27. The Microfinance programme in India has emerged as not only the largest in the world having covered about 8.6 crore poor households as on 31 March 2009, but also the main contributor towards financial inclusion in the country. As on 31 March 2009, 61.21 lakh SHGs maintained bank savings of Rs.5,545.62 crore and 42.24 lakh SHGs had loan outstanding of Rs.22,679.84 crore. During the year 2009-10, while 16.09 lakh groups availed of bank credit of Rs.12,253.51 crore, 581 Micro Finance Institutions (MFIs) availed of Rs.3,732.33 crore of bank credit. As on 31 March 2010, 1,915 MFIs had loan outstanding of Rs.5,009.09 crore. The share of SHG loan to GLC increased to 4.07 per cent in 2008-09 from 3.8 per cent in 2007-08. 28. During 2009-10, an amount of Rs.20.49 crore

30.

Under

the

Rajiv

Gandhi

Mahila

Vikas

Pariyojana (RGMVP), 21,868 SHGs were promoted in select districts of Uttar Pradesh, of which 12,749 were credit linked as on 31 March 2010. In addition, 676 Cluster Level Federations and 15 Block Level Federations were also formed.

31.

During

the

year,

1530

Micro-Enterprise

Development Programmes (MEDPs) were conducted for 38,313 SHG members on location-specific farm, non-farm and service sector activities. Cumulatively, 2,843 MEDPs were conducted for 71,518 participants as on 31 March 2010.

32.

NABARD

continued

to

extend

support

for

SHG-Post Office Linkage Programme in Tamil Nadu. NABARD sanctioned additional Rs.200 lakh RFA to India Post for onward lending to SHGs. Cumulatively, 2828 SHGs have opened zero-interest savings

was released as grant support for SHG promotional

accounts, of which 1,195 SHGs have been credit

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linked by Post Offices, with loans amounting to Rs.321.25 lakh as on 31 March 2010. RFA of Rs.5 lakh for on-lending to 50 SHGs in East Khasi Hills in Meghalaya was also sanctioned to India Post.

training/summer

placement

(Rs.802.84

lakh),

and

other activities (18.97 lakh). As on 31 March 2010, the cumulative disbursement stood at Rs.118.52 crore. During 2009-10, nine research projects and 112 seminars involving grant assistance of Rs.137.10 lakh and Rs.88.71 lakh were sanctioned respectively. An amount of Rs.787.32 lakh was utilised from the R&D Fund during the year for capacity building of the staff of Rural Financial Institutes (RFIs). During 2009-10, under the Summer Placement Scheme, projects on agriculture and rural development, allied sector, agri-business and social development were assigned to 57 students by 21 ROs, TE and HO, entailing an expenditure of Rs.15.52 lakh.

33.

A survey conducted by NABARD-GTZ Rural

Finance Institutions Programme (RFIP) revealed that 786 MFOs were in existence in 13 priority states, with a high geographical concentration (75%) in two states (Andhra Pradesh and Tamil Nadu) and the remaining scattered over 11 states.

34.

Under the NABARD-KfW SEWA Bank project KfW released a

under implementation in Gujarat,

grant assistance of Rs.2.94 crore to SEWA Bank during 2009-10, taking the cumulative release under the project to Rs.6.87 crore. 37. The Centre for Microfinance Research (CMR) in BIRD brought out the first issue of its half-yearly journal, The Microfinance Review. During the year, grant assistance of Rs.70 lakh was released by NABARD to CMR taking the cumulative assistance to Rs.194.18 lakh. An APRACA Centre of Excellence (ACE) in Linkage Banking was set up in CMR, as a Leading Centre of Knowledge in Linkage Banking.

Other Development Initiatives

NABARD Consultancy Services


35. During the year, Nabcons opened a liaison office in Nairobi, Kenya to garner potential rural development consultancies in the African continent. Nabcons a undertook assignments by GoI for APRACA of in Mongolia and Uzbekistan. Nabcons was approved as pass-through agency Ministry for Rural skill Development package. (MoRD), assisting

development and training programme under SGSY Nabcons contracted 83 assignments with a fee of Rs.1,711 lakh during the year as against 122 assignments for Rs.1,666 lakh last year. During the year 2009-10, the company earned an income of Rs.1,278 distribution lakh and consisting Rs.110 lakh Rs.171 of lakh Rs.997 from from lakh income from fund on assignments, mutual

38.

During the year, NABARD sanctioned grant

assistance of Rs.7.53 lakh to National Institute of Rural Banking (NIRB), Bangalore for conducting 21 programmes. Further, an amount of Rs.4.24 lakh and Rs.24.92 lakh were released to NIRB, Bangalore and Indian Institute of Bank Management (IIBM), Guwahati, respectively.

investments/other miscellaneous activities.

39.

Financial support of Rs.390.20 lakh from the

Co-operative Development Fund (CDF) was disbursed

Research and Development Fund Activities


36. During the year, Rs.982.98 lakh was utilised from the R&D Fund for activities like research projects/ studies (Rs.100.03 lakh), seminars (Rs.61.16 lakh),

to the Junior L evel Training Centres (JLTCs), Agricultural Co-operative Staff Training Institutes (ACSTIs) and Integrated Training Institutes (ITIs) for conducting 1019 programmes covering 12,088 participants during 2009-10.

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Business Operations
40. The total financial support extended by States [viz., Orissa (1366), Andhra Pradesh (1220), Jharkhand (500), Karnataka (498), Assam (272), Madhya Pradesh (103), West Bengal (88), Bihar (82) and other States (43)]. Of these, 1,781 Groups have been credit linked. 45. ST refinance to State Co-operative Agriculture

NABARD in 2009-10 was Rs.57,069 crore, registering a growth of 13 per cent over 2008-09.

Production Credit
41. As an incentive to co-operative banks that covered the maximum number of new farmers during 2008-09 in the wake of implementation of ADWDR Scheme, 2008, additional credit limits were provided. Again, credit limit applications were exempt from being routed through RCS, in states, which had executed MoU for implementing the GoI package for revival of Short Term Co-operative Credit Societies (STCCS) and amended their Co-operative Societies Acts. Relaxations were also granted to co-operative banks not complying with Section 11(1) of Banking Regulation Act, 1949 (AACS).

and Rural Development Bank (SCARDB) for Seasonal Agricultural Operations (SAO) was continued during the year, with a refinance of Rs.95.92 crore extended to Kerala (Rs.74.87 crore) and Rajasthan (Rs.21.05 crore) SCARDBs at 4.5 per cent, for lending to the ultimate borrowers at 7 per cent.

46.

During 2009-10, limits of Rs.6,832.13 crore

were sanctioned to 80 RRBs under ST-SAO as against Rs.3,546.81 crore sanctioned to 76 RRBs in 2008-09. The limits included Rs.577.85 crore for OPP , Rs.143.86 crore for DTP and Rs.4 crore for NPDP . The maximum outstanding was Rs.6,779.79 crore, forming 99 per cent of the limit sanctioned during 2009-10.

42.

During 2009-10, ST-SAO limits were sanctioned

to 20 SCBs aggregating Rs.18,109 crore as against Rs.15,448 crore sanctioned during 2008-09. The credit limits included Rs.1,809.95 crore for the Oilseeds Production Programme (OPP), Rs.155.62 crore for National Pulses Development Programme (NPDP) and Rs.592.99 crore for credit requirements of tribals under the Development of Tribal Population (DTP). The SCBs reached a maximum outstanding credit of Rs.17,436.66 crore during 2009-10, with a utilisation of 96 per cent.

47.

The aggregate limit for ST-OSAO sanctioned

to RRBs during 2009-10 was Rs.542 crore, as against Rs.190.80 crore last year. The maximum utilisation was Rs.318.24 crore (59%).

48. 43. During 2009-10, ST (weavers) credit limits

Aggregate interest subvention of Rs.1,284.56 crore

was provided by GoI to NABARD, co-operative banks and RRBs for the year 2007-08. An amount of Rs.1,205.17 crore has been disbursed for 2008-09. Interest subvention for 2009-10 was estimated at Rs.2,600 crore.

aggregating Rs.177.32 crore were sanctioned to five State Co-operative Bank (SCBs) (Andhra Pradesh, Karnataka, Puducherry, Tamil Nadu and West Bengal) for production/procurement/marketing Rs.265.63 crore was during outstanding, activities, 2008-09. crore, as The as against maximum

Rs.180.78

49.

NABARD continued to act as the nodal agency

against Rs.166.66 crore last year. 44. During the last three years, 4,172 Handloom

for the package announced by GoI for assisting co-operative sugar mills for loans availed of from co-operative banks. Out of Rs.138.54 crore received from GoI as interest subvention, Rs.131.22 crore 6

Weavers Groups (HWGs) were formed by banks in 12

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pertaining to 76 co-operative sugar mills, was released to the co-operative banks. An additional sum of Rs.113.07 crore was estimated as claims from banks for 2008-09, 2009-10 and 2010-11. Under the Scheme for Providing Financial Assistance to Sugar Undertakings2007 for payment of cane dues for 2006-07 and 2007-08 sugar seasons, GoI placed Rs.125.71 crore with NABARD, for release against interest subvention claims. An amount of Rs.60.97 crore was sanctioned to 59 sugar mills operating in Goa, Gujarat, Karnataka, Maharashtra, Orissa and Uttar Pradesh.

of

Government

guarantee

not

forthcoming,

alternatives like pledge of government securities or fixed deposit receipts issued by scheduled banks were considered.

53.

With effect from 01 March 2010, the interest

rates charged were, 8 per cent for commercial banks, 7.5 for RRB/co-operative banks and 6.5 for ADFC/ NEDFi. The rates on interim finance to SCARDBs and ADFCs were 9.75 and 6.5 per cent respectively. A special reduction of 50 basis points was provided to commercial banks in NER, hilly states, Eastern States and a few other states and Union Territories for all

50.

The

rates

of

interest

on

refinance

under

eligible purposes.

ST(SAO) and ST(Others) to co-operative banks, RRBs and scheduled commercial banks during 2009-10 varied between a minimum of 4 per cent and a maximum of 8.5 per cent for different purposes. 54. The refinance disbursed (including ST-SAO to

SCARDBs) during the year touched Rs.12,009.08 crore as against Rs.10,535.29 crore last year, recording an increase of 14 per cent. Commercial banks had the major share at 50.4 per cent. Across the

Investment Credit
51. NABARD continued granting relaxation to commercial banks, co-operative banks and RRBs in NER and Sikkim, for enhancing the flow of bank credit. The initiatives taken during 2009-10 were: (i) NPA norms for ST(SAO) refinance to State Cooperative Banks and Regional Rural Banks were relaxed by 5 and 3 per cent, respectively, (ii) cent per cent refinance support was extended to all agencies for all purposes. The rate of interest on refinance to commercial banks was reduced by 50 basis points.

regions, refinance disbursement varied widely with the major share going to the South (50%) followed by North (20%), Central (12%) and others (18%). During the year, Non Farm Sector (NFS) (28.86%) and Self-Help Groups (SHG) (26.42%) were the major sectors for which banks availed of refinance, followed by Farm Mechanisation (14.3%) and Dairy Development (6%).

55.

Eight new co-finance projects were sanctioned

during the year with total financial outlay (TFO) of 52. The release of refinance to SCARDBs as also Rs.62.13 crore taking the cumulative number of projects sanctioned to 48 with cumulative TFO of Rs.807.52 crore. An amount of Rs.11.99 crore was sanctioned during the year. NABARDs cumulative sanction and disbursement were Rs.229.44 crore and Rs.136.35 crore, respectively. As on 31 March 2010, there were 38 on-going cofinance projects.

SCBs/DCCBs for farm and non-farm sector activities was against Govt. guarantee. However, SCBs that were in profit during 2007-08 with no accumulated losses, net NPA less than 5 per cent as on 31 March 2008 and having A Audit classification were exempted from Govt. guarantee. Refinance to other SCB, including Section 11(1) of BR Act (AACS), noncompliant SCBs/DCCBs and to non-scheduled SCBs was only against Government. guarantee. In the event

56.

During the year, 60 projects were sanctioned

under cold storages/onion godowns with TFO of

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Rs.129.81 crore, bank loan of Rs.77.77 crore and subsidy of Rs.30.28 crore. As on 31 March 2010, 1,851 projects had been sanctioned involving TFO of Rs.2,900.59 crore, bank loan of Rs.1,634.67 crore and subsidy of Rs.443.58 crore, respectively. The cumulative capacity created under cold storages and storage facilities for onion as on 31 March 2010 stood at 76.74 lakh MT.

subsidy of Rs.1,042.33 lakh had been released to 612 units as on 31 March 2010.

61. credit

Potential Linked Plan (PLP) for 623 districts planning for exercise 2010-11. and Three infrastructure new District

were prepared during the year, to serve as a guide in development

Development Managers offices were opened, taking the total number of DDM offices to 395. In addition, 100 districts were tagged to specific DDM districts.

57.

During the year, 963 rural godown projects

were sanctioned with TFO of Rs.281.92 crore, bank loan of Rs.196.82 crore and subsidy of Rs.65.44 crore, respectively. Cumulatively, as at end March 2010, 17,556 rural godown projects were sanctioned, involving TFO of Rs.3,798.58 crore, bank loan of Rs.2,504.08 crore and subsidy of Rs.578.97 crore. The cumulative capacity created under rural godown scheme as on 31 March 2010 stood at 221.45 lakh MT.

Rural Infrastructure Development


62. The RIDF, started a for in 1995-96, had an was roads with

aggregate corpus of Rs.1,00,000 crore till RIDF XV (2009-10). introduced component Additionally, in of 2006-07 Bharat separate funding window rural

Nirman

Programme,

allocation of Rs.18,500 crore, till 2009-10. The total allocation for RIDF, thus, stood at Rs.1,18,500 crore, of Agricultural Marketing as on 31 March 2010.

58.

The

scheme

Infrastructure, Grading and Standardisation has been in operation since 2004. During the year, 573 projects with TFO of Rs.637.90 crore and bank loan of Rs.419.54 crore were sanctioned and subsidy of Rs.49.89 crore was released to 21 States and 5 UT. Cumulatively, 3,838 units with TFO and bank loan of Rs.1,933.56 were crore and Rs.1,283.13 and crore, of respectively, sanctioned subsidy 63. During the year 2009-10 (RIDF XV), 39,015

projects were sanctioned involving loan amount of Rs.15,629.82 crore, taking the cumulative number of projects to 4,02,806 crore and I sanctioned to the XV), year, amount of rural to Rs.1,03,718 amount (RIDF during which roads

Rs.85,597.38 crore had been phased. Of the total sanctioned accounted for 29 per cent, irrigation projects 27 per

Rs.190.89 crore was released.

59.

The scheme of Agri-Clinics and Agri-Business

cent, social sector projects 16 per cent, bridges 15 per cent and agri-related 13 per cent.

Centres (ACABC) was started in 2006-07. A subsidy of Rs.1.61 crore was disbursed for 76 projects involving TFO of Rs.5.99 crore and bank loan of Rs.4.66 crore during the year. Till 31 March 2010, 280 projects with TFO of Rs.20.87 crore, bank loan of Rs.15.98 crore and subsidy of Rs.3.09 crore were sanctioned.

64.

Disbursement

during

2009-10,

under

the

ongoing tranches amounted to Rs.12,387.54 crore taking the cumulative disbursements to Rs.68,439.74 crore, forming utilisation of 80 per cent. Additionally, an amount of Rs.6,500 crore was disbursed to the National Rural Roads Development Agency (NRRDA) under Bharat Nirman Programme (BNP), taking the total disbursements during the year to Rs.18,887.54 crore.

60.

Under the Capital Investment Subsidy Scheme

for Commercial Production of Organic Inputs, net

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The cumulative disbursement, as on 31 March 2010, touched Rs.86,939.74 crore, including Rs.18,500 crore under BNP. Disbursements under RIDF I to IX have been closed, while disbursements continued under RIDF X to XV.

intervention. On an average, the sample artisans produced 192 idols per annum getting an income of Rs.1,153 per idol, which yielded a return of 44 per cent of the fixed costs.

69. 65. With the receipt of Rs.16,395.95 crore as deposits from commercial banks in 2009-10, the cumulative deposits received under RIDF stood at Rs.82,725.38 crore. The rate of interest payable by NABARD on these deposits continued to be at Bank rate (at present 6%). An amount of Rs.4,248.07 crore was received from State Governments towards repayment of RIDF loans during 2009-10. The total RIDF loan outstanding was end March 2010. 66. During the year, NABARD carried out Rs.60,255.45 crore as at

Seven

studies

conducted

on

Rural (REDP)

Entrepreneurship

Development

Programme

revealed that the overall success rate in setting up new enterprises worked out to 34 per cent only in terms of new enterprises and 58 per cent when wage employment too was considered. The average annual net gain in income worked out to Rs.18,663 per trainee. The programme yielded more than 50 per cent returns to the investment in all the states studied. Banks and SHGs emerged as the major sources of credit. The studies suggested enrichment of the course material with success stories.

monitoring of 6,670 projects through field visits. As on 31 March 2010, the RIDF projects had created additional irrigation potential of 156.53 lakh ha, 3.04 lakh km length of rural roads and 5.84 lakh metre length of rural bridges and generated recurring employment of 81.17 lakh jobs and non-recurring employment of 57,853 lakh person days. 70. A study covering 14 states, viz., Andhra Himachal Pradesh, Assam, Gujarat, Haryana,

Pradesh, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Orissa, Punjab, Rajasthan, Uttar Padesh & West Bengal, was conducted covering 1,876 KCC holders from 178 bank branches from Co-operative banks, RRBs and CBs. The study suggested that KCC penetration could be further improved in terms of extending loan such as crop loan, working capital for allied & NFS activities and consumption loan in the ratio of 4:2:1. The study further suggested that there is a need to adopt mission mode approach to make KCC into a farmers friendly efficient instrument for effective credit delivery system accompanied by appropriate institutional mechanism.

Evaluation and Commodity Specific Studies


67. Six DRIP studies conducted during the last two years revealed that the RNFS units in the study districts were profitable with a rate of return of above 15 per cent in most cases.

68.

Two

studies

on

Cluster fibre

Development availability, 71. Under the scheme of rural godowns, 20,393

Programme (CDP) covering Sisal Fibre and Woodcraft clusters recommended ensuring highlighting the environmental benefits of sisal fibre products compared to cheaper plastic substitutes and encouraging individual initiatives to establish sisalbased cluster micro-enterprises. increased about The six study on woodcraft after the cluster revealed that the number of artisans in the times godowns with capacity of 238.37 metric tonnes were sanctioned all over the country, and for the same, a subsidy of Rs.543.02 crore was released. An in-house study on Rural Godowns in Gujarat: An Evaluation Study had been conducted during 2009-10. The study showed that major crops stored in these

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godowns

were

cotton,

castor,

mustard,

cumin,

72. per

Five studies on pulses were conducted in five hectare. Total processing cost and sales

tobacco, paddy and bajra. Although the state of Gujarat tops the list with the maximum number of rural godowns, the average capacity of godowns in the state at 217.7 metric tonnes was one of the lowest in the by country. The average bank loan rural sanctioned commercial banks, regional

states. The studies revealed low productivity at 622 kg proceeds for milling one MT of pulses was Rs.24,698 and Rs.26,400, respectively. The net value addition per one MT of raw pulses was Rs.1,702, at 7 per cent of the operating cost. The input-output ratio was 1:1.06.

banks and cooperative banks was Rs.6 lakh, Rs.2.89 lakh and Rs.2.59 lakh, respectively. The utilisation of capacity created was 67.2 per cent in society-owned godowns and 68.8 per cent in individual-owned godowns. While the society-owned godowns attained break-even level at 25.6 per cent of the available storage attained space, it at the 53.3 individual-owned per cent. The godowns repayment

73.

A study on Mentha, an aromatic herb, was

taken up in the state of Uttar Pradesh which accounts for 80 per cent of the crop area under mentha. The per acre cost of cultivation of mentha varied between Rs.14,765 and Rs.18,625. The average yield of oil per acre varied between 37.6 kg and 56.50 kg. The net income per acre varied between Rs.5,099 and Rs.11,207. The gross value of production from the sale of menthol crystals/flakes worked out to Rs.25,87,800 and the net income realised from processing plant per month worked out to Rs.77,662.

performance of all the godowns selected for the study was regular. The scheme of rural godown had injected Rs.1,270.7 lakh of private investment in the selected generated districts 3.4 viz., lakh Patan and Kheda, and 1.5 which lakh non-recurring

recurring employment.

Capacity Building of Client Institutions


Institutional Development
74. While the deposits of SCBs and DCCBs as on 31 March 2009, increased by 24 and 16 per cent, respectively over the previous year, the borrowings of SCBs decreased by 7 per cent and that of DCCBs increased by 6 per cent. Loans issued by SCBs increased significantly by 58 per cent and that of DCCBs decreased by 3.4 per cent. Loans 76. During 2008-09, 26 out of 31 SCBs were in outstanding of SCBs decreased marginally by 3.5 per cent while that of DCCBs increased marginally by 1.2 per cent. profit aggregating Rs.395 crore and the remaining 5 were in loss (Rs.71 crore). While 320 out of 370 DCCBs earned overall profit of Rs.1,611 crore, 50 incurred losses to the extent of Rs.337 crore. Eleven SCARDBs earned an aggregate profit of Rs.405 crore, 75. In the Long-Term Co-operative Credit while 8 incurred an aggregate loss of Rs.150 crore. Out of 697 PCARDBs, 326 earned an aggregate profit of Rs.206 crore, while 365 incurred an aggregate loss of Rs.360 crore. The aggregate accumulated losses of Structure (LTCCS), borrowings of SCARDBs, as on 31 March 2009, decreased marginally by 3.3 per cent while that of Primary Co-operative Agriculture and Rural Development Banks (PCARDB) increased

marginally by 0.25 per cent, over the previous year. While loans issued by SCARDBs and PCARDBs increased by 17 and 16 per cent, respectively, their loans outstanding decreased by 11 and 5 per cent, respectively over the previous year.

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DCCBs, SCARDBs and PCARDBs declined in 2008-09 with a slight increase for SCBs. 77. During 2008-09, the overall profits of SCBs

declined to 30.3 and 39.1 per cent as on 31 March 2009, from 35.0 and 43.5 per cent, respectively, during the previous year. The total NPAs of SCARDBs and PCARDBs were estimated at Rs.4,937.73 crore and Rs.4,392.95 crore, showing a decline per cent, respectively. of 23 and 14

increased to 37 per cent over the previous year. However, profits of SCBs decreased in the Northern region (9%).

82. 78. In the case of DCCBs, profits during 2008-09 increased across the regions. At the aggregate level, the number of profit-making DCCBs increased while the number of loss-making DCCBs reduced. 79. In the LT structure, the number of loss-making

Regional level NPAs of SCBs vis--vis the all-

India average was the lowest in Northern (3.1 %), and highest in North-eastern (37.4%) regions, as on 31 March 2009. During the same period, NPAs of DCCBs in Eastern, Western, Central and North-east regions were higher compared to those in the previous year.

SCARDBs reduced their losess by 65 per cent from the previous year. During 2008-09, aggregate profit of SCARDBs was Rs.255 crore. At the aggregate level, PCARDBs incurred losses of Rs.154 crore during 2008-09. 80. During the year 2008-09, SCARDBs in the

83.

The average loan recovery of SCBs and DCCBs

as on 30 June 2009 improved marginally to 92 and 72 per cent from 85 and 56 per cent, respectively, over the previous year. In absolute terms, loan recovery of SCBs improved from Rs.26,433.54 crore to Rs.33,893.73 crore. At the DCCB level, it increased from Rs.39,544.40 crore to Rs.57326.77 crore. The average loan recovery of SCARDBs and PCARDBs, as on 30 June 2009, declined to 40 and 40.3 per cent from 50 and 42 per cent, respectively, over the previous year. In absolute terms, loan recovery of SCARDB and PCARDB declined to Rs.3,860.44 crore and Rs.2,842.47 crore, as on 30 June 2009, from Rs.5,367.81 crore and Rs.3,190.10 crore, respectively, over the previous year.

northern region increased their profits, while those in Central, Eastern and Western regions moved from loss in 2007-08 to profits in 2008-09. While PCARDB in Central, Western and Eastern regions increased their profits, the PCARDB in the Northern region incurred further losses. At the aggregate level, number of profit-earning Rs.206.03 crore. 81. At the aggregate level, the percentage of gross PCARDBs increased profits to

NPA to total loans and advances outstanding in respect of both SCBs and DCCBs decreased to 11.9 and 17.9 per cent, as on 31 March 2009, from 12.3 and 18.5 per cent as on 31 March 2008, respectively. In absolute terms, NPA was estimated to be Rs.5,763.50 crore and Rs.17,929.15 crore for SCBs and DCCBs as on 31 March 2009, registering a decline of 7 and 4 per cent, respectively. The percentage of NPA to total loans and advances outstanding in the case of SCARDBs and PCARDBs 85. As on 31 March 2009, duly elected Boards were superseded in 8 SCBs and 91 DCCBs in the ST Structure, and in 9 SCARDBs and in 265 PCARDBs in the LT Structure. 84. As on 31 March 2009, 21 SCBs and 9

SCARDBs had executed DAP/MoU (Phase IV) with State Governments and NABARD.

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86.

During the year, sanctions and disbursements

Secretary (FS), Ministry of Finance, Govt. of India, to review the need for a separate package for the Revival of LTCCS submitted its report to the Government of India on 25 February 2010.

were Rs.3.76 crore and Rs.3.78 crore, respectively, under Co-operative Development Fund (CDF). As on 31 March 2010, crore, and cumulative respectively. Managing sanctions Ten and disbursements under CDF were Rs.91.74 crore and Rs.81.51 Business Aspirations

91.

The total number of RRBs as on 31 March

Revitalisation

Human

2010 was 82 (46 amalgamated and 36 stand alone), with the formation of four new amalgamated RRBs in 2009-10.

programmes, two ODI and two follow-up visits were conducted for co-operatives during the year.

87.

The special audits of STCCS was completed 92. The entire amount of Rs.1,795.97 crore of support GoI, the to 27 RRBs, having and recapitalisation received from

in 79,530 PACS out of 95,626 PACS across 25 states. The special audit of CCBs has been completed in twelve states and in the remaining States, it is in progress. An amount of Rs.7,972.22 crore has been released, till 31 March 2010, by NABARD as GoI share for recapitalisation of 49,764 PACS in fourteen states, while the state governments have released Rs.755.80 crore as their share.

negative net worth as on 31 March 2007, was state governments sponsor banks concerned, in the ratio of 50:15:35, respectively.

93.

In order to free the farmers indebted to money through debt swap, RRBs, had adopted

lenders 88. So far, 14 States Acts have amended The their draft

24,531 villages, as on 31 December 2009, of which 13,221 had been freed from debt to moneylenders.

Cooperative

Societies

(CSA).

amendments proposed by the remaining 11 States have been vetted by NABARD, even as previous amendments in three of these States are awaiting Presidential assent. 94. RRBs had opened 474 branches during 2008-09,

taking the total number of branches of all RRBs to 15,181, as on 31 March 2009. Against the target of opening 2,000 branches in the next two years, available information show that RRBs had opened about 263 branches in 2009-10 taking the total number of branches to around 15,444.

89.

Under the GoI package for STCCS, training

has been imparted to 226 master trainers from 16 States, who in turn, trained 1,896 district level trainers. As on 31 March 2010, training has been imparted to 72,127 Secretaries of PACS from 14 States, 99,219 elected Board Members of PACS from 11 States, 369 CEO of CCB and 1,671 Directors of CCB/SCB. In addition, training on CAS/MIS has been provided to 61,619 PACS functionaries and 3,471 bank supervisors/ departmental auditors.

95.

Fifteen RRBs were identified from 14 States for

R & D project on Financial Inclusion with ICT-based solutions, through use of smart cards, Point of Sale (PoS) devices and mobile technology, in different regions and client groups in the country.

90.

The

Task

Force,

constituted

under

the

96.

Under

the

Financial

Inclusion

programme,

Chairmanship of Shri G. C. Chaturvedi, IAS, Addl.

RRBs had opened 153.81 lakh No Frills Deposit

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Accounts out of a total number of 935.54 lakh deposit accounts opened as on 31 March 2009. The number of loan accounts stood at 170.66 lakh during the corresponding period.

101. The Chairmanship

Committee of Dr.

constituted K.C.

under

the

Chakrabarty,

Deputy

Governor, Reserve Bank of India, to examine the financials of RRBs with CRAR of less than 7 per cent and suggest measures to bring it to at least 9 per cent in a phased manner, submitted its Report to GoI on 30 April 2010.

97.

Over

period

of

three

years

(2008-10),

aggregate reserves of RRBs increased by 38.74 per cent while deposits and investments increased by 44.4 and 56.9 per cent, respectively. Borrowings also increased by 61.4 per cent, while loans and advances (outstanding) increased by 39.4 per cent in 2009-10.

Supervision of Banks
102. During 2009-10, statutory inspections of 343 banks (30 SCBs, 252 DCCBs and 61 RRBs) and voluntary inspections of 16 SCARDBs and one apex society, viz. Gujarat Rajya Handloom, Handicraft and Audhyogic Sahakari Federation Ltd. (GUISCA), were conducted. Some of the supervisory concerns that emerged provisions were and non-compliance KYC/AML with statutory improper standards,

98.

Financial projections for RRBs for the year

2009-10 indicate that they were likely to improve their performance with 78 out of 82 RRBs showing pre-tax profit to the extent of Rs.2,550.51 crore, as compared to Rs.1,823.55 crore in 2008-09. The remaining four RRB incurred losses of Rs.8.4 crore as compared to Rs.35.91 crore posted by 6 RRB in 2008-09. The aggregate reserves of RRBs that had wiped off their accumulated losses in 2008-09 and attained sustainable viability, increased to Rs.7,912.39 crore and the net worth increased to Rs.10,256.13 crore. The accumulated losses of RRBs have decreased by 30.9 per cent over the previous year.

application of IRAC norms, high NPAs, deficiencies in sanction, appraisal and post disbursement follow up of loans, inadequate net margins, ineffective funds management, inadequate risk management systems, lack of corporate governance, weak internal checks and control system, frauds, improper valuation of securities and irregularities in investment portfolio, violation of Credit Monitoring Arrangement (CMA)/ exposure norms, etc.

99.

The

recovery

performance

of

RRBs

was

103. The Board of Supervision (BoS), constituted by the Board of Directors of NABARD in 1999, met four times during the year 2009-10. It reviewed the functioning of co-operative banks and RRBs including insolvent/weak banks; frauds; adherence to CMA norms by co-operative banks; scheduling of amalgamated RRBs; migratory analysis of supervisory rating of SCBs, DCCBs and RRBs; compliance of banks to statutory provisions; disposal of complaints against supervised banks; etc.

estimated at 79.1 per cent, as on 30 June 2009, compared to 77.9 per cent as on 30 June 2008. All 15 RRBs in the Northern, 3 in Western and 10 in Southern region had registered a recovery performance above the national average. Six RRBs had a recovery percentage of above 90 while five others had a recovery percentage of less than 60 per cent.

100. The aggregate gross NPAs of all RRBs declined from 4.1 per cent, as at 31 March 2009, to 3.7 per cent as on 31 March 2010. 104. As on 31 March 2010, 88 banks (5 SCBs and 83 DCCBs) were not complying with the provisions of

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Section 11(1) of the B.R. Act, 1949 (AACS). The total erosion in the value of assets of these 88 noncompliant banks aggregated Rs.12,054.09 crore,

with Section 42(6)(a)(i) of RBI Act, 1934 in regard to minimum capital requirements of Rs.5 lakh, and three were not complying with Section 42(6)(a)(ii) of the Act. As on 31 March 2010, out of 82 RRBs, 70 complied with Section 42(6)(a)(i) of the RBI Act, 1934 and 49 complied with Section 42(6)(a)(ii) of the Act. The erosion in the value of assets of the 8 RRBs not complying with Section 42 (6)(a)(i) of the RBI Act stood at Rs.785.38 crore as on 31 March 2010 with erosion in their deposits to the extent of Rs.111.02 crore (2.27 per cent).

which had affected their deposits to the extent of Rs.3,780.55 crore (22.60%) in addition to their entire share capital. Sixty seven DCCBs and three SCBs were granted exemption from the provisions of

Section 11(1) of the Act, ibid by GoI, up to 31 March 2010, while applications for grant of exemption in respect of 17 banks (1 SCB & 16 DCCBs) were under the consideration of RBI/GoI.

105.

The licensing norms for co-operative banks had

109. During the year, detailed guidelines/instructions/ circulars/clarifications were issued to the SCB/DCCB/ SCARDB/RCS on a wide-ranging number of issues: on prevention/monitoring of frauds; prudential norms on asset classification, provisioning & income recognition in PACS; judicious utilization of funds post revival package; and ADWDR 2008 scheme implementation; need for timely completion of audit; working out CRAR by PACS and disclosing it in their balance sheets; the role of Chairman/CEO in Fraud Risk Management System in banks; importance of

been revised by RBI. Consequent upon the revised licensing norms, RBI had issued licenses to 8 SCBs and 98 DCCBs during the year, thus increasing the number of licensed banks to 195 (22 SCBs and 173 DCCBs) as on 31 March 2010. As a one-time measure, RBI, RPCD delegated to its Regional units the powers to grant licenses to cooperative banks. The number of scheduled SCBs remained unchanged at 16.

106. Thirtynine amalgamated RRBs were included by the RBI in the Second schedule of the RBI Act, 1934, after they were found complying with Section 42(6)(a)(i) &(ii) of the Act. With this, the number of scheduled RRBs stood at 75 as on 31 March 2010.

Section 19 of the Banking Regulation Act 1949 (AACS) concerning restriction on holding of shares; expeditious balancing of books and reconciliation of inter-branch accounts. Master circular on disclosure norms and revised guidelines on Long Form Audit Report (LFAR) were issued to the RRBs. Guidance note on Credit Risk Management (CRM) was issued to co-operative banks and RRBs. ROs were issued guidelines in dealing with cases of non-compliance with the provisions of Section 42(6)(1)(i) of the RBI Act, 1934 by RRBs; also, clarifications on compliance to Section 6 of B.R. Act 1949 (AACS) by co-operative

107. As on 31 March 2009, it was found that 39 RRBs had Provision Coverage Ratio (PCR) below 50 per cent, 29 had between 50 per cent & 70 per cent and 18 RRBs had PCR more than 70 per cent.

108. As on 31 March 2010, 5 SCBs and 83 DCCBs did not comply with Section 22(3)(a) of BR Act, 1949 (AACS), and 9 SCB and 214 DCCB did not comply with Section 22(3)(b) of the Act, ibid. Similarly, out of the 16 scheduled SCB, two were not complying

banks and procedure for valuation of unquoted securities were provided. Operational Manual for co-operative banks was prepared based on inputs and feedback obtained from NAFSCOB on many policy issues.

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Organisation and Management


110. During the year, the Board of Directors of NABARD met five times. The Executive Committee and Audit Committee met six times and four times, respectively, while the Sanctioning Committee for loans under RIDF and Risk Management Committee of the Board met seven times and three times, respectively. As on 31 March 2010, the Board of NABARD comprised eight new directors under Section 6 (1) (d) and 6 (1) (e) of NABARD Act, 1981. deputed for 153 off the shelf programmes, workshops, seminars deputed addition, and conferences for organised by various training In 663 institutes of repute. abroad 45 programmes, exposure training Further, 120 officers were various overseas visits, seminars, etc. programmes covering

employees were conducted at NBTC, Lucknow and ZTC, Hyderabad. Pre-promotional training programmes were also conducted promotion to Grade for 47 Group B staff for A and one pre-retirement

programme was conducted for 5 Group B and 111. Board of Directors decided to analytically Group C staff. examine the present and future role of NABARD and reposition the institution, to enable it to effectively address initiative, emerging termed and future challenges. Reposition, This was Project 115. During the year, 51 employees availed of facilities under the incentive scheme for professional studies in part-time and distance learning courses. Study leave was granted to four officers under the staff scheme for higher studies in well-known universities/institutions in India as well as abroad. of India conducted 12th

started from March 2010 and will be for a period of 18 months. The Bank has engaged consultancy agency for the purpose.

112. Reserve

Bank

Other Matters
116. During the year, 108 officers in Gr. A of RDBS were appointed. Further, 695 promotions were effected in various grades of the officers cadres of which 8, 34 and 92 were promoted to Gr. F, E and D,

Financial Inspection of NABARD with reference to their financial position as on 31 March 2009 between 27 January to 26 February 2010.

Overseas visits by top management


113. The Chairman attended the 57th EXCOM of APRACA held in Chiang Mai, Thailand in March 2010. The Managing Director attended the Regional workshop of FAO in Manila, Philippines in October, 2009.

respectively. As at end March 2010, NABARD has total staff strength of 4,770 employees of which 1,247 belonged to SC/ST constituting 26 per cent.

117. Industrial relations in the Bank continued to be harmonious during the year. Periodic discussions were held with the management and All-India NABARD Officers Association/All- India NABARD Employees

Training and Skill enhancement


114. During the year, 85 training programmes covering 1,675 officers were conducted at NBSC, Lucknow in functional, behavioural and technical areas. disaster Fifty four officers were deputed for tailor-made management, etc., designed to meet programmes delivered on post-harvest management,

Association.

118. Central Complaints Committee at Head Office and Committees at ROs are functioning for prevention of sexual harassment of women at the work place.

119.

Preventive vigilance inspection of 8 ROs/TE The bank observed

specialised training needs, while 424 officers were

was undertaken during the year.

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Vigilance

Awareness

Week

from

November

to

6 November 2009. 120. During means of the year, the banks intranet was

Financial Performance & Management of Resources


124. During the year 2009-10, the total Working Funds increased by 15.3% from Rs.1,18,176 crore to Rs.1,36,656 crore. The increase was due to net inflow of RIDF Deposits (Rs.12,846 crore), STCRC Fund (Rs.5,000 crore), Commercial Papers (Rs.2,499 crore) and Term Money Borrowings (Rs.519 crore). The borrowings of NABARD (Rs.25,703 crore) constituted 18.48 per cent of its working funds as on 31 March 2010.

expanded to collect data/returns from RO/TEs by On-Line Returns Management System (ORMS) to generate MIS reports. The accounting

software was made bilingual and upgraded with additional features to include preparation of e-TDS and other monitoring reports. During the year video conferencing facility and enhanced Human Resource Management System software was operationalised in the bank.

125. The funds utilised for ST (SAO) loans and ST(OSAO) loans advanced to SCBs and RRBs together increased by Rs.7,177 crore (42.5 per cent)

121. Inspection of 16 ROs, one TE and 19 HO departments were undertaken during the year. Concurrent audit of HO departments, viz., Finance Department, Accounts Department, GAD, Premises Department, Operations, Co-financing Information Cell of ICD, Treasury etc., System Audit,

to Rs.24,073 crore as on 31 March 2010 from Rs.16,896 crore as at the end of previous year. RIDF loans increased to Rs.60,255 crore as on 31 March 2010 compared to Rs.45,616 crore at the end of previous year, recording a net outflow of Rs.14,639 crore during the year.

continued to be outsourced to external auditors. 126. The total income of the Bank was Rs.7,964.80 crore for the year 2009-10 ( Rs.7,050.68 crore during the 122. The Bank continued to promote the use of Hindi as an effective tool of mass communication for its business development. Official Language Implementation Committee is constituted in all the offices to monitor the implementation of Rajbhasha policy of GoI. On-site inspection of eight ROs and six HO departments were also conducted during the year with a view to ensuring strict compliance with Rajbhasha policy. previous year). After meeting the expenditure of Rs.5,692.34 crore as against Rs.5,063.15 crore in the previous year towards interest/financial provisions crore as charges, and against establishment/other amounted to expenses,

depreciation, the profit before tax for the year Rs.2,272.45 Rs.1,987.53 crore in 2008-09. After providing for provision/adjustment for taxes, the profit after tax during the current year amounted to Rs.1,558.26 crore as against Rs.1,390.13 crore for the previous year. Amounts of Rs.350 crore, Rs.400 crore, Rs.10 crore

123. During the year, Members of the Drafting and Evidence Sub-Committee of the Parliamentary Committee on Official Languages visited Raipur and Hyderabad offices of the Bank. in Hindi. During the year, ROs brought out 102 PLPs and 54 inspection reports

and Rs.679 crore were transferred to Special Reserve u/s 36(1) (viii) of IT Act 1961, NRC (LTO) Fund, NRC (Stabilisation) Fund and Reserve Fund, respectively. Further, an aggregate amount of Rs.190 crore was transferred to various Funds maintained by the Bank for development purposes.

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I
Rural Economic Environment
The Indian economy is estimated have registered a growth rate of 7.4 per cent during 2009-10 as against 6.7 per cent witnessed during 2008-09. Due to the near drought conditions, the GDP in agriculture is estimated to show a meagre growth of 0.2 per cent during 2009-10. However, industry and services sectors registered comparatively better growth rates. This order of growth performance is expected to improve per capita income (at 2004-05 prices) from Rs.31,821 during 2008-09 to Rs.33,588 during 2009-10, an increase of 5.6 per cent during 2009-10, as against the previous years estimate of 5.0 per cent.

Global Economy
1.2 The growth in the global output witnessed 36.5 per cent of the global output of cereals, oil crops and milk and milk products, whereas, Indias share, on a two-year average basis, was 9.2 per cent, 8.4 per cent and 15.9 per cent, respectively (Table 1.2). deceleration from 3.8 per cent in 2007 to 3.0 per cent in 2008, but is estimated to have declined to (-) 0.6 per cent in 2009 due to recessionary conditions in advanced economies. Notwithstanding some positive signs of revival amidst ongoing policy support and improving financial market conditions, led by the Asian economies, especially China and India, the time horizon for global recovery remains uncertain in view of subdued consumption demand, increased unemployment levels and the anticipation of further contraction in demand. 1.3 In emerging and developing economies, the
Growth A. GDP (Real) a. World b. Advanced Economies i. United States ii. Euro Area iii. Japan iv. Newly Industrialised Asian Economies c. Emerging and Developing Economies i. Developing Asia ii. China iii. India iv. ASEAN - 5** Table 1.1: Overview of Global Economy (Annual per cent change) 2008 2009 2010*

3.0 0.5 0.4 0.6 (-)1.2 1.8 6.1 7.9 9.6 7.3 4.7

(-)0.6 (-)3.2 (-)2.4 (-)4.1 (-)5.2 (-)0.9 2.4 6.6 8.7 5.7 1.7

4.2 2.3 3.1 1.0 1.9 5.2 6.3 8.7 10.0 8.8 5.4

growth rate decelerated to 6.1 per cent in 2008 and further to 2.4 per cent in 2009 compared to 8.3 per cent in 2007. The global meltdown also impacted the economic growth of China (9.6 per cent) and India (7.3 per cent) in 2008 and it is estimated that the growth in China and India would have further declined to 8.7 per cent and 5.7 per cent, respectively in 2009. With the gradual picking up in global trade, the other indicators of economic activity such as capital flows, assets and commodity prices remain buoyant. The projected growth rates in China and India in 2010 are 10.0 per cent and 8.8 per cent, respectively (Table 1.1). 1.4 As per the estimates by Food and Agriculture

B. Consumer Prices a. Advanced Economies b. Emerging and Developing Economies C. Trade Volume (goods & services) a. Imports by Emerging and Developing Economies b. Exports by Emerging and Developing Economies D. Commodity Prices a. Oil Prices b. Non-Fuel Prices 36.4 7.5 (-)36.3 (-)18.7 29.5 13.9 8.5 4.0 (-)8.4 (-)8.2 9.7 8.3 3.4 9.2 0.1 5.2 1.5 6.2

Organisation (FAO), the world production of cereals decreased by 2.0 per cent; oil crops and milk and milk products increased by 8.2 per cent and 1.3 per cent, respectively in 2009 over 2008. Low income food deficit countries accounted for 41.8 per cent, 30.6 per cent and

* Projections; ** Includes Indonesia, Malaysia, Philippines, Thailand and Vietnam Source: World Economic Outlook, IMF, April 2010.

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Table 1.2: Production of Cereals, Oilseeds & Milk products in the World, 2008 and 2009 (Million Tonnes) Country/Group Cereals Production@ 2008* India*** Asia Africa Central America South America North America Europe Ocenia World Developed Countries Developing Countries Low Income Food Deficit Countries Least Developed Countries 216.9 973.7 147.9 41.7 134.7 457.0 493.9 35.1 2284.0 1042.9 1241.2 948.2 137.9 2009** 200.3 973.6 155.8 40.4 116.6 461.1 454.5 36.2 2238.2 1009.7 1228.4 943.3 139.3 % share in World 9.2 43.1 6.7 1.8 5.6 20.3 21.0 1.6 100.0 45.4 54.6 41.8 6.1 Oil crops Production 2008-09* 2009-10** 34.7 125.5 16.8 1.2 104.7 107.0 49.0 3.0 407.2 164.4 242.7 129.4 10.1 36.4 126.1 16.2 1.2 131.2 113.8 49.0 3.0 440.5 170.4 270 129.9 10
**: Forecast;

Milk and Milk Products 2008 109.1 248 36.1 15.8 57.4 94.5 215.4 24.6 691.8 363.2 328.5 250.3 25.7 2009* 112.3 254.8 36.6 16.1 57.7 93.7 216.1 26.0 701.0 365.2 335.7 257.6 26.2 % share in World 15.9 36.1 5.2 2.3 8.3 13.5 31.0 3.6 100.0 52.3 47.7 36.5 3.7

% share in World 8.4 29.7 3.9 0.3 27.8 26.0 11.6 0.7 100.0 39.5 60.5 30.6 2.4

@Rice is measured in terms of paddy (unhusked);

*: Estimated;

***: Dairy year commences from April

Source: FAOSTAT @FAO Statistics Division 2009; December 2009.

Indian Economy
A.
a.
1.5

Economic Scenario
Gross Domestic Product
After a phase of deceleration in growth from
Particulars a. Overall GDP

Table 1.3: Economic Indicators Annual percent change 2007-08 2008-09 9.2 4.7 6.2 8.5 4.7 35.0 29.1 (-)0.2 36.4 37.6 2.6 18.1 6.7 1.6 1.6 2.8 8.4 19.8 12.3 (-)0.2 32.5 35.6 6.0 20.5 2009-10^ 7.4 0.2 (-)6.9 10.4 3.8 (-)8.2 (-) 4.7 (-)0.2 34.0 37.2 6.6 --

9.2 per cent during 2007-08 to 6.7 per cent during 2008-09, there has been a recovery during 2009-10, with an estimated growth rate of 7.4 per cent (Table 1.3). The increase in the growth rate could be attributed partly to the growth rates of over 8 per cent in industry and services sectors. However, the contribution of agriculture, forestry and fishing sector is likely to register a growth of 0.2 per cent in its GDP during 2009-10 due to delayed monsoon and the consequent declines estimated in the production of foodgrains and oilseeds. 1.6 Sectoral analysis of growth rates between 2005-06

b. GDP from Agriculture & Allied Activities c. Foodgrains Production d. Industrial Production e. Inflation as measured by WPI f. Imports g. Exports Trade Balance* (as % of GDP) Gross Domestic Savings (as % of GDP) Gross Domestic Investment (as % of GDP) Fiscal Deficit** (as % of GDP) External Debt (as % of GDP)

and 2008-09 revealed a mixed trend. At disaggregated level, the overall growth rate during 2009-10 comprised of growth rates of 0.2 per cent in agriculture and allied activities, 9.3 per cent in industry and 8.5 per cent in

^ : Provisional. * : based on the balance as per DGCI & S (CMIE, June 2010) and GDP at current prices. ** : GDP at current prices (Revised estimate). Source: 1. Min. of Finance (DEA.Div). 2. CMIE, June 2010, Central Statistical Organisation, GoI.

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Table 1.4: Sectoral Growth Rates of GDP (2004-05 prices) Sector Agriculture & Allied Industry# Services Total GDP at factor cost 2005-06 5.2 (18.2) 9.3 (27.9) 11.1 (53.9) 9.5 (100.0) 2006-07 3.7 (17.1) 12.7 (28.7) 10.2 (54.2) 9.7 (100.0) 2007-08 (RE) 4.7 (16.4) 9.5 (28.8) 10.5 (54.8) 9.2 (100.0) 2008-09 (QE) 1.6 (15.6) 3.9 (28.0) 9.8 (56.4) 6.7 (100.0) 2009-10 (RE) 0.2 (14.6) 9.3 (28.5) 8.5 (56.9) 7.4 (100.0)

Figures in parentheses indicate percentage shares to total GDP #: Includes mining & quarrying, manufacturing, electricity, gas and water supply and construction Source: Central Statistical Organisation, GoI

services as compared to growth rates of 1.6 per cent, 3.9 per cent and 9.8 per cent, respectively during 2008-09. On the overall, the contributions of agriculture, industry and services to the GDP are estimated at 14.6 per cent, 28.5 per cent and 56.9 per cent, respectively during 2009-10 (Table 1.4).

during 2009-10. But it is estimated that the Gross Domestic Investment (GDI), as a proportion to GDP, to have accelerated from 35.6 per cent during 2008-09 to 37.2 per cent during 2009-10. At sectoral level, the capital formation in public sector increased from 8.9 per cent in 2007-08 to 9.4 per cent in 2008-09 and during the same period, the private sector capital formation decreased from 27.6 per cent to 24.9 per cent. Within the private sector, the investment rate for the corporate sector declined from 16.1 per cent in 2007-08 to 12.7 per cent in 2008-09 and that of the household sector increased from 11.5 per cent to 12.2 per cent.

b.
1.7

Consumption, Savings and Investments


The Private (at Final Consumption prices) are Expenditure estimated crore at and

(PFCE) and Government Final Consumption Expenditure (GFCE) in 2004-05 as against Rs.27,69,769 crore and Rs.5,65,860 crore, respectively, 2009-10 Rs.26,55,533 Rs.5,12,126 crore, respectively, in 2008-09. The overall share of consumption expenditure, both private and public in GDP , is estimated to decline marginally from 70.9 per cent in 2008-09 to 69.4 per cent in 2009-10. 1.8 The private expenditure on food items as a declining since 2004-05 while that of

c.

Inflation

1.10 The inflation rate as measured by variations in the Wholesale Price Index (WPI) on a monthly basis remained volatile during 2009-10. The overall inflation rate decreased from 8.4 per cent during fiscal 2008-09 to 3.8 per cent during fiscal 2009-10, but during the same period, the food articles prices shot up from 8.0 per cent to 14.6 per cent. Barring food articles, inflation in other commodity groups receded during 2009-10. (Box 1.1)

proportion to total private consumption has been gradually miscellaneous goods and services has been increasing. While the growth in per capita income accelerated from 5.0 per cent in 2008-09 to 5.6 per cent in 2009-10, that in per capita private consumption expenditure decelerated from 5.3 per cent in 2008-09 to 2.9 per cent during the same period. 1.9 The Gross Domestic Savings (GDS), as a

d.

Trade

1.11 The economy showed progress in integrating with the world economy as evident from the improved trade to GDP ratio at 38.9 per cent in 2008-09 as compared to 22.5 per cent during 2000-01. Despite the global financial crisis, during 2008-09, both exports 19 proportion to GDP, declined from 36.4 per cent during 2007-08 to 32.5 per cent during 2008-09 and this proportion is estimated to increase to 34.0 per cent

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Box 1.1 Food Inflation


Market prices for major food articles such as grains and vegetable oils have risen in recent past. However, this is not the first time India is experiencing inflation, but the current state of inflation is quite different. For instance, food inflation and non-food inflation were 20.2 per cent and 18.0 per cent, respectively during 1991-92. But during 2009-10, the estimated food inflation and non-food inflation were 14.6 per cent and 3.8 per cent respectively. The volatility of the inflation rate as measured by variations in monthly WPI during 2009-10 has been depicted in the Diagram. To arrest food inflation, the Reserve Bank of India and the Government of India have been taking up various monetary and fiscal measures. While the Reserve Bank of India has been trying to absorb excess liquidity by various financial instruments such as Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR) and Repo & Reverse Repo Rates, the Government of India has been trying to increase supply of foodgrains by (i) allowing import, (ii) reducing import duties, (iii) removing levy obligation in imports, (iv) banning exports, (v) allocating additional foodgrains to various States/UTs under Public Distribution System (PDS). Of late, both the Reserve Bank and the Government have sought to gradually exit from stimulus packages, as the economy has shown strong signs of recovery. Many factors have contributed to the current run up to the high food prices. Important among them are (i) adverse weather conditions and lower growth in agricultural production, (ii) escalating crude oil price, (iii) rising farm production costs on the supply side and (i) rapid economic growth, (ii) rising per capita consumption, (iii) diversion of crop output for bio-fuels production and (iv) dollar devaluation on the demand side. All these factors have contributed to the demand-supply mis-match causing a rise in food prices.

and imports in US dollar terms registered growth rates of 12.3 and 19.8 per cent respectively. Exports and imports are expected to reach US$ 176.17 billion and US$ 278.02 billion during the year 2009-10. But

the performance of agriculture sector in terms of its share in total exports was quite discouraging, with the share of both exports and imports from agriculture sector decreasing (Table 1.5).

Table 1.5: Trends in Exports and Imports (US$ billion) Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10^ Total Exports 83.51 (30.7) 103.08 (23.4) 126.26 (22.5) 162.98 (29.1) 183.10 (12.3) 176.17 (-3.8) Share of agriculture* in total exports (%) 10.1 29.9 10.0 11.3 9.6 -Total Imports 111.48 (42.6) 149.15 (33.8) 185.06 (24.1) 249.79 (35.0) 299.33 (19.8) 278.02 (-7.1) Share of food & allied products in total imports (%) 4.5 3.3 3.5 3.0 2.7 --

*: Agro products ^: Provisional Figures in the parentheses refer to percentage change over the previous year Source: 1. DGCI &S, Kolkata 2. CMIE, June 2010

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B.
a.

Agriculture & Rural Economy


Rainfall situation
the South-West monsoon (June-

1.12 During

September) 2009, the country as a whole received 689.3 mm rainfall which was 36 per cent less than the Long Period Average (LPA). The rainfall received in all divisions North-West, North East, Central and South Peninsular - was below the LPA by 36 per cent, 27 per cent, 20 per cent and 4 per cent, respectively. Out of the 36 sub-divisions, 23 recorded deficient rainfall and the remaining 13 recorded excess/normal rainfall during the South-West monsoon in 2009 (Table 1.6). Reservoir Level of 151.77 billion cubic metres; even so, 1.13 During the post-monsoon season (Octoberit was 10.0 per cent higher than the previous years level of 38.98 billion cubic metres. December), the cumulative rainfall received for the country as a whole was 135.5 mm, which was 8 per cent above the LPA. While the cumulative rainfall received in North-West India and North-East India was 21 per cent and 19 per cent below their previous monsoon, they were nevertheless above their previous season rainfall in Central India (51 per cent) and South Peninsular India (10 per cent). During the north-east monsoon, 23 sub-divisions recorded excess/normal rainfall and the remaining 13 sub-divisions recorded deficient rainfall. 1.14 Total live water storage in 81 major reservoirs across the country, by the end of March 2010 at 42.87 billion cubic meters was 28.2 per cent of the Full
Paddy field

b.

Crop acreage

1.15 The impact of the delayed and sub-normal monsoon during kharif season was reflected in reduced area under crop cultivation. The area sown under various crops during kharif 2009 was 95.07 million hectares, which was 5.44 million hectares less than the area covered during the corresponding period of kharif 2008. The major decline in area was under rice (6.1 million hectares), which was mainly in the states of Andhra Pradesh, Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh and West Bengal. (Table 1.7)

Table 1.6: Trends in the Rainfall and Water Storage Particulars South-West Monsoon* 2007 A. B. Cumulative rainfall (% variation from normal) Number of Sub- Divisions with Normal/Excess Deficient/Scanty/No Rain C. Reservoir status (% of FRL)@ 5 30 6 120.1 2008 -2 32 4 113.7 2009 -36 13 23 90.4 North-East Monsoon** 2007 -32 9 27 92.3 2008 -31 6 30 77.9 2009 8 23 13 75.8

Normal: +_19%; Excess: +20% or more; Deficient: -20 to -59%; Scanty: 60% or less; No Rain: 100% *: Cumulative position between 1 June and 30 September; **: Cumulative position between 1 October and 31 December **: Full Reservoir Level in 81 major reservoirs (accounting for 63% of total reservoir capacity in the country) as at the end of the season @ : As on 1 October in the case of SW Monsoon and 31st December in the case of NE Monsoon Source : Department of Agriculture & Cooperation (National Crop Forecasting Centre), Ministry of Agriculture, Government of India

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Table 1.7: Area Sown under Major Crops (Million hectares) Crop Kharif (a) 2008 Rice Wheat Coarse Cereals Pulses Total Foodgrains Oilseeds* Cotton Sugarcane All crops 38.92 0.00 20.67 9.60 69.19 18.44 8.49 4.39 100.51 2009 32.82 0.00 20.74 10.14 63.70 17.49 9.63 4.26 95.07 2008-09 4.32 27.59 6.87 13.70 52.48 9.83 0.00 0.00 62.31 Rabi (b) 2009-10 4.24 27.82 6.53 14.48 53.07 9.47 0.00 0.00 62.54 Total (a+b) 2008-09 43.24 27.59 27.54 23.30 121.67 28.27 8.49 4.39 162.82 2009-10 37.06 27.82 27.27 24.62 116.76 26.96 9.63 4.26 157.61

*: Covers nine oilseeds including rapeseed & mustard, groundnut, safflower, sunflower, sesamum and linseed Note: Kharif crops as on 23.10.2009 and Rabi crops as on 26.03.2010 Source: Department of Agriculture & Cooperation (National Crop Forecasting Centre), Ministry of Agriculture, Government of India

1.16 Rabi sowings began late in few regions due to delayed kharif harvesting. The overall sowings of rabi crops was satisfactory due to relatively more conducive weather conditions. The area sown under all rabi crops is reported at 62.54 million hectares as compared to 62.31 million hectares in the corresponding period of 2008-09. While the crop coverage under rabi season was higher under wheat and gram, area under rice, jowar, rapeseed and mustard and sunflower were lower than those in the previous year. 1.17 When both kharif and rabi crop areas are taken together, crop coverage during 2009-10 shows a fall from 162.82 million hectares during 2008-09 to 157.61 million hectares during 2009-10. The major changes estimated in cropping pattern during 2009-10

over 2008-09 were in rice [(-) 14.3 per cent], cotton (13.4 per cent), pulses (5.7 per cent) and oilseeds [(-) 4.6 per cent].

c.

Inputs use in agriculture

i. Seeds
1.18 There are 15 State Seed Corporations and 2 National Level Corporations in the country. In order to develop and strengthen the existing infrastructure for production and distribution of certified/quality seeds to farmers, the the Ministry scheme for of Agriculture Development has and implemented

Strengthening of Infrastructure Facilities for Production and Distribution of Quality Seeds since the year 2005-06. During 2008-09, breeder seed production and foundation seed production reached 1.0 lakh quintals and 9.69 lakh quintals, respectively registering 8.7 per cent and 17.9 per cent growth over the previous year. Certified/quality seed distribution during 2008-09 at 190 lakh quintals was 6.1 per cent higher than the previous year.

ii. Fertilizers
1.19 The
Seed village

fertiliser

consumption

(nutrient

terms)

increased by 10.4 per cent from 225.70 lakh tonnes during 2007-08 to 249.09 lakh tonnes during 2008-09. 22

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Box 1.2 Policy Recommendations on Agriculture & Rural Development


(i) Union Budget 2010-11: Highlights a. New fertiliser policy: With a view to promoting balanced fertilization through new fortified products and focus on extension services by the fertiliser industry, a Nutrient Based Subsidy Policy for the fertiliser sector has been approved by the government and will become effective from April 1, 2010. The policy is expected to increase agricultural productivity and consequently better returns for the farmers and reduce volatility in the demand for fertiliser subsidy in addition to containing the subsidy bill. The new system will move towards direct transfer of subsidies to the farmers. b. Agricultural production and productivity: With a view to increasing agricultural production and productivity, Rs.700 crore, i.e., i) Rs.400 crore for the Eastern region (Bihar, Chhatisgarh, Jharkhand, Orissa, West Bengal and Eastern Uttar Pradesh), and (ii) Rs.300 crore for organizing 60,000 pulses and oilseed villages in rain-fed areas in the country, has been proposed. c. Availability of credit to farmers: For the year 2010-11, the target has been raised to Rs.3,75,000 crore from Rs.3,25,000 crore during 2009-10. The subvention for timely repayment of crop loans has been raised from (ii) RBIs Monetary Policy, 2010-11 a. Financial Inclusion through grass-root co-operatives : In order to understand the operations of the cooperative societies and their potential to contribute to financial inclusion, it is proposed to constitute a Committee comprising representatives from Reserve Bank of India, NABARD and a few State Governments. b. Mobile banking in India: Recently, an inter-ministerial group constituted by the Government of India has made important recommendations for financial inclusion through bank-led model using the infrastructure already set up by mobile service providers. The Reserve Bank of India is examining the same. one per cent during 2009-10 to two per cent during 2010-11 so that the effective rate of interest for such farmers will be five per cent per annum. d. Financial inclusion: To reach banking services to the un-banked areas, the Government in 2007-08 had set up a Financial Inclusion Fund and a Financial Inclusion Technology Fund in NABARD. To give momentum to the pace of financial inclusion, Rs.100 crore for each of these funds has been proposed.

As against the desirable proportion of 4:2:1 of NPK, the average use has been 5.5:2.1:1, which affects adversely soil profile, micro-nutrient use and crop productivity. Current pricing mechanism, unscientific use of chemical fertilizers and a bias against micronutrients have resulted in nutrient imbalance with excessive use of urea (Box 1.2).

Artificial Groundwater Recharge through Dug wells. The Rainwater Harvesting Scheme, implemented in all States and Union Territories during 2004-05 to 2006-07, resulted in installation of 18,016 water harvesting structures with a total subsidy utilization of Rs.24.04 crore. This is expected to benefit around 8807 hectare of land of SC/ST farmers. 1.21 For extending assistance for the incomplete irrigations schemes, the Government of India initiated the Accelerated Irrigation Benefit Programme (AIBP) during the year 1996-97. As on March 2009, 268 projects have been covered under the AIBP scheme and 109 completed. Further, the cumulative Central Loan Assistance (CLA)/grant of an amount of Rs.34,783.78 crore has been released under the scheme as on March 31, 2009. For the year 2009-10, projected grant requirement of AIBP is Rs.12,285 crore 23

iii. Irrigation
1.20 Total irrigation potential created under all types of irrigation structures has increased from 81.10 million hectares in 1991-92 to 102.77 million hectares by March 2007. Utilisation was to the extent of 85 per cent, leaving a gap of 15 per cent. There have been several Central Sector schemes launched in recent years to create irrigation potential like Rainwater Harvesting Scheme for SC/ST farmers and

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Table 1.8: Agency-wise Ground level Credit Flow (Rs. crore) Agency 2005-06 2006-07 2007-08 2008-09 2009-10 (@)Growth Rate (%) 2005-10# 2008-09* Co-operative Banks Regional Rural Banks Commercial Banks Others Total 39404 15223 125477 382 180486 42480 20435 166485 0 229400 48258 25312 181088 0 254658 45966 26765 228951 226 301908 57500 34456 274963 0 366919 8.7 21.0 20.8 18.5 (-)4.7 5.7 26.4 18.6 2009-10* 25.1 28.7 20.1 21.5

@: Provisional; #: Compound Annual Growth Rate; Source: NABARD

*: Percentage change over previous year.

for creation of an additional irrigation potential of 10.50 lakh hectares.

1.23 During the period 2005-10, the GLC flow for agriculture and allied activities registered a Compound Annual Growth Rate (CAGR) of 18.5 per cent. The growth rate in short term credit flow fell to 16.0 per cent during 2008-09, compared to an annual growth rate of 26.4 per cent over the five year period ending 2008-09. However, the growth rate in long term credit flow during 2008-09 at 24.8 per cent was higher than the growth rate of 3.8 per cent over the five year period ending 2008-09. Sub sector-wise, hi-tech agriculture witnessed the highest annual growth rate of 25.1 per cent, followed by Animal Husbandry (15.1 per cent), Land Development (13.1 per cent) and Minor Irrigation (12.0 per cent) in GLC flow during 2008-09 (Table 1.9) (Box 1.3).

iv. Credit
1.22 As against the target of Rs.3,25,000 crore of credit flow to agriculture for 2009-10, the banking system disbursed Rs.3,66,919 crore (provisional) surpassing the target by 12.9 per cent. Within the banking system, Commercial banks, Co-operative banks and Regional Rural Banks disbursed Rs.2,74,963 crore, Rs.57,500 crore and Rs.34,456 crore, respectively sharing 74.9 per cent, 15.7 per cent and 9.4 per cent of the total credit flow during 2009-10 (Table 1.8).

Table 1.9: Sub-sector-wise Ground Level Credit Flow for Agriculture & Allied Activities (Rs.crore) Sr. No. Sector/Sub-Sector 2005-06 2006-07 2007-08 2008-09 Growth rate (%) 2005-09^ 105350 75136 8663 1749 9695 4481 7341 1019 9737 32451 180486 138455 90945 8566 2285 10113 5266 8045 1424 21498 33748 229400 181393 73265 2840 2553 8303 5910 9034 1248 33325 10052 254658 210461 91447 3180 2887 8334 6045 10398 1281 41694 17628 301908 26.4 3.8 (-)33.7 17.5 (-)6.3 10.7 12.3 5.7 61.6 (-)26.2 17.9 2008-09* 16.0 24.8 12.0 13.1 0.4 2.3 15.1 2.6 25.1 75.4 18.6

I. Crop Loan (ST-Production Credit) II. Term Loans (MT & LT Investment Credit) i. Minor Irrigation ii. Land Development iii. Farm Mechanisation iv. Plantation & Horticulture v. Animal Husbandry# vi. Fisheries vii. Hi-tech agriculture viii. Others$ Total (I + II)

^ : Compound Annual Growth Rate * : Percentage change over previous year. # : Animal Husbandry includes Dairy Development, Poultry Farming and Sheep/Goat/ Piggery $ : Others include storage/market yards, forestry/waste land development, RIDF, bullock and bullock carts, bio-gas and credit flow through private sector commercial banks.

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Box 1.3 Impact of Credit on Crop Yields


A recent study on Economic Analysis of Yield Gaps in Principal Crops in Various Regions in India supported by NABARD through its R & D Fund has evaluated the impact of credit on fertiliser consumption and that of fertiliser use on crop yields using State-wise data averaged for the years 2004-05 to 2006-07. For studying relationship between credit and crop yields, two-stage equations were used, i.e., (i) credit supply and fertiliser consumption and (ii) fertiliser consumption and crop yield, and it was found out that one per cent increase in credit supply increased fertiliser consumption by 0.30 per cent and one per cent increase in fertiliser consumption increased crop yields in the range of 0.14 per cent to 1.13 per cent. Main crops considered for the analysis were paddy, wheat, maize, bajra, masur, Bengal gram, rapeseed and mustard, jute, cotton, sunflower, onion and potato. When market density, number of villages electrified, literacy rate and credit supply were regressed on crop yields, it was found that the role of credit in influencing crop yield was quite positive and significant. The elasticity coefficients of credit were 0.28 for paddy and 0.55 for wheat. When the exercise was conducted at the district level (Hardoi in Uttar Pradesh, Burdwan in West Bengal, Chitradurga in Karnataka and Nanded in Maharashtra), similar relationships between credit supply and crop yields were observed. Similar observations presented in Box 1.4

d.
i.

Agricultural Production
Foodgrains & Non-foodgrains

be lower compared to the previous year; the reduction being larger at 17.2 per cent in case of coarse cereals, followed by rice at 9.9 per cent and sugarcane at 3.6 per cent (Table 1.10).

1.24 According to the 3rd Advance Estimates, the countrys foodgrain production during 2009-10 has been pegged at 218.19 million tonnes as compared to 234.46 million tonnes (final estimate) during the last year. During the year, production of all crops, except wheat, pulses, cotton and jute & mesta, is expected to

ii.

Plantation Crops

1.25 Although the total area covered by plantation crops is comparatively less, they play an important role

Table 1.10: Production of Major Crops (Million tonnes) Year/Crops 2005-06 2006-07 2007-08 2008-09* Target Rice Wheat Coarse Cereals Pulses Foodgrains Kharif Rabi Oilseeds Cotton# Sugarcane Jute & Mesta## 91.79 69.35 34.06 13.39 208.59 109.87 98.73 27.98 18.50 281.17 10.84 93.35 75.81 33.92 14.20 217.28 110.57 106.71 24.29 22.63 355.52 11.27 96.69 78.57 40.76 14.76 230.78 120.95 109.83 29.76 25.88 348.19 11.21 99.18 80.68 40.03 14.57 234.46 118.14 116.33 27.72 22.28 285.03 10.36 100.50 79.00 43.10 16.50 239.10 125.15 113.95 31.60 26.00 340.00 11.20 2009-10** Estimate 89.31 80.98 33.13 14.77 218.19 102.34 115.85 25.41 22.83 274.66 11.10

* Final estimate, ** 3rd Advanced Estimate; # Million bales of 170 kgs each; ## Million bales of 180 kgs each Source: Agricultural Statistical Division, Ministry of Agriculture, Government of India; Economic Survey 2010-11

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Table 1.11: Production, Consumption and Exports of Major Plantation Crops (lakh tonnes) Year Prodn. 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10^ 9.09 9.49 9.73 9.45 9.73 8.97 Tea Cons. 7.35 7.57 7.71 7.86 8.02 NA Exports 2.06 1.97 2.18 1.85 1.84 1.53 Prodn. 2.75 2.74 2.88 2.62 2.62 2.90 Coffee Cons. 0.75 0.8 0.85 0.90 0.94 NA Exports 2.12 2.15 2.49 2.19 2.04 NA Prodn. 7.50 8.03 8.53 8.25 8.64 6.32 Rubber Cons. 7.55 8.01 8.20 8.61 8.72 6.95 Exports 0.46 0.74 0.57 0.60 0.47 0.49

^: Provisional; NA: Not Available Source: Ministry of Commerce and Industry, GoI. Coffee Board, Tea Board and Rubber Board

in view of their export potential and employment generation. Tea production in the country during 2009-10 has been estimated at 8.97 lakh tonnes as against 9.73 lakh tonnes achieved in 2008-09. Further, the export of tea from India during 2009-10 is estimated at 1.53 lakh tonnes valued at Rs.2,274.74 crore with a unit price realization of Rs.123.64 per kg as against 1.84 lakh tonnes in 2008-09. The total import of tea into India during 2008-09 was valued at Rs.181.45 crore, which was higher by Rs.73.38 crore compared to the previous year. 1.26 In India, coffee is cultivated in an area of around 3.94 lakh hectares. The estimated coffee production for the year 2009-10 is 2.90 lakh tonnes, i.e., 0.95 lakh tonnes of Arabica and 1.95 lakh tones of Robusta. Despite not having regions geographically best suited to growing natural rubber, India continued to record the highest productivity in the world with an average yield of 1,867 kg/ha. In 2009-10, the estimated export of natural rubber was 49,926 tonnes against an import of 77,616 tonnes (Table 1.11).

production by 2011-12. At present, the NHM is in operation in 367 districts spread over 18 States and 3 Union Territories. Under the scheme, a total area of 4.92 lakh hectares was brought under horticulture crops and the maximum coverage was under perennial fruits particularly mango, aonla, citrus, guava and sapota. During 2009-10, while the area under various horticulture crops increased by 2.5 per cent from 20.2 million hectares during 2007-08, production increased by 3.6 per cent from 212.8 million tonnes during 2007-08. Area and production under horticulture crops reached a level of 20.7 million hectares and 220.5 million tonnes, respectively during 2008-09 (Table 1.12).

e.

Agriculture and Allied Sector

1.28 Agriculture and allied activities are further segregated into a few segments such as agriculture, forestry and logging and fishing. Agriculture is the largest component of the GDP originating in agriculture and allied activities, followed by forestry and logging and fishing. At disaggregated level, the overall growth during 2008-09 comprised of growth of 1.1 per cent in agriculture, 2.9 per cent in forestry

iii.

Horticulture Crops
horticulture significantly sector, in to prime mover in

1.27 The promoting contributes

and logging and 6.3 per cent in fishing as compared to a growth of 5.0 per cent in agriculture, 2.2 per cent in forestry and logging and 6.0 per cent in fishing. Table 1.13 provides the percentage distribution of GDP originating from sub-activities of agriculture and allied sector.

diversification

agriculture agriculture.

sector, During

2005-06, Government of India launched a Centrally Sponsored Scheme National Horticulture Mission (NHM) with a view to doubling horticulture

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Table 1.12: Area and Production of major horticulture crops (Area in million hectares and Production in million tonnes) Year Fruits 2003-04 2004-05 2005-06 2006-07 2007-08^ 2008-09* 5.1 5.1 5.3 5.6 5.8 6.1 Area (Million hectares) Vegetables 6.7 6.7 7.1 7.6 7.8 8.0 Flower 0.2 0.1 0.1 0.1 0.2 0.2 Total Horticulture 20.6 17.8 18.7 19.4 20.2 20.7 Fruits 49.8 50.9 55.4 59.6 65.6 69.4 Production (Million tonnes) Vegetables 101.4 101.2 110.1 115 129.3 133.1 Flower 0.6 0.7 0.7 38.0 44.5 48.9 Total Horticulture 165.5 167 181.8 191.8 212.8 220.5

^: Provisional; *: 3rd advance estimates

Source: Agricultural Statistics at a glance; various issues

i. Livestock and Poultry


1.29 During 2008-09, the livestock sector contributed 3.2 per cent of GDP and 28.0 per cent value of output from agriculture and allied activities. As per the 17th Livestock Census, 2003, the livestock and poultry population in the country were 485 million and 489 million respectively. The per capita availability of milk increased from 252 grams per day to 258 grams per day due to increase in milk production in the country by 3.5 per cent during 2008-09 over 2007-08.

increased by 7.0 per cent and reached 7.6 million tonnes (2.9 million tonnes of marine fish and 4.7 million tonnes of inland fish). Export earning from the sector was also on the increase with the value of marine products export touching Rs.8,608 crore during 2008-09.

f.

Agro and Food Processing Sector

1.31 Food processing is of paramount importance to the country as it has the potential to transform subsistence agriculture consumption to remunerative and and environmentally sustainable occupation. Further, due to changing pattern consumer preferences followed by growth of organized agri-food retailing, it is considered as a promising sector. Vision Document 2015 by ministry of Food Processing Industries has set the challenging target of trebling the size of processed food sector by 2015 through appropriate enabling policies.

ii. Fisheries
1.30 Fishing, aquaculture and related activities are reported to have provided livelihood to over 14 million persons during 2007-08. During 2008-09, the fishery sector contributed 0.8 per cent of GDP and 5.3 per cent value of output from agriculture and allied activities. During the period between 2007-08 and 2008-09, the total fish production in the country
Table 1.13: Gross Domestic Product of Agriculture and Allied activities by sub-activities (Percentage distribution) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Agriactivities Forestry & Fishing Agriculture and Logging Allied activities 15.9 15.3 14.5 13.9 13.2 2.1 2.0 1.8 1.7 1.7 0.9 0.9 0.8 0.8 0.8 18.9 18.2 17.1 16.4 15.7

g.

Commodity Futures
commodity futures staged a

1.32 Agriculture

remarkable recovery during 2009-10 after a steady decline over the previous two years. While the volume and value of trade in commodity futures market decreased by 26.4 per cent and 33.4 per cent respectively during 2008-09 over the preceding year, they increased by 26.0 per cent and 43.8 per cent, respectively, during 2009-10 (Up to December 2009) over the year 2008-09. The value of agricultural

Central Statistical Organisation, GoI

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Table 1.14: Gross Capital Formation in Agriculture (At 2004-05 prices) Investment in agriculture and allied sectors (Rs.crore) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Public 16183 19909 22978 23039 24452 Private 62665 73211 71422 86967 114145 Total 78848 93120 94400 110006 138597 Private sector to Total 79.5 78.6 75.7 79.1 82.4 Share in total investment (Per cent) Investment in agriculture to GDP in agriculture 14.1 15.8 15.4 17.2 21.3 Investment in agriculture to total GDP 2.7 2.9 2.6 2.8 3.3

Source: Economic Survey 2009-10

commodities

as

proportion

to

total

trade

in

accounted for 18 percent of the total cards issued followed by Andhra Pradesh (17 per cent), Maharashtra (9 per cent), Tamil Nadu (7 per cent), and Karnataka, Madhya Pradesh, Orissa and Rajasthan (6 per cent each) (Box 1.4) .

commodity futures market decreased from 23.2 per cent during 2007-08 to 12.0 per cent during 2008-09. But this share edged up to 16.3 per cent during 2009-10 (Up to December 2009).

h.

Capital Formation

j.

1.33 Capital formation is very crucial in determining the production capacity. Hence, there is a need to step up capital formation in agriculture to be able to reach the targeted growth of 4 per cent. Gross Capital Formation (GCF) in agriculture and allied sectors increased from Rs.78,848 crore in 2004-05 to Rs.1,38,597 crore (at 2004-05 prices) in 2008-09. The GCF in agriculture and allied activities as a proportion of total GDP stood at 2.7 per cent in 2004-05 and improved to 3.3 per cent in 2008-09 (Table 1.14).

Agricultural Debt Waiver and Debt Relief Scheme

1.36 The Union Budget 2008-09 had announced Agricultural Debt Waiver and Debt Relief (ADWDR) Scheme, 2008 to address the indebtedness of farmers and difficulties of the farming community, especially small and marginal farmers (also see Box 1.5). NABARD implemented the Scheme as the nodal agency for co-operative banks and RRB. In view of the recent drought in some states and the severe floods in some other parts of the country, the period of
Table 1.15: Agency-wise, Year-wise Kisan Credit Cards Issued (million) Year Co-operative Banks 2.60 2.30 2.09 1.34 1.61 37.76 Regional Commercial Rural Banks Banks 1.25 1.41 1.77 1.41 1.61 13.08 4.16 4.81 4.61 5.83 2.75 39.80 Total

i. Kisan Credit Card Scheme


1.34 During 2009-10, 5.97 million KCC were issued by banks with sanctioned credit limit of Rs.34,982 crore. Of the total 90.64 million credit cards issued as at endFebruary 2010, 39.80 million cards (43.9 per cent) were issued by commercial banks, followed by 37.76 million cards (41.7) per cent) by co-operative banks and 13.08 million cards (14.4 per cent) by regional rural banks (Table 1.15). 1.35 State-wise analysis of KCC issued as at end-February 2010, revealed that Uttar Pradesh 28

2005-06 2006-07 2007-08 2008-09 2009-10* Cumulative#

8.01 8.51 8.47 8.59 5.97 90.64

* : Data for commercial banks available up to 30 September 2009 and cooperative banks and regional rural banks up to 28 February 2010; # : Since inception of the Scheme, i.e., August 1998

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Box 1.4 Yield Effect of Kisan Credit Card (KCC)


An in-house study on the Impact Evaluation of KCC Scheme has been conducted. For the study, a multi-stage stratified sampling design covering 1,876 KCC holders from 178 bank branches from cooperative banks, regional rural banks and commercial banks in 14 States has been adopted. It was observed that paddy was the major crop cultivated by the sample KCC holders. The average productivity per hectare of paddy of the KCC holders was compared with non-KCC holders and it was found that the per hectare paddy yield of the KCC holders at 18 to 34 quintals was higher by 13.3 per cent over the non-KCC holders at 14 to 26 quintals. The increase in the crop yield was partly attributed to the credit access through KCC. Higher doses of application of various inputs have resulted in higher yield by the KCC holders as compared to the non-KCC holders. When the exercise has been performed region-wise, the mean yield difference is found significant in all regions, except Western region and Central region. However, the present model is too simple to answer the influence of credit on crop yield, especially in view of the cross-sectional data used in the analysis. Yi = 20.30 + 4.69 Di (t -value) (7.44) R = 0.76
2

To test the significance between estimated mean yield of KCC holders and non-KCC holders, possession or other wise of KCC had been regressed on crop yield and the result corresponding to All India position as depicted below suggests that the mean yield level of the KCC holders and non-KCC holders is significantly different:

repayment of the loan amount by farmers under debt relief was extended from December 31, 2009 to June 30, 2010. About 192.59 lakh farmer borrowers of co-operative banks and RRBs are estimated to have benefited under the Scheme, of which small and marginal farmers, constituting 83.5 per cent were the major beneficiaries. NABARD, under the ADWDR, Scheme 2008, disbursed Rs.25,485 crore against the claims of Rs.25,858 crore. The share of SCB, SCARDB and RRB stood at Rs.15,681 crore, Rs.3,513 crore and Rs.6,291 crore, respectively.

2,109 lakh hectares, have been covered, with an insured sum of Rs.1,48,250 crore. 1.38 The pilot Weather Based Crop Insurance

Scheme (WBCIS) is under implementation since kharif 2007 to provide insurance to farmers against adverse weather conditions affecting crop production. Between kharif 2007 and kharif 2009, 21.77 lakh farmers have been covered under the pilot scheme and claims to the tune of about Rs.388 crore have been paid against a premium of about Rs.444 crore. During 2009-10, the Coconut Palm Insurance Scheme (CPIS) was launched on a pilot basis in selected areas of seven States, i.e., Andhra Pradesh, Goa, Karnataka, Kerala, Maharashtra, Orissa and Tamil Nadu. In order to become eligible for the benefit under the scheme, a farmer should have been enrolled by the State Agriculture/Horticulture Department or Coconut Development Board or any other such agency under a rehabilitation/development/expansion scheme. Further, he should have at least 10 healthy nut-bearing palms in the age group of 4 to 60 years in contiguous area/plots.

k.

Agricultural Insurance

1.37 With a view to providing financial support to farmers in the event of crop failure, as a result of natural calamities, pests and diseases, the National Agricultural Insurance Scheme (NAIS) has been in operation since rabi 1999-2000. This scheme is open to all farmers irrespective of their size of holding and is being implemented by 25 States and two Union Territories. During the period from rabi 1999-2000 to rabi 2008-09, 1,347 lakh farmers, over an area of

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l.

Support Prices, Procurement and Stock of Foodgrains

schemes at 48.86 million tonnes during 2009-10 was 23.70 per cent higher than that at 39.50 million tonnes during 2008-09.

1.39 The increases in the Minimum Support Price (MSP) for common paddy, moong and wheat during 2009-10 over the year 2008-09 were 11.8 per cent, 9.5 per cent and 1.8 per cent respectively. The recent announcement of the MSP for kharif crops of 2010 season has hiked the MSP for various pulses in the range of 15 to 30 per cent. While the MSP for arhar has been hiked by 30 per cent from Rs.2,300 to Rs.3,000 per quintal, the MSPs for moong and urad have been raised by 15 per cent each. For rice and cotton, the MSPs have been maintained at the previous years levels and for other commodities they have been raised in the range of 2-9 per cent. 1.40 Giving due consideration for margins to farmers on account of risk as well as surplus over cost of production, including the cost of transportation, the Government of India has fixed the Fair and Remunerative Price (FRP) of sugarcane at Rs.129.84 per quintal during 2009-10, which is over 51 per cent higher than the Statutory Minimum Price (SMP) for the year 2008-09. For the year 2010-11 also, the Government has hiked the FRP of sugarcane by 7 per cent at Rs.139.12 per quintal. 1.41 The overall procurement of rice and wheat at 26.04 million tonnes (rice 25.51 million tonnes and wheat 0.53 million tonnes) as on April 1, 2010 ( kharif marketing season 2009-10 for rice and rabi marketing season 2009-10 for wheat) represents a decline of 1.66 per cent compared to the corresponding level last year. The stock of foodgrains (rice and wheat) held by Food Corporation of India (FCI) as on April 1, 2010 at 42.84 million tonnes was higher by 22.30 per cent over the level of 35.03 million tonnes as on April 1, 2009. The off-take of foodgrains (rice and wheat) under Targeted Public Distribution System (TPDS) and other 1.42 Food security has always been an area concern. Attaining sustainable food security become more complex as economies get globalised and climate change threatens to make agriculture more uneven. The pathway to food security is an evergreen revolution leading to the improvement of productivity of crops in perpetuity without associated ecological harm. With a view to enhancing the production of rice, wheat and pulses by 10 million tonnes, 8 million tonnes and 2 million tonnes, respectively by the end of the Eleventh Plan, the centrally sponsored National Food Security Mission (NFSM) has been launched from the rabi 2007-08 season. The main objectives of the NFSM are to increase production through area expansion and productivity enhancement, create employment opportunities and strengthen the farm-level economy to restore confidence of farmers. Presently, the Mission is being implemented in 312 select districts of 17 States in the country.

m.
1.43

Micro, Small & Medium Enterprises


The Micro, Small and Medium Enterprises

(MSMEs) play a pivotal role in the overall industrial economy of the country. In recent years, the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics (4thCensus of MSME Sector, 2006-07), this sector employed an estimated 59.7 million persons, spread over 26.1 million enterprises. The MSME sector contributes to about 8 per cent of countrys GDP . It is estimated that in terms of value, MSME sector accounts for about 45 per cent of the manufacturing output and around 40 per cent of the total exports of the country. Skill development has been accorded high priority in this sector.

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Box 1.5 Task Force to look into Issues of Private Moneylenders


The Union Finance Minister in his Budget Speech for 2009-10 (paragraph 29) had highlighted the growing influence of moneylenders and had proposed setting up of a Task Force. Subsequently, the Government of India (Ministry of Agriculture) set up a Task Force under the Chairmanship of Shri. Umesh Chandra Sarangi, Chairman, NABARD vide its order dated 06 October 2009 to look into the issue of large number of farmers, who had taken loans from private money lenders, not being covered under the loan waiver scheme. The specific Terms of Reference (ToR) are: i. Overview of the existing legislation in the states for regulating loans from private money lenders in the country; ii. Review of existing policy measures for addressing the issue of indebtedness arising out of loans from private money lenders and status of its implementation; The Task Force is to submit its report by 30 June 2010 v. To suggest measures for providing relief to farmers indebted to private money lenders iv. To examine and suggest measures for improving effectiveness of Kisan Credit Card (KCC) scheme including revised operational guidelines for distribution and sanction of KCC credit limits; and iii. To suggest measures for covering all categories of farmers more particularly small and marginal farmers, tenant farmers, share croppers and oral lessees within the institutional credit fold to meet their credit requirements in order to reduce their dependence on informal sources;

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II
Development Initiatives
NABARD continued to suppor t various innovative initiatives in addition to the Banks conventional on-going activities. This Chapter details the various initiatives and programmes of the Bank, efforts made in capacity building of its clientele, research and development activities funded during the year. In addition, it reports on various developmental programmes of the Government of India and State Governments with which the Bank is associated.

Farm Sector
A.
2.2

Watershed Development
The Watershed Development Fund (WDF),

Karnataka, Kerala and Maharashtra (for developing 15,000 ha. of watershed annually over two years in each of these districts), 83,000 ha. were taken up for implementation during the year, taking the cumulative area and financial commitment to 8.71 lakh ha. and Rs.958 crore, respectively. The aim of developing such watersheds is to significantly mitigate the distress of farmers in the area . The projects are entirely grant based in distressed districts and a combination of grant and loan is provided for nondistressed districts. During the year 2009-10, Rs.89.41 crore and Rs.14.79 crore were disbursed as grants and loans taking the cumulative disbursements to Rs.197.77 crore and Rs.30 crore, respectively. With these sanctions under distress and non distress districts, the total commitment as on 31 March 2010 was at Rs.1,493 crore. The findings of a quick study conducted by the Bank in distressed districts of Maharashtra is provided in Box 2.2. 2.4 The par ticipator y watershed development

established with Rs.200 crore during 1999-2000, was augmented during the year 2009-10, taking the total to Rs.1,102 crore, as on 31 March 2010. During 2009-10, 59 watershed projects were sanctioned, taking the cumulative number of projects to 513 in districts in 14 states. With a total commitment (loan and grant) of Rs.196.07 crore, an area 5.13 lakh ha. is expected to be covered. The projects continued to be implemented in Capacity Building Phase (CBP) and Full Implementation Phase (FIP). During the year, 41 projects graduated to FIP, taking the number of such projects to 210. A Mid Course Evaluation of Watershed Projects under WDF was conducted by the Central Research Institute for Dryland Agriculture (CRIDA), during the year 2009-10 and the major findings are given in Box 2.1. 2.3 Under the Prime Ministers Relief package for 31

distressed districts in the four States of Andhra Pradesh, Box 2.1 Major findings of Mid-Course Evaluation of WDF Watershed Projects by CRIDA
Impact of afforestation on hillocks is evidenced by visible vegetation, due to control of soil erosion, better water availability and soil moisture. Even during rabi season, there was sufficient water for irrigation, as reported by farmers, with the result that more areas have been brought under mango orchards. Gross cropped area increased, as fallow land/waste land was brought under cultivation. Significant gains in crop yields were observed due to better moisture regime in kharif crops like sorghum (33%), followed by black gram (32%) and green gram (24%).

programme implemented 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

Watershed Project

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Box 2.2 Findings of a Quick Study in Distressed Districts


A quick study was conducted by the bank in November 2009 in all the six distressed districts of Maharashtra, where work under National Holistic Watershed Development Programme (NHWDP) is being implemented. Main findings are given below: Of the 141 project villages covered in the study, no incidence of suicide due to agricultural indebtedness was reported. Water table, in all project villages, had gone up by 2 to 3 metres and availability of drinking water was ensured. The land, which was fallow before commencement of project work, was brought under cultivation. On an average, 50 ha. of additional land was brought under cultivation in each village. Distress migration was stopped in most of the villages and employment opportunities (demand for labour ) increased in project villages Yield of soyabean, cotton, gram and jowar had gone up by 20 to 30 per cent. VWC members of Kingaonjattu cluster in Lonar Taluka of Buldana District informed that agricultural income of the village had gone up by Rs.5 crore in one year after the commencement of watershed project. Green fodder was available in plenty, resulting in increased milk production. Number of milch animals in many project villages had gone up. Majority of the farmers were using compost and the use of pesticides was decreasing. The area under horticulture had also increased. Women SHGs had been formed and started small units of enterprises like flour mills, goatery, back yard poultry, small dairy units, mandap decorations, etc. Farmers having their own wells were growing vegetables in Rabi and summer seasons. Members of Kegaon Pahaphal VWC in Pandharkawada Taluka of Yeotmal District, reported that the people from nearby villages have expressed interest for undertaking similar work by requesting NABARD to extend such projects in their villages.

Rohtas districts with an allocation of Rs.60 crore. During the year, 34 projects graduated to FIP stage. Under the programme, a total of 79 projects in an area of 83,593 ha have been sanctioned, of which 30 projects are at CBP stage and 49 at FIP stage. A sum of Rs.8.37 crore was disbursed and the cumulative disbursement, as on 31 March 2010, stood at Rs.13.99 crore.

sanitation and cleaner environment. It has also helped in improving productivity and farm income by imparting better soil and water conservation techniques, better agricultural practices and knowledge of improved tools. In Phase II, the coverage of the programme is being extended to 1,500 additional villages.

C. B.
2.5

Village Development Programme


The Village Development Programme (VDP), 2.6

Capacity Building for Adoption of Technology


The Scheme for Capacity Building for Adoption

started in 2007, aimed at developing one village in each DDM district and five villages in each of the PPID blocks in an integrated and holistic manner. It is also supported under FTTF. As on 31 March 2010, the programme was implemented in 953 villages of 437 districts across 25 States. The VDP has mobilised the villagers and secured them f i n a n c i a l i n c l u s i o n , b e t t e r r o a d connectivity, good infrastructure in the form of school buildings and health centers, clean drinking water, good 33

of Technology (CAT) aims at capacity building through exposure visits and training to farmers for adopting new/ innovative methods of farming. Financial support for this purpose is extended from Farmers Technology Transfer Fund (FTTF). During the year, 261 exposure visits for 6,516 farmers were arranged in collaboration with select research institutes, Krishi Vigyan Kendras and State Agricultural University. Areas covered pertained to medicinal plants, tissue culture, vermicompost, poultry

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amounted to Rs.543.62 crore covering 56,330 families in 191 projects across 22 states and two UTs. The cumulative disbursement was Rs.107 crore. As on 31 March 2010, balance outstanding in the Fund was Rs.1,150.80 crore after disbursement of Rs.53.52 crore during the year.

E.
2.8

Farm Innovation and Promotion Fund


The Farm Innovation and Promotion Fund (FIPF)

was set up in 2005, with a corpus of Rs.5 crore. The objective is to promote innovative and viable concepts/
Innovative methods of farming under CAT

projects in agriculture and allied activities, development of marketable prototypes, technology, patenting, extension support, marketing, etc. The corpus under FIPF has since been enhanced to Rs.50 crore, from 1 April 2009. During 2009-10, 17 proposals in 11 states were sanctioned with financial assistance of Rs.155.37 lakh (Rs.135.37 lakh as grant and Rs.20 lakh as soft loan assistance). Some of the activities supported were: (i) pilot plant for extraction of zero calorie white powder sweetener from stevia; (ii) study and documentation of successful commercial dairy units; (iii) development of prototype machinery for filling feed pits for ver mi-compost production; (iv) rain water harvesting structures and treadle pump for micro irrigation; (v) promoting System of Wheat intensification; (vi) demonstrating hand held device, mobile TV for online technology transfer (Tata Elxsi); (vii) cost-effective shrimp farming; and (viii) increasing productivity of sugarcane through trench planting. Cumulatively, 78 projects were sanctioned financial support of Rs.618 lakh, of which 25 projects with financial assistance of Rs.104 lakh have been completed. Of the completed projects, five were in Maharashtra, three each in Tamil Nadu and Uttarakhand, two each in Chhattisgarh, Jharkhand, Karnataka, Orissa and Uttar Pradesh, and one each in Gujarat, Meghalaya, New Delhi and West Bengal.

farming, drip irrigation, off-season hybrid vegetable cultivation, sericulture, ornamental fish and aquarium maintenance, etc.

D.
2.7

Tribal Development
The Tribal Development Fund (TDF) was created

in 2004 with Rs.50 crore to support integrated tribal development projects with wadi (a small orchard) as the core component. The projects provide sustainable livelihood for tribal families through orchard based farming along with social welfare measures to improve their living standards. During the year, Kerala, Sikkim and Tamil Nadu and Union Territory of Andaman & Nicobar Islands, were newly covered. GIS-GPS-based monitoring systems were introduced on a pilot basis in Madhya Pradesh, to intensify monitoring. Projects focusing on minor forest produce like tasar silk, lac, gums and bee keeping, which are traditional tribal occupations and capable of income generation, were sanctioned during the year. Apart from supporting projects of traditional wadi fruit crops such as mango, cashew and aonla, support was extended to cover new crops like pineapple, kinnow, mandarins, clove, jackfruit, etc. For upscaling the programme, projects in collaboration with Commodity Boards, viz., Coconut Development Board and Central Silk Board, as also with corporate houses were taken up. During the year, financial assistance of Rs.236.19 crore (Rs.224.09 crore as grant and Rs.12.10 crore as loan) was sanctioned for 79 projects, benefiting 63,113 tribal families in various states. The cumulative sanction

F.
2.9

Farmers Technology Transfer Fund


The Farmers Technology Transfer Fund (FTTF)

set up and operationalised from 1 April 2008, with an initial corpus of Rs.25 crore was enhanced to Rs.50 crore from 1 April 2009. The Fund is to be used for promoting

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transfer of technology for enhancing production and productivity in agriculture and allied activities. During the year, 151 diverse and innovative proposals in 22 states for transfer of technologies were sanctioned a grant assistance of Rs.488 lakh. Cumulative disbursement, as on 31 March 2010, touched Rs.1,460 lakh. Some of the major proposals sanctioned were: (1) promotion of organic cotton cultivation; (2) nutrient management in rice; (3) establishment of Farmers Science Museum; (4) promotion of sustainable organic crop farming through crop demonstration, production and distribution of eco-friendly inputs; (5) promotion of transfer of technology in seed production and certification under Seed Village Programme; (6) Promotion of indigenous honey bee deploying fixed bee hives with moveable frames; (7) project on management of fruit flies in mango and cucurbits using male annihilation technology and bait application technique; (8) strengthening of Farmers Associations by for mation of producer groups; (9) improvement of sericulture productivity and profitability through technological inter vention; (10) livelihood support through vegetable cultivation and dehydration of vegetables; (11) farm productivity improvement through comprehensive technology transfer, training and capacity building initiatives; and (12) scientific integrated pig-cum-fish farming. An instance of support extended under FTTF, during the year, was an ICT initiative for providing information on market prices, crops and weather to farmers in the states of Karnataka, Maharashtra and Rajasthan, through SMS facility of mobile phones. This was extended by provision of prepaid vouchers of Reuters Market Light (RML) to Farmers Clubs (FCs). The volunteers of FCs have shared the garnered information with other farmers in a village, thus benefiting farmers at large.

It is aimed at augmenting income of the farmers through enhanced production and productivity of lead crops/ activities so as to improve living standards of the rural farming community.

H. Farmers Club Programme


2.11 The Vikas Volunteer Vahini launched by NABARD in 1982 was changed to Farmers Club (FC) programme in 2005. The FC programme aims to organise farmers to facilitate access to credit, extension services, technology and markets. Over the years, the scope has been enlarged to facilitate transfer of technology, propagation and popularisation of seed village concept, collective purchasing and distribution of inputs, aggregation and marketing of produce, capacity building of members to act as Business Facilitators (BFs)/Business Correspondents (BCs) of banks, formation of Self-Help Groups (SHGs), Joint Liability Groups (JLGs), Producer Groups/ Companies, Federations of Farmers Clubs, undertaking community works, leadership development and converting to business entities ultimately. During the year, 16,590 clubs were launched taking the total number of clubs to 54,805 covering 1,04,648 villages in 587 districts. Agency-wise, NGOs promoted maximum number of clubs (8,939), followed by RRBs (2,521), co-operative banks (2,507), commercial banks (2,276) and other agencies (347). The region-wise distribution of clubs indicate that the Central region has the major share (29.85%), followed by the Southern (24.47%), Eastern (18.81%), Western (13.03%) and Northern (10.82%) regions, while NER accounts for only 3.02 per cent. Telecasting documentary on Doordarshan and distributing literature/newsletters & VCDs to the Farmers Clubs helped in technology transfer.

I. G. Pilot Project for augmenting productivity of lead crops/activities

Government Projects

2.12 NABARD continued to implement /coordinate the undermentioned area specific projects of the Government of India (GoI):

2.10 A Pilot project for augmenting productivity of lead crops/activities through adoption of sustainable agricultural practices was launched during the year. The project is to be implemented in 4-6 clusters of 5 villages each, proliferating to 600-900 villages at the national level. 2.13 The projects have been implemented by BAIF, Pune in 13 districts of Bihar and 17 districts of Uttar

i. Cattle Development Projects

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Pradesh since 2004-05. The duration of both the projects has been extended from Februar y 2009 to 30 June 2010 by GoI without any additional financial assistance. NABARD is the co-ordinating agency and facilitator for channelling funds, ensuring its utilisation, project supervision and monitoring. Out of Rs.13.61 crore allocated for each project, an amount of Rs.10.89 crore each has been released by GoI till 31 March 2010. During 2009-10, Rs.2.12 crore and Rs.1.64 crore were released for Uttar Pradesh and Bihar, respectively, taking the cumulative disbursements to Rs.10.99 crore and Rs.10.09 crore, respectively, as on 31 March 2010. While 100 Cattle Development Centres have been established in each state, 16 and 13 District Dair y Far mers Associations have been formed, 82,415 & 91,192 families registered (target : 80,000 families) and 2,50,682 and 1,90,785 pregnancies confirmed (under the Artificial Insemination component) in UP and Bihar, respectively.

Sultanpur, out of 2,021 rural youth from BPL families trained, 1,350 youth were employed, while in Rae Bareli, the number of youth were 1,147 and 780, respectively.

iii. Dairy and Poultry Venture Capital Fund


2.15 Venture Capital Fund, introduced in 2005-06, was continued in 2009-10. The Fund has since been bifurcated into Dairy and Poultry Funds with separate allocations. As on 31 March 2010, Rs.132.99 crore was received from the Ministry of Agriculture, GoI, for Dairy Venture Capital Fund and Rs.16 crore for Poultry Venture Capital Fund. During the year, Rs.48.16 crore was sanctioned for 4,719 dairy units and Rs.9.04 crore for 76 poultry units. The cumulative sanctions, as on 31 March 2010, stood at Rs.146.91 crore for 15,368 dairy units and Rs.19.61 crore for 291 poultry units.

iv. Rural ii. Special Project on Livelihood Based Development


2.14 The Livelihood - Based Development special project sanctioned under SGSY by GoI is under implementation in Sultanpur and Rae Bareli districts of Uttar Pradesh since 2006-07. The project aims to cover 11,500 BPL (Below Poverty Line) families under Multiactivity Approach for Poverty Alleviation (MAAPA) and 7,500 financially very needy youth under Demand Driven Skill Development through Livelihood Advancement Business School (LABS) in each district at a project cost of Rs.14.97 crore for Sultanpur and Rs.14.90 crore for Rae Bareli. NABARD is the project holder, while BAIF and Dr. Reddy Foundation (DRF) are the implementing agencies. During 2009-10, Rs.3.86 crore and Rs.3.12 crore were released for Sultanpur and Rae Bareli districts, respectively, taking the respective cumulative disbursements to Rs.8.57 crore and Rs.7.39 crore, as on 31 March 2010. While the physical achievements under MAAPA for Sultanpur and Rae Bareli districts were 86.69% and 82.79% of the targets, respectively, the financial achievements were 65.2 per cent and 70.4 per cent as on 31 March 2010. Under the LABS project in

Slaughter

Houses,

Integrated

Development of Small Ruminants and Rabbits and Poultry Estates and Mother Units
2.16 Three new schemes, viz., (i) Establishment of Rural Slaughter Houses, (ii) Integrated Development of Small Ruminants and Rabbits, and (iii) Scheme for Poultry Estates and Mother Units for Rural Backyard Poultry, were launched in 2009-10. The actual implementation, however, will commence from 2010-11. 2.17 The Scheme for Rural Slaughter Houses was to be implemented on a pilot basis in three states, viz., Andhra Pradesh, Meghalaya and Uttar Pradesh, wherein creditlinked back-ended subsidy up to a maximum of Rs.2 crore will be available for establishment/modernisation of rural slaughter-houses, projects utilising by-products, cold storage and cold chains and certification of quality. The emphasis will be on hygiene, pollution control and value addition. 2.18 The Scheme for Integrated Development of Small Ruminants and Rabbits is to improve the breed quality, to promote rearing and breeding on commercial basis. Interest-free loans from NABARD will be available through

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the financing banks for setting up units for rearing/ breeding of sheep and goat and rearing of rabbits. NGOs will act as facilitators for organising the borrowers, training, coordinating with state Animal Husbandry Departments and banks, along with arranging for inputs and marketing of the animals.

families (target: 10,000 families) by establishing wadis of cashew and mango along with boundary plantations of fuel wood and fodder on 12,732 acres of land belonging to these families and benefited 9,300 farmers through water resource development. The programme has also reduced distress migration, changed cropping pattern in favour of vegetables and pulses, generated regular income and inculcated habit of savings through SHGs. The 488 SHGs formed have taken up income generation activities such as nursery raising, vermicompost, leaf cup making, hill brooms, etc. Eleven tribal co-operatives which facilitate collection and processing of cashew, mango and karonda, processed 410 MT of cashew during the year. KfW has also sanctioned Phase II (2006-2014) of the programme involving grant assistance of 7 million (about Rs.42.47 crore) to cover 4,700 families from these districts. Under Phase II, as on 31 March 2010 , 5,922 families had been identified and 5,789.5 acre of wadi established and 253 wadi tukadis (group of 8-10 wadi holders) formed.

2.19 The Scheme for Development of Poultry Estates aims at establishing poultry estates on the lines of industrial estates, wherein all common infrastructure facilities, supply of inputs and marketing arrangements will be provided. Two pilot projects are proposed under the scheme and preference will be given to states, which come forward to provide land and infrastructure for this purpose. Up to 100 broiler/layer units will be set up in the Poultry Estates. The units will be eligible for interestfree loan of 50% of TFO, to be routed through NABARD. Under the rural backyard poultry component of the scheme, interest-free loans of 50% of TFO of the project is available for Mother Units where day-old chicks of lowinput birds are reared for four weeks before distribution to the BPL borrowers. This component intends to promote rearing of low-input breeds which will survive in rural areas.

2.22 Under the KfW-NABARD-IX- Adivasi Development Programme in Maharashtra, the successful wadi model of Gujarat is replicated in Nasik and Thane districts through Maharashtra Institute of Technology Transfer for Rural Areas (MITTRA), Nasik. The programme, which commenced in 2000 and ends in 2011, aims to support 13,000 tribal families for cultivation of cashew and mango. The total families supported by the project are 13,848 in 258 villages, covering a wadi area of 12,293.5 acres. About 23,864 participant families have taken up vegetable cultivation, viz., tomato, spinach, radish, brinjal, bitter gourd, ridge gourd, fenugreek, etc., on 3,923 acres of land . A credit programme called Vikas Arth is being implemented in the project area wherein credit of Rs.344.72 lakh has been extended, the recovery of which has been 100 per cent. Five village-level cashew processing units have been set up. Apart from increasing farm income through fruit crops, the various measures have resulted in tribal families taking up irrigated farming, practising improved methods of irrigation such as drip, diversifying into vegetable and flower cultivation, taking up non-farm activities such as, tailoring, masonry, etc.

J.

Externally Aided Projects

2.20 NABARD received Rs.38.70 crore and disbursed an amount of Rs.41.17 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

2.21 The KfW-NABARD-V-Adivasi Development Programme in Gujarat having an outlay of Rs.62.89 crore is under implementation through BAIF in Valsad and Dangs districts since 1994-95. The focus is on development of wadi with other supportive interventions like development of water resources and agricultural activities, women development, health and sanitation. The programme has helped to rehabilitate 13,663

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Table 2.1: Externally Aided on-going Projects (As on 31 March 2010) (Rs. lakh)
Sr. Name of the Project No. Effective From Closing Date External Assistance ( million) Disbursements made by NABARD During 2009-10 Cumm. upto 31.03.2010 Amount received by NABARD During 2009-10 Cumm. upto 31.03.2010

1. i.

KfW-NABARD V-Adivasi Development Programme in Gujarat (Phase I) Adivasi Development Programme in Gujarat (Phase II) 23 Dec 1994 30 Dec 2010 13.29 1255.00* (+ 1.5 Suppl. Grant) 6941.98 900.09 6965.36

28 March 2006

31 Dec 2014

7.00

ii. iii.

IX-Adivasi Development Programme in Maharashtra Indo-German Watershed Development Programme in Andhra Pradesh Indo-German Watershed Development Programme in Maharashtra (Phase III) Indo-German Watershed Development Programme in Gujarat Indo-German Watershed Development Programme in Rajasthan KfW-Sewa Bank Project

2 June 2000

30 Dec 2010

14.32

1260.00*

5842.64

1241.52

5910.60

15 July 2002

31 Dec 2011

8.69

616.42

1283.55

340.63

1028.15

iv.

27 Aug 2005

30 Dec 2009

19.94

2929.12

5397.74

3065.25

5710.50

v.

17 Feb 2006

31 Dec 2012

9.20

241.80

422.28

213.51

443.85

vi.

7 Dec 2006 28 June 2002

30 Dec 2014 31 Dec 2009

11.00 4.09

330.57 294.12

454.00 687.07

250.66 297.09

411.28 694.01

vii. 2. i. ii. 3 i ii iii

KfW-NABARD- X- Credit Line for RNFS Grant Loans 20 Oct 2006 20 Oct 2006 30 Dec 2008 30 Dec 2008 1.20 ** 40.00 #

KfW-Umbrella Programme for Natural Resources Management (UPNRM) Loan Grant Grant for Accompanying Measures 16 Sept 2009 16 Sept 2009 16 Sept 2009 30 Dec 2014 30 Dec 2014 30 Dec 2014 FC Loan : 15.00 FC Grant : 1.4 FC Grant for Accompanying Measures : 3.00 1121.85 22.11 82.10 1432.48 27.61 94.13 672.38 14.64 86.57 672.38 14.64 86.57

* : From the year 2009-10, service charge is not included under disbursement. ** : Complementary Measures being implemented. # : Entire loan amount drawn.

2.23 The Indo-German Watershed Development Programme (IGWDP) introduced in Maharashtra, is an integrated programme implemented by Village Watershed Committees (VWC) in association with NGOs for regeneration of natural resources. Phase I (1990-2000)

and Phase II (2001-2007) of the programme have been successfully completed, covering 113 watersheds of 1 lakh ha., spread across 25 districts. Under Phase III (2005-12), 109 projects have been sanctioned since January 2005. Of these, while nine projects were completed, six are

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Box 2.3 Impact Evaluation Study of IGWDP Watersheds in Maharashtra by Action for Food Production (AFPRO) : Major Findings
Significant water recharge in almost all dried up wells. The number of wells increased from 17 to 26. Total area under waste land, pasture land and fallow land in six watersheds reduced by 50 per cent. Vegetative cover studied using satellite images indicates improvement. In Asarkheda, Mandwa and Kacchigati watersheds, area under Rabi increased by five fold, and in rest of the projects, it increased by 1.5 to 2 times. Yields of cereal crops increased by 70 - 80 per cent; pulses and oil seeds increased two folds. Rise in number of cross-breeding (CB) cows by 94 per cent and reduction in indigenous cows by 60 per cent. Two to three fold increase in average annual household income from agriculture. Employment generation to the tune of 1.19 lakh mandays per watershed. Women development - Improvement in drinking water conditions, drudgery reduction, kitchen sanitation, community hall, etc.

9.2 million (approx. Rs.51.52 crore). Thirty-five projects are being implemented with an assistance of Rs.241 lakh and are in various stages of progress. A Programme Management Unit (PMU) has been set up at Dahod to oversee the implementation from close quarters with the help of three consultants. SHG federations have been constituted in two watersheds and provided support for onlending to women SHGs formed in the project villages (Box 2.4). Box 2.4 German collaboration in Watershed Programmes
The first Financial Co-operation between the erstwhile Agriculture Refinance Development Corporation (ARDC) and KfW was way back in 1979 with the sanctioning of the Tawa Command Area Development project in Madhya Pradesh, and continued with KfW loan of DM 70 million to NABARD Credit Project I (1983); Support to natural resource management programmes 1992 ( 128.22 million); support for rural non-farm sector 1996 ( 41.2 million); support to SHG bank linkage programme 1996 ( 4.09 million) and support to co-operatives reforms 2004 ( 140 million). Under Natural Resource Management, the programmes suppor ted are Watershed Development (1992), Tribal Development Programme (1994) and Umbrella Programme on NRM (2008). Watershed programme was first started in

under feasibility report/interim phase (FR/IP) and 93 are under FIP. Major findings of IGWDP evaluation are provided in Box 2.3. 2.24 KfW, Germany committed a grant of 8.69 million (about Rs.48.66 crore) under IGWDP in Andhra Pradesh for rehabilitation of watersheds in four districts (Adilabad, Karimnagar, Medak and Warangal). Thirty seven projects are being implemented and are in various stages of progress. KfW has approved an additional amount of 2 million (about Rs.11 crore) towards Complementary Measures Programme for capacity building of stakeholders. 2.25 The IGWDP in Gujarat envisages rehabilitation of watersheds in four districts (Dahod, Panchmahals, Sabarkantha and Vadodara) with a commitment of 39

Maharashtra (Phase-I) with a support of

6.14 million followed

by Phase II with 9.64 million and Phase -III with 19.94 million. Later, it was extended to Andhra Pradesh ( 10.69 million), Gujarat ( 9.2 million) and Rajasthan ( 11 million). The President of Federal Republic of Germany, Mr. Horst Kohler , visited Darewadi-Shelkewadi watershed, Dist Ahmednagar, Maharashtra which was facilitated by Watershed Organisation Trust (WOTR) in February 2010 where a presentation was made, highlighting the long standing bilateral relationship between NABARD and German Development Cooperation (GDC) through German Bank for Reconstruction and Development [Kreditanstalt fur Wiederanfran (KfW) as well as German Agency for Technical Co-operation (GTZ-Deutsche Gesellschaft fur Technische Insammenarabeit) supported by German Federal Ministry for Economic Cooperation and Development (BMZ). The President expressed satisfaction on the good work done in watershed development.

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2.26

KfW, Germany had committed grant assistance of

Corporation (GDC) for the programme was 30.40 million ( 19.4 million from KfW, 8 million from GTZ and 3 million from NABARD). During the year, 25 community managed sustainable NRM - based livelihood projects were sanctioned with assistance of Rs.73.89 crore. Cumulatively, financial assistance of Rs.79.36 crore was sanctioned for 30 projects in ten states (Andhra Pradesh, Bihar, Gujarat, Himachal Pradesh, Jharkhand, Karnataka, Maharashtra, Orissa, Tamil Nadu and West Bengal) and in the UT of Andaman and Nicobar Islands, as on 31 March 2010, to be implemented by NGOs, producers companies, private limited companies and co-operatives. During the year, Rs.1,223 lakh (Rs.1,122 lakh as loan and Rs.101 lakh as grant) were disbursed, taking the cumulative disbursement to Rs.1,555 lakh (Rs.1,433 lakh as loan and Rs.122 lakh as grant) as on 31 March 2010. An amount of Rs.687.03 lakh was received from KfW as reimbursement. In addition, marketing efforts through workshops, meetings, publishing marketing flyers and one-to-one contact among NGOs, corporates, state governments and mFIs were taken up. During the year, exposure visitcum-sensitisation programme and on-site capacity building workshops for NABARD officers and potential channel partners were conducted. Two initiatives under UPNRM projects are detailed in Box 2.5.

11 million (about Rs.61.60 crore) under the IGWDP in Rajasthan for watershed development in five districts (Banswara, Chittorgarh, Dungarpur, Pratapgarh and Udaipur). Thirty two projects are in various stages of progress. A PMU has been set up at Udaipur. IGWDP, Rajasthan, was honoured with Contribution to Community 2009 Award by Project Management Institute, India, for its sustained performance and innovations that improved the livelihood of the rural poor.

b.

Umbrella Programme on Natural Resource Management

2.27 The Umbrella Programme on Natural Resource Management (UPNRM) is a loan-cum-grant based programme being implemented since 2007-08 under Indo-German collaboration. It is a shift from (i) project based to programme based funding; and (ii) grant based to loan based funding. The implementation agreement on technical co-operation with GTZ was already executed for 3 million during 2008-09 with an additional 5 million component for Public Private Partnership of

included during the year. The Loan and Financing Agreement with KfW was also signed during the year. The total fund envisaged by Ger man Development

Box 2.5 UPNRM Projects - Initiatives


1. Tasar Silk Yarn Producers of Bihar and Jharkhand MASUTA Producers Company Ltd., of Tribal Women UPNRM loan-cum-grant assistance of Rs.488 lakh has been sanctioned to MASUTA Producers Company Ltd. (MASUTA) to facilitate 2,600 tribal women tasar silk yarn producers in Bihar and Jharkhand. These women are dependent on cocoons of tasar silk worm for their livelihood. MASUTA procures tasar cocoons and provides treatment, storage and handling facilities to the tribal women guaranteeing them employment and income throughout the year. This has resulted in better income to the tribal women. NABARD has also provided funds for Arjun tree plantation and rearing of tasar worms under Tribal Development Fund and watershed development in the area to facilitate convergence for improved and sustainable livelihoods to rural poor. 2. Eco-tourism and Biodiversity Conservation in Biligiriranga (BR) Hills, Karnataka Vivekananda Girijana Kalyana Kendra (VGKK), Karnataka, an NGO, was sanctioned an amount of Rs.157 lakh for implementing eco-tourism project in BR Hills, Chamarajanagar district, Karnataka. The project aims at taking up eco-tourism with social goals through par tnership with State Forest Department, State Tourism Department and other funding agencies. It is a unique experiment attempting to link the best practices of biodiversity conservation and eco-tourism with local community, SHGs, youth organizations, etc. The aim of the project is to serve as a model in forest management and integrating wildlife enthusiasts, conservationists and tribal communities for their mutual benefit and to demonstrate that everyone can contribute to the process of sustainable natural resource management.

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Rural Non-Farm Sector


A. NABARD-SDC Rural Innovation Fund
marketing of minor forest produce by tribals in the state of Andhra Pradesh was successfully completed. Various workshops were arranged/conducted during the year for 2.28 The Rural Innovation Fund (RIF), constituted from 1 October 2005, is meant to support innovative and risk mitigating experiments in farm, non-farm and micro-finance sectors. It is also used for projects with potential to generate employment opportunities. During 2009-10, 155 innovative projects were sanctioned, taking the cumulative number to 252. An amount of Rs.17.70 crore (including supplementary assistance to projects sanctioned earlier) was sanctioned taking the cumulative commitment, upto 31 March 2010, to Rs.38.37 crore (up from Rs.20.67 crore as on 31.3.2009). An amount of Rs.10.69 crore was disbursed during the year for 252 projects, taking the cumulative disbursements to Rs.17.99 crore. As on 31 March 2010, 16 projects have been successfully completed and 48 projects were in advanced stages of implementation. A diagnostic study on collection and 2.29 The District Rural Industries Project (DRIP), started as a pilot in 1993-94 for creating sustainable employment opportunities enhanced credit flow to the rural non-farm sector (RNFS), was extended to 106 districts by March 2007 and 43 of them phased out by 2007-08, on successful implementation. These districts will continue to get support from NABARD, based on merit. During 2009-10, GLC flow in 42 districts under various phases reached Rs.675.99 crore and refinance availed of was Rs.11.11 crore. In all, 45,701 units were capacity building of staff and for dissemination of information to partner institutions (See Box 2.6 for a success story).

B.

District Rural Industries Project

Box 2.6 RIF Success Story - Solar Lanterns for Weavers


Among the difficulties faced by handloom weavers in cluster villages is the lack of lighting for the weavers during evening. If only they had adequate and uninterrupted light, their output would increase by 20 to 30 per cent. It was then thought that solar lantern would be a good and clean source of lighting. The Energy Resources Institute (TERI), New Delhi, advised centralised charging station with 50 Solar lanterns. A project through Ujjala Nawaz SHG of village Bade Longiyan was conceived with a grant of Rs.4.65 lakh under Rural Innovation Fund of NABARD, for setting up of central charging station with 50 Solar lanterns and back up battery support for cloudy days. After sanction in August 2009, Bihars first community-based solar-lantern centralised charging station was installed at Bade Longiyan, a nondescript village situated on the banks of river Chaandan in Jagdishpur block of Bhagalpur. The training of the Ujjala SHG members has been undertaken by TERI immediately after installation. The Ujjala SHG implementing the project, levies user charges for each solar lantern, which will give adequate light for 4 to 5 hours at a cost of Rs.1 per day for SHG with 12 members, whereas other 38 lanterns are used for augmenting the income of the SHG. From Sept 2009 till March 2010, the Ujjala SHG has made additional earnings of more than Rs.11,000. Maujama didi tells proudly that she is able to get clean light in her home, at a cost less than the cost of 1 litre of kerosene, and without health hazards of smoke associated with kerosene. Tartila didi tells that male members of her family who undertake weaving would no longer have the fear of any harm to their eyesight, because of the improved lighting. When in the initial stage it could not be imagined that one single project would bring in changes in so many dimensions, the Ujjala Nawaz SHG is now eager to act as a technical consultant to other SHGs for similar projects. They also wish to graduate to a Solar mobile charging unit, which is also in great demand in their village.

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set up generating employment for 1.42 lakh persons. Since inception, GLC flow aggregated Rs.24,295.11 crore, facilitating establishment of 19.5 lakh units and generating employment opportunities for 44.48 lakh persons. The cumulative refinance availed of amounted to Rs.3,658.46 crore, as on 31 March 2010.

C.

Strengthening of Rural Haats

2.30 Scheme for Strengthening of Rural Haats, introduced in 1999 in DRIP districts was extended to all districts, village bazaar boards, SHGs, NGOs and to PRIs/ PACs, during the year. Grant Assistance was increased to Rs.5 lakh from Rs.3 lakh and coverage extended to include permanent structure/s as per local requirements. During 2009-10, grant support of Rs.298.72 lakh was sanctioned to 87 rural haats. Cumulative grant assistance of Rs.629.53 lakh has been sanctioned in 188 rural haats across 22 States.
Rural Haat supported by NABARD.

participatory clusters including two rural tourism, were sanctioned with a total grant support of Rs.225 lakh. As many as 22 clusters are being supported in the NER alone and a large number of clusters are being developed in backward states like Chhattisgarh, Jharkhand, Orissa and Madhya Pradesh. For smooth implementation and monitoring of the initiative, capacity building programmes were organised for the participants from banks, government departments and NGOs/VAs. During 2009-10, five on-location cluster workshops were conducted, taking the total number of such programmes to 25.

D.

Cluster Development

2.31 NABARD has been implementing the Cluster Development Programme in 56 clusters under the National Programme on Rural Industrialisation (NPRI) from 1999-2000. The programme encompasses a comprehensive strategy aimed at holistic development of clusters, raising income levels and living standards of ar tisans through various planned inter ventions. NABARD decided to develop additional 55 clusters (50 participatory clusters partnering with other agencies and 5 intensively on its own) in 2005-06, within a period of 3-5 years. Under the partnership mode, grant support up to a maximum of Rs.15 lakh per cluster over 3 years will be made available, while under the intensive mode, grant not exceeding Rs.1 crore per cluster for a maximum of 5 years would be provided. The broad sectors identified for development on priority basis were agriculture and allied activities, food processing, rural small and medium enterprises, handicrafts and handlooms, rural tourism, etc. As on 31 March 2010, 107 clusters across 84 districts in 22 States have been approved. During 2009-10, 15

E.

Rural Entrepreneurship Development and Skill Development Programmes


Entrepreneurship (REDP) and Skill Development Development

2.32 Rural Programmes

Programmes (SDP) were supported by NABARD since the early 1990s as proven tools for generating selfemployment opportunities in rural areas. During 2009-10, 2,627 REDPs/SDPs with an amount of Rs.1,048.38 lakh were sanctioned, benefiting 0.62 lakh rural youth. Cumulatively, 14,532 REDPs/SDPs with grant support of Rs.7,101.53 lakh covering 3.63 lakh persons have been supported. This includes support extended to RUDSETI/RUDSETI-like institutions for incur ring capital and recurring expenditure. NABARD revised its policy on assistance for setting up R-SETIs. RSETIs

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set up under GoI/similar scheme, where lumpsum capital grant is available, would not be eligible for capital grant assistance from NABARD. Financial support for sharing cost of training programmes, where such support is not forthcoming from Govt./other agencies would still be extended on merit basis, to enhance capacity of these institutions.

Rs.146.13 lakh. The Bank continued to co-sponsor SARAS Mahalaxmi Fair wherein 127 artisans from 26 States participated in the 12-day long exhibition that helped the artisans to realise sales of over Rs.60 lakh. To enable rural artisans/craftsmen realise remunerative prices and to establish marketing linkages, 119 rural marts in 22 States were sanctioned grant assistance of Rs.134.04 lakh during 2009-10. Cumulative grant support of Rs.332.65 lakh have been provided to 321 rural marts across 23 States.

F. Women Empowerment Programme


2.33 As on 31 March 2010, 116 Women Development Cells (WDC) were supported in 58 RRBs, 55 co-operative banks and three SCARDBs, to address gender discrimination in credit and support services. A sum of Rs.40.39 lakh was disbursed till 31 March 2010. Under Marketing of Non-Farm Products of Rural Women (MAHIMA) and Assistance to Rural Women in Non-Farm Development (ARWIND) schemes, grant support of Rs.6.92 lakh and Rs.17.56 lakh, respectively, were released as on 31 March 2010.

H.

Swarojgar Credit Card Scheme

2.35 During the year, 63,198 Swarojgar Credit Cards (SCC) having credit limit of Rs.240.12 crore were issued for facilitating hassle-free availability of credit for investment and working capital requirements of small/ micro-entrepreneurs. The cumulative total of SCC was 10.48 lakh, involving credit limit of Rs.4,254.88 crore.

I.

G.

Marketing / Other Initiatives

Training and Sensitisation Programmes

2.36 During the year, NABARD supported 42 training 2.34 During 2009-10, 263 marketing events/ exhibitions, were supported with grant assistance of programmes, conducted by reputed training institutions, which benefited 1161 officials from client banks.

Financial Inclusion
2.37 The GoI had set up the Rangarajan Committee on Financial Inclusion (in June 2006) to look into the issues involved and suggest measures for bringing the excluded population into the ambit of financial system. The Committee envisaged that 50 per cent of the excluded rural households (55.8 million) should have access to financial services by 2012, and the rest by 2015. Towards this end, two funds recommended by the Committee, have been set up in NABARD, viz. , Financial Inclusion Fund (FIF) for meeting the cost of developmental and promotional inter ventions of financial inclusion and Financial Inclusion Technology Fund (FITF), for meeting the cost of technology adoption. Each Fund consists of an overall corpus of Rs.500 crore, to be contributed by the GoI, RBI and NABARD in the ratio of 40:40:20 in a phased manner over five years, depending upon utilisation of funds. GoI and NABARD made initial upfront contributions of Rs.10 and Rs.5 crore, respectively to each of these funds, for 2007-08. GoI again contributed Rs.10 crore for 2009-10 to each of the funds. Reserve Bank of India has decided to contribute to the funds on reimbursement basis. As on 31 March 2010, the total contribution under FIF and FITF stood at Rs.50 crore each. The guidelines for these two funds have been formulated and circulated among stakeholders.

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A.

Policy initiatives and events during the year

gap support in one or two districts per RRB. A model for such projects has been worked out and workshops for RRB Chairmen have been conducted for adoption of such intervention. iv As backward and underfinanced areas need special attention, it has been decided to extend financial support from FIF & FITF at 100 per cent of project outlay for eligible activities in Andaman and Nicobar Islands, Chhattisgarh, Himachal Pradesh, Jammu and Kashmir, Jharkhand and Uttarakhand to CBs/ RRBs/Cooperatives on the lines of support extended in NER and Sikkim. Ten districts, viz. , Khammam (Andhra Pradesh); Bokaro, East Singhbum, Latehar and West Singhbum (Jharkhand); Deogarh, Gajapati, Malkangiri, Rayagada and Sambalpur (Orissa), which are considered disturbed but dont figure in the list of critically excluded 256 districts identified by the Committee on Financial Inclusion, are to be given priority as applicable to the 256 districts. As on 31 March 2010, 50,255 villages have been covered under financial inclusion through FIF and FITF. v Workshops and seminars on financial inclusion were organised at reputed training institutes for the benefit of NABARD officials, bankers and officials from other organisations involved in financial inclusion. A road map has been formulated for achieving financial inclusion by synergising the efforts of all stakeholders.

2.38 The Advisory Boards, constituted by GoI for each Fund to tender policy advice and consider proposals, met three times during the year. A Sub-Committee of Advisory Board for FITF, which looks into the ICT-based interventions for extending the financial services met four times. The following policy initiatives were taken during the year: i Scheduled commercial banks and RRBs were advised by IBA and NABARD to achieve a target of adding 250 rural household accounts every year, at each of their rural and semi urban branches. The total number of no frills accounts opened by PSU and private sector banks was around 330 lakh as on 31 March 2009 vis--vis 4.89 lakh as on 31 March 2006 as per RBI sources. ii Business Correspondents/Business Facilitator model along with technology is intended to extend the outreach of banks. In order to strengthen the model, training cost of candidates, who successfully complete the cer tification programme on Business Correspondents/Business Facilitators from the Indian Institute of Banking Finance (IIBF) and get engaged as BC/BF will be met from the FIF. RRBs were advised to consider appointing Farmers Clubs as BF. This is expected to have a two-pronged effect, viz ., addressing the need of Financial Inclusion and strengthening FC a grassroot level local organisation, leading to far reaching and lasting impact on agriculture and rural development in the country. The BC/BF model is also being implemented for the Government-supported programmes like National Rural Employment Guarantee Programmes and Social Security Pension. Nearly 85 BC have been appointed by the banks for the purpose as reported by RBI Working Group on BC Model, (2009) . iii In order to facilitate RRBs for undertaking Cardbased ICT project, the FITF would extend viability 44

B.

Fund Utilisation : Support to Projects

2.39 Out of the corpus of Rs.50 crore each of FIF and FITF, an amount of Rs.19.47 crore and Rs.21.83 crore, respectively, have been sanctioned for financial inclusion. The major projects supported under these funds are furnished, respectively, in Box 2.7 and 2.8.

C.

NABARD-UNDP Collaboration for Financial Inclusion

2.40 In addition to financial inclusion initiated under FIF/FITF, NABARD and UNDP have entered into

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Box 2.7 Projects Sanctioned under FIF during 2009 - 2010


Pilot project to establish Farmers Service Centres/Village Knowledge Centres (VKCs), mobile credit counselling centres, promotion of financial literacy and far mer education through mass media to promote financial inclusion in South Malabar district of Kerala for setting up eight Farmers Service Centres/VKCs in eight districts. Viability gap funding for the Biometric card project through BC/BF model in NER for Smart card based accounts. Suppor t for Cer tificate Course for Business Project for Financial Resource Centre at RRB to cater to the capacity building and research needs for upscaling financial inclusion in four districts, i.e., Murshidabad, Nadia, North and South 24 Parganas of West Bengal. Total financial inclusion project by DCCB through one-day camp followed by base level survey, covering financial literacy and actual provision of financial services by Support to Thrissur DCCB for setting up of Information Dissemination-cum-Human Resource Development Centre. Financial inclusion through BC/BF model in Vidarbha for comprehensive FI through Financial Literacy training Conduct of 10 Training of trainers covering 300 resource persons drawn from SHG leaders, FCs and retired bank personnel. Households not covered by the banking sector to be included under no-frill accounts and SHGs. Using post office as Business Correspondent of RRB to utilise branches of postal depar tment for business expansion in Uttarakhand. Post office to offer two services, opening savings bank account /KCC/GCC accounts in five z on es , i. e. , Ara m b ag h , Ta rakes wa r, Ch a n d i ta l a , Sreerampore and Chinsurah of Hooghly district resulting in opening of at least 150 account per camp. Project for financial inclusion through FC acting as BF of RRB in Assam. It involves four training programmes for members of 11 FCs identified by the bank. A total of 100 members of the FC will be trained in Morigaon district. Financial literacy by RRB in Assam in Nalbari district. Capacity Building Programme for LDMs of banks conducted by BIRD, Lucknow. Capacity building programme for RRB and post office for using Post office as BC of RRB through five training programmes for staff of post offices/banks in Uttarakhand. Correspondents (BCs) and Business Facilitators (BFs) to Indian Institute of Banking & Finance (IIBF) to cover 20,000 candidates over a period of 2 years, i.e., 2009-10 and 2010-11. S upport to Kozhikode DCCB for setting up of Credit Counselling and Livelihood Promotion Centre. viz ., collection of deposits and disbursements of loans and collection of repayments. Micro-credit programme in Nagaland with Village Development Boards (VDBs) as inter mediaries for augmenting the corpus of 107 VDBs in Longleng and Kiphire districts of Nagaland.

collaboration for financial inclusion in seven focus states, viz., Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh. This collaboration is part of the Country Programme Action Plan (CPAP) signed between Government of India (GOI) and UNDP. A fund for the collaboration, viz. , UNDP NABARD Financial Inclusion Fund has been established in NABARD with UNDP support. The overall objective of the collaboration is to provide better access to financial products and services to reduce risks and enhance

livelihoods for the poor in at least two states, especially women and men from SC and ST groups, minorities and the displaced. UNDP will provide the project budget for Annual Work Plan 2009 to the tune of US$ 2,98,335 equivalent of Rs.1.40 crore. A sensitisation workshop for the Officers-in-charge of the seven focus state ROs of NABARD was conducted and projects have been initiated. Under the NABARDUNDP collaboration, Rs.47.5 lakh has been sanctioned and Rs.17.04 lakh disbursed in these seven states.

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Box 2.8 Projects Sanctioned Under FITF during 2009 2010


Pilot project for extending banking services in ten bank branches (one Customer Service Points per branch) in Pali district of Rajasthan through BCs and enabling technology by RRB and providing financial services to 1,20,512 households through seventy-four branches. Financial Inclusion Project for implementing Core Card-based ICT solution by RRB, engaging 104 BCs in two districts, viz., Sonitpur & Sibsagar districts in Assam to open minimum 1,04,000 card-based accounts. To foster social and economic development of the rural people by extending banking services in remote rural areas through 43 bank branches in West Singhbhum and Gumla districts in Jharkhand to open 1,00,000 accounts. Implementation of pilot project through BC model using card-based ICT solutions by RRB in Gulbarga and Bidar districts in Karnataka to cover 4,50,000 accounts. Pilot Project for extending financial services to 5000 new customers through BC and enabling contactless smart card and biometric finger print scanning technology in Chamba district of Himachal Pradesh by RRB. Introduction of Gramin Bank smart card in Nainital and Almora districts covering 5000 customers by RRB on pilot basis in the service area of two of their branches. To provide banking services through one lakh new accounts using BC model and bio-metric enabled mobile services by a commercial bank for transaction at Village Customer Service Points in 194 villages in five blocks of three districts (Mandvi and Nakhtrana blocks of Kutch district, Kankrej and Bhabhar blocks of Banaskantha district and Silvassa block of UT of Dadra & Nagar Haveli). Project to provide financial services to 1,25,000 rural households by implementing ICT solution for Financial Inclusion in 569 villages of Kanpur Dehat district of Uttar Pradesh by RRB. Installation of four ATMs in Andaman and Nicobar Islands by a co-operative bank where the services of banks have not penetrated thereby providing banking facilities at their doorsteps to local populace. Card-based ICT solution by RRB, engaging 30 BCs in three districts, viz., Papum Pare, West Siang and Upper Subansiri of Arunachal Pradesh for opening 30,000 card-based accounts in two years. Implementation of pilot project through BC model using card-based ICT solution by RRB in Bellary and Chitradurga districts in Karnataka covering 7,06,000 beneficiaries. Card-based ICT solution by RRB for opening of 1,20,000 accounts in two districts, viz, West Tripura and Dhalai of Tripura. Implementation of pilot project through BC model by RRB using card-based ICT solutions in Hamirpur district of Uttar Pradesh to cover 64,420 beneficiaries. To provide financial services to the unbanked population in Gopalganj district of Bihar through card-based ICT solution by RRB to cover 1,90,000 new accounts. To provide financial transaction facility in villages by establishing Point of Transaction with infrastructure and technical support to cover 60,000 beneficiaries in Latehar district by RRB in Jharkhand. Card-based ICT solution by RRB for opening 40,000 new accounts in four blocks of two districts, viz., Aizawal and Kolasib in Mizoram. Card-based ICT solution by RRB in Bahraich and Shrawasti districts in Uttar Pradesh to cover 1,50,000 new accounts. Card-based ICT solution by RRB, engaging 100 BCs in the two hilly tribal districts of Karbi Anglong and North Cachar Hills in Assam to open minimum 1,00,000 cardbased accounts through 50 branches.

Banking Solution through usage of COIN software developed by National Informatics Centre (NIC) in Sikkim by a Co-operative Bank, six branches and 10 Multi Purpose Credit Societies (MPCS) in the first phase and five MPCS in the immediate second phase.

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Microfinance
2.41 Microfinance has made tremendous strides in India. It has become a household name, in view of the variety of benefits reaped by the poor from microfinance services. Self-Help Groups (SHGs) have become the common vehicle of development process, converging all development programmes. SHGBank Linkage Programme launched by NABARD way back in 1992 synthesising formal financial system and informal sector, has become a movement throughout the country. It is considered as the largest microfinance programme in terms of outreach in the world and many other countries are keen to replicate this model. At present, a large number of Self-Help Promoting Institutions (SHPIs), all the banking agencies and Microfinance Institutions (MFIs) are pursuing this programme for upliftment of the poor. The RBI also recognised this as part of priority sector lending and normal banking business. It has removed the interest rate cap for the final beneficiaries under the mF investment. The programme is also the main contributor towards financial inclusion in the country. As on 31 March 2009, there were more than 61.21 lakh savings-linked SHGs and more than 42.24 lakh credit-linked SHGs and, thus, about 8.6 crore poor households have been covered under the programme. The share of SHG loan to Ground Level Credit (GLC) increased from 3.8 per cent in 2007-08 to 4.07 per cent in 2008-09. The overall progress of the microfinance programme is given in Table 2.2.
SHG Meeting in progress.

A.

Micro-finance Development and Equity Fund (MFDEF)

2.42 The Micro-finance Development and Equity Fund (MFDEF) is being utilised for promotion of various microfinance activities such as formation and linkage of SHGs through SHPIs, training and capacity building of stake holders, capital and soft loan assistance to MFIs, livelihood propagation, studies, documentation, etc. During 2009-10, an amount of Rs.80.91 crore was released, of which Rs.20.49 crore was grant support for promotional activities and Rs.60.42 crore was for Capital Support/Revolving Fund Assistance (RFA) to MFIs, as against Rs.18.73 crore and Rs.15.93 crore in the previous year, respectively.

Table 2.2: Progress of the Micro-Finance Programme (As on 31 March 2009) (Rs. crore) Si. Particulars No. 2008 Number 1 Loans disbursed during the year 2 Loans Outstanding 3 Savings Accounts with Banks 12,27,770 (2,46,649) 36,25,941 (9,16,978) 50,09,794 (12,03,070) Amount 8,849.26 (1,857.74) 16,999.90 (4,816.87) 3,785.39 (809.51) Self-Help Groups 2009 Number 16,09,586 (2,64,653) 42,24,338 (9,76,887) 61,21,147 (15,05,581) Amount 12,253.51 (2,015.22) 22,679.84 (5,861.73) 5,545.62 (1,563.39) Micro-Finance Institutions (MFIs)* 2008 Number 518 1109 Amount 1970.15 2748.84 2009 Number 581 1915 Amount 3732.33 5009.09

Figures in parentheses indicate the share of SHGs covered under SGSY * : Actual Number of MFIs provided with bank loans would be lower, as several MFIs availed loans from more than one bank.

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B.

Support to Partner Agencies

support to the unreached clients for inclusive growth. Recognising their role as a tool for financial inclusion, NABARD has been supporting them through grant and soft loan assistance.

2.43 NABARD continued to extend grant support to NGOs, RRBs, DCCBs, FCs and Individual Rural Volunteers (IRVs) for promoting and nurturing quality SHGs. New SHPIs were identified even while supporting the existing ones. During 2009-10, grant assistance of Rs.2,878.17 lakh was sanctioned to various agencies for promoting 71,268 groups, taking the cumulative assistance sanctioned to Rs.10,766.07 lakh for 4,92,746 groups (Table 2.3). As on 31 March 2010, Rs.4,037.74 lakh was released and 2,36,683 SHGs credit linked to banks.

(i)

Support to Banks and MFIs

2.46 NABARD continued to provide grant assistance to commercial banks and RRBs for getting the MFIs rated by accredited rating agencies (CRISIL, M-CRIL, ICRA, CARE and Planet Finance). Under the scheme, professional fees charged by the rating agency are reimbursed to the bank/MFI concerned, subject to a maximum of Rs.3 lakh. The assistance is available for the first rating of MFIs with loan outstanding higher than Rs.50 lakh and less than Rs.10 crore. During the year, the scheme for providing grant assistance to MFIs for their rating was revised (Box 2.9). During the year, rating suppor t amounted to Rs.6.76 lakhs for five agencies .

C.

Capacity Building of Partner Agencies

2.44 To fine-tune the strategies for up-scaling support to the microfinance sector, NABARD conducted many awareness creation and sensitisation programmes and arranged exposure visits for SHG members, NGOs, bankers, trainers, Panchayat Raj Institution (PRI) representatives, NABARD officials, IAS officers and micro- entrepreneurs throughout the year, entailing an expenditure of Rs.9.93 crore as against Rs.11.18 crore in the previous year.

(ii)

Capital Support and Revolving Fund Assistance to mFIs

2.47 Capital Support is given to MFIs to leverage capital, so that commercial and other funds required for providing financial services at affordable cost to the poor and achieving sustainability in credit operations over a period of 3 to 5 years, could be easily accessed from banks. During the year, capital support of Rs.6.87 crore was sanctioned to 10 agencies, taking the cumulative

D.

Support to Micro-Finance Institutions

2.45 Micro-Finance Institutions (MFIs), registered in various legal forms are supplementing the efforts of the formal banking network in providing credit

Table 2.3: Grant Assistance Extended to various Partners inSHG-Bank Linkage Programme (As on 31 March 2010) (Rs. lakh) Agency Sanctions during the year No. Co-operative Banks RRB NGO Farmers Clubs IRVs Total 2 319 154.70 2878.17 9250 71268 68 2911 684.46 10766.07 40483 492746 7 4 306 Amount 63.23 40.14 2620.10 No of SHGs 5230 3395 53393 Cumulative Sanctions No. 102 117 2624 Amount 626.36 429.44 9025.81 No. of SHGs 59105 47985 345173 Cumulative Progress Amount released 252.95 189.23 3469.69 61.96 63.91 4037.74 SHGs formed 44618 54271 244367 14858 9991 368105 SHGs linked 29075 36155 157831 7986 5636 236683

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Box 2.9 Grant Assistance for MFI Ratings a) Scheme of Grant Assistance for Rating of MFIs 1. The scheme has been made operational on an ongoing basis. 2. Banks can avail of 100% reimbursement of expenses towards cost of rating of MFIs up to Rs.3 lakh by way of grant, for the first rating of MFI only. 3. MFIs with minimum loan outstanding of Rs.50 lakh and maximum loan outstanding of Rs.10 crore would be eligible for support under the scheme. 4. Regional Offices of NABARD have been delegated powers to sanction and release grant assistance under the scheme. b) Rating/Grading support to MFIs seeking Capital Support and/or RFA under MFDEF from NABARD 1. Grant assistance scheme continued beyond November 2009 and is operational as a regular scheme, on an ongoing basis 2. 100% reimbursement of professional fee of the Credit Rating Agency (CRA) for rating of MFIs only, subject to a ceiling of Rs.3 lakh. 3. The MFI that had been provided with Capital/Equity/RFA by NABARD under MFDEF will be eligible for assistance for the second rating on a 50:50 sharing basis, subject to improved performance of the MFI.

E.

Special Initiatives in Backward Region


(RGMVP) - Special SHG Initiative in Various Districts of Uttar Pradesh

(i) Rajiv Gandhi Mahila Vikas Pariyojana

2.48 NABARD continued to support the RGMVP, a special initiative of Rajiv Gandhi Charitable Trust (RGCT), for promotion, credit linkage and federating of SHGs in select districts of UP , in association with participating banks and implementing NGOs. With an implementation period of eight years (2007 to 2014), the project covers 15 blocks in Phase I and 29 blocks in Phase II. An amount of Rs.5.92 crore and Rs.11.33 crore has been sanctioned for Phase I and Phase II, respectively. Demonstration effect is given through external Community Resource Persons (CRPs) from Andhra Pradesh, who are SHG members coming out of pover ty and willing to share their experiences with rural women of Uttar Pradesh, for forming SHGs. As on 31 March 2010, 21,868 SHGs have been promoted under RGMVP , of which 12,749 have been credit linked. In addition, 676 Cluster Level Federations and 15 Block Level Federations have been formed.

(ii) Priyadarshini Project


2.49 A programme for Rural Women Empowerment and Livelihood in Mid Gangetic Plains called Priyadarshini envisaging holistic empowerment of 1,08,000 poor women and adolescent girls through

support to Rs.27.87 crore for 33 agencies. Revolving Fund Assistance (RFA) is provided to mFIs, on selective basis, for on-lending to the unreached poor. The idea behind such selective assistance is to experiment with various mF models for innovating the alternative credit deliver y systems and for drawing lessons for sustainability and replicability. During the year, RFA amounting to Rs.23 crore was sanctioned to 13 agencies, taking the cumulative credit sanctioned to Rs.74.02 crore for 42 agencies. During the year, the scheme for Capital/ RFA support to MFIs was thoroughly revised to give more support to startup MFIs and at a cheaper cost, so as to make them sustainable over a period of time.

formation of 7,200 SHGs, was launched with effect from 4 December 2009. It covers four districts (Sultanpur, Bahraich, Shravasti and Rae Bareily) of Uttar Pradesh and two districts (Madhubani and Sitamarhi) of Bihar. The eight-year programme, envisages a project outlay of US $ 32.73 million and is funded by International Fund for Agriculture Development (IFAD) through an assistance of US $ 30 million, with the balance contribution to be met by the Government of India. The Programme Loan Agreement (PLA) has been executed with NABARD designated as the Lead Programme Agency. NABARD has initiated work on the project at Head Office, Regional Office and district levels, as mandated in the PLA.

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F.
(i)

Scaling-up of Micro-Finance Programme: Special Initiatives


Support to Activity Based Groups (ABG)

credit linkage of SHGs has been enhanced with special focus on hilly/tough districts and resource poor regions. To ensure that SHGs develop self-expertise in managing themselves, an additional handholding support for one year, over and above three years has also been allowed, subject to certain conditionalities.

2.50 NABARD continued to support the scheme for small-scale activity-based groups wherein capacity building, credit and market-related support will be extended. The focus is on forming and nurturing groups engaged in similar economic activities , i.e., farmers, handloom weavers, craftsmen, fishermen, etc., to improve production and realising better price for produce. The scheme has both grant and loan components. While grant support would cover group formation, training, extension services, establishing market linkages, etc., bank loan/s would cover investment and working capital needs of the groups. could draw refinance for the loans provided to activity-based groups like SHGs. In select cases, NABARD may provide loans directly to registered groups or through agencies promoting the groups, to establish a few initial projects where none exists.

(iv)

Scheme for Providing Technology Support to NGOs for Strengthening MIS of SHG

2.53 The

scheme

of

suppor ting

NGOs

for

computerisation of MIS of the SHG-Bank linkage programme has been revised. NGOs promoting a minimum of 250 SHGs would now be eligible for a maximum grant assistance of Rs.50,000 for hardware components (one PC unit + LaserJet/dot matrix printer + UPS).

(v) Micro-Enterprise Development Programme


2.54 NABARD had launched the Micro-Enterprise Development Programme (MEDP) during 2005-06 for skill upgradation and development of sustainable livelihoods/venturing into micro-enterprises by matured SHG members. During the year, 1530 MEDPs were conducted for 38,313 SHG members on locationspecific farm, non-farm and service sector activities like bee-keeping, soyabean and mushroom cultivation, organic farming, horticulture and floriculture, agarbattimaking, tailoring, beauty parlour, plate making from areca-nut, jute crafts, screen printing, crochet and chikan work, mandap decoration, motor coil rewinding, lantana basket weaving, etc. Cumulatively, as on 31 March 2010, 2,843 MEDPs had been conducted covering 71,518 participants.

(ii)

Financing of Joint Liability Groups

2.51 Studies conducted in several states by NABARD revealed that JLG financing was a good business proposition on account of the simplified documentation, group dynamics, good repayment culture and prospects of credit enhancement to quality clients. To upscale promotion of JLGs, revised guidelines were issued to banks, with focus on small and marginal farmers, oral lessees, tenant farmers for farm and non-farm activities separately. NABARD will provide yearly promotional grants to banks for forming, nurturing and financing JLGs, for the first three years. Banks might use the services of suitable JLG-promoting agencies for the interventions, similar to the BF model. NABARD will also extend support for training, exposure visits, experiencesharing, etc., for staff of the banks.

(iii) Grant Assistance to Self-Help Promoting Institutions (SHPIs) for Promotion and Credit Linkage of SHGs - Revision of Existing Guidelines
2.52 The promotional grant assistance given to various agencies for forming, nurturing and linking and stabilising 50

G.

State Specific Support in North East Region (NER)

2.55 NABARD continued to suppor t the project sanctioned to Government of Arunachal Pradesh for implementing Micro-Finance Vision 2011. Further grant support was also sanctioned to the Essomi Foundation

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Trust for setting-up a Resource Centre at Itanagar. An amount of Rs.5.45 lakh has been released to the Trust for setting up of Micro-Finance Suppor t Centre. NABARD continued to provide technical support to the State project on SHGs being implemented by Government of Tripura for credit linking of 11,500 existing SHGs, formation and credit linkage of 35,000 new SHGs to promote livelihood activities among three lakh SHG members.

local markets, the focus of most entrepreneurs was on traditional, farm related activities. The state-specific experiences are being evaluated to arrive at strategies for wider replication.

I. Other Developments
(i) NABARD GTZ Studies

a. MFOs:
2.59 NABARD GTZ Rural Finance Institutions Programme (RFIP) undertook the task of creating a detailed information base of the NGOs working as microfinance organisations (MFOs) in 13 priority states. Its objectives were: (i) to get clear position of MFOs; (ii) to know the profile and nature of activities of MFOs and (iii) to understand the capacity development needs of the MFOs. Accordingly, the inventory of MFOs included area of operation, client outreach, age of MFOs, legal status, types of services provided, loan per client, staff, etc. The inventory survey revealed that 786 MFOs were in operation, with high geographical concentration (75%) in two states only (Andhra Pradesh 62% and Tamil Nadu 13%) and the remaining were scattered over 11 States. Incidentally, it was found that states with high concentration of MFOs were also having high concentration of SHGs and substantial SHG-Bank credit linkage.

H.

Pilot Pr o j e c t s

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.

(i) SHG-Post Office Programme


2.57 The results of SHG-Post Office Linkage Programme in Tamil Nadu has been very encouraging. NABARD sanctioned additional Rs.200 lakh RFA to India Post for onward lending to SHGs. The project utilises vast network of post offices in rural areas in disbursement of credit to the rural poor, on agency basis. Cumulatively, 2,828 SHGs have opened zero interest savings accounts, of which 1,195 SHGs have been credit linked by post offices, with loans amounting to Rs.321.25 lakh, as on 31 March 2010. The project is also being implemented in Meghalaya. RFA of Rs.5 lakh for on-lending to 50 SHGs in East Khasi Hills was sanctioned to India Post and Rs.0.50 lakh released so far.

b.

Remittances:

2.60 The Financial Inclusion Policy recognises remittances as one of the key components. An estimated 100 million migrant workers in India regularly need to remit money to their homes. At present, most of these micro remittances are sent via informal channels. It is very important for Indian migrant workers and the financial sector that micro remittances get included in the formal systems of the financial sector, through adequate financial services. Towards this end, NABARD in association with GTZ conducted a scoping study on remittance needs. The study confirmed the magnitude and significance of remittance issue and identified important points for the way forward. NABARD entered 51

(ii) Pilot Project for Promotion of Micro-Enterprises


2.58 The pilot project launched in 2005-06 for promotion of micro-enterprises, based on 3M (Micro credit, Micro market, Micro planning) approach, has come to an end. It was implemented in nine districts in nine states. A total of 11,714 SHG members were identified, of which 96 per cent underwent orientation and training in their chosen enterprise. Out of these, 7,177 members successfully started micro-enterprises. With a view to succeeding in their endeavours in the readily available

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into agreement on joint technical cooperation within the framework of the on-going RFIP. Remittances and Payments System will be an additional component of RFIP. The German Government has committed 5 million to this new component, subject to the positive outcome of a joint appraisal that was launched in January 2010 to appraise and identify the concept, deliverables and important institutional arrangements for the envisaged component.

a grant assistance of Rs.2.94 crore to SEWA bank during 2009-10, taking the cumulative release to Rs.6.87 crore The pilot phase of the programme has ended and a mid-term review was undertaken by KfW, NABARD and SEWA Bank, on the basis of which, it was decided to take the project to the full implementation phase.

(iii) Study Visit of an Indonesian Delegation


2.62 A team of the coordinating Ministry for Economic

(ii) KfW-SEWA Bank project:


2.61 The NABARD-KfW SEWA Bank project under implementation in Gujarat aims at providing access of rural and urban women to micro credit. KfW has released

Affairs of the Republic of Indonesia visited NABARD from 28 to 30 December 2009 to understand the role and functions of NABARD in Microfinance. Apart from NABARD HO, the team also visited Maharashtra RO, SHG members, NGOs and banks.

NABARD Consultancy Services


2.63 NABARD Consultancy Ser vices Pvt. Ltd. (Nabcons), a subsidiary of NABARD, established itself as a professional consultancy service provider in agriculture, allied activities and rural development. Government of India, state governments, commercial banks, small entrepreneurs, APRACA, UPDASP, etc. are its clients. Nabcons signed Memoranda of Understanding (MoU) with a number of banks and International Consultancy Organisations for promotion of business. like DPR on embryo transfer technology, awareness programmes on commodity trading for FMC and Winery Project in TN, even while continuing with the third phase of MPLAD monitoring. Nabcons undertook assignments for APRACA relating to micro finance policy and regulatory framework in Mongolia and Uzbekistan and for preparation of technical guide on bank linkage. Nabcons opened a liaison office in Nairobi, Kenya on 2 October 2009, to garner potential rural development consultancies in the African continent in the areas of mF, NRM, development programmes, etc. Nabcons is at present executing one assignment on impact study on 2.64 Nabcons has procured assignments for third-party monitoring of infrastructure projects from Arunachal Pradesh and Jammu and Kashmir Governments. Efforts are on to obtain similar assignments from other state governments. Nabcons has started capacity building programmes for co-operative banks in treasury and investment management. One such programme was conducted for Raigad DCCB and six for Maharashtra State Cooperative Bank. Nabcons has been approved as a pass-through agency by Ministr y of Rural Development, GoI for assisting skill development and training programme under SGSY package. Further, during the year, Nabcons made inroads into new areas development of coffee plantations.

A.

Important Developments

B.

Progress

2.65 During the year 2009-10, Nabcons contracted 83 assignments with a fee of Rs.1,711 lakh as against 122 assignments for Rs.1,666 lakh last year and completed 62 assignments involving consultancy fee of Rs.1,099 lakh. During the year 2009-10, the company ear ned an income of Rs.1,278 lakh consisting of Rs.997 lakh from assignments, Rs.110 lakh from Mutual Fund Distribution and Rs.168 lakh from income on investments; Rs.3 lakh was other (miscellaneous) income.

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RESEARCH AND DEVELOPMENT ACTIVITIES


2.66 The Research and Development (R&D) Fund was set up in NABARD in 1982-83 as mandated by NABARD Act 1981. The Fund is to provide financial support to select agencies for promoting applied research projects/studies, training and upgrading skills of personnel of client institutions and disseminating research findings. The corpus of the Fund has been kept at Rs.50 crore since 2004-05. 2.70 The study on Prospects of Advancing Organic farmers, tenant farmers, sharecroppers and oral lessees for accessing credit from formal institutions and to evolve a uniform reporting system for new farmers. Some of the suggestions from farmers in the study area included minimal documentation, lower interest rates, flexibility in repayments, with rebates in case of crop failure and creation of awareness about KCC.

A. Utilisation of the Fund


2.67 During the year, Rs.982.98 lakh was utilised from the fund for supporting activities like research projects/ studies (Rs.100.03 lakh), seminars (Rs.61.16 lakh), training/summer placement (Rs.802.84 lakh), and other activities (Rs.18.95 lakh). As on 31 March 2010, the cumulative disbursement stood at Rs.118.52 crore.

Farming for Cotton Crop by Gokhale Institute of Politics and Economics, Pune examined some of the issues in organic cotton farming like inputs use pattern, cost, yield, net returns, etc., vis--vis inorganic cotton farming, in Yavatmal (Vidarbha) and Dhule (Khandesh) districts of Maharashtra. A comparative analysis of organic and inorganic cotton farming revealed the advantages of organic cotton farming in terms of lower cost, higher profits and employment and reduced yield risks. The study recommended and stressed on adequate supply of organic inputs, role of farmers association in organic certification, creating awareness on the benefits of organic farming, adequate and timely dissemination of organic market information of the domestic and export markets, imparting training to farmers regarding organic practices, etc.

B.

Research Projects/Studies

2.68 During 2009-10, nine research projects involving a grant assistance of Rs.137.10 lakh were sanctioned. Further, six projects/studies sanctioned earlier were completed during the year. 2.69 Studies on the implementation of Doubling of

Agriculture Credit for the period 2004-05 to 2006-07 were conducted in Madhya Pradesh (Xavier Institute of Development Action and Studies, Jabalpur), Maharashtra (Gokhale Institute of Politics and Economics, Pune), Rajasthan (Institute of Development Studies, Jaipur), Tamil Nadu (TNAU, Coimbatore) and Uttar Pradesh (Bankers Institute of Rural Development, Lucknow). The study revealed inter-agency and inter-district variations with regard to the year of achievement of doubling of agricultural credit. In all the states, the commercial banks fared better than the RRBs and Co-operatives. In the current Management Information System maintained by the Rural Financial Institutions (RFI), there was no precise definition and provision for recording data of new farmers/ new accounts. The study suggested the need to orient agriculture credit policy towards marginal and small

C.

Seminars, Conferences and Workshops

2.71 During the year, grant assistance of Rs.88.71 lakh was sanctioned to various universities, research institutes and other agencies for organising 112 seminars, conferences, symposia and workshops covering subjects/ areas relatedto agriculture and rural development including the dynamics of banking sector reforms, Agripreneurship and Rural Development, Agro food processing, poultr y production, biotechnology, horticultural research, plant pathology, fisheries, agri marketing, commodities futures, use of Coal Ash in Agriculture and Forestry, management strategies,food security, Bio resources, etc. The grant support extended to the organisers enabled them to document the proceedings and publish background papers, thus

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facilitating wider dissemination of the recommendations/ action points and initiate suitable policy interventions by agencies concerned.

from the R & D fund during the year for capacity building of the staff of RFIs.

D. Occasional Papers
2.72 NABARD continued its endeavour of publishing Occasional Papers to generate and disseminate information on policy issues related to agricultural and rural development. During the year, two Occasional Papers on Economics of Cashew in India and Economics of Pulses Production & Processing of India were published.

F. Summer Placement Scheme


2.74 The Summer Placement Scheme is 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 in agriculture and rural sectors. The students are assigned tasks/projects of relevance to the Bank to generate new product and service ideas, that could be introduced for the benefit of its constituents. During 2009-10, projects on agriculture and rural development, allied sector, agri-business and social development were assigned to 57 students by 21 ROs, establishments (TEs) and HO, entailing expenditure of Rs.15.52 lakh.

E. Training Activities
2.73 Apart from extending grant assistance for various R&D activities, an amount of Rs.25.65 lakh was utilised

Training of Personnel
A. Training and Sensitisation Programmes
BIRD-Lucknow to provide advanced training to the RFI personnel and to supplement the efforts of other training institutions through technical support. During the year, 467 training programmes were conducted by the TEs covering 11,507 participants (Table 2.5). Out of 261 training programmes conducted by BIRD, 27 programmes were conducted in collaboration with NBSC, Lucknow for 547 par ticipants from client institutions. The programmes conducted by RTC, Mangalore included one exposure programme on microfinance for senior level officials of SANSA Development Bank, Sri Lanka.

2.75 NABARD continued to provide financial and other support to training institutions like Bankers Institute of Rural Development (BIRD), Lucknow, Regional Training Centres (RTCs) at Mangalore and Bolpur, National Institute of Rural Banking (NIRB), Bangalore, Manpower Development and Management Institute (MDMI)Shillong and Indian Institute of Bank Management (IIBM), Guwahati.

B. Training of Personnel of RFI


2.76 Three training establishments (TEs) have been set up by NABARD, viz., RTC-Bolpur, RTC-Mangalore and

C.

Developments in 2009-10

2.77 A Technology park set up in BIRD premises with the support of technology vendors, for display of

Table 2.5: Training of RFI Personnel (Nos.) Institute 2007-08 BIRD, Lucknow RTC, Mangalore RTC, Bolpur Total 192 103 73 368 Programmes Conducted 2008-09 2009-10 257 91 86 434 261 93 113 467 2007-08 4311 2399 1778 8488 Personnel Trained 2008-09 6616 2065 2268 10949 2009-10 6139 2474 2894 11507

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equipment

and

technology

relating

to

financial

2.80 An APRACA Centre of Excellence (ACE) in Linkage Banking was set up in CMR. It will act as a Leading Centre of knowledge in Linkage Banking. 2.81 During the year, NABARD sanctioned grant assistance of Rs.7.53 lakh to National Institute of Rural B a n k i n g ( N I R B ) , B a n g a l o re f o r c o n d u c t i n g 2 1 programmes. An amount of Rs.4.24 lakh was released t o N I R B , B a n g a l o re f o r c o n d u c t i n g 1 7 t r a i n i n g programmes under which 196 par ticipants were covered. Further, during the year, NABARD released Rs.24.92 lakh from its R&D Fund to the Indian Institute of Bank Management (IIBM), Guwahati towards 15 per cent share in revenue expenditure. 2.82 NABARD has been extending funding support under SOFTCOB to Junior Level Training Centres (JLTCs) of SCARDBs, Agricultural Co-operative Staff Training Institutes (ACSTIs) of SCBs and Integrated Training Institutes (ITIs) out of the Co-operative Development Fund (CDF). During the year 2009-10, the bank provided technical and financial support to seven JLTC, twelve ACSTIs and three ITIs set up by SCARDBs and SCBs, respectively, to enable them to improve their training system. A total amount of Rs.390.20 lakh was disbursed to the JLTCs, ACSTIs and ITIs out of the CDF for conducting 1019 programmes covering 12,088 participants during 2009-10 as against Rs.330.74 lakh disbursed for conducting 303 programmes covering 6,146 participants during 2008-09. The scheme has been revised and extended for a period of three years from 1 April 2010 to 31 March 2013. The ACSTIs, JLTCs, and ITIs will be eligible for additional assistance under the revised scheme as support from NABARD for linking their activities with CPEC.

inclusion was inaugurated by the Chairman, NABARD during the year. 2.78 NABARD had established the Centre for Microfinance Research (CMR) in 2008 at BIRD and four sub-centres at Guwahati, Patna, Chennai and Jaipur to conduct research in various themes of micro finance covering all regions of the country. During the year, a national seminar on Microfinance Issues and Challenges was organised by CMR. The CMR also identified 20 projects for research and brought out the first issue of its half-yearly journal, The Microfinance Review. During the year, grant assistance of Rs.70 lakh was released by NABARD to CMR taking the cumulative assistance to Rs.194.18 lakh. 2.79 T h e C e n t re f o r Pr o f e s s i o n a l E x c e l l e n c e i n Co-operatives (C-PEC) set up at BIRD, Lucknow during the year 2008-09 in collaboration with GTZ, continued to focus its efforts to make the training system of the co-operative credit structure more professional. During 2009-10, C-PEC completed the preliminary work of inventory of training institutions in the co-operative sector, TNA study of the short-term co-operative credit structure (STCCS) and conducted workshops for zonal stakeholders. All the co-operative credit institutions and the training establishments have been addressed by C-PEC for seeking accreditation and to participate in the initiatives for infusing a professional attitude in the co-operative workforce. It is expected that C-PEC will begin rolling out certified Training of Trainers (TOTs) Programme and accreditation of training institutes from 2010-11.

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III
Business Operations
The business operations of NABARD mainly comprise (a) providing refinance support to co-operative banks, commercial banks, regional rural banks, scheduled primary urban co-operative banks (PUCBs), Agriculture Development Finance Companies (ADFCs) to supplement their financial resources for enhancing credit flow to agriculture and rural sectors, (b) providing loans to state governments for rural infrastructure projects under the Rural Infrastructure Development Fund (RIDF), and (c) co-financing viable projects with commercial banks. This chapter details the business operations and achievements of the Bank during the year. 3.2 The total financial support extended by registering a growth of 13 per cent over 2008-09 (Chart 3.1).

NABARD during 2009-10 stood at Rs.57,069 crore,

Production Credit
A.
a.
i.

Short-Term Refinance
State Co-operative Banks (SCBs)
Support for Operations Seasonal Agricultural

resulting in increased refinance made available to them, which ranged between 40 and 50 per cent of their RLP. 3.5 As an incentive to co-operative banks that

3.3 The refinance assistance to co-operative banks for Shor t-Ter m Seasonal Agricultural Operations (ST-SAO) was linked to net NPA level of the banks. Consolidated limits were sanctioned to SCBs on behalf of eligible DCCBs to the extent of 40 per cent, 35 per cent and 30 per cent of Realistic Lending Programme (RLP), with net NPA up to 10 per cent, between 10 to 15 per cent and above 15 per cent, respectively. The limits were further enhanced by 5 per cent of RLP after the mid-term review in December 2009. 3.4 SCBs in Andaman and Nicobar Islands, Sikkim and Uttarakhand were

covered maximum number of new farmers during 2008-09 on account of implementation of ADWDR Scheme, 2008, it was decided to provide additional credit limit of 5 per cent of their RLP for the year 2009-10 to two DCCB in each state having a three-tier structure. In states with two-tier structure, SCBs were made eligible for the incentive, if at least 25 per cent of the total crop loan had been disbursed to new beneficiaries under ADWDR Scheme, 2008. In the case of states that executed MoU and amended their Cooperative Societies Act, as required under the GoI package for revival of STCCS, it was decided that credit limit applications need not be routed through RCS. Relaxations were also granted to co-operative banks not complying with section 11(1) of B. R. Act, 1949 (AACS). The stipulation of minimum coverage of SF/ MF, continued to be at 30 per cent. 3.6 The short-term refinance assistance to

Himachal Pradesh, Jammu and Kashmir, North Eastern Region (NER), considered for relaxation in NPA norms and provided enhanced quantum of refinance between 45 per cent and 55 per cent. In addition, SCBs in eastern region, viz ., Bihar, Chhattisgarh, Orissa and West Bengal were made eligible for additional refinance up to 5 per cent over and above the applicable quantum of refinance, 56

co-operative banks and RRBs indicating credit limits and

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maximum outstanding for the last five years are given in Table 3.1. 3.7 During 2009-10, ST-SAO limits were sanctioned

ii.
3.9

Support for Short-term (Others)


Short-term (Others) included ST-agriculture/allied

activities/marketing of crops/ pisciculture/industrial co-operative societies (other than weavers)/labour contract and forest labour co-operative societies (including collection of minor forest produce)/rural artisans (including weaver members of PACS/LAMPS/ FSS)/procurement and distribution of agricultural inputs. ST- Labour Contract Co-operatives engaged in civil work in rural areas were also made eligible for refinance under ST (Others) during the year . A consolidated ST (Others) limit was sanctioned to SCBs on behalf of eligible DCCBs. SCBs with net NPA not exceeding 10 per cent, as on 31 March 2008, were considered eligible for refinance. Relaxations in NPA norms extended to Eastern and North Eastern regions in the case of ST-SAO were made applicable for ST-Others. The assessment nor ms, hitherto followed, for different purposes were continued. 3.8 While SCBs in northern (Haryana, Himachal Pradesh, Punjab and Rajasthan) region accounted for 35 per cent, SCBs in southern (Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu), western (Gujarat and Maharashtra) and central (Madhya Pradesh, Uttarakhand and Uttar Pradesh) regions accounted for 20, 17 and 16 per cent, respectively, of the aggregate credit limits sanctioned. Eastern region (Bihar, Chhattisgarh, Orissa and West Bengal) accounted for 12 per cent. The share of refinance availed by the co-operative banks in the NER continued to be low despite relaxations. Meghalaya, Nagaland and Sikkim SCBs were sanctioned credit limits aggregating Rs.5.25 crore, against which the utilisation was Rs.5.21 crore. to 20 SCBs aggregating Rs.18,109 crore as against Rs.15,448 crore sanctioned during 2008-09. The credit limits included Rs.1,809.95 crore for the Oilseeds Production Programme (OPP), Rs.155.62 crore for National Pulses Development Programme (NPDP) and Rs.592.99 crore for credit requirements of tribals under the Development of Tribal Population (DTP). SCBs reached a maximum outstanding of Rs.17,436.66 crore during 2009-10 with a utilisation rate of 96 per cent. The utilisation included an amount of Rs.199.43 crore towards disbursements made as incentive to co-operative banks that covered maximum number of new farmers during 2008-09 on account of the implementation of ADWDR Scheme, 2008.

iii.

Support to Weavers

3.10 Refinance assistance for weavers credit limit (short-term) to co-operative banks for working capital requirements of Primary/Apex/Regional Weavers was linked to net NPA level. Consolidated limits were sanctioned to SCBs on behalf of eligible DCCBs. Relaxations in NPA norms as extended to Eastern and North Eastern regions in the case of ST-SAO were made applicable for weavers also. The refinance assistance for weavers credit limit (short-term) to commercial banks for working capital requirements of cooperative societies for production and marketing of handloom products,

Table 3.1: Short term refinance (Production credit) for the last five years (Rs. crore) Year 2005-06 2006-07 2007-08 2008-09 2009-10 Limit sanctioned 12080 16089 18291 19627 25661 Maximum outstanding 10769(89.15) 14168(88.06) 16352(89.40) 17212(87.70) 24715(96.31)
Handloom weaving

Figures in the parentheses refer to percentage share.

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individual weavers, handloom weaver groups and master weavers was also linked to net NPA level. Scheduled commercial banks having net NPA of less than 3 per cent as on 31 March 2008, and making profit in 2007-08, without accumulated losses, were considered eligible. Short-term credit was also available to SCBs and scheduled commercial banks for financing working capital requirements of State Handloom Development Corporations for production/procurement and marketing of handloom products. During 2009-10, ST (weavers) credit limits aggregating Rs.177.32 crore were sanctioned to five SCBs (Andhra Pradesh, Karnataka, Puducherry, Tamil Nadu and West Bengal) for production/ procurement/marketing activities, as against Rs.265.63 crore during 2008-09. The maximum outstanding was Rs.180.78 crore as against Rs.166.66 crore in the previous year. 3.11 During the last three years , 4,172 Handloom

(Rs.74.87 crore) and Rajasthan (Rs.21.05 crore) SCARDBs at 4.5 per cent interest rate for lending to the ultimate borrowers at 7 per cent.

c.

Regional Rural Banks

3.13 Refinance to RRBs was also linked to net NPA levels. While RRBs with net NPA up to 5 per cent were eligible for refinance to the extent of 25 per cent of their RLPs, RRBs having net NPA between 5 and 10 per cent were eligible for refinance to the extent of 20 per cent of RLP. RRBs, net NPA of which exceeded 10 per cent, were eligible for refinance up to 15 per cent of RLP. This was further enhanced by 5 per cent, i.e. 30, 25 and 20 per cent of RLP , during the mid-term review. 3.14 The RRBs in Eastern Region (Bihar, Chhattisgarh, Jharkhand, Orissa, West Bengal), were made eligible for additional refinance up to 5 per cent over and above the applicable quantum of refinance, which varied between 25 and 35 per cent. The RRBs in the Himachal Pradesh, Jammu & Kashmir, North Eastern Region and Uttarakhand were granted relaxation in NPA norms and enhanced quantum of refinance varying between 30 per cent and 40 per cent, to facilitate greater credit flow. RRBs were advised to increase lending to tenant farmers and oral lessees through the JLG Scheme or otherwise. 3.15 During 2009-10, limits of Rs.6,832.13 crore were sanctioned to 80 RRBs under ST-SAO as against Rs.3,546.81 crore sanctioned to 76 RRBs in 2008-09. The limit included Rs.577.85 crore for Oilseeds Production Programme (OPP), Rs.143.86 crore for Development of Tribal Population (DTP) and Rs.4.00 crore for National Pulses Development Programme (NPDP). Uttar Pradesh with the limit of Rs.1,079 crore accounted for the largest share of credit limits sanctioned, followed by Andhra Pradesh (Rs.897 crore), Rajasthan (Rs.823 crore), Kerala (Rs.740 crore) and Karnataka (Rs.545 crore). The maximum outstanding was Rs.6,779.79 crore forming 99 per cent of the limit sanctioned during 2009-10. Five RRBs in North Eastern Region were sanctioned credit limit of Rs.27.23 crore, which was utilised fully.

Weavers Groups (HWG) were formed by banks in 12 states, viz ., Orissa (1,366), Andhra Pradesh (1,220), Jharkhand (500), Karnataka (498), Assam (272), Madhya Pradesh (103), West Bengal (88), Bihar (82) and other States (43). Of these, 1,781 HWG have been credit linked.

b.

State Co-operative Agriculture and Rural Development Banks

3.12 The scheme of extending short-term (ST) refinance to State Co-operative Agriculture and Rural Development Banks (SCARDBs) for SAO was continued during the year. Refinance of Rs.95.92 crore was extended to Kerala

Tea Garden

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3.16 Consolidated limits were sanctioned to RRBs for ST - Other than SAO (ST-OSAO) to the extent of 60 per cent of their RLP for eligible purposes like marketing of crops, pisciculture, approved purposes like production and marketing activities of artisans (including handloom weavers), village/cottage/tiny sector industries, financing persons belonging to the weaker sections engaged in trade/business/service activities including distribution of inputs for agriculture and allied activities. RRBs having net NPA upto 5 per cent were eligible for refinance. The aggregate limit for ST-OSAO sanctioned during 2009-10 was Rs.542 crore, against Rs.190.80 crore in the previous year. The maximum utilisation was Rs.318.24 crore (59 per cent).

providing concessional refinance to SCBs and RRBs at 4.0 per cent and 4.5 per cent interest rates, respectively. Aggregate interest subvention of Rs.1,284.56 crore was provided by GoI to NABARD, co-operative banks and RRBs for the year 2007-08. An amount of Rs.1,205.17 crore has been disbursed for 2008-09. Interest subvention for 2009-10 was estimated at Rs.2,600 crore.

b. Package for Sugar Industry


3.18 NABARD continued to act as the nodal agency for the package announced by GoI for loan assistance to co-operative sugar mills from co-operative banks. Out of Rs.138.54 crore received from GoI as interest subvention, Rs.131.22 crore pertaining to 76 co-operative sugar mills was released to the co-operative banks. An additional sum of Rs.113.07 crore was estimated as claims from banks for these years from 2008-09 to 2010-11. Under the Scheme for Providing Financial Assistance to Sugar Undertakings 2007 for payment of cane dues for 2006-07 and 2007-08 sugar seasons, GoI placed Rs.125.71 crore with NABARD for release against interest subvention claims. An amount of Rs.60.97 crore was sanctioned to 59 sugar mills operating in Goa, Gujarat, Karnataka, Maharashtra, Orissa and Uttar Pradesh.

B.
a.
3.17

Other Initiatives
Interest Subvention to Farmers
The continuance of the interest subvention scheme

was announced in the Union Budget 2009-10. Interest subvention of 2 per cent per annum was available to public sector banks, co-operative banks and RRBs for deploying their own funds for crop loan upto Rs.3 lakh per farmer, provided the ultimate borrower got such loans at 7 per cent interest rate per annum. An additional subvention of 1 per cent was announced during the year, to those farmers who repaid crop loans promptly within one year of disbursement. Thus, the interest paid on crop loans by such farmers was effectively 6 per cent. This was to reward the prompt payers even while helping the lending institutions by declogging the line of credit. Suitable interest subvention was given to NABARD for

c.

Interest Rates on Refinance Assistance

3.19 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 2009-10 are indicated in Table 3.2.

Table 3.2: Rates of Interest on Refinance (Per cent) Sl. No. Purpose 1 2 3 4 5 6 7 8 9 SAO SAO against Pledge of securities ST (Others other than weavers) ST (Weavers Primary and Apex/ Regional Weavers Co-operative Societies.) ST Weavers - Financing of Primary Weavers Co-operative Societies ST-Other than SAO loans (ST- OSAO) ST - Working capital requirements of SHDC MT (Conversion) loan LT loans to State Governments Agency SCB/RRB SCB SCB SCB Scheduled Commercial Banks RRB SCB & Scheduled SCB/RRB State Governments Interest Rate 4.0/4.5 8.0 8.0 7.5 7.5 8.0 7.5 5.5 8.5

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Investment Credit
A. Refinance Policy and Eligibility Criteria C. Security Norms

3.22 The release of refinance to SCARDBs as also to SCBs/DCCBs for farm and non-farm sector activities was against government guarantee. However, SCBs that were profit making during 2007-08 with no accumulated losses, net NPA of less than 5 per cent, as on 31 March 2008, and having A Audit classification were exempted from government guarantee. Refinance to other SCBs, including Section 11(1) of BR Act (AACS) non-compliant SCBs/DCCBs and to non-scheduled SCBs was against government guarantee only. In the event of government guarantee not forthcoming, alternatives like pledge of government securities or fixed deposit receipts issued by scheduled banks were considered.

3.20 The policy of preferential treatment to states in North-Eastern and Hilly Regions was extended also to the states in Eastern Region during 2009-10. As a result, the client financial institutions in Bihar, Jharkhand, Orissa and West Bengal have benefited. Concessions include 100 per cent refinance, concessional interest rates on refinance and relaxations in eligibility criteria in respect of recovery and gross/net NPA. Refinance was also extended to Section 11(1) of B.R. Act (AACS) noncompliant SCB/DCCB in states that executed MoU for implementing the GoI revival package for revival of STCCS. SCBs, SCARDBs and RRBs continued to be classified under A/B/C/D categories based on the level of gross/net NPA against loans and advances outstanding, recovery performance, net worth and profitability. However, (i) SCBs with gross NPA of more than 20 per cent, (ii) SCARDBs with recovery of less than 30 per cent, (iii) commercial banks/PUCBs with net NPA of more than 3 per cent, (iv) RRBs with deposit erosion of more than 30 per cent, and (v) NBFCs with net NPA of more than 5 per cent were considered ineligible for availing refinance during the year.

D.

Interest Rates on Refinance

3.23 The changing market conditions and their impact on the cost of funds for NABARD led to the interest rates being revised four times during 2009-10. The interest rates, with effect from 1 March 2010, stood at 8 per cent for commercial banks, 7.5 for RRBs/ co-operative banks and 6.5 for ADFC/NEDFi. The rate on interim finance to SCARDB and ADFC was 9.75 and 6.5 per cent, respectively. A special reduction of 50 basis points was provided to commercial banks in NER (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura), Hilly States (Himachal Pradesh, Jammu & Kashmir and Uttarakhand), Eastern States (Bihar, Jharkahand, Orissa and West Bengal), Chhattisgarh, Sikkim, Andaman & Nicobar Islands and Lakshadweep, for all eligible purposes.

B.

Special Package for NER and Sikkim

3.21 With a view to enhancing the flow of credit to NER and Sikkim, NABARD continued to grant relaxation to commercial banks, co-operative banks and RRBs operating in the area. The initiatives operationalised during 2009-10 were: (i) NPA norms were relaxed by 5 and 3 per cent, respectively, to enable SCB and RRB to avail of refinance for ST (SAO); and (ii) the rate of interest on refinance to commercial banks was reduced by 0.5 per cent. The refinance support extended was 100 per cent for all purposes to all agencies. 60

E.

Refinance Support

3.24 The refinance disbursed (including ST-SAO to SCARDB) during the year was Rs.12,009.08 crore as against Rs.10,535.29 crore in the previous year, recording an increase of 14 per cent.

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Table 3.3: Agency-wise disbursement (Rs. crore) Agency SCARDB SCB Commercial Banks RRB PUCB/ADFC Total Disb.2007-08 1,950.58 826.55 3,951.73 2,313.99 3.42 9,046.27 Share (%) 21.56 9.14 43.68 25.58 0.04 100.00 Disb.2008-09 1,986.54 801.51 5,867.19 1,879.04 1.01 10,535.29 Share (%) 18.86 7.61 55.69 17.83 0.01 100.00 Disb.2009-10 2221.30 1251.95 6057.19 2457.46 21.18 12,009.08 Share(%) 18.50 10.43 50.44 20.46 0.17 100.00

a)

Agency-wise Disbursements of Refinance

Nadu and Uttar Pradesh, while around eighty-eight per cent of the refinance to SCBs was in Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Orissa, Punjab, Uttar Pradesh and West Bengal. Ninety-six per cent of the refinance to SCARDBs was in Haryana, Karnataka, Kerala, Punjab, Rajasthan, Uttar Pradesh and West Bengal.

3.25 During 2009-10, though commercial banks availed of the highest refinance at 50.44 per cent, their share showed a decline from the previous year (55.7%). The shares of RRBs, SCBs and PUCB/ADFCs increased, while those of SCARDBs decreased. In absolute terms, however, all the agencies recorded increases in availment of refinance (Table 3.3/Chart 3.2).

c)

Sector-wise disbursements

b)

Spatial Distribution of Refinance

3.27 During the year 2009-10, non-farm sector (NFS) (28.9%) and Self-Help Groups (SHG) (26.4%) were the major purposes for which banks availed of refinance, followed by farm mechanisation (14.3%) and dairy development (6%) (Table 3.5). An analysis of the data for the latest three years revealed that farm mechanisation, dairy development, poultry/ SGP/ AH-others, storage/market yard, NFS and SHG have

3.26 Refinance disbursement across regions varied widely with the highest share being in the south (50%), followed by north (20%), central (12%) and others (18%) (Table 3.4/Chart 3.3). Ninety per cent of the disbursement to RRBs was in Andhra Pradesh, Haryana, Karnataka, Kerala, Punjab, Rajasthan, Tamil

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Table 3.4: Region-wise Disbursement (Rs. crore) Region Northern North-Eastern Eastern Central Western Southern Total Disb.2007-08 1,957.78 178.57 1,134.73 1,810.40 712.26 3,252.53 9,046.27 Share(%) 21.64 1.97 12.55 20.01 7.87 35.96 100.00 Disb.2008-09 2,636.45 174.18 1,102.99 1,526.02 796.74 4,298.91 10,535.29 Share(%) 25.02 1.65 10.47 14.49 7.56 40.81 100.00 Disb.2009-10 2419.87 139.85 891.07 1478.60 1111.79 5967.90 12,009.08 Share(%) 20.15 1.16 7.42 12.31 9.26 49.70 100.00

Northern: Haryana, Himachal Pradesh, Punjab, Rajasthan, J&K, Delhi and Chandigarh North-Eastern: Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura. The disbursement in Sikkim has been included under this region. Eastern: Bihar, Jharkhand, Orissa, West Bengal and A&N Islands Central: Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Uttarakhand Western: Gujarat, Goa, Maharashtra, Dadra and Nagar Haveli and Daman &Diu Southern: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Puducherry and Lakshwadeep Islands

recorded substantial growth in refinance, while minor irrigation, land development and fisheries showed declining trends.

rose to 48 with cumulative total financial outlay (TFO) of Rs.807.52 crore. An amount of Rs.11.99 crore was sanctioned and Rs.26.60 crore was disbursed during the year. Cumulative sanction and disbursement by NABARD were Rs.229.44 crore and Rs.136.35 crore, respectively. As on 31 March 2010, there were 38 on-going projects under co-financing.

F.
3.28

Co-financing
NABARD has executed MoU with 16 commercial

banks, three RRBs, one SCB and an NBFC for supporting agricultural projects under co-financing arrangement. During the year, eight projects were sanctioned with total financial outlay (TFO) of Rs.62.13 crore and total term loan sanctions amounting to Rs.33.53 crore. The cumulative number of projects sanctioned since 2003

G.
3.29

Capital Investment Subsidy Schemes


Since 2000-01, NABARD is the nodal agency for

various Capital Investment Subsidy Schemes (CISS) of

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Table 3.5: Sector-wise disbursement (Rs. crore) Sector Minor Irrigation Land Development Farm Mechanisation Plantation & Horticulture Poultry Farming / Sheep, Goat and Piggery /Animal Husbandry - Others Fisheries Dairy Development Forestry Storage & Market Yards SGSY NFS SC/ ST-Action Plan SHG Others Total 2007-08 403.68 (4.46) 462.14 (5.11) 1747.65 (19.32) 341.82 (3.78) 216.29 (2.39) 25.45 (0.28) 605.87 (6.70) 6.39 (0.07) 136.28 (1.51) 258.58 (2.86) 2747.95 (30.38) 20.52 (0.23) 1615.50 (17.86) 458.15 (5.05) 9,046.27 (100.00) 2008-09 545.85 (5.18) 949.94 (9.02) 1514.03 (14.37) 374.54 (3.56) 298.70 (2.84) 77.15 (0.73) 489.41 (4.65) 6.56 (0.06) 141.01 (1.34) 201.12 (1.91) 2706.79 (25.69) 28.94 (0.27) 2620.03 (24.87) 581.22 (5.51) 10,535.29 (100.00) 2009-10 496.73 (4.14) 303.67 (2.53) 1714.66 (14.28) 377.40 (3.14) 349.79 (2.91) 54.62 (0.46) 725.35 (6.04) 6.46 (0.05) 187.22 (1.56) 151.50 (1.26) 3465.99 (28.86) 2.30 (0.02) 3173.56 (26.43) 999.83 (8.33) 12009.08 (100.00)

grading and standardisation, and (iv) establishment of Agri-clinics and Agri-business Centres (ACABC) by agriculture graduates. Back-ended subsidy varies for each scheme, with the NER/weaker sections getting a higher quantum under each of the schemes.

a.

Promotion Scheme for Cold Storages, Onion Godowns and Rural Godowns

3.30 The scheme, launched in 1999-2000, aimed at promoting creation of cold storage and scientific storage facilities to prevent heavy post-harvest losses, wastage, product deterioration and distress sales. It was to act as a hedge against wide price fluctuations of horticultural produce. The number of projects sanctioned under Cold Storages, Onion Godowns and Rural Godowns Scheme are detailed in Table 3.6.

b.

Agricultural Marketing Infrastructure, Grading and Standardisation

3.31 The scheme in operation since 2004, aims at establishing/strengthening infrastructure for marketing, grading, standardisation and quality certification of produce. It is to be implemented in only such States where APMC Act is amended to allow private participation. During the year, 573 projects with TFO of Rs.637.90 crore and bank loans of Rs.419.54 crore were sanctioned and subsidy of Rs.49.89 crore was released to 21 states and five UTs. Cumulatively, 3,838 units with TFO and bank loans of Rs.1,933.56 crore and Rs.1,283.13 crore, respectively, were sanctioned and subsidy of Rs.190.89 crore was released.

Figures in parentheses indicate percentage to total.

GoI. During 2009-10, four Schemes were implemented, viz., (i) construction of cold storages and onion godowns, (ii) construction of rural godowns, (iii) development/ strengthening of agriculture marketing infrastructure,

Table 3.6: Details of Projects under Cold Storages, Onion Godowns and Rural Godowns (Rs. crore) Sl. Facility No. 1. Cold Storage & Onion Godowns 2. Rural Godowns No. of Projects 60 963 2009-10 TFO for the year 129.81 281.92 Bank Loan 77.77 196.82 Subsidy 30.28 65.44 Cumulative as on 31.03.2010 No. of Projects 1851 17556 TFO 2900.59 3798.58 Bank Loan 1634.67 2504.08 Subsidy 443.58 578.97 Cumulative Capacity*

76.74 221.45

* Capacity: Lakh Metric Tonnes .

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c.

Agri-Clinics and Agri-Business Centres

of NABARD, banks and other participating agencies. The back-ended subsidy at 45 per cent of the project cost, to be released by NABARD through the financing banks, is available to the beneficiaries under the scheme. As on 31 March 2010, an amount of Rs.32.02 crore was released to four RRBs and 13 commercial banks as subsidy under the scheme.

3.32 With a view to providing fee-based extension services to farmers and at the same time providing selfemployment avenues to unemployed agricultural graduates, a central sector scheme with subsidy component, was launched by GoI in 2006-07 to promote the establishment of agri-clinics and agri-business c e n t r e s ( A C A B C s ) . D u r i n g t h e y e a r, s u b s i d y o f Rs.1.61 crore was disbursed for 76 projects involving TFO of Rs.5.99 crore and bank loan of Rs.4.66 crore. Till 31 March 2010, 280 projects with TFO of Rs.20.87 crore, bank loan of Rs.15.98 crore and subsidy of Rs.3.90 crore were sanctioned.

e.

National Project on Organic Farming NPOF - CISS for Commercial Production of Organic Inputs

3.34 The GoI launched the National Project of Organic Farming (NPOF) in 2005 to promote organic farming in the country and is providing subsidy under the capital investment subsidy scheme (CISS) for commercial production of organic inputs like biofertiliser, vermiculture hatchery and units for composting of fruit and vegetable wastes. The GoI has since extended the Scheme for 2009-10. An amount of Rs.40.25 crore has been earmarked as subsidy for bankable projects. The fund is being operated by both NABARD and NCDC. Since inception, 612 units (Ver mi-hatchery units - 569, Bio-fertilizer 32 and Fruit & Vegetable waste compost unit - 11) have been sanctioned by NABARD with subsidy of Rs.1,497.89 lakh, as on 31 March 2010. Subsidy of Rs.1,042.33 lakh has been released.

d.

Bihar Ground Water Irrigation Scheme


The implementation of Bihar Ground Water

3.33

Irrigation Scheme (BIGWIS), promoted by the Planning Commission, GoI, commenced from 2009-10 to provide irrigation to 9.28 lakh ha. of agricultural land in Bihar by installing 4.64 lakh units of private shallow tubewells/ dugwells with pumpsets over a period of three years. The scheme is to be implemented in all districts of Bihar through commercial banks and RRBs, utilizing the balance amount of Rs.231.67 crore, under Million Shallow Tubewell Programme, which was closed on 31 March 2007. The Minor Water Resources Department, Government of Bihar, is the nodal department for implementation of the scheme with the active support

H.
3.35

Investment and Scheme Specific Studies


NABARD conducts Investment Specific Studies

(ISS) to identify the problems at the field level in implementation of the schemes, assess the availability and adequacy of backward and forward linkages, to estimate the benefits accruing from the investment, and study repayment performance, etc. During 2009-10, 30 ISS were conducted by ROs in association with financing banks and nodal Departments of state governments. The studies covered investments in farm and rural non-farm sectors.

I.
Project under agricultural marketing infrastructure

Physical Achievements

3.36 The refinance disbursements supporting varied economic activities under various types of investments

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during the year are depicted in Table 3.7. Under minor irrigation (MI) 28,000 tubewells with pumpsets and 33,000 pumpsets on existing wells were financed. Tractor financing continued to be a major item of investment under farm mechanisation (FM) with 49,000 units financed during the year. During 2009-10, under land

developement, an area of 31,000 ha. was developed. Under the animal husbandry sector, dairy farming and sheep/goat rearing showed an increase of 2.38 lakh and 2.80 lakh animals, respectively. The poultry sector showed good growth with 1.35 crore birds being financed during 2009-10.

Table 3.7: Units Financed and Completed Sr. Investments No. Units Units Financed (upto 31 March) 2009 1. Minor Irrigation i. Tubewells with pumpsets @ 000 000 000 000 000 000 ha. 1,612 2,094 1,724 2,467 1,886 3,351 1,640 2,096 1,725 2,500 1,919 3,387 1,594 2,081 1,723 2,436 1,849 3,285 1,621 2,083 1,724 2,469 1,882 3,319 2010 Units Completed (upto 31 March) 2009 2010

ii. Dugwells with pumpsets * iii. Dugwells with conventional lift iv. Pumpsets on existing wells v. 2. 3. Others **

Land Development*** Farm Mechanisation i. Tractors

000 000 000 000 ha. lakh ETPs 000 tonnes No. 000 animals 000 animals 000 animals lakh birds

1,427 164 741 2,323 3,216 18,636 3,080 16,020 38,469 1,702 1,892

1,476 168 766 2,324 3,217 18,898 3,559 16,261 38,758 1,712 2,029

1,391 160 733 2,273 2,657 18,449 3,047 15,789 38,010 1,693 1,860

1,440 163 758 2,274 2,658 18,711 3,526 16,031 38,299 1,703 1,997

ii. Power tillers iii. Other farm equipments 4. 5. 6. 7. 8. 9. 10. 11. 12. Plantation & Horticulture Forestry Storage Market Yards Dairy Development Sheep/ Goat Rearing Piggery Poultry Fishery i. Mechanised Boats

No. No. ha. 000 ha. 000 000

22,765 75,019 5,371 417 8,268 15,330

22,777 75,025 5,381 418 8,549 15,882

22,082 73,799 5,308 412 8,088 14,671


ETPs : Entire Trans-Planting.

22,094 73,805 5,318 413 8,368 15,224

ii. Other Boats iii. Brackish Water Aquaculture iv. Fresh Water Aquaculture 13. 14. Non-Farm Sector Miscellaneous$

@ : Includes borewells with pumpsets.

* : Includes dug-cum-borewells with pumpsets,

** : Includes dugwells/ dugwells-cum-borewells, deep tubewells with pumpsets, deepening/ renovation of wells, sprinkler, pipeline, storage/water harvesting tank, lift irrigation, drip, pump house, shallow tubewells/million shallow tubewell programme, etc. *** : Includes soil conservation, saline/ alkaline soil, channels/ lining/ under 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 2009, but not likely to have been completed. It is possible that some of the units have turned out to be infructuous or remained incomplete beyond their normal gestation period.

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J.

Rescheduling/Postponement of Principal Amount Repayment

as a guide in credit planning exercise and infrastructure development for 2010-11. The sector-wise credit flow projections captured in the PLPs were utilised for arriving at the credit flow target for agriculture and priority sector.

3.37 On account of implementation of ADWDR Scheme 2008, repayment of principal amount of Rs.30 crore by Haryana SCARDB was rescheduled. On account of natural calamity, repayment of Rs.1.14 crore by Chhattisgarh SCARDB was also postponed.

b.

State Focus Paper

3.40 State Focus Papers presenting a comprehensive picture of potential available in various sectors in the rural areas along with critical infrastructure gaps to be filled and linkage support to be provided by line departments/banks were prepared by Regional Offices based on PLPs. State credit seminars were organised for discussion with various stake holders for bridging the infrastructure gaps and facilitating targeted credit flow.

K.

Shortfall in Contribution to Floatation of Special Development Debentures


Governments for Special Development

3.38 SCARDBs receive contribution from Central and State Debentures (SDD). However, during the year, in respect of five SCARDBs, viz. , Himachal Pradesh, Kerala, Madhya Pradesh, Orissa and Punjab, there was shortfall in GoI/State Government contribution towards floatation of SDDs. The respective state governments/ SCARDBs were advised by NABARD to take necessary steps in this regard.

c.

District Level Offices

3.41 Three new District Development Managers offices were opened, taking the total number of DDM offices to 395. In addition, 100 districts were tagged to specific DDM districts to focus on developmental activities in these districts.

L.
a.

Credit Planning
Potential Linked Credit Plans

d.

Integrated District Plans

3.42 NABARD was involved as a Technical Support Institution (TSI) in the preparation of Integrated Development Plans under the Backward Regions Grants Fund in 17 districts of five states, viz., Andhra Pradesh, Jharkhand, Maharashtra, Tripura and Uttar Pradesh.

3.39 In order to provide meaningful link between development and credit planning to support agriculture and rural development, NABARD prepared Potential Linked Credit Plans (PLP) for 623 districts that served

Rural Infrastructure Development


3.43 Infrastructure plays a key role in stimulating economic growth by raising factor productivity and enhancing quality of life through provision of necessary amenities. Reckoning the imperative need for creation of economic and social infrastructure on sustainable basis, which truly reflects the development needs anticipated of the local community, Rural Infrastructure Development Fund(RIDF) was created in NABARD as a follow-up to the announcement made in the Union Budget, 1995-96. RIDF was created with an initial allocation of Rs.2,000 crore with the objective of providing term loans at concessional rates to state governments for financing rural infrastructure projects. RIDF Scheme with its localised approach, wider allIndia coverage, operational flexibility, social focus, communitys involvement in planning, designing, managing and execution of works, etc., marks a watershed in the participatory planning process in the country.

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A.

Funding

(iii)

Rural Connectivity:

3.44 The funds for RIDF were sourced in the form of deposits from scheduled commercial banks, to the extent of their respective shortfalls in lending to agriculture under the priority sector, including agriculture. With its successful implementation, and annual allocations since 1995-96, the RIDF has had an aggregate corpus of Rs.1,00,000 crore, accumulated since RIDF I till RIDF XV (2009-10). Additionally, a separate window was introduced in 2006-07 for funding rural roads component of Bharat Nirman Programme, with allocation of Rs.18,500 crore, till 2009-10. The total allocation for RIDF, thus, stood at Rs.1,18,500 crore, as on 31 March 2010.

3.48 Rural Connectivity includes rural roads & rural bridges and loans for these sectors are provided at 90 per cent of project cost for NER & Hill States and at 80 per cent for all other states.

C.

RIDF XV - Terms and Conditions


population,

3.49 NABARD allocates the Fund among the States as Nor mative Allocation based on geographical area, rural infrastructure index, rural creditdeposit (CD) ratio and past performance. Generally, the implementation phase for projects is spread over 3-5 years. The maximum phasing in the case of major and medium irrigation projects and other stand-alone projects involving RIDF loan of Rs.50 crore and above is five years. The quantum of actual drawal of funds by a state government, however, depends upon the pace at which it implements the projects. NABARD provides funds on reimbursement basis, except for the initial 20 per cent of the project cost (30 per cent in NER and Sikkim) given as mobilisation advance. A state governments borrowings under RIDF is also governed by Article 293(3) of the Constitution under which GoI determines its borrowing powers from the market and financial institutions during a year. The rate of interest payable by NABARD on deposits from commercial banks under RIDF-XV is the Bank Rate (at present 6 per cent) while the State Governments have to pay Bank Rate plus 0.5 percentage points, i.e. 6.5 per cent to NABARD. Each drawal under the sanctioned projects is considered as a separate loan.

B.

Eligible Activities:

3.45 The broad categories of projects covered under RIDF are:

(i)

Agriculture and allied sectors:

3.46 These include irrigation projects, soil conservation, flood protection, watershed, reclamation of water logged areas; animal husbandry, plantation and horticulture, seed, agriculture and horticulture farms, forest development, fishing harbour/jetties, riverine fisheries; market yards, godowns, marketing infrastructure; cold storages; grading/certifying mechanisms; testing laboratories; hydel projects (upto 10 MW); village knowledge centres; infrastructure for IT in rural areas; desalination plants in coastal areas; and setting up of KVIC industrial estates/centres. The loans are provided at 95 per cent of project cost for all states.

(ii)
3.47

Social Sectors:
Social sector includes drinking water; public health

D.
i.

RIDF Operations
Sanctions

institutions; construction of toilet blocks in existing schools, specially for girls and Pay & Use toilets in rural areas, infrastructure for rural education; construction of anganwadi centres. The loans for the above sectors are provided at 90 per cent of project cost for NE & Hill States and at 85 per cent for all other states.

3.50 During the year 2009-10 (RIDF-XV), 39,015 projects were sanctioned involving aggregate loan amount of Rs . 15,629.82 crore. The cumulative number of projects rose to 4,02,806 involving loan amount of Rs.1,03,718 crore. The tranche-wise position of sanctions is given in Chart 3.4.

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3.51 Of the total amount sanctioned during the year, rural roads accounted for 29 per cent, irrigation projects 27 per cent, social sector projects 16 per cent, bridges 15 per cent and agri-related 12 per cent (Table 3.8). Cumulative sanctions according to sectors are indicated in Chart 3.5.

Rs.18,887.54 crore. The cumulative disbursement as on 31 March 2010 stood at Rs.68,439.74 crore, (excluding Rs.18,500 crore under Bharat Nirman). Cumulative sanctions and disbursements are given in Table 3.9. The position of year-wise disbursements under RIDF excluding NRRDA under Bharat Nirman is given in Chart 3.6.

ii.

Disbursements iii. State wise utilisation


3.53 As per phasing of the projects, under various tranches (RIDF I to XV), state governments had a total pool of projects of Rs.1,03,718 crore as on 31 March 2010. The state-wise analysis of ratio of

3.52 Disbursements during 2009-10 under the ongoing tranches amounted to Rs.12,387.54 crore. Additionally, an amount of Rs.6,500 crore was disbursed to the National Rural Roads Development Agency (NRRDA), taking the total disbursements during the year to

Table 3.8: Sector wise Projects and Amounts Sanctioned (As on 31 March 2010) (Rs. crore) Sector No. of projects RIDF XV(2009-10) Share in total amount(%) 42.80 2.85 12.58 37.97 0.03 3.77 100.00 Amount Share in total amount(%) 26.52 15.25 29.32 16.08 0.96 11.87 100.00 No projects RIDF I to XV (Cumulative) Share in total amount(%) 53.55 3.34 18.13 18.16 0.19 6.63 100 .00 Amount Share in total amount(%) 32.15 11.12 32.54 13.12 1.91 9.16 100 .00

Irrigation Rural Bridge Rural Roads Social Sector Power Agri Related Sector Total

16697 1110 4907 14816 12 1473 39015

4145.27 2383.39 4581.90 2513.91 149.59 1855.76 15629.82

215718 13450 73046 73142 750 26700 402806

33341.83 11534.78 33747.17 13610.76 1980.19 9503.27 103718

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Table 3.9: Cumulative Sanctions and Disbursements under various Sectors (I XV) (As on 31 March 2010) (Rs. crore) Sector Irrigation Rural Roads & Bridges Social Sector Power Agriculture Related Total
* with respect to amount phased.

Amount Sanctioned 33341.83 45281.95 13610.76 1980.19 9503.27 1,03,718.00

Phased Sanctions 28629.07 37256.94 10317.35 1,669.56 7724.46 85,597.38

Amount Disbursed 21986.53 31419.22 7979.30 1301.28 5753.41 68,439.74

% of disbursement* 76.80 84.33 77.34 77.94 74.48 79.96

disbursements to the sanctions, as per approved phasing, is given in Table 3.10. 3.54 The amount of loan sanctioned and disbursed to states in the NER aggregated Rs.5,240.47 crore and Rs.2,750.62 crore, respectively. Comparatively slow pace of actual utilisation of loans under RIDF in some states was mainly due to procedural delays in administrative and technical approvals by state governments in land acquisitions, mid-course design changes or cost escalations, statutory clearances and tendering process. The state governments are progressively rationalising these procedures.

v. Deposits/Repayments
3.56 With the receipt of Rs.16,399.96 crore as deposits from commercial banks in 2009-10, the cumulative deposits received under RIDF stood at Rs.82,725.38 crore. The details of year/Tranche wise disbursements against deposits received are given in Table 3.12. An amount of Rs.3,553 crore was received from state governments towards repayment of RIDF loans during 2009-10. The total RIDF loan outstanding, as on 31 March 2010, was Rs.59,869 crore.

E.
iv. Tranche-wise
3.55 Disbursement under tranches RIDF I to IX have been closed. The details of disbursements under the ongoing tranches RIDF X to XV are given in Table 3.11. 3.57

Monitoring of RIDF Projects


Monitoring of RIDF projects is an important

responsibility of NABARD to ensure timely completion of the projects and high quality of the assets created. The primary responsibility, however, rests with state governments. NABARD undertakes monitoring of RIDF projects by exception, through (a) desk reviews, based on periodical returns and (b) field visits by its officers from HO/ RO and the consultants. The ongoing dialogue with state governments after such monitoring studies and the feedback from field visits help in removing identified bottlenecks in implementation and in sorting out issues related to smooth flow of funds. A High Powered Committee on RIDF, chaired by the Chief Secretary/Finance Secretary of the State, meets every quarter to review the progress of RIDF projects. It has proved to be an effective tool for monitoring and steering the progress of RIDF and ensuring timely completion of projects. During the year, NABARD carried out monitoring of 6,670 projects through

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Table 3.10: Utilisation Percentage of RIDF (I TO XV) Funds (As on 31 March 2010) (Rs. crore) Sl.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 State Andhra Pradesh Bihar Chhattisgarh Goa Gujarat Harayana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Puducherry Punjab Rajasthan Tamil Nadu Uttar Pradesh Uttarakhand West Bengal Total NE States & Sikkim 22 Arunachal Pradesh 23 Assam 24 Manipur 25 Meghalaya 26 Mizoram 27 Nagaland 28 Sikkim 29 Tripura Total for NE Region & Sikkim Grand Total
* with respect to amount phased.

Sanctions 11749.75 3834.81 1569.29 328.12 8210.38 2621.10 2691.22 3156.44 2480.42 5555.18 2950.66 7531.50 6633.59 4870.72 133.32 3925.14 6331.96 7194.39 8747.44 1702.52 6259.58 98477.53 734.65 1846.26 57.72 445.30 215.76 627.19 396.76 916.83 5240.47 103718.00

Phasing 10089.42 2777.55 1500.33 198.10 7567.27 2014.68 1988.15 2502.12 2096.02 4626.82 2433.68 6424.60 5546.61 3849.98 21.83 3251.58 5311.12 6282.18 7627.63 1058.03 4927.49 82095.19 599.89 1499.26 53.94 261.10 140.86 278.01 169.30 499.83 3502.19 85597.38

Drawn 8090.34 1784.42 1195.40 200.29 6280.94 1815.75 1714.95 2082.07 1282.81 3491.45 1910.69 4734.18 4643.33 2617.13 23.43 2914.59 4197.40 5585.10 6222.85 1076.02 3825.98 65689.12 457.89 1163.75 24.88 261.53 160.79 255.73 154.60 271.45 2750.62 68439.74

Utilisation (%)* 80.19 64.24 79.68 101.11 83.00 90.13 86.26 83.21 61.20 75.46 78.51 73.69 83.71 67.98 107.33 89.64 79.03 88.90 81.58 101.70 77.65 80.02 76.33 77.62 46.13 100.16 114.15 91.99 91.32 54.31 78.54 79.96

field visits. Based on the feedback, major observations/ issues were taken up with the Finance Departments of

state governments and the implementing Departments for improving the pace and quality of project execution.

Table 3.11: Tranche-wise sanctions and disbursements - Ongoing tranches RIDF X to XV (As on 31 March 2010) (Rs. crore) Tranche No. X XI XII XIII XIV XV Total Allocation 8,000 8,000 10,000 12,000 14,000 14,000 66,000 Sanctioned 7,671.71 8,320.33 10,411.15 12,705.64 14,708.02 15,629.82 69,446.67 Phased 7,671.71 8,320.33 10,411.15 12705.64 8,935.26 3,281.96 51,326.05 Disbursed 6,489.35 6,604.80 7,280.43 7,600.60 6,652.51 3,474.35 38,102.04 Disbursement (%) 84.59 79.38 69.93 59.82 74.45 105.86 74.24

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F.

Impact of RIDF

3.58 The RIDF projects, besides creating critical infrastructure, facilitated expansion of the production base in rural areas, increased credit-off take and created additional employment opportunities - recurring and non-recurring (Table 3.13 & Table 3.14 ).

G.

Evaluation Studies of Rural NonFarm Sector (RNFS) Programmes:


Check Dam under RIDF

3.59 During the last two years, NABARD conducted 20 in-house studies, evaluating its rural non-farm sector (RNFS) promotional programmes. The findings of the studies are summarised in the following paragraphs.

lending institutions (PLIs), awareness programmes, coordination efforts as also other RNFS promotional interventions like REDP, ARWIND, Rural Haats, Cluster Development Programmes, etc., to understand the implementation of the project. Bargarh district (Orissa) recorded the highest growth in the number of new enterprises at 57 per cent, while it was 39 per cent in Udaipur (Rajasthan), 17 per cent in Medak district

a.

District Rural Industries Project (DRIP)

3.60 Six studies were conducted on DRIP, delving into the interventions such as training of officers of primary

Table 3.12: Year/Tranche-wise Disbursements and Deposits received under RIDF (As on 31 March 2010) (Rs. crore) Year 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Total Deposits 350.00 1042.30 1007.04 1337.95 2306.63 2653.64 3590.72 3857.09 2158.69 4353.47 6092.37 6966.43 (0.00) * 7369.46 (4438.42) * 12157.78 (6647.43) * 12677.01 (3718.95) * 82725.38 Disbursements 387.34 1087.08 1009.03 1313.12 2277.87 3176.85 3790.37 4103.42 3922.09 4316.85 5953.32 6222.58 (0.00) * 8033.64 (4500.00) * 10458.64 (7500.00) * 12387.54 (6500.00) * 86939.74 Tranche I II III IV V VI VII VIII IX X XI XII * XIII * XIV * XV * Total Deposits 1586.56 2225.00 2308.02 1412.53 3051.88 4080.54 4073.77 5188.08 4873.08 6420.15 6421.23 7774.50 3945.95 7834.61 3415.66 6442.49 3817.18 4228.15 3626.00 82725.38 Disbursements 1760.87 2397.95 2453.50 2482.00 3054.96 4070.85 4052.59 5148.50 4916.48 6489.35 6604.80 7280.43 4000.00 7600.60 4000.00 6652.51 4000.00 3474.35 6500.00 86939.74

* figures in parentheses indicate deposits under Bharat Nirman Programme

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Table 3.13: Impact of RIDF - Rural Infrastructure and Employment Generation S.No. Particulars 1 2 3 4 5 Irrigation potential Rural Bridges Rural Roads Recurring Employment Non- recurring employment Irrigation Rural Roads & Rural Bridges Others 6 Power Sector (Hydel Power & System Improvement) 7 Social Sector A. Health Centres B. Primary & Secondary Schools C. Rural Drinking Water Supply 390.77 lakh persons 92.04 lakh students 907.35 lakh persons 24,643.94 lakh mandays 32,210.25 lakh mandays 16,022.49 lakh mandays 180.45 MW Hydel Power Generation & Saving of T & D Losses - 22315 lakh Units per year Additional benefits created 156.53 lakh hectares 5,83,637 Mts. 3,04,337 Kms. 81,16,613 Jobs

(Andhra Pradesh). Ground level credit flow (GLC) also showed increase across the districts with Bargarh district recording an annual increase of 55 per cent followed by Medak district (35 per cent). The growth rates ranged between 17 and 18 per cent in Ambala (Haryana) and Udaipur (Rajasthan) districts. The study reports on Medak and Udaipur districts, therefore, recommended creation of wider awareness about DRIP. The RNFS units in the study districts were profitable in general, with a fairly good rate of return of above 15 per cent in most cases, barring a few, like shoe-making units and spice mills (Udaipur district).
Rural road under RIDF

b.

Cluster Development Programme (CDP)

to establish sisal-based micro-enterprises. The study on woodcraft cluster revealed that the number of artisans in the cluster increased about six times after the intervention. On an average, the sample artisans produced 192 idols per annum realising an income of Rs.1,153 per idol, which yielded a return of 44 per cent on fixed costs.

3.61 Two Studies were conducted on CDP covering Sisal Fibre cluster in Chamarajanagar district, Karnataka and Woodcraft cluster in Villupuram district, Tamil Nadu. In the Sisal Fibre cluster, 150 artisans were trained to make value added premium products. The training helped augment the family income by about 67 per cent. The NGO acting as the Cluster Development Agency (CDA), coordinated the cluster activities, organised production and marketing. The study recommended ensuring fibre availability, highlighting the environmental benefits of sisal fibre products compared to cheaper plastic substitutes and encouraging individual initiatives

c.

Rural Entrepreneurship Development Programme (REDP)

3.62 Seven studies conducted on REDP revealed that the overall success rate in setting up of new enterprises worked out to 34 per cent and 58 per cent when wage

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Table 3.14: Statewise Benefits EstimatedUnder RIDF I to XV (As on 31 March 2010) State IRRI (ha) Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattishgarh Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand UT of Puducherry West Bengal Total 1,633,605 316,747 555,058 824,173 61,659 1,179,118 674,235 281,625 130,340 71,325 419,447 180,898 1,152,616 623,888 57,167 23,712 2,990 8,678 749,463 402,493 486,973 2,589 287,363 5,015 4,225,908 90,005 12,912 1,192,988 15,652,990 Potential Bridges (m) 42,505 2,473 42,476 13,355 36,619 706 5,050 5,241 15,321 7,960 28,171 37,991 40,039 29,677 45,586 4,990 9,149 205 55,968 8,343 12,188 1,814 44,521 17,855 39,403 11,476 1,922 22,633 583,637 Roads (km) 29,700 1,010 749 2,954 4,605 258 19,067 2,927 6,692 9,679 5,471 32,194 4,163 11,885 21,862 1,379 2,885 225 1,378 5,070 6,579 42,473 13,255 31,164 2,847 23,589 5,829 1,068 13,380 304,337 Value Prodn. (Rs. crore) 2,652 348 697 1,031 77 1,209 1,356 791 200 204 1,083 467 2,437 1,219 528 125 3 8 1,191 641 965 2 389 6 3,263 167 24 1,075 22,158 Recurring Employment (Numbers) 1,906,957 102,400 230,201 135,210 9,392 1,321,078 140,547 152,668 258,763 85,859 121,900 80,555 367,061 264,215 664,041 8,000 1,976 3,927 323,681 172,106 146,513 604 272,949 2,450 561,833 27,251 8,829 745,647 8,116,613 Non-recurring Emp. IRRI RR & RB (lakh Mandays) 4,979.75 81.27 310.36 1,241.39 117.60 1,438.92 649.37 346.70 426.49 298.77 1,571.39 273.42 2,528.59 2,617.98 325.60 271.21 11.91 29.97 1,560.49 500.59 1,389.69 8.27 579.53 34.88 1,899.75 169.41 33.47 947.17 24,643.94 5,355.40 233.14 751.04 1,017.53 810.90 48.21 907.81 524.92 526.67 1,013.75 617.17 2,516.15 830.38 1,193.72 1,974.33 143.17 477.33 41.78 126.36 1,806.05 757.03 2,521.84 136.03 3,229.28 789.48 1,522.29 694.04 151.54 2,492.91 2,934.31 62.10 196.80 443.68 359.80 7.82 578.74 374.51 138.22 256.94 342.41 737.52 321.18 371.61 34.54 30.68 48.72 15.24 248.80 206.35 682.98 1,638.25 43.43 1,322.01 649.23 702.10 45.23 298.12 2,931.17 Others

33,210.25 16,022.49

employment too was considered. The average annual net incremental income worked out to Rs.18,663 per trainee. The highest incremental income was observed in Andhra Pradesh and West Bengal (Rs.22,600) and minimum in Orissa (Rs.11,292) due to differences in the level of operation of the units set up by the trainees. The programme yielded more than 50 per cent return on the investment in all the states studied. Banks and SHGs emerged as major sources of credit. The studies suggested enrichment of the course material with success stories.

H. Commodity Specific Studies


3.63 A series of commodity specific studies on pulses, medicinal and aromatic plants were conducted. The findings of the studies, completed during the year 2009-10, are reported below:

i.

Pulses

3.64 Pulses, being the prime source of protein in Indian diet and the poor mans only source of protein, have assumed topical importance in recent years due to rising

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prices. India is the largest producer as well as the largest importer of pulses. Stagnant production of around 14 million tonnes, coupled with expansion in demand has resulted in higher dependence on imports and substantial rise in domestic prices. Five studies were conducted in the states of Andhra Pradesh, Haryana, Karnataka, Orissa and Uttar Pradesh covering 285 farmers, 39 processing units and 57 traders and a few commission agents. The studies brought out issues of stagnant area and low productivity at 622 kg per hectare (1908 kg/ha in Canada/ USA) to the fore. Low yields were attributed to lack of high-yielding and short duration varieties, inadequate irrigation, cultivation on marginal lands, absence of fertilizer use, frequent attack of pests and diseases, lack of extension services and poor infrastructure and slow transfer of technology. Tur farmers of Andhra Pradesh obtained highest net income of Rs.10,913 per acre followed by Karnataka (Rs.6,495) and UP (Rs.5,706). In respect of gram, Andhra Pradesh growers earned a net income per acre of Rs.16,075, while it was Rs.2,136 in Karnataka and Rs.1,282 in Haryana. Per acre net income of urad in Karnataka was Rs.8,163, while it was Rs.7,824 in Andhra Pradesh. Mung in Karnataka gave a net income of Rs.4,169 per acre followed by Orissa (Rs.882). Total processing cost and sales proceeds for milling one MT of pulses was Rs.24,698 and Rs.26,400, respectively. The net value addition per MT of raw pulses has been worked out as Rs.1,702 i.e., 7 per cent of the operating cost. The input-output ratio was 1:1.06. Dal processing units could break-even on milling 1648 MT of raw pulses, the capacity utilisation being 60-70 per cent. Financial rate of return of the processing units is 25 per cent. The studies emphasised expansion of area, especially in rabi , development of high-yielding and short-duration varieties, development of multiple disease/ pest resistance varieties, use of micro-irrigation, supplementing micro-nutrients, among others, to enhance production of pulses. Focus on improving the yield of pulses has been recommended.

aroma compound menthol is used in pharmaceuticals, food flavouring, confectionery, cosmetics, beverages and related industries. India produces around 78 per cent of the worlds mint oil production followed by China (10 per cent), Brazil (8 per cent) and United States (4 per cent). Uttar Pradesh, where the study was conducted during 2008-09, accounts for 80 per cent of the crop area under mentha (2.27 lakh ha) and the major mentha producing districts in the State, viz. Barabanki, Moradabad, Badaun, Sitapur and Jalaun, account for more than 90 per cent of total area under mentha. The per acre cost of cultivation of mentha reported by sample beneficiaries was Rs.18,625 in the case of Jalaun/Jhansi districts as compared to Rs.14,765 in Moradabad district. The higher cost in the former was due to longer duration of crop as the farmers in Jalaun/Jhansi were undertaking two cuttings of the crop whereas in Moradabad it was grown as single cutting crop. The yield of sucker planted mentha was slightly higher as compared to transplanted mentha in Moradabad district and the average yield worked out to 37.6 kg of oil per acre. The yield per acre in the case of Jalaun/Jhansi districts was 56.50 kg per acre for both cuttings. The net income per acre from production of mentha worked out to Rs.5,099 (Moradabad) and Rs.11,207 (Jhansi/ Jalaun), inclusive of the imputed cost of family labour at the sample farmer level. The gross value of production from the sale of menthol crystals/flakes worked out to Rs.25,87,800 and the net income realised from processing plant per month worked out to Rs.77,662. The study report highlighted the rising cost of irrigation in Sambhal block (Moradabad district) due to depleting ground water levels, infirmities in the delivery of inputs especially fertilizer, scarcity of distillation units during the harvesting season, lack of market research and market-related information for the farmers. The study also pointed out to the absence of any kind of regulation in the market, the dilution in quality control measures in trading of essential oil, in general, and mint oil in particular and unhealthy trading practises by traders in the mint oil market. The study suggests directing R & D efforts towards development of mechanical harvesters which can prove effective in obtaining optimum yield

ii.

Medicinal and Aromatic Plants

3.65 Mentha, an aromatic herb of temperate region, is utilised for extracting mentha oil and its principal 74

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from harvests, developing risk mitigation strategies, which may include insurance to safeguard farmers, bring about more transparency in the mint oil futures market, apart from other measures.

account of higher doses of various inputs compared to the control farmers for paddy crop. The study clearly indicated that the Management Information System (MIS) for monitoring the progress of the Scheme was fraught with shortcomings. The report identified four types of shortcomings in the MIS (i) family members having the same operational holding had been issued multiple cards, (ii) the same person was issued multiple KCC by various banks, (iii) in certain cases, KCC lapsed after a period of three years, but such cards were still counted as active cards, (iv) in certain cases, cards were renewed after a period of three years, but such cards were shown to be freshly issued. 3.69 The study suggested that KCC penetration could

I.

Other studies

3.66 During 2009-10, an all-India study of Kisan Credit Card (KCC) scheme in 14 states and a study of rural godown scheme in Gujarat were completed.

(i)

Study on KCC

3.67 A study covering 14 states, viz., Andhra Pradesh, Assam, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Orissa, Punjab, Rajasthan, Uttar Padesh & West Bengal was conducted covering 1,876 KCC holders from 178 bank branches from co-operatives, RRBs and CBs. The impact of formal credit in the form of KCC loan on paddy productivity was attempted. Sample KCC holders across the states had cultivated paddy by availing of crop credit from different agencies. Average productivity per hectare of paddy taken up by KCC holders was compared with the average yield level of control farmers, i.e., non-KCC holders. It was found that the overall productivity of paddy grown by KCC holders was higher by 13.3 per cent as against the yield level by control farmers. The per hectare yield of KCC holders was 18 to 34 quintals as against the per hectare yield of 14 to 26 quintals of control farmers. The increase in yield was partly attributed to the credit access through KCC. The higher use of inputs such as fertilizer, manure, pesticide, labour, irrigation, etc., by KCC farmers were the contributing factors for higher yield. 3.68 The gross value of output for sample KCC holders per hectare was 13.6 per cent higher for paddy cultivated by KCC farmers as compared to the control farmers. It was Rs.17,500 to Rs.31,500 per hectare for KCC farmers, as against Rs.13,500 to Rs.25,500 per hectare for control farmers. The corresponding per hectare cost of cultivation of paddy was Rs.11,100 to Rs.14,500 and Rs.10,500 to Rs.13,000, respectively. The cost of cultivation per hectare was higher by 7.6 per cent for KCC holders on

be further improved in terms of extending loans such as crop loan, working capital for allied & NFS activitites and consumption loan in the ratio of 4:2:1. The study further suggested that there was need to adopt mission mode approach to make KCC into a farmers friendly efficient instrument for effective credit delivery system accompanied by appropriate institutional mechanism.

(ii)

Rural Godowns

3.70 By 31 March 2009, 20,393 rural godowns with a capacity of 238.37 lakh metric tonnes were sanctioned under the scheme, involving a subsidy of Rs.543.02 crore. New projects were sanctioned to private, Government and co-operative sectors while co-operatives were supported for renovation of existing godowns. Of the 16,606 godowns under NABARD component, the maximum number of godowns were in Gujarat, followed by West Bengal and Maharashtra. The average capacity of the godowns was maximum in Uttar Pradesh at 5748.2 metric tonnes followed by Haryana (5731.9 metric tonnes) and Andhra Pradesh (3951.7 metric tonnes). Although Gujarat tops the list with the maximum number of rural godowns, the average capacity of godowns in Gujarat was the lowest at 271.7 metric tonnes in the country. The co-operative banks, followed by the CBs, sanctioned the maximum number of rural godowns in Gujarat. The average bank 75

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loan sanctioned by commercial banks, RRBs and co-operative banks was Rs.6.00 lakh, Rs.2.89 lakh and Rs.2.59 lakh, respectively. 3.71 While the guidelines prescribe that the subsidy may be kept in the Subsidy Reserve Fund Account in the name of borrower, some of the banks had kept the subsidy in fixed deposit in the name of the borrower. Similarly, as per the guidelines, subsidy should be adjusted after liquidation of bank loan, but it should not be done before 5 years from the date of disbursement of the first instalment of the term loan. But, some banks had been allowing the repayment of loan and pre-closure of accounts before the expiry of 5 years. While co-operative banks, and public sector

commercial banks had fixed the repayment period of 5 years with yearly instalment, private banks had fixed 7-year repayment with half yearly instalments. 3.72 Capacity utilisation in co-operative society

godowns was 67.2 per cent and in individual godowns, it was 68.8 per cent. Co-operative society godowns reached the break-even point at 25.6 per cent of the available storage space, while the individual godowns reached it at 53.3 per cent. The repayment in respect of all godowns was regular. The major crops stored in godowns were cotton, castor, mustard, cumin, tobacco, paddy and bajra. Due to the addition of the rural godowns, an addition of 3.4 lakh non-recurring and 1.5 lakh recurring employment had been generated in sample districts.

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IV
Capacity Building of Client Institutions
The financial and managerial soundness of rural credit institutions are critical to a robust rural financial delivery system. The Regional Rural Banks (RRB) and co-operative banks, which play a very crucial role in financial intermediation in agriculture and rural development, are under increasing pressure from competition from other agencies. NABARD endeavours to strengthen the capacity of these institutions through various developmental and supervisory initiatives to effectively face such competition.

Institutional Development
A.
a.

Rural Co-operative Credit Institutions


Performance

31 March 2009 indicate that while their deposits increased by 24 per cent and 16 per cent, respectively, over the year, the borrowings of SCBs and DCCBs decreased by 7 per cent and 6 per cent, respectively. Loans issued by SCBs increased significantly by 58 per cent and those of DCCBs decreased by 3.4 per cent. Loans outstanding of SCBs and DCCBs decreased marginally by 3.5 per cent and 1.2 per cent, respectively. 4.4 In the Long-Term Co-operative Credit Structure

4.2 The total membership of Primary Agricultural Credit Societies (PACS) during 2008-09 stood at 13.23 crore, of which borrowing members were 7.66 crore constituting 58 per cent of total. While there was only a marginal increase in membership of PACS over the previous year, the borrowing members decreased by 3.5 per cent during the period. Both deposits and loans issued (as on 31 March 2009) also showed marginal increase of only 3.1 and 1.8 per cent, respectively, over the previous year. Similarly borrowings of PACS also registered only a marginal increase of 2.2 per cent over the previous year (Table 4.1). 4.3 An analysis of the financial positions of the SCBs and DCCBs (Table 4.2) as on 31 March 2008 and

(LTCCS), borrowings of State Co-operative Agriculture and Rural Development Banks (SCARDBs) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) as on 31 March 2009, decreased marginally by 3.3 per cent and 0.25 per cent, respectively, over the previous year. While loans issued by SCARDB and PCARDB increased by 17 and 16 per cent, respectively, their loans outstanding decreased by 11 and 5 per cent, respectively, over the previous year (Table 4.3).

Table 4.1: Growth of PACS (As on 31 March) (Rs. crore) Particulars Number Membership (lakh) Borrowing Members (lakh) Owned Funds Deposits Borrowings Loans issued
Source: NAFSCOB.

Table 4.2: Growth of Short-Term Co-operative Banks (As on 31 March) (Rs.crore) Particulars Number Share Capital Reserves Deposits Borrowings Loans Issued Loans Outstanding SCB 2008 2009 P# 31 1497 9898 57404 22513 59205 50208 31 1570 10104 71272 20970 93833 48471 DCCB 2008 2009 P# 370 6030 22575 110178 31724 93270 101458 370 6409 23255 127779 29858 90105 100198

2007 97,224 1,258 479 11,039 23,484 43,714 49,613

2008 94,950 1,315 794 10,984 25,449 47,848 57,642

2009* 95,626 1,323 766 11,906 26,243 48,919 58,686

* : Data provisional.

P : Data provisional. # : Data for SCB and DCCB in Bihar and DCCB in Jharkhand repeated from 2007-08.

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Table 4.3: Growth of Long-Term Co-operative Banks (As on 31 March) (Rs. crore) Particulars Number Share Capital Reserves Deposits Borrowings Loans Issued Loans Outstanding SCARDB 2008 20 1254 2810 670 16293 2208 18392
@

Table 4.5: Accumulated Losses (As on 31 March) (Rs.crore) Year SCB # 389 428 404 DCCB # 5667 6211 5299 SCARDB * 908 1263 1117 PCARDB 2770 3374 3604

PCARDB 2008 697 1025 3409 350 12406 1768 11770 2009 P 697 1514 3444 419 12375 2045 11229 20

2009 P 814 3158 710 15751 2585 16279

2007 2008 2009#

Data for 2009 Provisional. # : Data for the year 2008-09 of SCB and DCCB in Bihar and Jharkhand repeated from 2008. * : Manipur SCARDB is under orders of liquidation.

@ : Manipur SCARDB is under orders of liquidation. P : Data provisional.

4.7

During 2008-09, the overall profits of SCBs

increased by 37 per cent over the previous year. Profits of SCBs in all regions improved, but decreased in Northern region (-9%); Western region slipped into loss making, while the North Eastern region transformed itself into profit making (Table 4.6). Kerala SCB in southern region and Arunachal SCB in North Eastern region had incurred losses in the previous year and these SCBs turned around in 2009-10. The Southern region improved remarkably in reporting profits, of which AP SCB had earned during the year 9.4 times profit of the previous year. While 12 SCBs (Delhi, Meghalaya, Haryana, Karnataka, MP , UP, Punjab, A&N, West Bengal, Andhra Pradesh, Manipur and Tamil Nadu) improved their profit, as on 31 March 2009, over the previous year, 11 SCBs (Chhattisgarh, Uttarakhand, Orissa, Mizoram, Sikkim, Chandigarh, Himachal Pradesh, Jammu and Kashmir, Rajasthan, Maharashtra and Goa) showed declining trend in earning profits over the previous year. Bihar SCB maintained a status quo . While Nagaland and

b.
i.
4.5

Working Results
Profitability
During 2008-09, 26 out of 31 SCBs were in profit

aggregating Rs.395 crore and the remaining 5 SCBs were in loss (Rs.71 crore), resulting in an aggregate profit of Rs.324 crore. While 320 out of 370 DCCBs earned overall profit of Rs.1,611 crore, 50 DCCBs incurred losses to the extent of Rs.337 crore. Eleven SCARDBs earned an aggregate of profit of Rs.405 crore, while eight incurred an aggregate loss of Rs.150 crore. Out of 697 PCARDBs, 326 earned an aggregate profit of Rs.206 crore, while 365 incurred an aggregate loss of Rs.360 crore (Table 4.4). 4.6 The aggregate accumulated losses of DCCBs,

SCARDBs and PCARDBs declined in 2008-09 with a slight increase in respect of SCBs (Table 4.5).

Table 4.4: Working Results of Co-operative Banks (Rs.crore) Agency Year Total (No.) In Profit (No.) Profit Amount In Loss (No.) Loss Amount SCB 2007-08 31 26 286 5 49 2008-09 31 26 395 5 71 DCCB 2007-08 * 370 261 868 108 926 2008-09 * * 370 320 1611 50 337 SCARDB $ 2007-08 20 9 150 10 426 2008-09 @ 20 11 405 8 150 PCARDB# 2007-08 697 283 210 412 588 2008-09 697 326 206 365 360

* : 1 DCCB in Gujarat was neither in profit nor in loss for the year 2007-08. ** : The data for SCB and DCCB in Bihar and DCCB in Jharkhand repeated from 2007-08. $ : Data for Manipur SCARDB is not available as the same is under orders of liquidation. # : The data for 04 PCARDB in Kerala and 2 in West Bengal for 2008-09 and 2 PCARDB in West Bengal for 2007-08 is not available.

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Table 4.6: Region-wise Working Results of SCB (As on 31 March) (Rs. crore) Region Profit/Loss (+) / (-) 2007-08 Central Northern Eastern Western Southern North-Eastern All-India 65.12 116.22 32.15 31.72 10.10 -18.89 236.42 2008-09 69.17 105.39 43.29 -33.99 125.77 14.50 324.13 2007-08 820.01 321.99 533.52 2352.32 1718.23 444.60 6190.67 NPA 2008-09 607.16 347.03 505.64 2268.67 1599.99 435.01 5763.50 NPA as % to loans outstanding 2007-08 12.50 2.87 10.78 19.75 11.85 41.26 12.33 2008-09 10.01 3.12 10.32 20.42 11.34 37.39 11.89 Recovery (%) (As on 30 June) 2007-08 2008-09 82.94 97.70 82.23 67.54 87.66 41.54 84.59 92.99 97.29 86.82 83.26 95.03 49.23 91.79

Data for the year 2009 is provisional. Data for SCB in Bihar repeated from the year 2007-08.

Gujarat SCBs, which were in profit in 2007-08, slipped to loss during 2008-09, SCBs in Assam, Tripura and Puducherry reduced their losses during 2008-09. 4.8 In the case of DCCB, during 2008-09 the number

decrease in profits by 19.4 per cent. Thus, there has been overall improvement in all regions. Similarly, percentage of NPA to loans outstanding reduced in all regions, except in Northern and Western regions, where the same had increased marginally (Table 4.7). 4.9 In the LT structure, the loss-making SCARDBs

of profit making DCCBs increased across all regions. The extent of profits and number of profit making DCCBs increased in Chhattisgarh, MP, UP, Uttarakhand, Haryana, Himachal Pradesh, Punjab, Rajasthan, West Bengal, Gujarat, Maharashtra, Andhra Pradesh and Karnataka while the DCCBs in Bihar, Jharkhand and Kerala remained static and DCCB in Tamil Nadu showed had reduced their losses by 65 per cent over the previous year. At aggregate level, SCARDB earned profit of Rs.255 crore and PCARDBs incurred a loss of Rs.154 crore during 2008-09. The number of profit-making PCARDBs declined from 412 in 2007-08 to 369 in 2009-10.

Table 4.7: Region-wise Working Results of DCCB (As on 31 March)


(Rs. crore) Region 2007-08* 2008-09# Total NPA NPA % to Loans Outstanding DCCB No. Central Northern Eastern Western Southern All-India * 104 73 64 49 80 370 Profit No. 77 57 45 29 53 261 Amt. 179.53 116.60 51.50 180.80 339.70 868.13 No. 27 16 19 19 27 108 Loss Amt. 188.37 57.95 105.61 337.78 236.60 926.31 DCCB Profit Loss Amt. 43.48 27.67 75.00 133.39 77.70 3481.67 1383.01 1465.06 6940.32 5483.56 3357.10 1806.62 1136.44 6501.97 5127.01 27.85 6.83 16.01 22.32 16.69 27.73 9.58 15.91 22.53 15.55 17.89 46.94 65.18 52.97 44.30 63.80 50.62 73.63 59.17 62.96 66.37 2008 2009 2008 2009 2008 Recovery % (As on 30 June) 2009

No. No. 104 73 64 49 80 90 69 48 41 72

Amt. No. 293.83 148.47 53.42 631.25 484.07 14 4 16 8 8 50

370 320 1611.03

337.04 18753.62 17929.15 18.48

55.61 72.17

: Data for 2009 provisional.

* : 1 DCCB in Gujarat was neither in profit nor in loss for the year 2007-08 and 2008-09. # : The data for DCCB in Bihar and Jharkhand repeated from 2007-08.

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4.10 During the year 2008-09, SCARDBs in Central and Eastern region moved from loss in 2007-08 to profit. While the profits of SCARDB in Rajasthan, West Bengal and Gujarat increased, it decreased in the state of Haryana, Punjab and Tamil Nadu. The loss-making SCARDBs turned around in the states of Chhattisgarh, Uttar Pradesh, Himachal Pradesh and Puducherry during the year 2008-09. The SCARDBs in Assam incurred further losses, while those in Bihar, Orissa, Maharashtra, Jammu and Kashmir and Tripura reduced their losses. The SCARDBs in Karnataka and MP, which were in profit earlier, incurred huge losses during the year 2008-09. While PCARDBs in Central, Western and Eastern regions increased their profits, the PCARDBs in Northern region incurred further losses and those in eastern, central, western and southern regions reduced their losses during 2008-09 (Table 4.8). While the profits of profit making PCARDBs in Madhya Pradesh, Orissa and Rajasthan increased, the lossmaking PCARDBs in Chhattisgarh, Haryana and Karnataka added to their losses substantially. While those loss-making PCARDBs in Orissa, Punjab, Kerala, Maharashtra, Rajasthan and Tamil Nadu reduced their losses over the previous year, a lone PCARDB in Himachal Pradesh slipped into losses during the year.

funds at 5.17 per cent, resulting in a financial margin of 2.23 per cent (excluding miscellaneous income of 0.58 per cent). The average transaction cost and risk cost of SCBs during the year worked out to be 1.36 per cent and 0.88 per cent respectively. SCBs as a group earned a positive net margin of 0.57 per cent (including miscelleanous income) during 2008-09 compared to a net margin of 0.95 per cent during the previous year. 4.12 In the case of DCCBs, the overall return on

working funds was 7.85 per cent while the cost of funds was 5.09 per cent, yielding a financial margin of 2.76 per cent (excluding miscellaneous income of 1.68 per cent). The average transaction and risk cost as percentages to working funds were 2.15 and 1.33 per cent, respectively, during 2008-09. The DCCBs as a group earned gross and net margins of 2.29 per cent and 0.96 per cent (including miscelleanous income), respectively. 4.13 During the year 2008-09, out of 19 SCARDBs, 13 had positive net margins while the remaining six had negative net margins. Out of reporting PCARDB in 12 states, only four states had positive net margins.

iii. ii. Costs and Margins


4.14

Non-Performing Assets (Gross) and Recovery Performance


At the aggregate level, the percentage of gross

4.11 During 2008-09, SCBs as a group earned an overall return of 7.40 per cent on funds, with the cost of

NPA to total loans and advances outstanding in respect

Table 4.8: Region-wise Working Results of SCARDB (As on 31 March) (Rs. crore) Regions No. of Branches 2009 Central Eastern North Eastern Northern Southern Western All India Total 349 138 35 85 56 181 844 Profit/Loss 2008 -171.11 -26.20 -1.04 48.88 57.05 -183.51 -275.93 2009 207.89 0.32 -2.58 68.84 -41.41 -22.19 255.25 Impaired Assets 2008 2754.76 444.67 18.21 723.64 924.31 1569.08 6434.67 2009 1724.69 359.00 16.34 759.77 696.12 1381.81 4937.73 NPA % 2008 47.86 45.71 58.61 12.99 22.53 80.08 34.99 2009 39.21 39.17 51.96 13.86 18.97 77.57 30.33 Recovery % to demand 2008 69.48 33.70 70.98 58.47 47.55 9.97 49.94 2009 35.31 28.31 53.41 64.92 51.27 20.06 40.00

Manipur SCARDB is defunct.

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of both SCBs and DCCBs decreased to 11.9 and 17.9 per cent, as on 31 March 2009, from 12.3 and 18.5 per cent as on 31 March 2008, respectively (Tables 4.6 and 4.7). In absolute terms, NPAs were estimated to be Rs.5,736.50 crore and Rs.17,929.15 crore for SCBs and DCCBs as on 31 March 2009, registering a decline of 7 and 4 per cent, respectively. The percentage of NPAs to total loans and advances outstanding in the case of SCARDBs and PCARDBs decreased to 30.3 and 39.1 per cent as on 31 March 2009, from 35.0 and 43.5 per cent, respectively, during the previous year. The total NPAs of SCARDBs and PCARDBs were estimated to be Rs.4,937.73 crore and Rs.4,392.95 crore, showing a decline of 23 and 14 per cent, respectively (Tables 4.9 and 4.10). 4.15 As on 31 March 2009 vis--vis the all-India average for SCB, NPA was the lowest in Northern region (3.12%), and was low in Eastern (10.32%) and Central (10.01%) regions, while it was the highest in Northeastern region (37.39%), followed by Western (20.42%), and Southern (11.34%) regions. SCBs in Arunachal Pradesh, Bihar, Assam, Manipur, Tripura, Nagaland, Jammu and Kashmir, Kerala and Maharashtra continued to have high levels of NPAs. In the case of DCCBs, as compared to the all-India average, NPAs of DCCBs was the highest in the central region(27.73%), while it was low for Northern (9.58%) southern (15.55%) and Eastern

Table 4.10: Composition of NPAs of Co-operative Banks (As on 31 March 2009)P (Rs.in crore) Assets Classification Sub-Standard Doubtful Loss Assets Total NPA Provisions made SCB 1678.39 3843.06 242.05 DCCB* SCARDB# PCARDB 8029.83 7221.29 2678.03 2937.45 1965.28 35.00 4937.73 1217.68 1536.02 2574.16 1793.13 25.67 4392.96 790.13 892.45

5763.50 17929.15 3308.85 11462.72

Provisions required 2882.87 10225.06

P : Data Provisional. # : Manipur SCARDB is under orders of liquidation. * : Data for SCB and DCCB in Bihar and Jharkhand repeated from 2007-08.

(15.91%) regions. While Haryana, Himachal Pradesh, Orissa and Punjab had low levels of NPAs, DCCBs in Andhra Pradesh, Chhattisgarh, Gujarat, Jammu and Kashmir, Jharkhand, Madhya Pradesh, Maharashtra, Kerala, Tamil Nadu and Uttar Pradesh registered high NPA levels. 4.16 As on 30 June 2009, the average loan recovery

of SCBs and DCCBs improved marginally to 92 and 72 per cent from 85 and 56 per cent, respectively, as on 30 June 2008 (Table 4.11). In absolute terms, loan recovery of SCBs improved by 28.20 per cent from Rs.26,433.54 crore to Rs.33,893.73 crore. At the DCCBs level, it increased by 22.4 per cent from

Table 4.9: Region-wise Working Results of PCARDB (As on 31 March) (Rs. crore)
2008 Profit No. Central Eastern Northern Southern Western All-India 17 8 95 162 1 283 Amt. 0.97 1.99 132.66 72.14 2.02 209.78 No. 33 60 50 241 28 412 Loss Amt. 120.11 38.28 56.87 102.69 269.79 587.73 Profit No. 23 39 98 162 4 326 Amt. 24.06 33.57 72.37 69.95 6.08 206.03 2009 * Loss No. 27 29 47 237 25 365 Amt. 69.02 22.44 76.23 60.65 131.88 360.20 2008 744.21 201.19 2163.82 1239.49 767.93 5116.64 2009 561.08 129.91 1849.88 1237.88 614.21 4392.95 Impaired Assets NPA % to Loans Outstanding 2008 53.39 26.97 40.20 37.08 84.90 43.47 2009 47.55 19.75 34.73 36.14 95.91 39.12 Recovery % to Demand 2008 56.81 75.19 41.19 46.84 4.10 42.15 2009 37.64 73.72 39.14 50.15 7.97 40.3

* : Data for 2009 provisional.

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Table 4.11: Percentage of Recovery of loans to Demand (As on 30 June) Agency SCB # DCCB # SCARDB* PCARDB 2007 86 71 44 52 2008 85 56 50 42 2009 92 72 40 40.3

4.17 The average loan recovery of SCARDBs and PCARDBs, as on 30 June 2009, declined to 40.00 and 40.30 per cent from 49.94 and 42.15 per cent, respectively as on 30 June 2008 (Table 4.11). In absolute terms, loan recovery of SCARDBs and PCARDBs declined to Rs.3,860.44 crore and Rs.2,842.47 crore, as on 30 June 2009, from Rs.5,367.81 crore and Rs.3,190.10 crore, as on 30 June 2008. While loan recovery of SCARDBs in Puducherry and Rajasthan improved considerably, it was only marginal in the case of SCARDBs in Chhattisgarh, Punjab and Kerala. Low recovery performance and declining trend were displayed by SCARDBs in Assam, Bihar, Har yana, Jammu and K ashmir, K arnataka, Madhya Pradesh, Orissa, Tamil Nadu and Uttar Pradesh. While PCARDBs in Chhattisgarh, Himachal Pradesh, Punjab and Karnataka showed improvement in recovery, PCARDBs in West Bengal improved their recovery performance considerably, as on 30 June 2009, over the previous year. PCARDBs in Haryana, Madhya Pradesh, Rajasthan, Orissa, Kerala and Tamil Nadu were on the path of decline, while poor recovery performance was observed in PCARDBs in Maharashtra. 4.18 The frequency distribution of loan recovery of banks in the co-operative structure are presented in Table 4.12 to 4.14.

Data Provisional for the year 2009 * : Manipur SCARDB is under orders of liquidation. # : Data for SCB and DCCB in the states Bihar and Jharkhand repeated from previous year.

Rs.39,544.40 crore to Rs.57,326.77 crore. The SCBs in Puducherry and Assam recorded impressive recovery of 91 and 69 per cent compared to 73 and 55 per cent, respectively, recorded in the previous year. Tamil Nadu SCB sustained the previous year recovery performance of 100 per cent and the same position was maintained during the year. While SCBs in Orissa, Assam, Mizoram, Nagaland, Sikkim, Tripura, Delhi, Himachal Pradesh, Jammu and Kashmir, Rajasthan, Karnataka, Puducherry, Uttar Pradesh, A&N Islands, West Bengal, Manipur, Punjab, Andhra Pradesh, Maharashtra and Goa improved their recovery performance, it was a marginal improvement in the case of Arunachal SCB. The SCBs in Chhattisgarh, Meghalaya, UT of Chandigarh, Kerala, Gujarat and Haryana, however, showed a decline in recovery. The SCBs in Madhya Pradesh, Uttarakhand, Kerala, Gujarat and Bihar maintained their recovery positions of the previous year.

Table 4.12: Frequency Distribution of Co-operative Banks According to Loan Recovery (As on 30 June) (Number) Recovery (%) 2008 <40 >40 to < 60 >60 to < 80 >80 Total 3 6 11 11 31 SCB (No.) 2009 3 2 7 18 31 2008 131 86 74 55 346 DCCB (No.) 2009 69 85 115 101 370 2008 9 2 6 2 19 SCARDB (No.) 2009 10 4 2 3 19 PCARDB (No.) 2008 382 173 98 43 696 2009 337 205 113 42 697

Data provisional for the year 2009, Data as on 30 June 2008 for one DCCB in Rajasthan and one DCCB in Punjab are not available. Data as on 30 June 2009 for SCB and DCCB in Bihar and Jharkhand repeated from previous year, Manipur SCARDB is under orders of liquidation.

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Table 4.13: Frequency Distribution of States/ UTs According to Level of Loan Recovery of SCBs and DCCBs (As on 30 June 2009) Recovery (%) <40 SCB DCCB Haryana (1), Bihar (5), Jharkhand (7), Orissa (4), West Bengal (3), Madhya Pradesh (3), Uttar Pradesh (17), Gujarat (2), Maharashtra (3), Andhra Pradesh (21), Karnataka (2), Tamil Nadu (1). (102) Haryana (9), Jammu and Kashmir (2), Rajasthan (4), Bihar (10), Jharkhand (1), Orissa (4), West Bengal (5), Madhya Pradesh (14),Chhattisgarh (1), Uttar Pradesh (16), Uttarakhand (1), Gujarat (2), Maharashtra (9), Andhra Pradesh (1), Karnataka (1), Kerala (2), Tamil Nadu (3) (85) Haryana (9), Himachal Pradesh (1), Punjab (3), Rajasthan (15), Bihar (6), Orissa (4), West Bengal (7), Madhya Pradesh (16), Chhattisgarh (5), Uttar Pradesh (12), Uttarakhand (4), Gujarat (7), Maharashtra (13), Karnataka (5), Kerala (3), Tamil Nadu (5) (115) Himachal Pradesh (1), Jammu and Kashmir (1), Punjab(17), Rajasthan (10), Bihar (1), Orissa (5),West Bengal (2), Madhya Pradesh (5), Uttar Pradesh (5), Uttarakhand (5), Gujarat (7), Maharashtra (6), Karnataka (13), Kerala (9), Tamil Nadu (14) (101)

Arunachal Pradesh, Bihar, Manipur and Megahlaya,

>40 and <60%

Chhattisgarh, Jammu and Kashmir

>60 and <80%

Chandigarh,Assam,Mizoram, Nagaland, Andaman and Nicobar, Sikkim, Uttar Pradesh, Andhra Pradesh, Tripura Delhi, Goa, Haryana, Punjab, Himachal Pradesh, Rajasthan, Orissa, Madhya Pradesh, Uttarakhand, Gujarat, Puducherry, Karnataka, Kerala, Tamil Nadu, West Bengal and Maharashtra 31

>80%

Total

370

DCCB-wise data for Bihar and Jharkhand are repeated from previous year

c.

Supersession of Elected Boards

of the covenants of MoU executed by the state governments under the GoI revival package for STCCS stipulates that the co-operative banks should be managed by duly elected Boards of Directors. Despite this, the

4.19 NABARD, as a matter of policy, continues to emphasise the need for co-operative banks to be managed by duly elected Boards of Management. One

Table 4.14: Frequency Distribution of States/UTs According to Levels of Loan Recovery of SCARDBs and PCARDBs (As on 30 June 2009) Recovery < 40 % SCARDBs Madhya Pradesh, Uttar Pradesh, Bihar, West Bengal, Assam, Jammu & Kashmir, Karnataka, Tamil Nadu, Gujarat and Maharashtra. (10) Chhattisgarh, Orissa, Himachal Pradesh and Rajasthan(4) Haryana, Punjab, Kerala and Tripura(4) Puducherry (1) PCARDBs Haryana (16), Punjab (26) Rajasthan (12), Orissa (2), West Bengal (14), Chhattisgarh (3), Madhya Pradesh (24), Maharashtra (29), Karnataka (41) and Tamil Nadu (170) (337)

> 40 % and < 60%

Haryana (3), Himachal Pradesh (1) Punjab (38), Rajasthan (22), Orissa (2),West Bengal (6), Chhattisgarh (6), Madhya Pradesh (13), Karnataka (96), Kerala (10) and Tamil Nadu (8) (205) Punjab (20), Rajasthan (2), Orissa (14), West Bengal (3), Chhattisgarh (3), Madhya Pradesh (1), Karnataka (38), Kerala (30) (113) Punjab (5), Orissa (28), West Bengal (1), Karnataka (2) and Kerala (6) (42) 697

> 60% and <80% > 80%

Total

19*

* Data in respect of Manipur SCARDB is not available.

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practice of superseding elected Boards continued in some states. As on 31 March 2009, duly elected Boards were superseded in 9 SCBs and 127 DCCBs in the ST Structure, and in 9 SCARDBs and in 265 PCARDBs in the LT Structure (Table 4.15).

sanctioned and Rs.3.78 crore disbursed (including sanctions of previous years). As on 31 March 2010, cumulative sanctions and disbursements under CDF were Rs.91.74 crore and Rs.81.51 crore, respectively. The CDF is replenished annually through appropriations from NABARDs surplus. The balance in the Fund as on 31 March 2010, stood at Rs.125 crore.

d.

Development Action Plans / Memorandum of Understanding

4.20 The process of preparing institution specific Development Action Plans (DAP) and execution of Memorandum of Understanding (MoU) began in 1994-95. It was implemented in three phases, 1994-95 to 1999-2000 (Phase I), 2000-01 to 2003-04 (Phase II) and 2004-05 to 2006-07 (Phase III). PACS were advised for the first time to prepare viability action plans under the guidance of DCCBs and to enter into MoUs with the respective DCCBs in the third phase. The fourth phase of DAP/MoU for both ST and LT structures is for the period April 2007 to March 2012. The policy changes in Phase IV aim at repositioning NABARD, RBI and RCS as external facilitators in planning, implementing and monitoring of DAP . As on 31 March 2009, 21 SCBs and 9 SCARDBs had executed DAP/MoU (Phase IV) with state governments and NABARD. The DAP are regularly monitored and reviewed during State Level Task Force (SLTF)/DLMRC meetings.

f.

Organisation Development Initiatives (ODIs)

4.22 The design, methodology and objective of ODIs are now more focused towards enabling financial inclusion and sustainable viability. Business Revitalisation and Managing Human Aspirations (BRAMHA), a recast of Organisation Development Initiative (ODI) for co-operatives, was launched in 2007-08 to facilitate changes in the organisational structure, staff composition, skills, strategic planning and shared values vis--vis the wider external environment to enable an organisation to fulfil its mission. During the year, ten BRAMHA (Phase I-9, Phase II-1) and 2 ODI (Phase I & II) were conducted.

g.
(i)

Other Developments
Human Resource Policy for Short-Term Cooperative Credit Structure
A Working Group (Chairman: Shri S.K. Mitra,

4.23

e.

Co-operative Development Fund

Executive Director, NABARD) was constituted to formulate a comprehensive human resource policy for the STCCS. Based on the recommendations of the Working Group, NABARD issued guidelines on staffing, recruitment, transfer and promotion policy to all SCBs and DCCBs for consideration and adoption by them. Separate guidelines were issued to SCBs in NER. The SCBs would constitute a separate State Level Steering Group in each State, comprising HR professionals, representatives of NABARD, NAFSCOB, Co-operation Department of State Governments, BIRD and other Training Establishments of NABARD and select CCBs, for preparation of road map for implementation, monitoring and review of the recommendations of the Working Group. The ROs of NABARD would conduct a one-day workshop for the benefit of officials of SCBs,

4.21 The Co-operative Development Fund (CDF) was broad based during the year after a comprehensive review of various existing schemes of assistance. At present, 11 schemes have been put into operation for strengthening the co-operatives. During 2009-10, Rs.3.76 crore was

Table 4.15: Elected Boards under Supersession (As on 31 March 2009) Particulars Total Institutions (No.) Boards under Supersession (No.) Boards under Supersession (%) * Data provisional SCB* 31 9 29 DCCB* SCARDB* PCARDB* 370 127 34 20 9 45 697 265 38

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CCBs, RCS, Department of Co-operation of respective State Governments for familiarising with the Working Groups recommendations and facilitating implementation.

democratic, self-reliant and efficient functioning and (c) initiating measures to improve the quality of management. Keeping in view the financial health of the institutions in the NER, the GoI in November 2008, announced a special dispensation for the STCCS in NER, including Sikkim. So far, twenty-five States (covering 96 per cent of the STCCS in the country), have executed the MoU with GoI and NABARD for implementing the revival package.

(ii)

Working Group for Computerisation in SCBs/ DCCBs

4.24 In the wake of Revival Package for strengthening co-operative credit structure at grass-roots level and growing competitive banking environment, it has become imperative to introduce advanced technology to stimulate the working and functions of co-operatives. With this in view, a Working Group has been constituted under the chairmanship of Dr. Prakash Bakshi, Executive Director, NABARD. The first meeting of the Working Group was held during the year. The Working Group, apart from giving a comprehensive solution to the co-operatives, will focus on the following areas : (a) Assess the status of front and back-office

i.

Special Audit and Release of Funds

4.26 Financial assistance is provided both for cleansing of balance sheets of STCCS (as on 31 March 2004) and capital infusion to ensure a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 7 per cent, subject to legal and institutional reforms. Bottom up approach is adopted with financial assistance provided to PACS first, followed by CCBs and then SCBs. Eligibility of PACS is determined on their recovery position as on 30 June 2004. Capitalisation of ineligible PACS would take place by settling their dues to the higher tier, with the State Government having to decide the future set-up of ineligible PACS. The funding of the package is shared by the GoI, State Governments and the STCCS, based on origin of losses and existing commitments. The special audits of STCCS, as on 31 March 2004, to arrive at the precise amount of losses after factoring in prudential provisioning norms and the sharing pattern, is complete in 79,530 PACS out of 95,626 PACS across 25 States. The special audit of CCB has been completed in twelve states and is in progress in the remaining States. An amount of Rs.7,972.22 crore has been released till 31 March 2010 by NABARD as GoI share for recapitalisation of 49,764 PACS in fourteen states, while the State Governments have released Rs.755.80 crore as their share.

computerisation requirements in CCBs and SCBs to remain competitive by 2012 and beyond based on their business growth, (b) assess the gap in computerisation vis--vis the above expectation, (c) suggest a road map for different categories of co-operative banks with reference to available infrastructure and operational costs and (d) to design an implementable plan for bank specific computerisation and operationalisation aspects such as funding, training, maintenance of hardware/ software upgradation, etc. The report of the Working Group is expected to be finalised shortly.

h.

Package for Short-Term Rural Cooperative Credit Structure

4.25 The Government of India (GoI) announced a Revival Package in 2006 for the STCCS, based on recommendations of the Task Force appointed by it for making the STCCS a well-managed and vibrant medium to serve the credit needs of rural India. The integrated package envisages (a) provision of liberal financial assistance to bring the system to an acceptable level of health, through cleansing of balance sheet, (b) introduction of legal and institutional reforms essential for their 85

ii.

Legal Reforms

4.27 The participating states are required to amend their Co-operative Societies Acts (CSAs) for securing the democratic character and autonomy of co-operatives and for their regulatory control by RBI. So far, fourteen States have amended their CSAs. The draft amendments

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proposed by the remaining eleven States have been vetted by NABARD, even as previous amendments in three of these States are awaiting Presidential assent. Based on the amendments, the rules and bye-laws of the societies are being revised by the states.

continuous basis and a Business Development programme for PACS in North Eastern States, keeping in view the special conditions in the region, are proposed to be launched in the next financial year.

v. iii. Common Accounting System and Management Information System

Impact of the Revival Package

4.30 Implementation of the Revival Package has brought about many positive changes in the functioning of the STCCS institutions. With the amendment of the CSAs, the STCCS has been enabled to become member driven and autonomous, affording them freedom in all financial and internal administrative matters. The statutory audits of CCBs and SCBs are being conducted by Chartered Accountants, from a panel supplied by NABARD, as opposed to departmental auditors earlier. The appointment of CEOs and Professional Directors on Boards of CCBs as per fit and proper criteria specified by the Reserve Bank of India (RBI) will ensure that the STCCS is run in a professional manner. PACS have started preparing Business Development Plans for prudent funds utilisation and for diversification of business activities. The preparation of balance sheets of PACS as per Common Accounting System (CAS), generation of information as per prescribed MIS formats and computerisation will ensure uniform accounting procedure, minimise misappropriation/frauds and bring in transparency. As on 31 March 2010, 49,764 PACS have been fully recapitalised, substantially improving their net worth and financial position.

4.28 The Common Accounting System (CAS) and Management Information System (MIS) formulated for PACS are being put in place to standardise accounting systems and decision-making process. Books of accounts, as per the CAS, have been printed and distributed in 11 States. Training on CAS/MIS has also been initiated. Once operationalisation of CAS/MIS is complete and strengthening of capacities to manually maintain the new system is achieved, computerisation of CAS/MIS would commence.

iv.

HRD Initiatives

4.29 The Package lays emphasis on training and capacity building of Board Members and functionaries of STCCS. Training modules along with training material in vernacular, elaborate Trainers Manual and Guide have been developed for Secretaries of PACS, Departmental Auditors and Supervisors of co-operative banks and Board of Directors of PACS, CCB and SCB and branch managers and CEOs of CCBs. The thrust of training is on resource mobilisation, loan products, housekeeping and accounting (CAS and MIS), business diversification, best practices in governance and management and changes in the post reforms scenario. Till date, training has been imparted to 226 master trainers from sixteen States, who in turn have trained 1,896 district level trainers. As on 31 March 2010, training has been imparted to 72,127 Secretaries of PACS from fourteen States, 99,219 elected Board Members of PACS from eleven States, 369 CEOs of CCBs and 1,671 Directors of CCBs/SCBs. In addition, training on CAS/MIS has been provided to 61,619 PACS functionaries and 3,471 bank supervisors/ departmental auditors. A five-day module for branch managers of CCBs for providing hand-holding support to PACS on a 86

vi.

Revival of Long-Term Rural Co-operative Credit Structure

4.31 Based on the report of the Task Force (II) under the Chairmanship of Prof. A. Vaidyanathan, GoI had earlier considered a separate Revival Package for the Long-Term Co-operative Credit Structure (LTCCS). However, it has now constituted a Task Force under the Chairmanship of Shri G. C. Chaturvedi, IAS, Addl. Secretary (FS), Ministry of Finance, Government of India to review the need for a separate package for Revival of LTCCS. The Task Force submitted its report to the Government of India on 25 February 2010.

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B. Regional Rural Banks


a.
i.

iv. Branch Expansion Programme


4.35 As announced in the Union Budget 2007-08, RRBs

Development Initiatives
Amalgamation

had opened 474 branches during 2008-09, taking the cumulative number of branches of all RRBs to 15,181, as on 31 March 2009. Further, GoI has fixed a target of opening of 2,000 branches of RRBs in the next two years, for facilitating financial inclusion. During the year 2009-10, RRBs opened 263 branches as per information available, which would take the total number of RRB branches to 15,444.

4.32 The structural consolidation of RRBs initiated by GoI in September 2005 through amalgamation of Sponsor Bank-wise RRBs in a State, continued and four new amalgamated entities were formed in 2009-10, by amalgamating five stand-alone and three previously amalgamated RRBs. With this, the total number of RRBs as on 31 March 2010 stood at 82 (46 amalgamated and 36 stand alone).

v. ICT solution for Financial Inclusion


4.36 The Committee on Financial Inclusion (Dr. C. Rangarajan) had identified 256 districts in the country as most excluded and had recommended RRBs taking up ten pilot projects with ICT (Information and Communication Technologies) solutions. Accordingly, fifteen RRBs were identified from fourteen States for an R and D project on Financial Inclusion, with ICT based solutions, through use of smart cards, Point of Service (PoS) devices and mobile technology, in different regions and client groups in the country. The project, a PPP model, is partly funded by the World Bank, with back-ended incentive provided by NABARD from its Financial Inclusion Fund (FIF).

ii.

Capital Infusion

4.33 As part of financial strengthening of RRBs, the Honble Union Finance Minister, in the Budget 2007-08, had announced recapitalisation support to 27 RRBs having negative net worth, as on 31 March 2007. The entire amount of recapitalisation support of Rs.1,795.97 crore stand released to the RRBs by GoI, the State Governments and Sponsor Banks concerned, in the ratio of 50:15:35, respectively.

iii.

Village Adoption and Debt Swap vi. Financial Inclusion


4.37 As envisaged by GoI, RRBs, as a group, have become a strong intermediary for Financial Inclusion in rural areas by opening a large number of No Frills accounts and by financing under General Credit Card (GCC), as per RBI guidelines. The total number of accounts covered under both deposits and loans was 1,106.20 lakh, as on 31 March 2009 (Table 4.16).

4.34 RRBs were given the target of adopting at least one village per branch, for financing the indebted farmers to swap the debt taken from money lenders. Against the target, RRBs had adopted 17,490 and 24,341 villages as on 31 March 2008 and 31 March 2009, respectively. As on 31 December 2009, 24,531 villages had been adopted by the RRBs of which 13,221 villages had been freed of debt from money lenders.

Table 4.16: Status of Financial Inclusion - RRB (As on 31 March) (No. in lakh) Of total Loan Accounts, major areas of Financial Inclusion Year No. of Deposit Accounts 669.88 758.02 935.54 Of which, No-Frills Accounts 34.54 81.17 153.81 No. of Loan Accounts 164.97 171.20 170.66 SSI, artisans, SCC & retail trades 35.74 33.53 33.00

GCC 1.083 2.35 3.22

SHGs 6.52 7.20 8.04

KCC 82.84 93.14 114.71

Tenants 1.08 1.03 0.95

2006-07 2007-08 2008-09

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b. Performance Review
4.38 The performance of RRBs is being reviewed by GoI under the Chairmanship of Union Finance Minister, since January 2007, and the decisions taken in the meeting are in turn being reviewed by Finance Secretary, GoI on half-yearly basis or as and when needed. During the year, two such review meetings were held, one chaired by Finance Minister and the other by Finance Secretary, GoI.

Table 4.17: RRBs: Indicators of Performance (As on 31 March) (Rs. crore) Particulars No .of RRB (No.) Branch Network (No.) Share Capital Share Capital Deposit Reserves Deposits 2008 91 * 14761 197.00 2832.53 5703.06 2009 86 * 15181 197.00 3959.30 6753.99 2010 @ 82 * 15444 197.00 3959.77 7912.39

99093.46 120189.90 142980.48 11494.00 48559.54 58984.27 38581.97 82 1383.69 8 55.58 1328.11 2624.22 36 80.84 6.05 12734.65 65909.92 67802.10 43367.13 80 1823.55 6 35.91 1787.64 2299.98 31 77.85 4.14 18555.84 76167.29 82221.59 55727.75 78 2550.51 4 8.44 2542.07 1813.03 30 79.12 3.66

Financial Performance
4.39 Post amalgamation, the number of RRB in the country, as on 31 March 2010, stood at 82, with a network of 15,444 branches covering 618 notified districts in twenty-six States and one UT (Puducherry). Over a period of three years (2008-10), aggregate reserves of RRB increased significantly (38.7%), while deposits and investments increased by 44.3 and 56.9 per cent, respectively. Borrowings also increased by 61.4 per cent, while loans and advances (outstanding) increased by 39.40 per cent in 2009-10 (Table 4.17). 4.40 Financial results of RRBs for the year 2009-10

Borrowings Investments Loans & Advances (Outstanding) Loans Issued RRB earning Profit (No.) Amount of Profit (A)$ RRB incurring Losses (No.) Amount of Losses (B) Net Profit (A B)$ Accumulated Losses RRB with accumulated losses (No.) Recovery (%) NPAs to loans outstanding (%) Net worth

indicate that they have improved their performance with 78 out of 82 RRBs showing pre-tax profit to the extent of Rs.2,550.51 crore as compared to Rs.1,823.55 crore in 2008-09. The remaining four RRBs incurred losses of Rs.8.44 crore as compared to Rs.35.91 crore posted by six RRBs in 2008-09. The status of RRBs that can be considered as sustainably viable (with no accumulated losses) is also expected to have improved, as on 31 March 2010 as compared to the previous year. The aggregate reserves of RRBs increased to Rs.7,912.39 crore while their networth increased to Rs.10,256.13 crore as on 31 March 2010. The accumulated losses of RRBs have decreased by 30.9 per cent over the previous year. The performance of RRBs varied widely across the regions in 2009-10. While all RRBs in the Eastern, Northern and Western region were in profit, a few in the Central, North-Eastern and Southern regions were incurring losses (Table 4.18).

6107.37

8610.31

10256.13

* : Number reduced due to amalgamation. @ : Estimated. $ : Before Tax.

c.

Recovery Performance

4.41 The recovery performance of RRBs was estimated at 79.1 per cent as on 30 June 2009, compared to 77.9 per cent as on 30 June 2008 (Table 4.18). All RRBs in the Northern, three in Western and ten in the Southern region had registered a recovery performance above the national average (Table 4.19). Six RRBs in the country had achieved a recovery percentage of above 90, while five had a lower recovery percentage ranging between 40 and 60 per cent.

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Table 4.18: Region-wise Working Results of RRB (As on 31 March 2010) (Rs. crore) Region RRBs (No.) Profit Earning No. North-Eastern Eastern Northern Central Western Southern All India 8 14 15 23 6 16 82 7 14 15 21 6 15 78 Amt. 107.14 439.63 379.67 841.51 92.40 690.16 2550.51 Loss Incurring No. 1 0 0 2 0 1 4 Amt. 3.33 0.00 0.00 4.89 0.00 0.27 8.44 103.81 439.63 379.67 836.62 92.40 689.94 2542.07 192.68 1239.58 208.11 99.62 72.75 0.29 1813.03 3259.19 13817.77 13680.12 20581.21 3904.31 26978.99 82221.59 Net Profit Accumu lated Losses Loans & Advances O/S NPAs Recovery (%) (As on 30 June 2009) % 6.52 6.75 1.96 4.16 4.57 2.09 3.66 2008 65.51 68.10 85.01 76.24 77.85 81.51 2009 70.29 71.72 86.95 75.14 78.75 81.97

Amount 212.34 932.19 268.05 856.09 178.26 564.42 3011.35

77.85 79.12

d.

Non-Performing Assets

Deputy Governor, Reserve Bank of India, to examine the financials of RRBs with capital to risk-weighted assets ratio (CRAR) of less than 7 per cent and suggest measures to bring it to at least 9 per cent in a phased manner. The Committee had constituted a Subcommittee to analyse the financials of RRBs in detail for assessing capital required to attain 7 per cent CRAR by March 2011 and 9 per cent by March 2012 and for suggesting measures for maintaining sustainability in the long run. The Committee submitted its Report on 30 April 2010.

4.42 The aggregate gross NPAs of all RRBs declined from 4.1 per cent, as at 31 March 2009, to 3.7 per cent as on 31 March 2010 (provisional).

e.
i.

Other Developments
Committee on capitalisation of RRBs for Maintaining Higher CRAR

4.43 The GoI had constituted a Committee in September 2009, under the Chairmanship of Dr. K.C. Chakrabarty,

Table 4.19: Frequency Distribution of States According to Levels of Recovery of RRBs (As on 30 June 2009) Recovery (%) < 40 > 40 and < 60 > 60 and < 80 0 5 40 Nil Bihar (1), Madhya Pradesh (1), Manipur (1), Orissa (1), Uttar Pradesh (1) Andhra Pradesh (3), Arunachal Pradesh (1), Assam (1), Bihar (3), Chhattisgarh (3), Gujarat (1), Jammu & Kashmir (1), Jharkhand (2), Karnataka (2), Madhya Pradesh (4), Maharashtra (2), Meghalaya (1), Nagaland (1), Orissa (4), Tripura (1), Uttar Pradesh (6), Uttarakhand (1), West Bengal (3) >80 38 Andhra Pradesh (2), Assam (1), Gujarat (2), Haryana (2), Himachal Pradesh (2), Jammu & Kashmir (1), Karnataka (4), Kerala (2), Madhya Pradesh (3), Maharashtra (1), Mizoram (1), Punjab (3), Rajasthan (6), Tamil Nadu (2), Uttar Pradesh (4), Uttarakhand (1), Puducherry (1)
* : No. of RRB as on 31 March 2010 was 82 after amalgamation. Data provided for 83 RRBs as on 30 June 2009.

States

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Supervision of Banks
4.44 NABARD inspects SCBs and DCCBs in terms of the powers vested under Section 35(6) of the Banking Regulation Act, 1949 (AACS), and RRBs under Section 35(6) of the Banking Regulation Act, 1949. NABARD also conducts voluntary inspection of SCARDBs, Apex level Co-operative Societies and Federations. Considering the unique nature of all these institutions, the supervisory role of NABARD, apart from ensuring conformity with banking regulations and prudential norms, is very comprehensive and holistic, encompassing inspections (on-site and off-site), portfolio studies, monitoring, guiding and facilitating functions. The periodicity of statutory inspections of all SCBs and those DCCBs and RRBs not complying with minimum capital requirements as stipulated under Banking Regulation Act, 1949 (AACS) / RBI Act 1934 and voluntary inspections of all SCARDBs continues to be annual. The statutory inspections of those DCCBs and RRBs with positive networth biennially. and voluntary inspections of Apex Co-operative Societies/Federations are conducted 4.46 These concerns were communicated to the banks, the Registrars of Co-operative Societies (RCS), State Governments and Sponsor Banks for corrective action. NABARD also held discussions with the Boards of Directors of SCBs/ DCCBs/ RRBs, and with the CEOs for core area compliance and then rated the compliance reports. NABARD also conveyed the supervisory ratings to the top management of the concerned banks. (vi) ineffective funds management, (vii) inadequate risk management systems, (viii) delay in submission of statutory returns and compliance to inspection observations; (ix) lack of corporate governance; (x) weaknesses in internal checks and control system; (xi) incidence of frauds; (xii) improper valuation of securities and irregularities in investment portfolio; (xiii) violation of Credit Monitoring Arrangement (CMA)/ exposure norms and (xiv) non-compliance with KYC/ AML standards, etc.

b.

Board of Supervision

A. Operational Matters
a. Inspection of Banks
4.45 During 2009-10, statutory inspections of 343 banks (30 SCBs, 252 DCCBs and 61 RRBs) and voluntary inspections of 16 SCARDBs and one apex society, viz., Gujarat Rajya Handloom, Handicraft and Audhyogic Sahakari Federation Ltd. (GUSICA), were conducted. Some of the supervisory concerns relating to these institutions, as brought out by the inspection reports are (i) non-compliance with statutory provisions; (ii) improper application of Income Recognition and Asset Classification (IRAC) norms resulting in inflated profit/reduced losses, shortfall in provisions, etc.; (iii) high level of NPAs/erosion of assets; (iv) deficiencies in sanction, appraisal of loans/advances and follow-up of post disbursements; (v) inadequate financial margin/ high cost of management/ adverse working results,

4.47 The Board of Supervision (BoS) constituted by the Board of Directors of NABARD in 1999, met four times during the year 2009-10. It reviewed: (i) the functioning of SCBs, DCCBs and SCARDBs in the previous years, (ii) functioning of co-operative credit institutions and RRBs in MP, Assam, West Bengal and Tamil Nadu, (iii) reports of frauds in the supervised banks, (iv) functioning of weak DCCBs and RRBs, (v) adherence to CMA norms by the co-operative banks for the year 2008-09, (vi) scheduling of amalgamated RRBs (vii) migratory analysis of supervisory rating of SCBs, DCCBs and RRBs (viii) compliance of the banks to various important statutory provisions, (ix) disposal of complaints against supervised banks, (x) concept paper on the action required in case of slippage in the key parameters for judging the financial position of banks, (xi) the working of RRBs sponsored by some of the commercial banks, and (xii) major observations

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noticed during the investment portfolio studies taken up in some of the banks.

revision of the licensing norms, RBI has issued licenses to eight SCBs and 98 DCCBs during the year, thus increasing the number of licensed banks to 195 (22 SCBs and 173 DCCBs) as on 31 March 2010. During the year, no SCB was included in the Second Schedule to the Reserve Bank of India Act, 1934. Thus, the number of scheduled SCBs remains unchanged at 16. 4.50 All RRBs were from inception, included in the Second Schedule to the RBI Act 1934. However, amalgamated RRBs could become Scheduled Banks only with the approval of RBI, on the basis of recommendations given by NABARD, after conducting statutory inspection. Thirty nine amalgamated RRB were included by the RBI in the Second Schedule of the Reserve Bank of India Act, 1934, after they were found complying with Section 42(6)(a)(i) &(ii) of the Act, ibid. With this, the number of scheduled RRB stood at 75 as on 31 March 2010.

c.
i.

Health of Supervised Banks


Compliance to Minimum Share Capital Requirement

4.48 During the year 2009-10, 25 DCCBs had improved their financial position and recomplied with the provisions of Section 11(1) of Banking Regulation Act, 1949 (AACS). As on 31 March 2010, 88 banks (5 SCBs and 83 DCCBs) were not complying with the provisions of Section 11(1) of the B.R. Act, 1949 (AACS). The total erosion in the value of assets of these 88 non-compliant banks aggregated Rs.12,055.00 crore, which had affected deposits to the extent of Rs.3,780.6 crore (22.6% of their total deposits) in addition to their entire share capital. Sixty seven DCCBs and three SCBs were granted exemption from the provisions of Section 11(1) of the Act, ibid , by GoI, upto 31 March 2010, while applications for grant of exemption in respect of 17 banks (one SCB & 16 DCCBs) were under the consideration of RBI/GoI.

iii. Provision Coverage Ratio (PCR) of RRBs


4.51 In order to ascertain the PCR of RRBs an exercise was carried out by NABARD based on the available data and the position is given in Table 4.20.

ii. Grant of License/Scheduling of Banks


4.49 Pursuant to the recommendations of Dr. Rakesh Mohan Committee on Financial Sector Assessment (CFSA), RBI has since revised the licensing norms for co-operative banks (Box 4.1). As a one-time measure, RBI, RPCD has delegated to its Regional units the powers to grant licenses to co-operative banks. Consequent upon

iv. Compliance with various Statutory Provisions


4.52 As on 31 March 2010, 5 SCBs and 83 DCCBs did not comply with Section 22(3)(a) of the B.R. Act, 1949 (AACS), as regards their capacity to pay their depositors in full and nine SCBs and 214 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. Similarly, out of the 16 scheduled SCBs, two were not complying

Box 4.1 Revised Licensing norms for Co-operative Banks


The banks should have CRAR of 4% and above as per the last inspection report of NABARD; The banks should have complied with the CRR and SLR requirements during the last one year; and Stray/default in CRR/SLR requirement up to two occasions during the last one year may be ignored for the purpose.

Table 4.20: Provision Coverage Ratio for RRBs (As on 31 March 2009) Provision Coverage Ratio (%) <50 50-70 >70 Total Number of RRB 39 29 18 86

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with Section 42(6)(a)(i) of RBI Act, 1934 in regard to minimum capital requirement of Rs.5 lakh, and three were not complying with Section 42(6)(a)(ii) of the Act ibid, as the affairs of these banks were conducted in a manner detrimental to the interests of their depositors. As on 31 March 2010, out of 82 RRB, 70 complied with Section 42(6)(a)(i) of the RBI Act, 1934 and 49 complied with Section 42(6)(a)(ii) of the Act ibid. The erosion in the value of assets of the eight RRBs not complying with Section 42 (6)(a)(i) of the Act, ibid stood at Rs.785.38 crore as on 31 March 2010 and their deposits were eroded to the extent of Rs.111.02 crore, forming 2.27 per cent of the total deposits held by these banks.

b.

SCARDBs

4.54 In the case of SCARDBs, (i) instructions on prudential norms in respect of advances covered by ADWDR Scheme, 2008 were issued, (ii) detailed guidelines on prevention/monitoring of frauds in banks were issued and (iii) as directed by BoS, SCARDBs were advised to expeditiously complete balancing of books and reconciliation of inter-branch accounts.

c.

RRBs

4.55 For RRBs, (i) detailed guidelines on prevention/ monitoring of frauds, (ii) a Master circular on Disclosure norms and (iii) revised Long Form Audit Report (LFAR) guidelines, (iv) guidance note on Credit Risk and Operational Risk Management, and (v) guidelines on Business Continuity Plan (BCP), were issued.

B.
a.

Policy Decisions/ Guidelines


SCB/CCB

4.53 During the year, (i) detailed guidelines were issued to supervised banks on prevention/monitoring of frauds; (ii) guidelines were issued to the RCS of all States to implement prudential norms on Asset Classification, Provisioning and Income Recognition in PACS ; (iii) in keeping with the decision not to grant extension of time for publication of annual accounts of co-operative banks, RCS/Director of Audit were impressed upon the need for timely completion of audit; (iv) in view of the sizeable inflow of funds into the STCCS by way of recapitalisation assistance under Vaidyanathan Committee I (VC-I) and under the ADWDR Scheme 2008, banks were cautioned to utilise the funds judiciously; (v) as CRAR norms have been made applicable to PACS following VC-I recommendations, the RCS of all states were advised to instruct the PACS to work out CRAR and disclose it as Notes on accounts in the balance sheet; (vi) a circular on Fraud Risk Management System in banks - Role of Chairmen/Chief Executive Officers was issued; (vii) a circular under Section 19 of the Banking Regulation Act 1949 (AACS) - Restriction on holding of shares, was issued to all co-operative banks. (viii) guidance note on Credit Risk Management (CRM) was issued to all SCBs and CCBs, and (ix) guidelines on Business Continuity Plan (BCP) was also issued to all co-operative banks.

C.

Supervisory Interventions

(i) ROs were advised to take necessary steps in case of non-compliance with the provisions of Section 42(6)(a)(i) of the RBI Act, 1934 by RRBs; (ii) clarifications were issued to ROs in respect of compliance to Section 6 of Banking Regulation Act 1949 (AACS) by co-operative banks; (iii) inspection of SCBs, DCCBs and RRBs; and (iv) procedure for valuation of unquoted securities was advised to all ROs.

D.

Other Developments

4.56 To improve the quality and effectiveness of inspections, three Seminars on Regional Supervision were held for officers of NABARD stationed in DoS. Regional Seminars on Internal Checks and Control Systems were conducted for the Chiefs of Audit and Inspection Departments of both RRBs and co-operative banks. At the instance of Financial Intelligence UnitIndia (FIU-IND), two meetings of Chairmen of RRBs and three state-level meetings of co-operative banks and RRBs were held in MP and UP to review the status of implementations of Anti-Money Laundering (AML)/ Combating Financing of Terrorism (CFT) guidelines. The

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Bank associated itself with NABARD-GTZ Rural Financial Institutions Programme (RFIP) review meetings and study on Audit structure in CCS. HO officials attended meetings of Mutual Evaluation Team from Financial Action Task Force (FATF) held at RBI, on the initiatives taken on AML/CFT. RO conducted sensitisation workshops on KYC (Know Your Customer)/ AML, CMA (Credit Monitoring Arrangement), Statutory Audit, Frauds, Investments, Inter nal Checks and Controls, Corporate Governance, etc. In addition, NABARD, through its Regional Offices and Training Establishments, conducted training/sensitisation programmes and workshops on Investment Management, Asset Liability Management (ALM), AML, KYC, monitoring of frauds, prudential norms and CMA for the auditors and other personnel of SCBs, DCCBs and RRBs.

4.57

For a holistic and more effective approach

towards supervision, NABARD had forged partnerships with other related agencies, especially in strengthening the internal checks and control systems in the supervised banks. In this regard, the Bank associated with the study on enhancing the audit capacity in the Co-operative Credit Structure during the year. The Bank also associated with GTZ in preparation of Training Needs Analysis (TNA) of Credit Cooperatives and Corporate Governance during the year. NABARD, for the first time, also associated with the Conferences of Principal Officers of RRBs and the Trainers Training Programme (TTP) on AML convened by the FIU-IND. Inputs and feedback on many policy issues were obtained from the National Federation of State Cooperative Banks (NAFSCOB) resulting in the preparation of Operational Manual for co-operative banks.

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V
Organisation and Management
Management aspects for organisation. and human resources functioning this, are of crucial any has context of the changes in the economy. The Bank continues to lay emphasis on capacity building of its staff through honing their skills and developing expertise. effective Recognising

NABARD

initiated steps to reposition itself (Box 5.1) in the

Management
A.
5.2

Board of Directors
The Board of Directors met five times during

Ministry of Finance, Government of India was appointed as Director with effect from 9 December 2009 vice Shri Amitabh Verma. (g) Shri Roshan Lal, Financial Commissioner and Principal Secretary, of Agriculture was Department, appointed as Government Haryana

the year, while the Executive Committee and the Sanctioning Committee for Loans under RIDF, met six and seven times, respectively. The Audit Committee of the Board (ACB) met four times, while the Risk Management Committee of the Board (RMCB) met thrice during the year. 5.3 The following changes took place in the

Director with effect from 3 May 2009 vice Smt. Shakuntala Jhaku. (h) Shri Letkhogin Haokip, Commissioner (Social Welfare, Agriculture), Government of Manipur was appointed as Director with effect from 19 November 2009 vice Shri O. Nabakishore Singh. (i) Shri Pankaj Dwivedi, and Agriculture Chief Production Secretary,

composition of the Board of Directors during the year: (a) Dr. Ram S. Tarneja and Dr. Anup Kumar Sinha ceased to be Directors on the Board, with effect from 29 May 2009, after completing their terms. (b) Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India was appointed as Director with effect from 26 August 2009 vice Smt. Usha Thorat, Deputy Governor, RBI. (c) Shri Lakshmi Chand and Smt. Shashi Rekha Rajagopalan were re-appointed on the Board with effect from 16 October 2009. (d) Shri Prabeer Kumar Basu, Secretary, Ministry of Agriculture, GoI was appointed as a Director w i t h e f f e c t f r o m 2 8 Fe b r u a r y 2 0 1 0 v i c e Shri T. Nandakumar. (e) Shri B.K. Sinha, Secretary, Ministry of Rural Development, Govt. of India was appointed on the Board with effect from 3 February 2010 vice Dr. Rita Sharma . (f) Shri Alok Nigam, Joint Secretary (Banking (k) (j)

Commissioner

Special

Government of Andhra Pradesh, was appointed as Director with effect from 17 June 2009 vice Dr. S. Chellappa. On completion of the tenure of the State Governments representation on the Board of Directors, he ceased to be a Director on the Board with effect from 13 December 2009. Shri A. P . Singh, Secretary, Agriculture Government and of

Sugarcane

Development,

Jharkhand ceased to be a Director on the Board with effect from 13 December 2009 on completion of the tenure of the State Governments representation on the Board of Directors. Shri Mohd. Iqbal Khandey, Principal Secretary, Agricultural Production Department, Government of Jammu and Kashmir was appointed as Director with effect from 18 March 2010.

Operations), Department of Financial Services,

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Box 5.1 Repositioning initiative of NABARD


While addressing the Board of Directors of NABARD on the occasion of its Silver Jubilee Celebrations in 2007, the Union Ministers of Finance and Agriculture expressed satisfaction over the functioning of NABARD for the last 25 years. While echoing the confidence and goodwill enjoyed by NABARD with its stakeholders, they also shared their vision regarding the need for NABARD to reposition itself, in terms of networking resources, building of capabilities and partnering institutions to bring about integrated rural development across the country more effectively. The major concerns flagged were, the declining influence of NABARD in expanding credit coverage and directing credit flow to desired sectors, sub-sectors and regions; NABARDs limitation in raising cost effective resources, progressively interfering with performance of its mandated role. Considering these aspects as also other relevant factors, the Board of Directors decided to examine the present and future roles of NABARD, and to initiate a repositioning of the institution for enabling it to effectively address emerging and future challenges. The objectives of this initiative are: The Project Reposition was approved by the Board of Directors and the Bank has engaged Boston Consulting Group (BCG), for a period of 18 months with effect from 03 March 2010. (iv) to redesign the organizational structure with an implementable time-bound framework to achieve the above; and (v) to strengthen rural financial institutions and provide quality training to its staff and improve operational systems. (i) to focus on measures to expand and improve the existing financial and developmental interventions of NABARD so as to enhance agricultural credit flow; (ii) to analyse the financial, developmental and supervisory roles of NABARD and to explore new and innovative areas; (iii) to access adequate and cost effective resources to enable NABARD to provide higher levels of development support to the rural people;

(l)

Shri

L.C.

Goyal,

Agricultural

Production

C.
5.5

Right to Information
The Right to Information (RTI) Cell has been with the statutory requirements with

Commissioner, Government of Kerala, was appointed as Director with effect from 18 March 2010.

complying

regard to RTI Act, 2005. During the year, the CGM/

B.
5.4

Inspection of NABARD
Reserve Bank of India conducted the twelfth

O-i-C of Regional Offices were designated as Central Public Information Officer to expedite furnishing of information at the state level in compliance with the provisions of the RTI Act. Information on NABARD website is updated periodically as required under the Act.

financial inspection of NABARD (with reference to its financial position of 31 March 2009) from 27 January 2010 to 26 February 2010.

Human Resources Management


A.
5.6 officers

Training and Skill Upgradation


During 2009-10, National Bank Staff College on various was subjects. for Stress both Management officers and

Disaster Management, etc., designed to meet their specialised training needs, while 424 officers were deputed for 153 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 and treasury management.

(NBSC), Lucknow conducted 85 programmes for 1675 Programme made conducted on

employees. Further, 54 officers were deputed for tailorprogrammes Post-Harvest Management,

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5.7

During 2009-10, National Bank Training Centre

Table 5.1: Promotions Effected During the Year Particulars Total of which SC Officers from Grade B to C Officers from Grade A to B Group B to officers cadre (Grade A) Group C to Group B Total 242 261 54 4 561 55 42 15 112 ST 37 26 2 65

(NBTC), Lucknow and Zonal Training Centre (ZTC), Hyderabad conducted 45 training programmes for 663 Group B and C Staff. It also conducted prepromotional training programmes for 47 Group B staff for promotion to next higher grade in the officers cadre and one pre-retirement programme for five Group B and C staff.

Overseas Training/Visits by Top Management


5.8 During the year, 120 officers from NABARD and four from Client Institutions were deputed for various overseas training programmes, exposure visits, seminars, etc. This included five teams comprising 63 officers, who were deputed to Germany, Mauritius and Israel for study of co-operatives, consultancy, etc. The Chairman, Shri Umesh Chandra Sarangi attended the 57 EXCOM of APRACA held in Chiang Mai, Thailand from 27 to 31 March 2010. He was part of the selection team for appointment of new APRACA Secretary General. The MoU between NABARD and APRACA for setting up of APRACA Centre of Excellence (ACE) in Linkage Banking was signed during this period. Dr. K.G. Karmakar, Managing Director presented a paper in the Forum on Policy and Regulation of Financial Inclusion in Malaysia in May 2009 and also led a delegation of senior officers of NABARD on a study tour on Rural Development and Natural Resources Management in Germany. He also presented a paper on Review of the Development of micro-Finance Services for Coastal Small-scale Fisheries and Aquaculture in South Asian Countries with Special Attention to Women, in the Regional Workshop of FAO in Manila, Philippines in October 2009. He attended the Expert Group meeting on Supportive Financial System and Green Growth for Achieving the Millennium Development Goals in the Asia Pacific Region in Bangkok from 14 to 17 February 2010.

courses of relevance through distance education, 51 staff members availed of the facility during the year. Four officers were granted study leave during the year under the Scheme of enabling officers to pursue higher studies in well-known Universities/Institutions in India and abroad.

B.
a.

Staff Matters
Recruitment and Promotion

5.10 Out of 120 officers identified for recruitment in Grade A in the Rural Development Banking Service of the Bank, 108 officers were appointed during the year. A total of 695 promotions were effected during the year, of which 8, 34 and 92 were promoted to Grade F, E and D, respectively. Details of other promotions effected are given in Table 5.1.

b.
5.11

Staff Strength
The total staff strength of the Bank, as on 31

March 2010, stood at 4,770 of which 849 belonged to Scheduled Castes (18%) and 398 to Scheduled Tribes (8%) (Table 5.2). The staff strength of ex-servicemen and physically challenged employees stood at 101 and 99, respectively, each constituting 2 per cent of the total staff strength.

Table 5.2: Total Staff Strength Cadre Group A Total SC 2833 1065 872 4770 409 134 306 849 Group B Group C Total of which ST 197 96 105 398

Support for Higher Studies


5.9 Under the Incentive Scheme, introduced in April 2007, to encourage staff members to pursue 96

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Administrative and Other Matters


A. Industrial Relations
implemented by the Bank. The Board of Directors of NABARD 5.12 Industrial relations in the Bank continued to be harmonious during the year. Periodic discussions were held between the Management and the All-India National Bank Officers Association/All-India NABARD Employees Association. also reviewed the implementation of Reservation Policy in the Bank, during its meeting held on 23 November 2009. Quarterly meetings of the Senior Executives and Chief Liaison Officer with representatives of the Welfare Association of SC/ST employees were held at Head Office (HO) and Regional Office (RO). A two-day workshop on implementation of Reservation Policy was conducted for the benefit of staff members attached to various administrative units. Nine pre-promotional training programmes for 168 SC/ST staff members were conducted in addition to pre-recruitment training for 1,165 SC/ST candidates at various centres. Other benefits extended included granting scholarship to 86 wards of SC/ST employees and providing compassionate appointment to dependents of thirteen deceased employees.

B.
i.

Transparency / Consultative Approach


Grievances Redressal System

5.13 The Bank introduced a Grievances Redressal System for the benefit of its staff members from 30 June 2009 with the objective of having an independent mechanism for redressal of grievances of individual officer/employee on the decisions of the Bank on various service matters. and A an Grievances Appellate Redressal Committee [GRC]

Committee have been set up in this regard. Five meetings of the GRC were held and 13 representations were considered.

D.

Other Welfare Measures for the Staff


During the year, housing loans aggregating against the sanctions, including

5.16

ii.
5.14

Joint Consultation Scheme for Officer Staff


The Joint Consultation Scheme (JCS) was

Rs.4,610.50 lakh were sanctioned to 400 employees. Disbursements lakh. 5.17 The Festival of thirteenth the Annual Sports and was Cultural held in sanctions of previous year, amounted to Rs.4,273.59

revived in June 2009 by setting up the Joint Consultative Committee [JCC] at HO comprising representatives Human of the Officers Association Department, and for Resources Management

discussing issues of common interest in HR areas. The first meeting of the JCC took place on 18 January 2010.

Bank,

NABOTSAV,

Bengaluru between 1 and 5 February 2010, in which 318 staff members from all over India participated. 5.18 The Central Complaints Committee in HO and in of RO sexual functioned harassment effectively of women for at

C.

Welfare Measures for SC/ST Employees


The Bank continued to adhere to instructions

Committees prevention workplace.

5.15

issued by GoI on reservation for SC/ST employees in recruitment and promotions. Prof. N. M. Kamble, Honble Vice-Chairman, National Commission for Scheduled Castes reviewed the Reservation Policy 5.19 NABARD Employees Group Gratuity Trust was set up during the year with Shri S.K. Mitra, Executive Director, NABARD as the Chairman.

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E.

Other Developments

of

NABARD of

and

updated by

every the ROs

month. in

Star

5.20 During the year, two sensitisation seminars on administrative matters including disciplinary and RTI cases were organised for 100 officers from HO and various RO/TE. 5.21 The Committee the has set up to review and

Performance position

Indicators

showing

comparative important

achievements

functional areas is also made available on NABNET every month for monitoring the performance by the top management. An innovative indexation model called the District Agricultural Development Index was developed for analysing the comparative position of Districts of various states in respect of overall Agricultural Development. This year, the model was prepared for Uttar Pradesh. The internal and external circulars of the Bank and an e-journal called Issues in Agriculture and Rural Development are also made available on NABNET. NABSTATS a quarterly bulletin of statistical information in the domain of Agriculture and Rural Development is also being published and made available on the website of the Bank for wider dissemination.

recommend of DDMs

existing/new submitted

facilities/amenities its report. The

enjoyed by DDMs along with assessing the workloads recommendations are under examination.

F.
5.22

Library
The Central Library at HO houses 28,902

English and 5,554 Hindi books, respectively. Apart from subscribing to 120 journals and magazines on agriculture and allied activities, banking, etc., rural the development, information technology,

Library also subscribes to institutional membership of the British Library. It also networks with other major libraries in Mumbai. Further, on-line access to the Library Catalogue and relevant articles are made available. An exhibition of books was arranged at HO, Mumbai during the year

H.
5.24

Information Technology
During the year, the Banks intranet was

expanded to collect data/returns from RO/TE by means of an Online Returns Management System (ORMS), accurately. developed generate The in-house, MIS to help quickly was HO and made Departments reports software

G.
5.23

Data Management
During 2009-10, district profile data were

accounting

bilingual and upgraded with additional features to include preparation of e-TDS and other monitoring reports. Speech Recognition Software was provided to RO/DDM to improve efficiency. A dedicated software for to providing saving computer support and from a remote direct location was introduced on a pilot basis. With a view executive time facilitating interaction and to effectively control travel and related costs, a video conferencing facility was set up in the Bank in the last week of March 2010. Performance Appraisal Reports (PAR) of officers (through in-house Human This is Resources another Management step of System Bank Software) towards were submitted online, for the first time in NABARD. the transparency, optimum use of technology and saving precious time for fruitful pursuits. further refined and widened to include 19 parameters relating to agriculture and rural development. Further, a Banking Profile was also developed, covering nine important banking parameters, viz., Network and Outreach, Deposits, Loans and Advances Outstandings, CD Ratio, Performance under Financial Inclusion, Achievement of National Goals, Agencywise performance under Annual Credit Plans and Recovery Position. The revised and updated District Data Profile and Banking Profile have been included in the PLP for 2010-11. In addition, MIS for Top Management giving the latest achievements in all major business and development areas is continued to be made available on NABNET, the internal website

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I.
5.25

Office Premises / Residential Quarters


At present, apart from the own-office premises at

5.28

The

Concurrent viz., of

Audit

of

Head

Office

Departments, Financing

Finance ICD,

Department, Treasury

Accounts

Department, GAD, Premises Department and CoCell Operations, Information System Audit, etc., continued to be outsourced to external auditors. During the year, the audit of Library and HRMD-Leave Section was also done by external auditors. The concurrent audit of all RO/TE continued to be undertaken by Concurrent Audit Cells (CAC) set up in the respective RO/TE. In order to improve the efficiency and effectiveness of the CAC in RO/TE, two workshops were held, one at RTC, Mangalore and the other at NBSC, Lucknow.

HO Mumbai and at the Training Complex, Lucknow, the Bank has its own premises in sixteen out of twenty-nine cities where the Regional Offices are located. Construction of Regional Office Buildings at Bengaluru, Itanagar, Port Blair and Regional Training College (RTC), Mangalore is in progress. The premises for Jammu RO, RTC Bolpur and Natural Resource Management Centre (NRMC), Kolkata, will enter construction phase during 2010-11. Purchase of plots for office buildings/residential quarters is in process in Imphal, Dimapur, Gangtok and Agartala. Construction of residential flats is in progress in Raipur and Ranchi.

L.

Public Relations

J.
5.26

Vigilance
Eight Preventive Vigilance Inspections of

5.29 In its endeavour to build strong corporate image and to disseminate information on rural development programmes/schemes, NABARD initiated a number of steps, which resulted in wide coverage of its activities, particularly in the print media. New areas like Co-financing, Development Rural Innovation and Fund, Village Inclusion Programme Financial

Regional Offices/BIRD/RTC were conducted by Central Vigilance Cell (CVC), HO, to ensure that the systems and procedures were duly followed. A workshop was also conducted at NBSC, Lucknow for officers posted in Vigilance Cell of RO/TE, to create awareness and equip officers to function effectively as Vigilance Officers, Enquiry Officers and for Presenting Officers. A Vigilance Awareness Week was observed in the Bank in the first week of November 2009.

were highlighted in the print media. An application status tracking system has been activated to enable the public and other stakeholders to know the status of their applications with NABARD. A Coffee Table Book Nurturing Dreams, Harvesting Happiness, brought out by the Bank won the Gold in the Prestige

K.

Inspections, Concurrent Audits and Committee Meetings

Publications category of the Association of Business Communicators Similarly, house journal, of won India Parivar, the (ABCI) the Silver Awards Banks in the 2010. Internal NABARD quarterly

5.27 During the year 2009-10, in accordance with the Annual Inspection Programme approved by Audit Committee of the Board (ACB), the Inspection Department of the Bank carried out inspection of 19 HO Departments, 16 Regional Offices and Bolpur Regional Training Centre. On conclusion of the

Magazines category, placing it second among all house journals published in India.

M.
5.30

Visit of Parliamentary Committee


During the year 2009-10, following three

inspections and issue of Inspection Reports (IR), Flash Reports (FR), citing major areas of concern were submitted to Top Management. Memorandum and Synopsis of the IR issued together with compliance were also placed before the Management Committee (MC) and ACB for deliberation and guidance. 99

Parliamentary Committees visited the Bank. 1. The Committee on Subordinate Legislation

(Rajya Sabha) visited Shimla and Manali for discussions on Regional Rural Bank (Officers and

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Employees) Service Regulations, 2002 from 11 June 2009 to 17 June 2009. 2. Drafting and Evidence Sub-Committee of Parliament on Official Language visited Hyderabad from 21 October 2009 to 22 October 2009. 3. Drafting and Evidence Sub-Committee of

during

the

year.

Special

efforts

were

made

to

popularise the use of unicode Hindi fonts through special workshops conducted for training on use of APS Saral, the unicode-compliant version of the Banks official bilingual software. A Rajbhasha orientation programme for senior officers was also conducted at NBSC, Lucknow. With a view to making Rajbhasha staff capable of using state-of-the-art computer technology in use of Hindi in computerised work environment, a five-day IT-oriented technical skill enhancement Lucknow. to programme A five-day their was conducted at for skills.

Parliament on Official Language visited Raipur on 19 March 2010.

N.

Promotion of Hindi

NBSC, in

programme translation

5.31 In addition to using Hindi in its day-to-day functioning in order to comply with the statutory provisions relating to Rajbhasha, NABARD also continued to promote use of Hindi as an effective tool of mass communication for its business development. Official Language Implementation Committees constituted in all offices, including Head Office, monitored implementation of the Rajbhasha Policy of the Govt. of India. Monitoring was also done through quarterly progress reports received from Regional Offices/Training Establishments. On-site inspection of 8 Regional Offices and 6 Head Office Departments was also conducted during the year with a view to ensuring strict compliance with the Rajbhasha Policy. 5.32 As part of its efforts towards capacity building

Rajbhasha officers was also conducted during the year order improve DoS Glossary was prepared in consultation with the Department of Supervision and made available to the offices in Region A, to be used by the inspecting officers and by those scrutinising the reports for encouraging issuance of inspection reports in Hindi in this region. During the year, these offices prepared 102 Potential-linked Credit Plans and issued 54 inspection reports in Hindi. 5.33 Under the Cash Award Scheme launched to motivate the staff to do their office work originally in Hindi, cash award was given to eligible staff during the year. Rajbhasha Shield for excellent work in Hindi during 2008-09 was awarded to the best RO in the Regions A, B & C, respectively and to one Training Establishment and to two HO Departments.

of the staff in order to enable them to use Hindi in their official work, workshops including the newly introduced 3-level innovative workshops, were conducted

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VI
Financial Performance & Management of Resources
Resource Management is an important aspect of NABARDs overall management. resource management system. 6.2 The financial resources of NABARD increased Rs.1,18,176 Infrastructure Term crore during 2008-09. Fund The NABARD, like any other financial organisation, has put in place a sound Commercial Papers and internal accruals. The funds deployed for investment operations (including rural infrastructure co-operative deployed for development) credit and loans to state by governments for contributing to the share capital of institutions and increased marketing Rs.16,993 crore as on 31 March 2010, while those production activities (including conversion and liquidity support) decreased by Rs.4,586 crore during 2009-10. The sources and uses of funds are as under:

by Rs.18,116 crore to Rs.1,36,292 crore during 2009-10 against Rural Short increase in resources was by way of net inflow of Development Rural Deposits, Fund, Co-operative Credit

Sources of Funds
A. Capital, Reserves & Surplus
6.3 The paid-up capital remained at Rs.2,000 crore (Rs.550 crore subscribed by GoI and Rs.1,450 crore by RBI) since 2001-02 against the authorised capital of Rs.5,000 crore. The amount of reserves and surplus increased by Rs.1,140 crore from Rs.9,535 crore to Rs.10,675 crore as at the end of current year.
Table 6.1: Sources of Funds (Rs. in crore) Particulars 31.03.2009 Amount Share (%) Capital, Reserves & Surplus NRC (LTO) and (Stab.) Funds Deposits Bonds & Debentures STCRC Fund Borrowings from GoI Borrowings from Commercial Banks Certificate of deposits Commercial Paper Term Money Borrowings RIDF Deposits Foreign Currency Loan Borrowing under CBLO Other Liabilities/Funds Total 11,535 15,571 482 23,699 4,622 354 500 1,816 181 244 47,023 498 0 11,651 1,18,176 9.8 13.2 0.4 20.1 3.9 0.3 0.4 1.5 0.2 0.2 39.8 0.4 0 9.8 31.03.2010 Amount Share (%) 9.3 11.7 0.4 14.7 7.1 0.1 0.4 0.3 1.9 0.5 43.9 0.4 0.2 9.1

B.
6.4

NRC (LTO) & NRC (Stabilisation) Funds


The National Rural Credit (Long Term

Operations) and National Rural Credit (Stabilisation) Funds are utilised for investment operations and for conversion/reschedulement of short-term credit, respectively. These funds are augmented by internal accruals and contributions made by RBI. During the year, an amount of Rs. 412 crore was contributed to these Funds.

Deposits
6.5 The amount of term deposits and the deposits from tea, coffee and rubber companies received

12,675 15,983 505 20,004 9,622 147 500 379 2,680 763 59,869 494 215 12,456

aggregated Rs.505 crore, as on 31 March 2010 as against Rs.482 crore at the end of previous year, reflecting an increase of Rs.23 crore in the current year. 6.6 During the year, RIDF deposits from

commercial banks under RIDF VIII to XV aggregated Rs.16,399 crore, with repayments being Rs.3,553 crore under RIDF V to XIV. As on 31 March 2010, RIDF deposits outstanding stood at Rs.59,869 crore, as against Rs.47,023 crore at the end of previous year, resulting in a net inflow of Rs.12,846 crore . 6.7 To augment NABARDs resources for ST credit

100 1,36,292 100.00

facilities to Co-operative Institutions, the Short-Term

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Cooperative Rural Credit (Refinance) Fund was set up in 2008-09 with a corpus of Rs.4,622 crore contributed by scheduled commercial banks and strengthened with an additional allocation of Rs.5,000 crore for 2009-10. The outstanding under STCRC I & II at the end of the current year were Rs.9,622 crore.

v.

NABARD Rural Bonds

6.13 No fresh bonds were issued during the year. The outstanding at the end of the year was Rs.24 crore.

Certificates of Deposit
6.14 Certificates of Deposits of Rs.379.46 crore were raised during the year while the redemption was Rs.1,995 (face value) crore resulting in a net outflow of resources. The outstanding amount was Rs.379 crore, as on 31 March 2010 as compared to Rs.1,816 crore as on 31 March 2009.

Borrowings
6.8 In order to meet the increasing credit demand, NABARD has been augmenting its resources from market borrowings in the form of bonds, commercial papers, certificates of deposits, term money borrowings, corporate borrowings, borrowings from Government of India and bor rowings in foreign cur rency. The borrowings of NABARD constituted 18.5 per cent of its working funds as on 31 March 2010. The developments relating to the market borrowings of the bank is given below.

Term Money Borrowings


6.15 Term Money Borrowings (TMB) of three to six months tenor were resorted to meet short term requirements. TMBs of Rs.921.52 crore were raised and Rs.403.09 crore repaid during the year, leaving an outstanding of Rs.763 crore, as on 31 March 2010, as against Rs.244 crore at the end of previous year.

i.

Capital Gains Bonds

6.9 Capital Gains Bonds aggregating Rs.329.30 crore were redeemed and the outstanding at the end of the year stood at Rs.361.64 crore.

GoI Borrowings
6.16 There were no borrowings from the Government of India during the year 2009-10 but only repayment of

ii.

Corporate Bonds

Rs.207 crore on maturity of loans drawn under various externally-aided projects. The outstanding borrowing stood at Rs.147 crore, as on 31 March 2010, while Rs.354 crore was the outstanding as on 31 March 2009.

6.10 No fresh Corporate Bonds were issued during the year; but Rs.3,280.50 crore were redeemed. The amount outstanding at the end of the year 2009-10 was Rs.14,876 crore.

Corporate Borrowings
6.17 There were no fresh borrowings or repayments during the year. The outstanding Corporate Borrowings stood at the previous years level of Rs.500 crore as on 31 March 2010.

iii.

Statutory Liquidity Ratio (SLR) Bonds

6.11 During the year, SLR Bonds worth Rs.89.35 crore were redeemed and the outstanding was Rs.188.63 crore, as on 31 March 2010.

Borrowings in Foreign Currency


iv. Bhavishya Nirman Bonds (BNBs)
6.18 An amount of Rs.6.1 crore was drawn under KfW (XI) (UPNRM) which resulted in borrowings in foreign currency from KfW, Germany, aggregating Rs.494 crore, as on 31 March 2010. The foreign exchange risk on this loan as well as interest payments have been hedged at a cost of 1.02 per cent for 10 years. 102 6.12 The approval to issue BNBs was obtained from GoI in the last quarter of 2009-10. The issue was opened in March 2010 and Rs.15.63 crore were mobilised. The outstanding under BNBs stood at Rs.4,554.11 crore as on 31 March 2010.

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Uses of Funds
A. Loans and Advances
a. ST Loans, MT (Conversion) Loans and Liquidity support
The ST (SAO) loans advanced to the SCBs at Rs.45,616 crore at the end of previous year,

recording a net outflow of Rs.14,639 crore during the year.

6.19

Rs.17,002 crore and to RRBs at Rs.6,699 crore together with ST (OSAO) loans to SCBs at Rs.167 crore and RRBs at Rs.205 crore increased to Rs.24,073 crore, as on 31 March 2010, from Rs.16,896 crore at the end of previous year. The liquidity support extended to the co-operative banks and RRBs for providing short-term credit had come down from Rs.2,591 crore as on 31 March 2009 to Rs.20 crore at the end of the current year.

ii. Non-Project Loans


6.21 The amount outstanding under the non-project long-term (LT) loans granted to state governments for contributing to the share capital of co-operative credit institutions, amounted to Rs.199 crore, at the end of the year, compared to Rs.252 crore as on 31 March 2009.

Investment Credit
b.
i.

Loans to State Governments


Project Loans under RIDF

6.22 Refinance assistance of Rs.35,742 crore, as on 31 March 2010, was extended to banks for medium and long-term investment credit as against Rs.33,335 crore at the end of previous year.

6.20 RIDF loans to State Governments stood at Rs.60,255 crore as on 31 March 2010 compared to

Table 6.2: Uses of Funds (Rs. crore) Particulars 31.03.2009 Amount Cash and Bank Balance Government Securities and other Investments Production and Marketing Credit Conversion of Production Credit into MT Loans Liquidity Support MT and LT Project Loans LT Non Project Loans Loans out of RIDF Co-Finance Loans (net of provision) Other Loans (including MT Investment Credit) Fixed Assets and Other Assets Total 13,975 2,995 16,896 20 2,591 33,335 252 45,616 95 48 2,353 1,18,176 Share (%) 11.8 2.5 14.3 0.0 2.2 28.2 0.2 38.6 0.1 0.1 2.0 100.0 31.03.2010 Amount 9,628 3,785 24,073 0 20 35,742 199 60,255 84 133 2,373 1,36,292 Share (%) 7.1 2.8 17.7 0 0.1 26.2 0.1 44.2 0.0 0.1 1.7 100.00

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Co-finance
6.23 Projects with large outlay, unproven technology and having long-gestation period were co-financed (net of provisions) in association with other banks to the tune of Rs.84 crore as on 31 March 2010 against Rs.95 crore at the end of previous year. as

Other Loans
6.24 Other loans extended out of different Funds (CDF, MFDEF, WDF and TDF) stood at Rs.133 crore, as on 31 March 2010, compared to Rs.24 crore in the previous year.

Investment of Surplus Funds


6.25 The amount of surplus funds deployed by NABARD in various financial instruments stood at Rs.12,785 crore at the end of the year. for provision/adjustment for taxes, the profit after tax during the current year amounted to Rs.1,558.26 crore as against Rs.1,390.13 crore for the previous year. Amounts of Rs.350 crore, Rs.400 crore, Rs.10 crore and Rs.679 crore were transferred to Special Reserve u/s 36(1) (viii) of IT Act 1961, NRC (LTO) Fund, NRC (Stabilisation) Fund and Reserve Fund, respectively. Further, an aggregate amount of Rs.190 crore was transferred to various Funds, viz., Cooperative Development Fund, Research and Development Fund, Investment Fluctuation Reserve, FIF, FITF, FTTF and FIPF.

Income and Expenditure


6.26 The total income of NABARD during the current year amounted to Rs.7,964.80 crore as against Rs.7,050.68 crore during the previous year. After meeting an expenditure of Rs.5,692.34 crore interest/financial charges, establishment/other expenses, provisions and depreciation, the profit before tax for the year amounted to Rs.2,272.45 crore. After providing

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Annual Accounts 2009-2010

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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, 2010 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 10 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. 1/14/2004BOA dated March 03, 2010 issued by Ministry of Finance, Department of Financial services. Also incorporated in the Balance Sheet, Profit and Loss Account and Cash Flow Statement are the returns from 19 Regional Offices and 2 Training Centers which have not been subjected to audit. These unaudited offices account for 33.46% of advances, 0.23% of deposits and term money borrowings, 31.08% of interest income and 0.05% of interest expenses. These financial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. Subject to the limitations of the audit mentioned in paragraph 1 above, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit and have found them to be satisfactory; b. In our opinion, the transactions of the Bank which have come to our notice have been within the powers of the Bank; c. The returns received from Regional Offices and Training Centers of the Bank have been found adequate for the purposes of our audit; d. The Balance Sheet and Profit and Loss Account have been drawn up in accordance with Schedule A and Schedule B of Chapter IV of the National Bank for Agriculture and Rural Development (Additional) General Regulations, 1984; e. In our opinion and to the best of our information and according to the explanations given and as shown by the books of the Bank: i. the Balance Sheet, read with Significant Accounting Policies and notes on accounts contains all necessary particulars and is properly drawn up in conformity with the accounting principles generally accepted in India so as to exhibit a true and fair view of the state of affairs of the Bank as at March 31, 2010; and

ii. the Profit and Loss Account, read with Significant Accounting Policies and notes on accounts, shows a true balance of the profit for the year ended on that date, and is in conformity with accounting principles generally accepted in India; and iii. the Cash Flow Statement gives a true and fair view of the cash flows of the Bank for the year ended on that date. Place: Mumbai Dated: May 26, 2010 For and on behalf of Khimji Kunverji & Co. Chartered Accountants Firm Registration No. 105146W

Hasmukh B. Dedhia Partner (F-033494)


Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India. Telephones: +91 22 22662550, 22661270, 22662011 Fasimile: +91 22 22664045 E-mail: info@khimjikunverji.com Website: www.khimjikunverji.com

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NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT BALANCE SHEET AS ON 31 MARCH 2010
Sr. No. 1. FUNDS AND LIABILITIES SCHEDULE As on 31.03.2010

(Rupees) As on 31.03.2009

Capital (Under Section 4 of the NABARD Act, 1981) Reserve Fund and Other Reserves National Rural Credit Funds Funds out of grants received from International Agencies Gifts, Grants, Donations and Benefactions Other Funds Deposits Bonds and Debentures Borrowings Current Liabilities and Provisions Total Forward Foreign Exchange Contracts (Hedging) as per contra 1 2 3 4 5 6 7 8 9

2000,00,00,000 10674,59,96,115 15983,00,00,000 149,87,64,124 4708,08,54,379 2735,06,35,346 69996,02,02,581 20004,38,12,150 5177,79,67,741 4863,30,88,915 136292,13,21,351 563,65,53,807

2000,00,00,000 9535,20,60,005 15571,00,00,000 154,81,78,661 5111,01,92,515 2101,80,68,588 52127,12,34,628 23699,43,69,900 3592,94,14,312 4282,76,12,962 118176,11,31,571 634,56,79,356

2. 3. 4. 5. 6. 7. 8. 9. 10.

(Rupees) Sr. No. 1. 2. 3. 4. 5. PROPERTY AND ASSETS SCHEDULE As on 31.03.2010 9628,33,75,484 3785,49,64,266 120505,84,57,361 234,71,83,481 2137,73,40,759 136292,13,21,351 563,65,53,807 17 18 As on 31.03.2009 13975,21,04,689 2994,68,29,886 98852,67,05,981 247,17,14,222 2106,37,76,793 118176,11,31,571 634,56,79,356

Cash and Bank Balances Investments Advances Fixed Assets Other Assets Total Forward Foreign Exchange Contracts (Hedging) as per contra Commitment and Contingent Liabilities Significant Accounting Policies and Notes on Accounts

10 11 12 13 14

Schedules referred to above form an integral part of accounts. As per our attached report of even date Khimji Kunverji & Co. Chartered Accountants

Hasmukh B. Dedhia Partner Mumbai Date : May 26, 2010

S. Akbar Chief General Manager Accounts Department Mumbai : May 25, 2010

Umesh Chandra Sarangi Chairman

Dr. K.G. Karmakar Managing Director

Dr. K. C. Chakrabarty Director

Shashi Rekha Rajagopalan Director

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NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2010
Sr.No. INCOME 1. 2. 3. 4. Interest received on Loans and Advances (Refer Note B-4 of Schedule 18) Income from Investment Operations / Deposits Discount and Commission Other Receipts (Refer Note B-6 of Schedule 18) Total A Sr.No. EXPENDITURE 1. 2. 3. 4. Interest and Financial Charges Establishment and Other Expenses Provisions Depreciation (Refer Note B-15 of Schedule 18) Total B 5. 6. Profit before Tax (A - B) a) Provision for Income Tax b) Provision for Deferred Tax - (Asset) (Refer Note B-11 of Schedule 18) c) Provision for Fringe Benefit Tax Profit after Tax Significant Accounting Policies and Notes on Accounts Schedules referred to above form an integral part of accounts. 18 SCHEDULE 15 16 A 16 B SCHEDULE 2009-10 6653,31,46,297 1212,73,43,457 42,95,49,641 55,79,61,620 7964,80,01,015 2009-10 4988,45,57,914 547,97,73,568 132,62,06,480 23,29,35,835 5692,34,73,797 2272,45,27,218 647,00,00,000 67,19,00,000 0 1558,26,27,218

(Rupees)
2008-09 5693,02,22,426 1214,81,25,586 92,55,15,672 50,29,52,260 7050,68,15,944 2008-09 4255,90,25,220 693,38,57,487 92,49,80,587 21,36,41,786 5063,15,05,080 1987,53,10,864 674,00,00,000 (-) 80,20,00,000 3,60,00,000 1390,13,10,864

7.

PROFIT AND LOSS APPROPRIATION ACCOUNT


(Rupees)
Sr.No. 1. 2. APPROPRIATIONS / WITHDRAWALS Profit for the year brought down Add: Withdrawals from Funds against expenditure debited to Profit & Loss A/c a) Co-operative Development Fund (Refer Schedule 1) b) Research and Development Fund (Refer Schedule 1) c) Watershed Development Fund (Refer Schedule 5) d) Micro Finance Development and Equity Fund (Refer Schedule 5) e) Farm Innovation & Promotion Fund (Refer Schedule 1) Financial Inclusion Technology Fund (Refer note B-8(b) of Schedule 18) Profit available for Appropriation Less: Transferred to: a) Special Reserve u/s 36(1) (viii) of IT Act, 1961 b) National Rural Credit (Long Term Operations) Fund c) National Rural Credit (Stabilisation) Fund d) Co-operative Development Fund e) Research and Development Fund f) Investment Fluctuation Reserve (Refer Schedule 1) g) Financial Inclusion Fund h) Financial Inclusion Technology Fund i) Farmers Technology Transfer Fund j) Farm Innovation & Promotion Fund (Refer Schedule 1) k) MFDEF Reserve Fund l) Reserve Fund Total Refer Schedule 18 for Significant Accounting Policies and Notes on Accounts. As per our attached report of even date Khimji Kunverji & Co. Chartered Accountants Hasmukh B. Dedhia Partner Mumbai Date : May 26, 2010 Umesh Chandra Sarangi Chairman Dr. K.G. Karmakar Managing Director S. Akbar Chief General Manager Accounts Department Mumbai : May 25, 2010 2009-10 1558,26,27,218 2008-09 1390,13,10,864

3. 4.

3,83,03,657 9,82,98,599 44,70,44,367 10,01,05,309 96,93,544 1,00,00,000 1628,60,72,694 350,00,00,000 400,00,00,000 10,00,00,000 3,83,03,657 9,82,98,599 30,00,00,000 0 0 64,58,40,784 96,93,544 80,00,00,000 679,39,36,110 1628,60,72,694

3,81,14,043 8,76,10,683 24,91,45,824 9,92,70,242 73,40,088 0 1438,27,91,744 340,00,00,000 400,00,00,000 10,00,00,000 3,81,14,043 8,76,10,683 42,00,00,000 18,50,00,000 32,50,00,000 31,61,42,310 46,55,57,504 0 504,53,67,204 1438,27,91,744

Dr. K. C. Chakrabarty
Director

Shashi Rekha Rajagopalan


Director

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SCHEDULES TO BALANCE SHEET


Schedule 1 Reserve Fund and Other Reserves (Rupees) Sr. Particulars No. Opening Balance as on 01.04.2009 5223,34,02,861 50,00,00,000 74,80,53,208 115,00,00,000 125,00,00,000 10,00,00,000 5,00,00,000 147,06,03,936 3735,00,00,000 0 50,00,00,000 9535,20,60,005 8602,84,75,385 Transferred From P&L Appropriation 679,39,36,110 9,82,98,599 0 30,00,00,000 3,83,03,657 0 0 0 350,00,00,000 80,00,00,000 96,93,544 1154,02,31,910 945,66,49,434 Transferred to P&L Appropriation 0 9,82,98,599 0 0 3,83,03,657 0 0 0 0 0 96,93,544 14,62,95,800 13,30,64,814 Balance as on 31.03.2010

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Reserve Fund Research and Development Fund Capital Reserve Investment Fluctuation Reserve Co-operative Development Fund Soft Loan Assistance Fund for Margin Money Agriculture & Rural Enterprise Incubation Fund Foreign Currency Risk Fund Special Reserve Created & Maintained u/s 36(1)(viii) of Income Tax Act, 1961 MFDEF - Reserve Fund Farm Innovation & Promotion Fund Total Previous year

5902,73,38,971 50,00,00,000 74,80,53,208 145,00,00,000 125,00,00,000 10,00,00,000 5,00,00,000 147,06,03,936 4085,00,00,000 80,00,00,000 50,00,00,000 10674,59,96,115 9535,20,60,005

Schedule 2 National Rural Credit Funds (Rupees) Sr. Particulars No. Opening Balance as on 01.04.2009 Contribution by RBI Transferred from P&L Appropriation Balance as on 31.03.2010

1. 2.

National Rural Credit (Long Term Operations) Fund National Rural Credit (Stabilisation) Fund Total Previous year

14016,00,00,000 1555,00,00,000 15571,00,00,000 15159,00,00,000

1,00,00,000 1,00,00,000 2,00,00,000 2,00,00,000

400,00,00,000 10,00,00,000 410,00,00,000 410,00,00,000

14417,00,00,000 1566,00,00,000 15983,00,00,000 15571,00,00,000

Schedule 3 Funds out of Grants received from International Agencies (Rupees)


Sr. No. Particulars Opening Grants received/ Balance as on adjusted during 01.04.2009 the year Interest credited to the Fund Exp./Disb./adjusted during the year Balance as on 31.03.2010

1. 2. 3. 4.

National Bank - Swiss Development Coop. Project Rural Innovation Fund (RIF) (Refer Note B-2 & 8(a) of Schedule 18) Rural Promotion Fund (RPF) (Refer Note B-2 & 8(a) of Schedule 18) KfW - NABARD V Fund for Adivasi Programme Total Previous year

55,61,77,174 89,28,89,998 7,25,30,324 2,65,81,165 154,81,78,661 170,38,44,460

0 0 77,84,111 15,53,84,211

0 4,71,54,118 2,14,711 0

0 10,69,88,027 0 15,29,63,661

55,61,77,174 83,30,56,089 8,05,29,146 2,90,01,715

16,31,68,322 4,73,68,829 7,76,09,944 5,05,40,943

25,99,51,688 149,87,64,124 28,38,16,686 154,81,78,661

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Schedule 4 Gifts, Grants, Donations and Benefactions


(Rupees) Sr. No. A. 1. 2. 3. 4. 5. 6. 7. KfW - NB - IX Adivasi Development Programme Maharashtra (Refer Note B-8(a) of Schedule 18) KfW UPNRM - Accompanying Measures KfW NB UPNRM - Financial Contribution KfW UPNRM - Risk Mitigation Fund International Fund for Agriculture Development (IFAD) Priyadarshini GTZ - Uttarakhand Regional Economic Development KfW-NB-Indo German Watershed Development Programme - Phase III - Maharashtra (Refer Note B-8(a) of Schedule 18) Indo German Watershed Development Programme Andhra Pradesh (Refer Note B-8(a) of Schedule 18) Indo German Watershed Development Programme Gujarat (Refer Note B-8(a) of Schedule 18) Indo German Watershed Development Programme Rajasthan (Refer Note B-8(a) of Schedule 18) KfW Umbrella Programme on Natural Resource Management Fund (Refer Note B-3 of Schedule 18) NABARD Grant for Fixed Assets under NB-SDC HID Project NE Council Fund for Miscellaneous Training Programme KfW NB SEWA Bank Capitalisation of Rural Financial Institutions (RFIs) GTZ Rural Financial Institutions Program (RFIP) Capital Investment Subsidy for Cold Storage Projects - NHB Capital Subsidy for Cold Storage - NHM Capital Subsidy for Cold Storage -TM North East Credit Linked Capital Subsidy for Technology Upgradation of SSIs Subsidy Reserve Co-Finance Capital Investment Subsidy for Rural Godowns On-farm Water Management for Crop Production Million Shallow Tubewell Programme - Bihar Bihar Ground Water Irrigation Scheme (BIGWIS) Cattle Development Programme - Uttar Pradesh (Refer Note B-8(a) of Schedule 18) Cattle Development Programme - Bihar (Refer Note B-8(a) of Schedule 18) National Project on Organic Farming Integrated Watershed Development Programme Rashtriya Sam Vikas Yojana Centrally Sponsored Scheme on Integrated Development of Small Ruminants and Rabbits Rain Water Harvesting Scheme 39,85,661 0 0 0 0 0 13,43,01,826 86,57,339 14,63,807 11,74,196 0 86,38,750 5,24,203 24,999 0 0 0 0 13,81,43,080 94,12,603 6,80,050 0 19,11,339 0 6,68,610 (-) 7,30,265 7,83,757 11,74,196 (-) 19,11,339 86,38,750 Particulars Opening Balance as on 01.04.2009 Grant received during the year Interest Credited to the Fund Adjusted against the expenditure Balance as on 31.03.2010

2,01,20,591 36,84,644 54,47,684 42,14,143 7,15,04,962 6,60,066 (-) 7,36,696 0 0

30,65,24,891 3,40,62,570 2,13,50,924 2,50,65,838 (-) 53,31,155 0 20,00,000 2,97,08,678 1,04,33,000

15,73,767 1,50,063 1,35,155 67,735 0 0 0 0 0

29,29,12,457 3,78,97,277 2,41,80,034 2,93,47,716 (-) 2,57,22,540 0 10,65,647 2,97,08,678 62,15,187

3,53,06,792 0 27,53,729 0 9,18,96,347 6,60,066 1,97,657 0 42,17,813

8. 9. 10. 11. 12. 13. 14. 15. B. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

98,89,910 27,84,090 1,54,42,626 63,90,352 0 23,76,77,452 1,91,818 231,67,29,889 0 2,22,73,308 2,71,77,680 4,63,11,838 18,62,95,492 0 82,81,344

47,51,84,646 0 4,91,43,864 3,95,15,000 40,16,350 55,90,00,000 0 0 231,67,29,889 0 0 0 0 3,00,00,000 0

0 0 0 0 0 0 0 0 0 3,71,038 10,47,619 0 0 0 0

28,91,57,100 18,17,600 2,14,42,626 4,47,04,972 0 65,44,81,505 0 229,04,14,615 32,01,88,625 2,22,60,000 1,72,76,000 2,38,37,375 8,61,77,136 0 (-) 30,000

19,59,17,456 9,66,490 4,31,43,864 12,00,380 40,16,350 14,21,95,947 1,91,818 2,63,15,274 199,65,41,264 3,84,346 1,09,49,299 2,24,74,463 10,01,18,356 3,00,00,000 83,11,344

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Schedule 4 Gifts, Grants, Donations and Benefactions


(Rupees) Sr. No. 16. 17. 18. 19. 20. 21. 22. 23. Particulars Opening Balance as on 01.04.2009 64,47,219 24,09,73,069 0 0 16,15,00,220 0 75,26,115 Grant received during the year 0 20,00,00,000 7,64,01,683 125,71,09,032 38,74,12,000 2,21,27,000 0 Interest Credited to the Fund 0 0 0 0 0 0 3,62,292 Adjusted against the expenditure 0 27,75,12,404 5,51,446 48,63,17,129 49,88,59,117 0 36,90,000 Balance as on 31.03.2010 64,47,219 16,34,60,665 7,58,50,237 77,07,91,903 5,00,53,103 2,21,27,000 41,98,407

Kutch Drought Proofing Project Dairy and Poultry Venture Capital Fund Poultry Venture Capital Fund Scheme for providing Financial Assistance to Sugar Undertakings - 2007 (SEFASU - 2007) Capital Subsidy for Agriculture Marketing Infrastructure, Grading and Standardisation Centrally Sponsored Scheme for establishing Poultry Estate Livelihood Advancement Business School - Sultanpur, Uttar Pradesh (Refer Note B-8(a) of Schedule 18) Livelihood Advancement Business School - Rae - Bareli, Uttar Pradesh (Refer Note B-8(a) of Schedule 18) Multi Activity Approach for Poverty Alleviation Sultanpur, Uttar Pradesh (Refer Note B-8(a) of Schedule 18) Multi Activity Approach for Poverty Alleviation - BAIF - Rae Bareli, Uttar Pradesh (Refer Note B-8(a) of Schedule 18) Capital Subsidy Scheme Agri Clinics Agri Business Centres Artificial Recharge of Groundwater in Hard Rock Area Subsidy Reserve - Central Sector Scheme for AgriMarketing Infrastructure (CSAMI) under RIDF Comprehensive District Plan United Nation Development Programme (UNDP) NABARD - Financial Inclusion Fund Debt Waiver and Debt Relief Scheme (DWDR) 2008 Interest Subvention (Sugar Term Loan) Revival Package of Short Term Cooperative Credit Structure

1,07,57,683

6,35,617

32,40,000

81,53,300

24.

9,15,615

3,93,24,000

3,34,934

3,58,75,000

46,99,549

25.

21,88,848 70,91,695 1393,40,91,600 69,47,300 0 0 888,98,76,325 22,35,28,920

3,84,78,000 2,00,00,000 0 0 0 17,04,000 10822,30,71,849 0

6,26,426 0 0 0 0 0 0 0

2,87,00,000 1,60,87,038 137,24,91,547 (-) 22,32,700 0 28,36,293 8781,04,66,593 15,03,91,929

1,25,93,274 1,10,04,657 1256,16,00,053 91,80,000 0 (-) 11,32,293 2930,24,81,581 7,31,36,991

26. 27. 28. 29. 30. 31. 32. C. 1. 2. 3. 4. 5. D.

Cost of Special Audit Recapitalisation Assistance to Credit Cooperative Societies Technical Assistance Human Resources Development Implementation Cost Long Term Co-operative Credit Structure (LTCCS) Total Previous year

15,81,79,625 2319,66,19,073 41,63,03,412 51,36,24,558 14,52,94,384 20,00,00,000 5111,01,92,515 3967,49,29,810

0 780,00,00,000 0 5,00,00,000 15,00,00,000 0 12231,72,67,977 21902,90,60,391

0 0 0 0 0 0 58,53,848 89,23,079

(-) 18,67,381 3097,74,84,520 9,53,24,009 3,80,85,442 24,11,68,493 0 12635,24,59,961 20760,27,20,765

16,00,47,006 1,91,34,553 32,09,79,403 52,55,39,116 5,41,25,891 20,00,00,000 4708,08,54,379 5111,01,92,515

E 1. 2. Grants to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 Less : Grants Released to RRBs/SCBs/SLDBs under ARDR Scheme, 1990 Total

As on 31.03.2010 2695,37,95,937 2695,37,95,937 0

As on 31.03.2009 2695,37,95,937 2695,37,95,937 0

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Schedule 5 Other Funds


Sr. Particulars No. Opening Balance as on 01.04.2009 Additions/ Adjustments during the year Transferred from P & L Appropriation Interest Credited Expenditure/ Disb.during the year Transferred to P&L Appropriation

(Rupees)
Balance as on 31.03.2010

1.

Watershed Development Fund (Refer Note B-8(a) of Schedule 18) Micro Finance Development and Equity Fund (Refer Note B-8(a) of Schedule 18) Interest Differential Fund (Forex Risk) Interest Differential Fund (Tawa) (Refer Note B- 1 of Schedule 18) Adivasi Development Fund Tribal Development Fund Financial Inclusion Fund (Refer Note B-8 (a) & 8(b) of Schedule 18) Financial Inclusion Technology Fund (Refer Note B-8 (a) & (b) of Schedule 18) Farmers Technology Transfer Fund Total Previous year

1125,20,82,053

4,88,98,759

62,14,79,659

44,70,43,368

44,70,44,367

1102,83,72,736

2.

133,92,26,272 131,72,59,945

20,00,00,000 13,50,96,743

0 0

5,10,57,237 0

10,48,37,639 0

10,01,05,309 0

138,53,40,561 145,23,56,688

3. 4.

11,55,448 3,39,55,294 574,98,34,187

0 4,35,97,724 628,85,46,109

0 0 0

0 0 0

0 7,55,25,000 53,01,13,090

0 0 0

11,55,448 20,28,018 1150,82,67,206

5. 6. 7.

34,08,56,423

16,50,00,000

2,50,37,352

7,98,49,235

45,10,44,540

8.

48,36,98,966 50,00,00,000 2101,80,68,588 1518,00,64,973

3,50,00,000 0 691,61,39,335 563,08,20,542

0 64,58,40,784 64,58,40,784 82,61,42,310

3,01,03,072 0 72,76,77,320 41,78,70,367

1,67,31,889 14,58,40,784 139,99,41,005 68,84,13,538

1,00,00,000 0 55,71,49,676 34,84,16,066

52,20,70,149 100,00,00,000 2735,06,35,346 2101,80,68,588

9.

Schedule 6 Deposits
(Rupees) Sr. Particulars No. 1. 2. 3. From Central Government From State Governments From Others a) Tea / Rubber / Coffee Deposits b) Term Deposits c) Commercial Banks (Deposits under RIDF) d) Short Term Cooperative Rural Credit Fund Total As on 31.03.2010 0 0 123,73,69,028 381,35,32,000 59868,64,76,553 9622,28,25,000 69996,02,02,581 As on 31.03.2009 0 0 60,45,95,645 421,63,02,000 47022,75,11,983 4622,28,25,000 52127,12,34,628

Schedule 7 Bonds and Debentures


(Rupees) Sr. Particulars No. 1. 2. 3. 4. 5. SLR Bonds Non Priority Sector Bonds Capital Gains Bonds Bhavishya Nirman Bonds NABARD Rural Bond Total As on 31.03.2010 188,63,09,000 14876,00,00,000 361,64,40,000 4554,11,06,150 23,99,57,000 20004,38,12,150 As on 31.03.2009 277,98,11,000 18156,50,00,000 690,93,90,000 4550,02,81,900 23,98,87,000 23699,43,69,900

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Schedule 8 Borrowings
(Rupees) Sr. Particulars No. 1. 2. 3. From Central Government Reserve Bank of India From Others : (a) In India (i) Certificate of Deposits (ii) Commercial Paper (iii) Borrowing under Collateralised Borrowing Lending Obligation (iv) Term Money Borrowings (v) Commercial Banks (b) Outside India (i) From International Agencies Total As on 31.03.2010 146,76,06,717 0 As on 31.03.2009 353,80,83,226 0

379,45,90,000 2679,71,76,000 214,82,34,328 762,50,00,000 500,00,00,000 494,53,60,696 5177,79,67,741

1816,15,33,900 180,61,86,000 0 244,07,00,000 500,00,00,000 498,29,11,186 3592,94,14,312

Schedule 9 Current Liabilities and Provisions


(Rupees) Sr. Particulars No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Interest / Discount Accrued Sundry Creditors Provision for Gratuity (Refer Note B-16 of Schedule 18) Provision for Pension (Refer Note B-16) Provision for Encashment of Ordinary Leave (Refer Note B-16 of Schedule 18) Unclaimed Interest on Bonds with RBI Unclaimed Interest on Bonds Unclaimed Interest on Term Deposits Bonds matured but not claimed (Refer Note B-10 of Schedule 18) Application money received pending allotment of Bonds Provisions and Contingencies (a) Amortisation of G. Sec. - HTM (b) For Standard Assets (c) Depreciation in value of investments - Equity (d) Sacrifice in interest element of restructured loans (e) Provision for Other Assets & Receivables (f) Provision for Income Tax [Net of Advance Tax] Total As on 31.03.2010 2489,39,45,807 972,40,00,623 1,62,24,627 690,04,64,685 (-) 9,91,64,455 6,54,086 4,37,40,749 8,283 12,32,18,250 15,64,32,250 90,90,79,760 594,57,00,000 1,44,36,000 8,00,000 35,48,250 0 4863,30,88,915 As on 31.03.2009 2012,53,59,327 596,61,60,450 261,52,90,025 637,35,36,151 24,52,09,592 6,54,086 9,36,66,167 27,913 69,11,50,000 4,19,36,006 72,72,63,808 493,07,00,000 2,12,28,000 4,54,00,000 35,48,250 94,64,83,187 4282,76,12,962

Schedule 10 Cash and Bank Balances


(Rupees) Sr. Particulars No. 1. 2. Cash in hand Balances with : a) Reserve Bank of India b) Others (I) In India (i) Other Banks in India a) On Current Account b) Deposit with Banks (ii) Remittances in Transit (iii) Collateralised Borrowing and Lending Obligations (II) Outside India Total As on 31.03.2010 11,720 25,45,41,784 As on 31.03.2009 21,579 169,67,65,931

533,94,81,680 9000,00,00,000 68,93,40,300 0 0 9628,33,75,484

420,21,61,811 13067,10,00,000 185,25,16,092 132,96,39,276 0 13975,21,04,689

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Schedule 11 Investments
Sr. No. 1. Particulars Government Securities a) Securities of Central Government (Refer Note B-7 of Schedule 18) [Face Value Rs.1979,65,70,000 (Rs.1530,30,50,000)] [Market Value Rs.1971,99,03,930 (Rs.1602,95,63,114)] b) Treasury Bills Other Approved Securities Equity Shares in : (a) Agri-Development Finance Company Ltd. (i) NABARD Financial Services Ltd. [52,00,000 (52,00,000) - Equity shares of Rs.10 each] (ii) Agri-Business Finance [Andhra Pradesh] Ltd. [52,00,000 (52,00,000) - Equity shares of Rs.10 each] (iii) Agri Development Finance [Tamil Nadu] Ltd. [52,00,000 (52,00,000) - Equity shares of Rs.10 each] (b) Agricultural Finance Corporation Ltd. [1,000 (1,000) - Equity shares of Rs.10,000 each] (c) Small Industries Development Bank of India [1,60,00,000 (1,60,00,000) - Equity shares of Rs.10 each] (d) Agriculture Insurance Company of India Ltd. [6,00,00,000 (6,00,00,000) - Equity shares of Rs.10 each] (e) NABARD Consultancy Services Pvt. Ltd. [50,00,000 (50,00,000) - Equity shares of Rs.10 each] (f) National Commodity and Derivatives Exchange Ltd. [53,61,850 (45,00,000) - Equity shares of Rs.10 each] (g) Multi Commodity Exchange of India Ltd. [25,00,000 (25,00,000) - Equity shares of Rs.5 each] Others (a) Units of Liquid Mutual Funds (Refer Note B-22 of Schedule 18) (b) BVF (Bio-Tech Venture Fund) - APIDC-V Investment [50,000 (50,000) Class A Units of Rs.1,000 each] (d) Commercial Paper [Face Value Rs.7,85,00,00,000 (Rs.150,00,00,000)] Total as on 31.03.2010 1991,50,08,966

(Rupees)
as on 31.03.2009 1555,21,24,186

2. 3.

0 0

156,51,75,000 0

Rs. 5,20,00,000 Rs. 5,20,00,000 Rs. 5,20,00,000 15,60,00,000 1,00,00,000 48,00,00,000 60,00,00,000 5,00,00,000 13,98,03,500 1,25,00,000 15,60,00,000 1,00,00,000 48,00,00,000 60,00,00,000 5,00,00,000 4,50,00,000 1,25,00,000

4.

900,00,00,000 5,00,00,000 744,16,51,800 3785,49,64,266

1000,00,00,000 5,00,00,000 142,60,30,700 2994,68,29,886

Schedule 12 Advances
Sr. No. 1. Particulars Refinance Loans a) Production & Marketing Credit b) Conversion Loans for Production Credit c) Medium Term Investment Credit- Non-Project loans d) Liquidity Support e) Other Investment Credit : i) Medium Term and Long Term Project Loans (Refer Note B-14 of Schedule 18) ii) Long Term Non-Project Loans iii) Interim Finance Direct Loans a) Loans under Rural Infrastructure Development Fund b) Other Loans: i) Co-operative Development Fund ii) Micro Finance Development Equity Fund iii) Watershed Development Fund iv) Tribal Development Fund v) KfW UPNRM vi) Farm Innovation & Promotion Fund c) Co-Finance Loans (Net of provision) Total as on 31.03.2010 24073,45,35,625 0 0 20,00,00,000 35741,82,79,036 198,66,92,820 1,43,00,000 60255,45,14,730 3,13,04,999 85,76,60,284 29,35,54,012 1,01,84,000 11,74,19,600 39,80,000 83,60,32,255 120505,84,57,361

(Rupees)
as on 31.03.2009 16896,23,31,000 20,06,77,000 4,80,000 2590,91,89,000 33334,81,37,417 251,92,69,717 0 45616,21,10,206 3,27,78,368 29,74,13,365 14,72,11,100 23,52,000 0 0 94,47,56,808 98852,67,05,981

2.

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Schedule 13 Fixed Assets


Sr. No. 1. Particulars LAND : Freehold & Leasehold (Refer Note B-13 of Schedule 18) Opening Balance Additions/adjustments during the year Closing Balance (at cost) Less: Amortisation of Lease Premia Book Value 2. PREMISES (Refer Note B-13 of Schedule 18) Opening Balance Additions/adjustments during the year Closing Balance (at cost) Less: Depreciation to date Book Value 3. FURNITURE & FIXTURES Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value 4. COMPUTER INSTALLATIONS & OFFICE EQUIPMENTS Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value 5. VEHICLES Opening Balance Additions/adjustments during the year Sub-Total Less: Cost of assets sold/written off Closing Balance (at cost) Less: Depreciation to date Book Value Total as on 31.03.2010

(Rupees)
as on 31.03.2009

144,51,35,867 1,60,76,990 146,12,12,857 38,60,33,256 107,51,79,601

144,16,62,113 34,73,754 144,51,35,867 32,37,09,461 112,14,26,406

258,02,09,415 1,06,01,520 259,08,10,935 144,81,04,467 114,27,06,468 56,27,20,774 1,17,83,139 57,45,03,913 20,56,856 57,24,47,057 54,29,22,820 2,95,24,237 66,14,02,398 6,64,48,045 72,78,50,443 4,55,82,864 68,22,67,579 60,00,70,293 8,21,97,286 4,76,03,062 71,75,150 5,47,78,212 1,08,30,151 4,39,48,061 2,63,72,172 1,75,75,889 234,71,83,481

256,05,62,671 1,96,46,744 258,02,09,415 135,58,29,200 122,43,80,215 54,85,48,549 1,57,37,977 56,42,86,526 15,65,752 56,27,20,774 52,71,25,392 3,55,95,382 61,87,59,611 6,26,97,833 68,14,57,444 2,00,55,046 66,14,02,398 59,23,72,621 6,90,29,777 4,19,68,259 1,63,83,824 5,83,52,083 1,07,49,021 4,76,03,062 2,63,20,620 2,12,82,442 247,17,14,222

Schedule 14 Other Assets


(Rupees)
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Particulars Accrued Interest Deposits with Landlords Deposits with Government Departments and Other Institutions Housing loan to staff Other Advances to staff Advances to Landlords Capital Work in Progress [Purchase of Staff Quarters & Office Premises] Sundry Advances Advance Tax (Net of Provision for Income Tax) Deferred Tax Assets [Refer Note B-11 of Schedule 18] Expenditure recoverable from Government of India/International Agencies Discount Receivable Total as on 31.03.2010 1496,44,47,110 1,25,45,727 2,82,21,123 124,06,19,359 61,30,38,906 60,000 29,76,18,676 34,45,05,693 51,56,46,745 317,80,00,000 2,80,77,071 15,45,60,349 2137,73,40,759 as on 31.03.2009 1501,44,94,051 1,23,85,912 2,28,58,811 103,55,76,565 64,33,12,331 1,54,000 9,84,29,348 26,19,12,331 0 384,99,00,000 4,37,219 12,43,16,225 2106,37,76,793

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Schedule 15 Interest & Financial Charges


(Rupees) Sr. Particulars No. 1. Interest Paid on a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) q) r) s) t) u) v) w) x) y) z) aa) ab) ac) 2. 3. 4. Loans from Central Government Borrowings from Reserve Bank of India Bonds (Refer Note B-5 of Schedule 18) Tea / Coffee / Rubber Deposits Term Money Borrowings Term Deposits Borrowings from International Agencies Commercial Paper (Refer Note B-5 of Schedule 18) Deposits under RIDF Cattle Development Programme (UP & Bihar) Watershed Development Fund Financial Inclusion Fund Financial Inclusion Technology Fund KfW UPNRM - Accompanying measures Short Term Cooperative Rural Credit Fund Micro Finance Development and Equity Fund Indo German Watershed Development Programme Andhra Pradesh Indo German Watershed Development Programme - Rajasthan KfW - NB Indo German Watershed Development Programme Phase III - Maharashtra KfW - NB - IX Adivasi Development Programme Indo German Watershed Development Programme - Gujarat Corporate Borrowings from Banks and FIs in India Rural Innovation Fund Livelihood Advancement Business School RF Project Sultanpur, Uttar Pradesh Multi Activity Approach for Poverty Alleviation BAIF Project Sultanpur, Uttar Pradesh Livelihood Advancement Business School RF Project Rae Bareli, Uttar Pradesh Multi Activity Approach for Poverty Alleviation BAIF Project Rae Bareli, Uttar Pradesh Deposits / Borrowings Discount Cost Paid on Certificate of Deposits 24,32,78,029 0 1623,91,44,305 5,74,19,047 8,24,28,299 37,67,21,717 23,28,38,957 128,50,30,515 2872,36,35,671 14,18,657 62,14,79,659 2,50,37,352 3,01,03,072 24,999 76,52,82,445 5,10,57,237 1,50,063 67,735 15,73,767 5,24,203 1,35,155 44,28,77,218 4,71,54,118 3,62,292 3,34,934 6,35,617 6,26,426 7,47,863 45,05,21,990 9,50,04,320 6,69,26,382 4,20,15,870 4988,45,57,914 25,76,35,682 5,99,45,694 1581,54,51,596 3,24,31,169 38,26,30,457 8,95,97,323 27,70,71,578 7,18,81,566 2157,00,88,384 37,11,391 33,83,13,420 94,71,129 96,43,865 0 27,69,81,135 6,04,41,953 1,76,130 3,25,906 2,28,182 4,42,023 2,43,625 130,08,45,106 5,05,40,943 4,57,349 4,70,663 6,53,726 12,22,446 12,83,178 175,19,07,902 3,17,86,414 3,14,00,171 13,17,45,114 4255,90,25,220 2009-10 2008-09

Discount on Collateralised Borrowing and Lending Obligations Swap Charges Discount, Brokerage, Commission & issue exp. on Bonds and Securities Total

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Schedule 16 A Establishment and Other Expenses


(Rupees) Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Particulars Salaries and Allowances Contribution to / Provision for Staff Superannuation Funds Other Perquisites & Allowances Travelling & Other allowances in connection with Directors & Committee Members Meetings Directors & Committee Members Fees Rent, Rates, Insurance, Lighting, etc. Travelling Expenses Printing & Stationery Postage, Telegrams & Telephones Repairs Auditors Fees Legal Charges Miscellaneous Expenses Expenditure on Miscellaneous Assets Expenditure on Study & Training [Including Rs.5,97,79,097(Rs. 5,52,86,037) pertaining to establishment expenses of Regional Training Colleges] Expenditure on promotional activities under (i) Cooperative Development Fund (ii) Micro Finance Development and Equity Fund (iii) Watershed Development Fund (iv) Farm Innovation and Promotion Fund (v) Exp. for NFS Promotional Measures/ Activities Wealth Tax Total 2009-10 250,33,22,223 84,86,65,360 19,06,50,477 19,77,322 1,46,125 19,62,09,673 23,38,96,324 2,80,42,431 6,06,28,395 4,71,57,806 7,66,640 29,69,367 25,57,96,452 41,63,331 24,80,27,436 2008-09 251,39,90,425 266,79,98,747 18,34,27,844 34,35,966 1,49,375 19,14,09,388 23,59,04,413 2,52,26,434 6,58,96,399 5,85,61,031 7,11,496 11,55,909 31,93,55,407 55,30,410 25,00,60,356

16.

17.

3,83,03,657 10,01,05,309 44,70,44,367 96,93,544 23,40,85,839 2,81,21,490 547,97,73,568

3,81,14,043 9,92,70,242 24,91,45,824 73,40,088 0 1,71,73,690 693,38,57,487

Schedule 16 B Provisions
(Rupees) Sr. No. Particulars Provisions for : Amortisation of G. Sec Standard Assets Non Performing Assets Depreciation in Value of Investment Account - Equity Sacrifice in interest element of restructured Accounts Other Assets / Receivable Total 2009-10 2008-09

1 2 3 4 5 6

18,18,15,952 101,50,00,000 17,60,23,540 (-) 67,92,000 (-) 4,46,00,000 47,58,988 132,62,06,480

18,18,15,952 73,70,00,000 8,88,11,531 46,20,000 (-) 8,62,00,000 (-) 10,66,896 92,49,80,587

Schedule 17 Commitments and Contingent Liabilities


(Rupees) Sr. No. 1 2 (i) Particulars Commitments on account of capital contracts remaining to be executed Sub Total A Contingent Liabilities Claims against the Bank not acknowledged as debt. (Refer Note B-18 of Schedule 18) Sub Total B Total (A + B) As on 31.03.2010 60,44,33,000 60,44,33,000 3,36,60,000 3,36,60,000 63,80,93,000 As on 31.03.2009 16,80,39,000 16,80,39,000 3,36,60,000 3,36,60,000 20,16,99,000

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Schedule 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010

A.
1.

Significant Accounting Policies


Basis of Preparation

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.

1.1 The accounts are prepared on the historical cost convention and comply with all material aspects contained in the National Bank for Agriculture and Rural Development Act, 1981 and Regulations thereof, applicable Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and regulatory norms prescribed by the Reserve Bank of India (RBI). Except otherwise mentioned, the accounting policies have been consistently applied by National Bank for Agriculture and Rural Development (NABARD / the Bank) and are consistent with those used in the previous year. 1.2 Preparation of financial statements as per Generally Accepted Accounting Policies (GAAP) requires the management to make several assumptions and estimates that affect reported results and the reported state of affairs of the Bank; the example of such cases include the estimated life of fixed assets, liability on account of employee retirement benefits, provision for anticipated losses, etc. Actual results could differ from such estimates. Such differences are recognized in the year of outcome of such results.

3.

Fixed Assets and Depreciation

3. 1 Fixed assets are stated at cost of acquisition less accumulated depreciation and impairment losses, if any. The cost of assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. Subsequent expenditure incurred on existing assets is capitalised only when it increases the future benefit from the existing assets beyond its previously assessed level of performance. 3.2 Expenditure incurred on assets purchased for the value not exceeding Rs.5,000 per unit is charged to Profit and Loss Account. 3.3 Land includes free hold and leasehold land.

3.4 Premises include value of land where segregated values are not readily available. 3.5 Depreciation on premises situated on free hold land is charged @ 10% p.a. on written down value basis 3.6 Depreciation on leasehold land and premises situated thereon is computed and charged at higher of 5% on written down value basis or the amount derived by amortising the premium/cost over the remaining period of lease hold land on straight line basis. 3.7 Depreciation on other fixed assets is charged over the estimated useful life of the assets ascertained by the management at the following rates on Straight Line Method basis:
Type of Assets Furniture and Fixtures Computer Installations Office Equipments Vehicles Depreciation Rate 20% 32% 20% 20%

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. Income by way of penal interest charged due to delayed receipt of loan dues or non compliance with terms of loan. Service Charges on loans given out of Micro Finance Development and Equity Fund, Watershed Development Fund. Expenses not exceeding Rs.10,000 at each accounting unit under a single head of expenditure.

b.

c.

d.

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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.

5.7

Treasury Bills are valued at carrying cost.

4.

Intangible Assets and Amortisation

5.8 Unquoted Shares are valued at breakup value, if the latest Audited Accounts of the investee companies is available, or at Re.1/- per share as per RBI guideline. 5.9 Brokerage, commission, etc. paid at the time of acquisition, are charged to revenue. 5.10 Broken period interest on debt investment is treated as a revenue item. 5.11 Transfer of a security between the categories is accounted for at lower of the acquisition cost/book value/ market value on the date of transfer and depreciation, if any, on such transfer is fully provided for.

Intangible assets are recognized/amortised as per the criteria specified in AS 26 Intangible Assets.

5.

Investments

5.1 In accordance with the RBI guidelines, Investments are classified into Held for Trading (HFT), Available for Sale (AFS) and Held to Maturity (HTM) categories (hereinafter called categories). Under each of these categories, investments are further classified under (i) Government Securities (ii) Other Approved Securities (iii) Shares and (iv)Others. 5.2 Securities that are held principally for resale within 90 days from the date of purchase are classified as HFT. Investments that the Bank intends to hold till maturity are classified as HTM. Securities which are not to be classified in the above categories are classified as AFS. 5.3 Investments categorized under HTM are carried at cost and provision for depreciation/diminution/ amortisation, if any, in value of investments is included under Current Liabilities and Provisions. 5.4 Provision for diminution, other than temporary, in the value of investments in subsidiaries under the category HTM is made, wherever necessary. 5.5 Profit on sale of investment categorized under HTM is recognized in Profit & Loss A/c and then transferred to Capital Reserve A/c. Loss on sale of investment categorized under HTM is recognized in Profit & Loss A/c. 5.6 Investments under AFS and HFT are marked to market scrip wise at the rate declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association of India (FIMMDA) at prescribed inter vals. 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.

6.

Advances and Provisions thereon

6.1 Advances are classified as per RBI guidelines. Provision for standard assets and non performing assets is made in respect of identified advances based on a periodic review and in conformity with the provisioning norms prescribed by RBI. 6.2 In case of restructuring/rescheduling of advances, the difference between the present value of future interest as per the original agreement and the present value of future interest as per the revised agreement is provided for at the time of restructuring/ rescheduling. 6.3 Advances are stated net of provisions towards Non-performing Advances.

7.

Foreign Currency Transactions

7.1 Foreign currency borrowings, which are covered by hedging agreements, are marked to market at every reporting date, the resultant gain if any is ignored and loss if any, is provided for. The liability towards foreign currency borrowings at the prevailing exchange rate on the reporting date is mentioned under the Balance sheet as a contra entry. 7.2 Profit on cancellation of or renewal of currency SWAP agreement, if any, is accounted for on the final settlement of agreement; however, loss on such transactions is provided at the market rates as on the date of Balance Sheet.

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8.

Retirement Benefits

8.1 The Bank has a Provident Fund Scheme managed by RBI. Contribution to the Fund is made on actual basis. 8.2 Provision for gratuity is made based on actuarial valuation, in respect of all employees including employees transferred from RBI. The amount of gratuity due from RBI, in respect of employees transferred from RBI, is accounted on cash basis. 8.3 Provision for Pension is made based on actuarial valuation. 8.4 Employers contribution to Provident Fund relating to the pension optees (part of Pension Fund) is maintained with RBI. 8.5 Provision for Encashment of Ordinary Leave is made on the basis of actuarial valuation.

10.2 Expenses that are directly identifiable with/ allocable to segments are considered for determining the segment result. The expenses, which relate to the Bank as a whole and not allocable to segments, are included under Other Unallocable Expenditure. 10.3 Income, which relates to Bank as a whole and not allocable to segments is included under Other unallocable bank income. 10.4 Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities include those that relate to the Bank as a whole and not allocable to any segment.

11.

Impairment of Assets

9.

Taxes on Income

11.1 As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine: a) b) the provision for impairment loss, if any required;or The reversal, if any, required for impairment loss recognized in the previous periods.

9.1 Tax on income for the cur rent period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of Income Tax Act, 1961 and based on expected outcome of assessments/appeals. 9.2 Deferred tax is recognized, on timing difference, being the difference between taxable income and accounting income for the year and quantified using the tax rates and laws that have been enacted or substantively enacted as on Balance Sheet date. 9.3 Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 9.4 Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 9.5 Provision for Wealth Tax is made in accordance with the provisions of Wealth tax Act, 1956.

11.2 Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount.

12

Provisions, Contingent Liabilities and Contingent Assets

12.1 Provisions are recognised for liabilities that can be measured only by using substantial degree of estimation if: a) the Bank has a present obligation as a result of a past event; a probable outflow of resources is expected to settle the obligation; and the amount of the obligation can be reliably estimated.

b)

c)

10.

Segment Reporting

10.1 Segment revenue includes interest and other income directly identifiable with / allocable to the segment.

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.

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12.3 a)

Contingent liability is disclosed in the case of : a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation, a present obligation when no reliable estimate is possible, and a possible obligation arising from past events where the probability of outflow of resources is not remote.

administration charges on providing refinance under interest subvention scheme to SCBs and RRBs for financing Seasonal Agricultural Operations. 7. Investments in Government securities include the following securities pledged with Clearing Corporation of India Limited as collateral security for Business segments:
(Rs. crore) Particulars Pledged for Business Segment (Securities) Pledged for Business Segment (Collateralised Borrowing and Lending Obligation) Face Value 50.00 (10.00) 49.76 Book Value (9.25)

b)

c)

12.4 Contingent assets are neither recognized, nor disclosed. 12.5 Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

1922.00 (1212.00)

1933.87 (1,220.97)

B.

Notes forming part of the Accounts


8 (a) Interest at the rate of 6.00% (6.00%) per annum on unutilised balances of RIF,RPF, Watershed Development Fund, KfW NB IGWDP(Andhra Pradesh, Gujarat, Maharashtra and Rajasthan) and KfW NB IX Adivasi Development Programme has been credited to respective fund based on respective agreements. Further, interest at the rate of 7.68% (6.47%) per annum on unutilised balances of Micro Finance Development and Equity Fund, Cattle Development Programme (Uttar Pradesh & Bihar), LABs Revolving Fund (Sultanpur & Rae Bareli) and MAPA BAIF (Sultanpur and Rae Bareli), Financial Inclusion Fund and Financial Inclusion Technology Fund has been credited to the respective funds. 8 (b) The Banks contribution to FITF was excess by Rs.7.50 crore and short to FIF by Rs.6.50 crore. Out of the excess contribution in FITF an amount of Rs.6.50 crore was transferred to FIF and Rs.1.00 crore to profit & loss appropriation account. 9. Pending receipt of confirmation of balance of Provident Fund Account in respect of employers contribution as on March 31, 2010 maintained with RBI, provision for pension is made after considering the balance of PF maintained with RBI as per the records available with the Bank. 10. Outstanding balance payable on account of bonds matured b u t n o t c l a i m e d a m o u n t i n g t o Rs.12.32 crore (Rs.69.12 crore) includes Rs.1.53 crore (Rs.1.53 crore) on account of SLR Bonds issued by the

1. In terms of TAWA Command Area Development Project Agreement, the Interest Differential Fund is to be utilized for certain specified purposes . 2. In accordance with the Memorandum of Understanding entered into with the Swiss Agency for Development Cooperation, repayment of loan, service charges and other receipts made out of Rural Innovation Fund (RIF) are being credited to the Rural Promotion Fund (RPF). 3. In terms of the agreement with KfW accretion/ income and certain expenditure under UPNRM have been charged to the fund. The loans granted out of the fund have been adjusted with direct loans. 4. Interest Received on Loans and Advances includes Rs.23.80 crore (Rs.10.70 crore) representing Interest Subvention received from GoI for providing assistance under Liquidity Support to State Co-operative Banks (SCBs)/ Regional Rural Banks (RRBs) for Rabi 2008-09. 5. Subvention received/receivable from GOI amounting to Rs. 794.67 crore (Rs.874.44 crore) being the difference between the cost of borrowing by NABARD and the refinance rate, has been reduced from interest and financial charges. 6. Other receipts includes Rs. 35.15 crore (Rs.32.02 crore) received/receivable from GoI towards

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Bank which were earlier serviced/managed by RBI. From October 1, 2003, servicing of these bonds was taken over by the Bank. 11. The Bank has, during the year, in accordance with AS 22 Accounting for taxes on Income, recognized in the Profit and Loss account the difference of Rs.67.19 crore between net deferred tax assets of Rs.317.80 crore and Rs.384.99 crore as at March 31, 2010 and March 31, 2009 respectively; as detailed below:
(Rs. crore) Sr. Deferred Tax Assets No. 1 Provision for Retirement Benefits made in the books but allowable for tax purposes on payment basis Depreciation on Fixed Assets Amortisation of G Sec Total 31 March 2010 274.85 31 March 2009 344.80

defined benefit plans. The present value of obligation is determined based on actuarial valuation using the Projected Unit Cost Method, which recognizes 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 Present value of defined benefit obligation at the beginning of year Current Service Cost Interest Cost Actuarial (gain)/ loss Benefits paid Present value of defined benefits obligations at the year end
@ $

Pension 892.01 (705.11) 20.65 (20.90) 66.90 (56.41) -10.01 (127.38) -10.79 (-17.79) 958.76 (892.01)@

Gratuity 250.53 (232.66) 15.27 (17.26) 18.79 (18.62) -25.60 (-9.84) -37.79 (-8.17) 221.20 (250.53) $

Leave Encashment 115.51 (92.18) 3.73 (9.10) 8.66 (7.37) 2.19 (10.64) -12.47 (-3.78) 117.63 (115.51)

2 3

22.35 20.60 317.80

23.71 16.48 384.99

12. Provision for Deferred 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. 13. Land and Premises include Rs. 33.82 crore (Rs.34.77 crore) paid towards Office Premises and Staff Quarters for which conveyance is yet to be completed. 14. The Bank has subscribed to debentures issued by various State Land Development Banks / State Cooperative Agriculture & Rural Development Banks, which are included under Advances Other Investment Credit Medium Term and Long Term Project Loans. The value of Allotment Letters / Debenture Scrips, yet to be received, as at the year end, aggregates to Rs. 30.12 crore (Rs.195.33 crore). 15. Depreciation charged in Profit & Loss Account is net of Swiss Development Corporation share of depreciation amounting to Rs. Nil (Rs. 42,503) on assets purchased under SDC HID project.

Excludes incremental pension of Rs.0.67 crore to be credited to fund Excludes incremental gratuity of Rs.2.54 crore to be paid to employees who have retired on or after January 01, 2006.

b. Amount recognized in the balance sheet as on 31 March 2010:


(Rs. crore) Particulars Pension (Partly Funded) 958.76 (892.01) 268.77 (254.66) @ 689.99 (637.35) Gratuity (Funded) 221.20 (250.53) 220.00 (0.00)* 1.20 (250.53) Leave Encashment (Funded) 117.63 (115.51) 127.55 (90.99) $ -9.91 (24.52)

Present value of defined benefits obligations as at the year end Fair value of plan assets as at the year end Liability recognized in the Balance sheet as at the year end @
*

16.

Disclosure required under AS 15 (Revised) on Employee Benefits is as under:


Defined Benefit Plans

Represents the Banks contribution towards PF for pension optees available with RBI.
The bank has set up NABARD Employees Group Gratuity Trust duly approved by the Commissioner of Income Tax to manage the Gratuity Fund of NABARD. During the year an amount of Rs.220 crore has been contributed to the Gratuity Fund managed by the said Trust. Represents the amount invested with Insurance companies towards the Liability for Leave Encashment.

16.1

Employees Retirement Benefit plans of the bank include Pension, Gratuity and Leave Encashment, which are

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c. Expenses recognized in the Profit and Loss Account during the year:
(Rs. crore) Particulars Pension Gratuity Leave Encashment 3.73 (9.10) 8.66 (7.37) 2.19 (11.21) -14.20 (-2.69) -0.38 (24.99)

made for the pension optees forms part of the plan assets of pension scheme. The total contribution charged to Profit and Loss account during the year is Rs.11.69 crore (Rs.12.29 crore)

Current Service Cost

20.65 (20.90) 66.90 (56.41) -10.01 (127.38) -

15.27 (17.26) 18.79 (18.62) -25.60 (-9.84) 0.00 (0.00) 8.46 (26.04)

Interest Cost

17. In the opinion of the Banks management, there is no impairment to assets to which AS 28 Impairment of Assets applies requiring any provision.

Actuarial (gain)/ loss

Expected return on Plan Assets Expense recognized in the statement of Profit & Loss

18. The movement in Contingent Liability as required in AS 29 Provisions, Contingent Liabilities and Contingent Assets is as under:
(Rs. crore) Particulars 2009-10 3.37 0.00 0.00 3.37 2008-09 9.11 0.01 5.75 3.37

77.54 (188.06)

d.

Actuarial assumptions:
Pension 1994-96 (Ultimate) 8.25% 4% 1% Gratuity 1994-96 (Ultimate) 8.25% 7% 1% Leave Encashment 1994-96 (Ultimate) 8.25% 7% 1%

Opening Balance Addition during the year Deletion during the year Closing Balance

Particulars Mortality Table (LIC)

Discount rate (per annum) Salary growth (per annum) Withdrawal rate

19. Prior period items included in the Profit and Loss account are as follows:
(Rs. crore) Sr. No. Particulars Depreciation Other Expenses Total 2009-10 4.038 0.000 4.038 2008-09 0.032 0.041 0.073

16.2 The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

1 2

16.3 The aforesaid liabilities include liabilities of employees deputed to subsidiaries.

20. Capital adequacy ratio of the Bank as on 31 March 2010 is 24.95% (25.85%) as against a minimum of 9% as stipulated by RBI.

16.4 The above information is certified by the actuary, except in respect of pension for fair value of plan assets, expected return on plan assets and expense recognized in profit and loss account.

21.

NPA on staff loans:


(Rs. crore)

Particulars Opening Balance

2009-10 0.07 0.03 0.02 0.08

2008-09 0.10 0.00 0.03 0.07

16.5

Defined Contribution Plan:

Addition during the year Written Back during the year Closing Balance

The bank contributes a defined sum of 10% on the basic salary for both pension optees and non pension optees every month towards Provident Fund. The contribution

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22.

Investments in Mutual Funds are as under:


(Rs. in crore) As at March 31, 2010 No. of units Book Value Market Value 2,86,07,635.3200 2,94,404.7780 4,41,48,228.8210 9,69,829.4780 8,09,238.4970 29,19,994.9850 7,19,88,360.6304 8,08,88,127.7770 4,57,99,983.5330 9,64,20,619.9960 3,43,10,340.1970 4,61,91,646.2350 3,37,27,478.7790 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 50.00 50.00 50.00 100.00 100.00 50.00 100.00 100.00 50.00 100.00 50.00 50.00 50.00 0.00 0.00 0.00 0.00 0.00 0.00 900.00 50.01 50.00 50.01 100.03 100.09 50.01 100.05 100.01 50.01 100.02 50.01 50.01 50.01 0.00 0.00 0.00 0.00 0.00 0.00 900.27 As at March 31, 2009 No. of units Book Value Market Value 7,11,18,191.3220 3,07,437.3330 2,80,52,064.6320 3,04,71,537.1780 0.0000 7,70,01,262.8210 3,11,04,973.0630 6,22,28,915.2880 4,66,88,828.2970 4,95,42,229.7970 0.0000 4,38,04,701.1210 0.0000 4,08,04,335.0530 2,54,54,489.9180 3,77,51,804.9860 3,80,30,332.9940 3,82,684.1840 4,13,70,522.6750 100.00 50.00 50.00 75.00 0.00 100.00 50.00 100.00 50.00 50.00 0.00 50.00 0.00 75.00 50.00 50.00 50.00 50.00 50.00 1,000.00 100.04 50.02 50.02 75.03 0.00 100.02 50.00 100.05 50.01 50.01 0.00 50.02 0.00 75.02 50.01 50.01 50.11 50.01 49.93 1,000.31

S. Name of the No. Mutual Fund 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Birla Sun life Tata Kotak Mahindra UTI - Money Market UTI - Treasury advantage ICICI Prudential Canara Robeco Life Insurance Corporation IDFC Baroda Pioneer PRINCIPAL Deutsche L&T HDFC SBI Reliance ING Franklin Templeton Religare Total

23. As per the information available with the Bank, there are no dues payable under Micro, Small and Medium Enterprises Development Act 2006. 24. Previous years figures have been regrouped / rearranged wherever necessary. 25. Figures in brackets pertain to previous year.

(c)

Risk weighted assets


(Rs. crore) 31 March 2010 49,921.32 25.18 31 March 2009 43,436.86 27.61

Particulars On Balance Sheet Items Off Balance Sheet Items

(d)

26. The following additional information is disclosed in ter ms of RBI circulars No. RBI/20092010/49 (DBOD.FID.FIC.2/01.02.00/200910) dated 01 July 2009 and No. RBI/20092010/347 (DBOD.BP.BC.No.79/21.04.018/200910) dated 15 March 2010.

Pattern of Capital contribution as on the date of the balance sheet


(Rs. crore) 31 March 2010 1,450 550 2,000 31 March 2009 1,450 550 2,000

Contributor Reserve Bank of India Government of India Total

26.1 Capital
(a) Capital to Riskweighted Assets Ratio (CRAR)
(Percent) Particulars CRAR Core CRAR Supplementary CRAR 31 March 2010 24.95 23.47 1.48 31 March 2009 25.85 24.45 1.40

26.2
(a)

Asset Quality and Credit Concentration


Net NPA position
31 March 2010 0.01559 31 March 2009 0.03062

Particulars Percentage of Net NPAs to Net Loans & Advances

(b)

Asset classification
2009-10 Amount (%) 120672.40 99.958 6.71 0.006 44.02 0.036 0.00 0.000 120723.13 100.000 (Rs. crore) 2008-09 Amount (%) 98822.36 99.969 6.86 0.007 23.45 0.024 0.00 0.000 98852.67 100.00

(b)

Subordinated Debt
(Rs. crore) 31 March 2010 Nil 31 March 2009 Nil

Classification Standard Substandard Doubtful Loss Total

Particulars Amount of subordinated debt raised and outstanding as Tier II Capital

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(c) Provisions made during the year


(Rs. crore) Provisions against Standard Assets Non Performing Assets Investments (Net) Income Tax Total 2009-10 101.50 17.60 -0.68 647.00 765.42 2008-09 73.70 8.88 -35.28 677.60* 724.90

(e) Credit exposure as percentage to Capital Funds and as percentage to Total Assets
Category 2009-10 Credit Exposure as % to Capital Funds Total Assets 2008-09 Credit Exposure as % to Capital Funds Total Assets

I II

* includes Rs. 3.60 crore towards Fringe Benefit Tax

Largest Single Borrower Largest Borrower Group

145.41

13.57

106.32

10.15

Not Applicable

Not Applicable

(d)

Movement in Net NPAs


(Rs. crore) 2009-10 30.31 8.35 38.66 5.93 32.72 13.96 18.76 2008-09 19.28 11.03 30.31 0.00 30.31 0.00 30.31

III Ten Largest Single Borrowers for the year IV Ten Largest Borrower Groups

379.27

35.40

333.06

31.81

Not Applicable

Not Applicable

Particulars (A) Net NPAs as at beginning of the year (B) Add: Additions during the year (C) Subtotal (A+B) (D) Less: Reductions during the year (E) Net NPAs before provision for PCR (CD) (F) Additional Provision for PCR (G) Net NPAs as at the end of the year (EF)

(f)

Credit exposure to the five largest industrial sectors as percentage to total loan assets: Not Applicable

26.3 Liquidity
(k) Maturity pattern of Rupee Assets and Liabilities (l) Maturity pattern of Foreign Currency Assets and Liabilities
More than 5 years upto 7 years 15363.61 (14243.36) 0.00 (0.00) 15363.61 (14243.36) 18416.73 (17404.61) 109.07 (108.69) 18525.80 (17513.3) 5007.03 (3551.34) 0.00 (0.00) 5007.03 (3551.34) 33482.22 (37205.11) 201.55 (206.64) 33683.77 (37411.75) 135696.12 (117680.92) 0.00 (0.00) 135696.12 (117680.92) 135201.58 (117182.63) 494.54 (498.29) 135696.12 (117680.92) More than 7 years Total #

The Provision Coverage Ratio (PCR) of the Bank as on 31 March 2010 stood at 62.98%

Sr. No.

Item

Less than or equal to 1 year

More than 1 year upto 3 years 35053.14 (28354.64) 0.00 (0.00) 35053.14 (28354.64) 35939.57 (22015.52) 64.71 (64.33) 36004.28 (22079.85)

More than 3 years upto 5 years 28992.26 (23204.68) 0.00 (0.00) 28992.26 (23204.68) 24755.17 (24003.42) 109.06 (108.68) 24864.23 (24112.10)

1 2

Rupee Assets Foreign currency assets Total Assets

51280.08 (48326.90) 0.00 (0.00) 51280.08 (48326.90) 22607.89 (16553.97) 10.15 (9.94) 22618.04 (16563.91)

3 4

Rupee Liabilities Foreign currency liabilities Total Liabilities

# Net of provision made as per RBI directives on Standard Assets as well as for diminution in value of Investments aggregating to Rs.596.01 crore (Rs.495.19 crore).

26.4 Operating results


Particulars (a) (b) (c) (d) (e) Interest income as a percentage to average working funds Non interest income as a percentage to average working funds Operating profit as a percentage to average working funds Return on average Assets (%) Net Profit per Employee (Rs. in crore) 2009-10 6.19 0.10 1.80 1.23 0.33 2008-09 6.47 0.13 1.86 1.30 0.28

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26.5 Movement in the provisions (a) Provision for Non Performing Assets (Loan Assets)
(Rs. in crore) Particulars Opening balance as at the beginning of financial year Add: Provision made during the year (Incl. provision for PCR) Less: Write off, write back of excess provision Closing balance at the close of financial year 200910 200809

26.7

Assets sold to securitisation company / reconstruction company: NIL (NIL) Forward Rate Agreements and Interest Rate Swaps : NIL (NIL) Interest Rate Derivatives : NIL (NIL)

26.8 26.9

14.40 18.68 1.08 32.00

5.52 8.88 0.00 14.40

26.10 Investments in Non Government Debt Securities : NIL (NIL) 26.11 Corporate Debt Restructuring (CDR)
During the year one loan account classified as Standard Asset with outstanding of Rs.24.25 crore has been subjected to restructuring under CDR.

(b)

Provision for depreciation in investments


(Rs. in crore) Particulars 200910 2.12 (37.40) 0.00 (0.63) 0.00 (0.00) 2.12 (38.03) 0.68 (35.91) 0.00 (0.00) 0.68 (35.91) 1.44 (2.12)

A B Add

Opening balance as at the beginning of the financial year (i) Provisions made during the year (ii) Appropriation, if any, from Investment Fluctuation Reserve Account during the year

26.12 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 93.07 million Euro and interest thereon for the entire loan period. Consequent upon hedging of foreign currency borrowings the same is shown at contracted value as per the Swap agreement. The Bank does not have any open exposure in foreign currency. The value of outstanding principal amount of hedge contract at the yearend exchange rate stood at Rs.563.66 crore and the value of outstanding principal liability in the books of account stood at contracted value i.e. Rs.494.54 crore. The quantitative disclosure in this regard is as under:
(Rs. in crore) Sr. Particulars No. 1. Derivatives (Notional Principal amount) A) For Hedging B) For Trading 2. Marked to Market Positions [1] a) Asset (+) b) Liability () 3. 4. Credit Exposure [2] Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives b) on trading derivatives Maximum and Minimum of 100*PV01 observed during the year a) on hedging b) on trading Currency Interest Rate Derivatives Derivatives

Sub Total [A+B(i)+B (ii)]

D Less (i) Write off, Write Backs of excess provision (ii) Transfer, if any, to Investment Fluctuation Reserve Account Sub Total [D] E Closing balance as at the close of financial year (CD)

26.6 Restructured accounts


During the current financial year eight loan accounts outstanding to the extent of Rs.50.60 crore (Rs.51.63 crore) have been rescheduled. Out of the above, four loan accounts outstanding of Rs.30.84 crore (Rs.26.47 crore) is classified as Standard asset and four loan accounts outstanding of Rs.19.77 crore (Rs.25.16 crore) has been classified as Sub Standard Asset. There is no Interest sacrifice on these reschedulements. The interest sacrifice on loans restructured during FY 200506 amounted to Rs.31.08 crore. Interest sacrifice is reviewed at each balance sheet date and necessary provision is made or reversed. Accordingly, Rs.4.46 crore (Rs.8.62 crore) was written back during the current financial year.

563.66 (498.29) NA 69.12 (136.28) 0.00 (0.00) NA NA

NA NA

NA NA NA NA NA NA NA NA NA

NA NA NA NA

5.

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26.13 Exposures where the FI had exceeded pr udential the year: NIL (NIL) 26.14 Related Party Transactions

exposure

limits

during

As the Bank is state controlled enterprise within the meaning of AS-18 Related Party Transactions, the details of the transactions with other state controlled enterprises are not given.

List of Related Parties:


Key Management Personnel: 1. Shri Umesh Chandra Sarangi - Chairman 2. Dr. K G Karmakar Managing Director Name of the Party Nature of Relationship Key Management Personnel Chairman Key Management PersonnelManaging Director Nature of Transaction Remuneration including perquisites Remuneration including perquisites Amount of transaction during the year 0.26 (0.14)

(Rs. in crore) Outstanding

Shri U C Sarangi

Dr. K G Karmakar

0.30 (0.22)

No amounts, in respect of the related parties have been written off/back, or provided for during the year. Related party relationships have been identified by the management and relied upon by the auditors.

26.15 Issuer categories in respect of investments made


(Rs. in crore) Sr. Issuer No. Amount Investment made through private placement (4) 60.00 (60.00) 48.00 (48.00) 20.60 (20.60) 21.23 (11.75) Below investment grade Securities held (5) Unrated Securities held (6) 20.60 (20.60) 21.23 (11.75) Unlisted Securities

(1) (2) 1. 2. 3. 4. 5. 6. PSUs FIs Banks Private Corporate Subsidiaries/Joint ventures Others (Net of Provision) including Mutual Funds Provision held towards depreciation Total

(3) 60.00 (60.00) 48.00 (48.00) 20.60 (20.60) 1663.96 (1152.23)

(7) 60.00 (60.00) 48.00 (48.00) 20.60 (20.60) 1663.96 (1152.23)

(0.00)

7.

1.44 (2.12) 1794.00 (1282.95)

1.44 (2.12) 1794.00 (1282.95)

149.83 (140.35)

0.00 (0.00)

41.83 (32.35)

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26.16 Non performing investments: NIL (NIL) 26.17 Disclosure on Repo transactions
(Rs. crore) Particulars Minimum outstanding during the year 0.00 (0.00) 476.02 (275.00) Maximum outstanding during the year 0.00 (0.00) 476.02 (275.00) Daily average outstanding during the year 0.00 (0.00) 1.30 (0.75) Outstanding as on 31 March 2010 0.00 (0.00) 0.00 (0.00)

Securities sold under repo Securities purchased under reverse repo

26.18 Concentration of Deposits, Advances, Exposure and NPAs


(a) Concentration of Deposits
(Rs. in Crore) Total Deposits of twenty largest depositors Percentage of Deposits of twenty largest depositors to Total Deposits of the Bank 57661.54 82.38%

26.20 Movement of Gross NPAs


Particulars Gross NPAs as on 1st April of particular year (Opening Balance) Additions (Fresh NPAs) during the year Sub-total (A) Less:(i) Upgradations (ii) Recoveries (excluding recoveries made from upgraded accounts) Write-offs Amount in Rs. Crore 44.71 8.87 53.58 0.00 2.85 0.00 2.85 50.73

(b) Concentration of Advances


(iii) (Rs. in Crore) Total Advances to twenty largest borrowers Percentage of Advances to twenty largest borrowers to Total Advances of the Bank 67384.61 55.82%

Sub-total (B) Gross NPAs as on 31st March of following year (closing balance) (A-B)

(c) Concentration of Exposure


(Rs. in Crore) Total Exposure to twenty largest borrowers/ customers Percentage of Exposure to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers 67384.61 51.94%

26.21 Overseas Assets, NPAs and Revenue: NIL (NIL) 26.22 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms) : NIL (NIL) 26.23 Information on Business Segment
(a) Brief Background
The Bank has recognized Primary segments as under: i) Direct Finance : Includes Loans given to state governments for rural infrastructure development, co-finance loans and loans given to voluntary agencies/non governmental organisations for developmental activities. 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.

(d) Concentration of NPAs


(Rs. in Crore) Total Exposure to Top four NPA accounts 32.02

26.19 Sector-wise NPAs


S. Sector No 1 2 3 4 Agriculture and allied activities Industry (Micro & Small, Medium and Large) Services Personal Loans Percentage of NPAs to Total Advances in that sector 0.00 0.44 0.00 0.00

ii)

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iii)

Tr e a s u r y : I n c l u d e s i n v e s t m e n t o f f u n d s i n 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.
(Rs. in Crore) Treasury 1,255.69 (1,307.36) 1,227.10 (1,283.21) 12,985.48 (16,434.04) 239.82 (192.86) Unallocated 19.59 (16.03) -525.00 (-596.01) 1,564.42 (1,678.08) 20,281.86 (19,248.04) Total 7,964.80 (7,050.68) 2,272.45 (1,987.53) 1,36,292.13 (1,18,176.11) 1,36,292.13 (1,18,176.11)

(b)

Information on Primary Business Segment


Direct Finance 3,295.94 (2,337.37) 372.12 (118.46) 60,519.42 (45,798.54) 60,642.12 (47,695.61) Refinance 3,393.58 (3,389.92) 1,198.23 (1,181.87) 61,222.81 (54,265.45) 55,128.33 (51,039.60)

Segment Revenue Segment Results Total carrying amount of Segment Assets Total carrying amount of Segment Liabilities Other Items : Cost to acquire Segment Assets during the year Amortization & Depreciation Non Cash Expenses

0 0.00 (0.00) 17.96 (9.07)

0 0.00 (0.00) 96.37 (64.65)

0 18.18 (18.18) -0.68 (0.46)

11.21 (11.79) 23.29 (21.36) 73.34 (47.76)

11.21 (11.79) 41.48 (39.54) 186.99 (121.94)

(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

Hasmukh B Dedhia Partner Mumbai Mumbai, May 26, 2010

S Akbar Chief General Manager Accounts Department Mumbai, May 25, 2010

Umesh Chandra Sarangi Chairman

Dr. K.G. Karmakar Managing Director

Dr. K. C. Chakrabarty Director

Shashi Rekha Rajagopalan Director

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National Bank for Agriculture and Rural Development Cash flow for the year ended 31 March 2010
Particulars (a) Cash flow from Operating activities Net Profit as per Profit and Loss a/c before tax Adjustment for: Depreciation Provisions and Amortisations Provision for Non performing Assets Provision for Standard Assets Provision for sacrifice in interest element of Restructured Loan Profit / Loss on sale of Fixed Assets Interest credited to various Funds (including addition/ adjustment made to Interest Differential Fund) Income from Investment (including Discount Income) Expenditure from various Funds Operating profit before changes in operating assets Adjustment for net change in: Current Assets Current Liabilities Increase in Loans and Advances (Including Housing Loan & Other Advances to Staff Cash generated from operating activities Payment of Income Tax Net cash flow from operating activities (b) Cash flow from Investing activities Income from Investment (including Discount Income) Increase / Decrease in Fixed Asset Increase / Decrease in Investment Net cash used / generated from investing activities (c ) Cash flow from financing activities Proceeds of Bonds Increase / Decrease in Borrowings Increase / Decrease in Deposits Grants / contributions received Net cash raised from financing activities Net increase in cash and cash equivalent (A)+(B)+(C ) Cash and Cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year 1. Cash and cash equivalent at the end of the year includes : Cash in hand Balance with Reserve Bank of India Balances with other Banks in India Remittances in Transit Collateralised Borrowing and Lending Obligations Total 2. (C) (B) (A) During 2009-10 2272,45,27,218 23,29,35,835 17,97,82,941 17,60,23,540 101,50,00,000 (-) 4,46,00,000 (-) 20,90,556 91,59,96,739 (-) 1255,68,93,098 (-) 12801,23,52,653 (-) 11537,16,70,034 4037,11,93,160 679,38,95,145 (-) 21785,29,44,290 (-) 28605,95,26,019 (-) 793,21,29,932 (-) 29399,16,55,951 1255,68,93,098 (-) 10,63,14,538 (-) 808,31,58,332 436,74,20,228 (-) 3699,24,93,756 1584,85,53,429 17868,89,67,953 12928,14,78,891 28682,65,06,517 (-) 279,77,29,206 908,11,04,689 628,33,75,483 2009-2010 11,720 25,45,41,783 533,94,81,680 68,93,40,300 0 628,33,75,483

(Rupees) During 2008-09 1987,53,10,864 21,36,41,786 18,53,69,056 8,88,11,531 73,70,00,000 (-) 8,62,00,000 (-) 7,61,670 61,78,34,663 (-) 1307,36,41,258 (-) 20857,49,50,989 (-) 20001,75,86,017 (-) 6610,57,48,689 1110,19,36,226 (-) 16067,34,69,946 (-) 41569,48,68,426 (-) 598,75,73,999 (-) 42168,24,42,425 1307,36,41,258 (-) 11,17,05,555 (-) 431,26,76,503 864,92,59,200 (-) 4996,49,24,694 (-) 1207,32,41,806 21428,30,49,166 22461,69,90,603 37686,18,73,269 (-) 3617,13,09,955 4525,24,14,644 908,11,04,689 2008-2009 21,579 169,67,65,931 420,21,61,811 185,25,16,092 132,96,39,276 908,11,04,689

Previous years figures have been regrouped/ rearranged to conform to the current years presentation, wherever necessary.

As per our attached report of even date Khimji Kunverji & Co Chartered Accountants Hasmukh B Dedhia Partner Mumbai, May 26, 2010 Umesh Chandra Sarangi Chairman Dr. K.G. Karmakar Managing Director Dr. K. C. Chakrabarty Director S Akbar Chief General Manager Accounts Department Mumbai, May 25, 2010 Shashi Rekha Rajagopalan Director

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Consolidated Balance Sheet Profit and Loss Account & Cash Flow of NABARD & its Subsidiaries
(NABCONS, ADFT, ABFL & NABFINS)

2009-2010

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Khimji Kunverji & Co.


Chartered Accountants

Auditors' Report on Consolidated Financial Statements


To the Board of Directors NATIONAL BANK FOR AGRICULTURE 1.
AND

RURAL D EVELOPMENT

We have examined the attached Consolidated Balance Sheet of NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (The Bank) and its Subsidiaries as at March 31, 2010, 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 Banks 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 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. 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 87.42 crore and Rs15.60 crore respectively. The financial statements of all the four subsidiaries, being unaudited, 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 management certified financial statements. 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. 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) b) c) in the case of the Consolidated Balance Sheet, of the state of affairs of the Bank as at March 31, 2010; 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 in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Bank for the year ended on that date.

2.

3.

4.

5.

Place: Mumbai Dated: May 26, 2010 For and on behalf of Khimji Kunverji & Co. Chartered Accountants Firm Registration No. 105146W

Hasmukh B. Dedhia Partner (F-033494)


Suit 52, Bombay Mutual Building, Sir Phirozshah Mehta Road, Fort, Mumbai - 400 001, India. Telephones: +91 22 22662550, 22661270, 22662011 Fasimile: +91 22 22664045 E-mail: info@khimjikunverji.com Website: www.khimjikunverji.com

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National Bank for Agriculture and Rural Development Consolidated Balance Sheet as on 31 March 2010
(Rupees) Particulars FUNDS AND LIABILITIES Capital Reserve Fund and Other Reserves National Rural Credit Funds Funds Out of Grants received from International Agencies Gifts Grants, Donations and Benefactions Other Funds Minority Interest Deposits Bonds and Debentures Borrowings Current Liabilities and Provisions TOTAL FUNDS AND LIABILITIES 2000,00,00,000 10695,52,59,087 15983,00,00,000 149,87,64,124 4708,08,54,379 2735,11,97,846 13,42,22,569 69996,02,02,581 20004,38,12,150 5176,83,03,241 4887,86,69,194 136350,12,85,171 2000,00,00,000 9551,33,61,533 15571,00,00,000 154,81,78,661 5111,01,92,515 2101,80,68,588 12,73,59,475 52127,12,34,628 23702,62,34,987 3592,94,14,312 4281,43,94,987 118206,84,39,686 As on 31.03.2010 As on 31.03.2009

PROPERTY AND ASSETS Cash and Bank Balances Investments Advances Fixed Assets Other Assets TOTAL PROPERTY AND ASSETS 9694,91,32,622 3764,99,64,266 120512,26,31,072 234,98,90,260 2142,96,66,950 136350,12,85,171 14018,72,65,778 2974,08,29,886 98858,23,52,501 247,31,45,985 2108,48,45,536 118206,84,39,686

As per our attached report of even date Khimji Kunverji & Co Chartered Accountants

Hasmukh B Dedhia Partner Mumbai, May 26, 2010

S Akbar Chief General Manager Accounts Department Mumbai, May 25, 2010

Umesh Chandra Sarangi Chairman

Dr. K.G. Karmakar Managing Director

Dr. K. C. Chakrabarty Director

Shashi Rekha Rajagopalan Director

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National Bank for Agriculture and Rural Development Consolidated Profit and Loss Account for the year ended 31 March 2010
(Rupees) Particulars Income: Interest Received on Loans and Advances Income from Investment operations Discount Received Other Receipts TOTAL INCOME Expenditure: Interest and Financial Charges Establishment and other expenses Depreciation Provisions TOTAL EXPENDITURE Profit before Income Tax Provision for Income Tax Provision for Fringe Benefit Tax Deferred Tax Asset Adjustment Short / (Excess) provision for Income Tax in earlier years Profit after Tax Share of Profit / Loss in Subsidiaries attributable to Minority Interest Profit available for Appropriation Appropriations: Profit as above Add: Withdrawals from various funds against expenditure debited to Profit & Loss Account Total Profit Available for Appropriation Transferred to: Special Reserve u/s 36(I)(viii) of the Income Tax Act, 1961 National Rural Credit (Long Term Operations) Fund National Rural Credit (Stabilisation) Fund Co-operative Development Fund Research & Development Fund Investment Fluctuation Reserve Financial Inclusion Fund Financial Inclusion Technology Fund Farm Innovation and Promotion Fund Farmers Technology Transfer Fund MFDEF Reserve Fund Reserve Fund Total 350,00,00,000 400,00,00,000 10,00,00,000 3,83,03,657 9,82,98,599 30,00,00,000 0 0 96,93,544 64,58,40,784 80,00,00,000 684,80,26,373 1634,01,62,957 340,00,00,000 400,00,00,000 10,00,00,000 3,81,14,043 8,76,10,683 42,00,00,000 18,50,00,000 32,50,00,000 46,55,57,504 31,61,42,310 509,99,05,910 1443,73,30,450 1634,01,62,957 1443,73,30,450 1563,67,17,480 70,34,45,477 1395,58,49,570 48,14,80,880 4988,46,50,149 554,72,01,330 23,33,50,246 132,71,74,889 5699,23,76,614 2281,10,90,247 649,54,88,364 0 67,17,34,084 0 1564,38,67,799 71,50,319 1563,67,17,480 4255,90,43,429 698,69,20,566 21,39,95,163 93,04,17,887 5069,03,77,045 1996,43,48,948 676,66,13,885 3,66,35,726 (-) 80,28,25,064 9,397 1396,39,15,004 80,65,434 1395,58,49,570 6654,03,24,335 1216,51,46,645 42,95,49,641 66,84,46,240 7980,34,66,861 5694,13,82,207 1218,59,65,570 92,55,15,672 60,18,62,544 7065,47,25,993 2009-10 2008-09

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Additional Notes to Consolidated Accounts


1. 2. 3. Consolidation has been done pursuant to the listing agreement with stock exchange. Financial statement in respect of Agri Development Finance (Tamilnadu) Ltd, NABARD Financial Services Limited, NABARD Consultancy Services Limited and Agri Business Finance (AP) Ltd. are unaudited. Details of the subsidiaries: Name of the Subsidiary Agri Development Finance (Tamilnadu) Ltd. Agri Business Finance (AP) Ltd. NABARD Financial Services Limited NABARD Consultancy Pvt. Ltd. Country of Incorporation India India India India Proportion of Ownership 52.10 47.82* 82.41 100.00

*NABARD controls the Board of Directors of Agri Business Finance (AP) Ltd.and hence considered as a subsidiary. 4. The financial statements of the company and its subsidiary companies are combined on a line to line basis by adding together expenses after fully eliminating infra-group balances and intra-group transactions in accordance with Accounting Standard - (AS) - 21 Consolidated Financial Statement Depreciation on fixed asset is provided on Written Down Value Method (WDV), at the rates specified in Schedule XIV to the Companies Act, 1956 by Agri Development Finance (Tamilnadu) Ltd and Agri Business Finance (AP) Ltd., whereas NABARD Financial Services Ltd. and NABARD Consultancy Services (Private) Limited has provided depreciation on fixed assets by adopting Straight Line Method (SLM) at the rates specified in Schedule XIV to the Companies Act, 1956 on prorata basis. Thus the Accounting Policy followed by subsidiaries for depreciation are different from the Accounting Policy for depreciation followed by NABARD in the preparation of Consolidated Financial Statements. Thus out of the total depreciation of Rs.23.34 crore (21.40 crore) included in the Consolidated Financial Statement, 0.18% (0.17%) 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. Income on foreign assignments by NABCONS is accounted on receipt basis. The amount of such fees receivable is not material. Disclosures as required under AS-17 Segment Reporting in consolidated financial statements are as under: (Rs. in crore) Financial Year 2009-10 (Consolidated) Segment Revenue Segment Results Total carrying amount of Segment Assets Total carrying amount of Segment Liabilities Other Items : Cost to acquire Segment Assets during the year Amortization & Depreciation Non Cash Expenses (other than above) Direct Finance 3298.75 (2340.89) 374.13 (120.78) 60538.90 (45814.35) 60661.60 (47711.41) Refinance 3393.58 (3389.92) 1198.23 (1181.87) 61222.81 (54265.45) 55128.33 (51039.60) Treasury 1255.69 (1307.36) 1227.10 (1283.21) 12985.48 (16434.04) 239.82 (192.86) Unallocated 32.32 (27.30) -518.36 (-589.43) 1602.94 (1693) 20320.38 (19262.97) Total 7980.35 (706.47) 2281.11 (1996.43) 136350.13 (118206.84) 136350.13 (118206.84)

5.

6. 7.

0.03 (0.02) 18.06 (9.62)

0.10 0 96.37 (64.66)

18.18 (18.18) (-) 0.68 (0.46)

11.27 23.30 (21.37) 73.34 (47.75)

11.37 41.52 (39.58) 187.09 (122.49)

Note: There are no reportable secondary segments for the bank and its subsidiaries 8. Previous Year figures have been regrouped / rearranged wherever necessary

As per our attached report of even date Khimji Kunverji & Co Chartered Accountants Hasmukh B Dedhia Partner Mumbai, May 26, 2010 S Akbar Chief General Manager Accounts Department Mumbai, May 25, 2010 Dr. K.G. Karmakar Managing Director Dr. K. C. Chakrabarty Director Shashi Rekha Rajagopalan Director

Umesh Chandra Sarangi Chairman

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National Bank for Agriculture and Rural Development Consolidated Cash Flow Statement for the year ended 31 March 2010
(Rupees)
Particulars (a) Cash flow from Operating activities Net profit as per P & L a/c before tax Depreciation Provisions and Amortisations Provision for Non performing Assets Provision for Standard Assets Provision for Sacrifice in interest element of restructured loan Interest credited to various funds Other expenses Income from Investment Profit / Loss on sale of Fixed Asset Expenditure from various funds During 2009-10 During 2008-09

2281,10,90,247 23,33,50,246 17,97,82,940 17,60,23,540 101,50,00,000 (-) 4,46,00,000 91,59,96,740 (-) 57,807 (-) 1255,68,93,098 (-) 20,90,556 (-) 12801,23,52,653 (-) 11528,47,50,400 4033,86,71,481 698,41,85,640 (-) 21790,01,00,598 (-) 28586,19,93,877 (-) 795,74,81,119

1996,43,48,948 21,39,95,164 18,53,69,056 9,42,07,091 73,70,00,000 (-) 8,62,00,000 61,78,34,663 0 (-) 1307,40,79,660 (-) 7,61,799 (-) 20857,49,50,989 (-) 19992,32,37,526 (-) 6610,56,33,642 1109,81,36,716 (-) 16067,23,06,900 (-) 41560,30,41,352 (-) 601,39,55,521 (-) 42161,69,96,873 1307,40,79,660 (-) 11,21,48,627 (-) 432,27,47,422 863,91,83,611 (-) 4996,49,24,694 (-) 1207,32,41,806 21424,95,42,087 22461,69,90,603 (-) 29,24,875 37682,54,41,315 (-) 3615,23,71,947 4527,11,51,488 911,87,79,541 2008-09 27,285 173,44,35,078 420,21,61,810 185,25,16,092 132,96,39,276 911,87,79,541

Operating profit before working capital changes Adjustment for net change in: Current Assets Current liabilities Increase/Decrease in Loans and Advances Cash generated from operating activities Payment towards Income tax Net cash flow from operating activities (b) Cash flow from Investing Activities Income from Investment Increase / Decrease of Fixed Assets Increase / Decrease in Investments Net cash used in investing activities (c) Cash flow from Financing Activities Proceeds of Bonds Increase / Decrease in Borrowings Increase / Decrease in Deposits Grants / contributions received Dividend paid Net cash raised from financing activities (C) Net increase in cash and cash equivalent (A)+(B)+(C) Cash and cash equivalent at the beginning of the period Cash and cash equivalent at the end of the period Cash and cash equivalent at the end of the period includes : Cash in hand Balance with Reserve Bank of India Balances with other Banks in India Remittances in Transit Collateralised Borrowing and Lending Obligations Total As per our attached report of even date Khimji Kunverji & Co Chartered Accountants Hasmukh B Dedhia Partner Mumbai, May 26, 2010 (B) (A)

(-) 29381,94,74,996 1255,68,93,098 (-) 10,80,03,965 (-) 808,60,63,486 436,28,25,646 (-) 3699,24,93,756 1591,33,42,629 17863,32,63,161 12928,20,41,391 (-) 58,49,750 28683,03,03,675 (-) 262,63,45,675 911,87,79,541 649,24,33,867 2009-10 21,950 25,45,41,784 554,85,29,833 68,93,40,300 0 649,24,33,867

S Akbar Chief General Manager Accounts Department Mumbai, May 25, 2010 Dr. K.G. Karmakar Managing Director Dr. K. C. Chakrabarty Director Shashi Rekha Rajagopalan Director

Umesh Chandra Sarangi Chairman

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Regional Offices/Sub-Office/Training Establishments


REGIONAL OFFICES
ANDAMAN & NICOBAR 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 : nabpbl@sancharnet.in portblair@nabard.org ANDHRA PRADESH 1-1-61, RTC Cross Road Musheerabad Hyderabad - 500 020 Tel No. : (040) 27685555, 27612640 Fax No. : (040)27611829 E-mail : nabapro_hyd@dataone.in hyderbad@nabard.org GOA Third floor, Nizari Bhavan Menezes Braganza Road Panaji - 403 001 Tel No. : (0832) 2220490, 2420504 Fax No. : (0832) 2223429 E mail : panaji@nabard.org K A R N ATA K A 113/1, Jeevan Prakash Annexe J.C. Road, P. B. No. 29 Bangalore - 560 002 Tel No. : (080) 22225241/44 Fax No. : (080) 2222148 E mail : bangalore@nabard.org MIZORAM Ramhlun Road (North) Bawngkawn Aizawl - 796 014 Tel No. : (0389) 2342328, 2305290 Fax No. : (0389) 2340815 E mail : nabaiz@sancharnet.in

G U JA R AT Opp. Municipal Garden Usmanpura Ahmedabad - 380 013 Tel No. : (079) 27552257-59 Fax No. : (079) 27551584 E mail : ahmedabad@nabard.org

KERALA Punnen Road, Statue P. B. No. 220 Thiruvananthapuram - 695 039 Tel No. : (0471) 2323846, 2323590 2323859 Fax No. : (0471) 2324358 E mail : trivandrum@nabard.org

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 : dimapur@nabard.org NEW DELHI NABARD Tower 24 Rajendra Place New Delhi - 110 125 Tel No. : (011) 41539353, 25818707 Fax No. : (011) 41539187, 41539185 E mail : delhi@nabard.org

ARUNACHAL PRADESH Bank Tinali, Post Box No. 133 Basar Building, T.T. Marg Opposite State Bank of India Itanagar - 791 111 Tel No. : (0360) 2212675, 215967 Fax No. : (0360) 2212675 E mail : nabardita@sancharnet.in

H A R YA N A Plot No.3, Sector - 34 'A' Chandigarh - 160 022 Tel No. : (0172) 5046703, 5046728 Fax No. : (0172) 5046784 E mail : haryana@nabard.org

MADHYA PRADESH E-5, Arera Colony Ravishankar Nagar, Post Office, Bittan Market Bhopal - 462 016 Tel No. : (0755) 2463341, 2463369 2466695 Fax No. : (0755) 2466188 E mail : bhopal@nabard.org nabmpro@dataone.in MAHARASHTRA 54, Wellesley Road Shivaji Nagar Pune - 411 005 Tel No. : (020) 25541439, 25542090 Fax No. : (020) 25542250 E-mail : pune@nabard.org

ASSAM G.S.Road, Post Box No.1 Opposite Assam Secretariat Dispur Guwahati - 781 006 Tel No. : (0361) 2235661, 2238013/14 Fax No. : (0361)2235657 E mail : guwahati@nabard.org

HIMACHAL PRADESH NABARD Bhavan, Block Number 32 S.D.A. Commercial Complex Dev Nagar, Kasumpati Shimla - 171 009 Tel No. : (0177) 2624373, 2624379-80 Fax No. : (0177) 2622271 E-mail : nabardsm@dataone.in shimla@nabard.org. JAMMU & KASHMIR B-II, South Block Bahu Plaza Complex, P.B. No. 2 Jammu - 180 012 Tel No. : (0191) 2472355, 2472620 Fax No. : (0191) 2472337 E mail : jammu@nabard.org

ORISSA 'Ankur', 2/1, Nayapalli Civic Centre Bhubaneswar - 751 015 Tel No. : (0674) 2553884 Fax No. : (0674) 2552019 E mail : nabbhu@sancharnet.in bhubaneswar@nabard.org

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 : Pat_nab@dataone.in patna@nabard.org CHHATTISGARH Pithalia Complex, K.K. Road Fafadih, Raipur - 492 009 Tel No. : (0771) 2888499 Fax No. : (0771) 2884992 E mail : raipur@nabard.org nab_rpr@dataone.in

MANIPUR Leiren Manson Opposite Supermarket Lamphelpat, Manipur - 795 004 Tel No. : (0385) 2410706, 2416192 Fax No. : (0385) 2416191 E-mail : imphal@nabard.org

PUNJAB Plot No.3, Sector 34-A Post Box No. 7 Chandigarh - 160 022 Tel No. : (0172) 5046700, 5046701 Fax No. : (0172) 5046702 E mail : chandigarh@nabard.org

JHARKHAND Opp. Adivasi College Hostel Karamtoli Road Ranchi - 834 001 Tel No. : (0651) 2361107 Fax No. : (0651) 2361108 E-mail : nabardjh@dataone.in

MEGHALAYA 'U' Pheit Kharmihpen Building Plot No.28(2), Dhankheti 2nd & 3rd Floor Shillong - 793 003 Tel No. : (0364) 2221602, 2503499 2501518 Fax No. : (0364) 2227463 E mail : shillong@nabard.org

RAJASTHAN 3, Nehru Place Tonk Road Post Bag No. 104 Jaipur - 302 015 Tel No. : (0141) 2740821 Fax No. : (0141) 2742161 E mail : Jaipur@nabard.org

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SIKK IM Om Nivas, Church Road Post Box No. 46 Gangtok - 737 101 Tel No. : (03592) 203015, 204173 Fax No. : (03592) 204062 E mail : nabard_gtk@dataone.in gangtok@nabard.org TAMIL NADU 48, Mahatma Gandhi Road Post Box No.6074 Nungambakkam Chennai - 600 034 Tel No. : (044) 28276088, 2830444 Fax No. : (044) 28275732 E mail : nabchn@dataone.in chennai@nabard.org

TRIPURA Palace Compound (East) Uzirbari Road, Post Box No.9 Agartala - 799 001 Tel No. : (0381) 2302378, 2229644 2229633 Fax No. : (0381) 2224125 E mail : agartala@nabard.org UTTARAKHAND 113/2, Hotel Sunrise Building 2nd & 3rd Floor Post Bag No.139 Rajpur Road, Dehradun - 248 001 Tel No. : (0135) 2748611 Fax No. : (0135) 2748610 E mail : dehradun@nabard.org

UTTAR PRADESH 11, Vipin Khand Gomti Nagar Lucknow - 226 010 Tel No. : (0522) 2304530 Fax No. : (0522) 2304531 E mail : lucknow@nabard.org

WEST BENGAL Abhilasha, 2nd floor 6, Royd Street, Post Box No.9083 Kolkata - 700 016 Tel No. : (033) 22552102, 22267943 Fax No. : (033) 22494507 E-mail : nabardkol@dataone.in kolkata@nabard.org

SUB-OFFICE/CELL
SRINAGAR CELL Opp. Gate No. 1 Amar Singh College Gogji Bagh Srinagar - 190 008 Tel No. : (0194) 2310280 Fax No. : (0194) 2310479

TRAINING ESTABLISHMENTS
BOLPUR Bolpur Lodge Regional Training College Bolpur 731 204 Birbhum (West Bengal) Tel No. : (03463) 252812, 254065 Fax No.: (03463) 252295 E-mail : ksh_nabbol@sancharnet.in ksh_nabprbol@sancharnet.in HYDERABAD Zonal Training Centre 10-1-128/4 NABARD Officer's Quarters Masab Tank Hyderabad - 500 028 (A.P.) Tel No. : (040) 23375006 Fax No.: (040) 23375007 E mail : nabard7_hyd@dataone.in LUCKNOW National Bank Staff College Sector 'H', LDA Colony Kanpur Road Lucknow - 226 012 Tel No. : (0522) 2421072 Fax No.: (0522) 2421035 E mail : nbsc@sancharnet.in LUCKNOW Banker's Institute of Rural Development Section 'H', L.D.A. Colony Kanpur Road Lucknow - 226 012 Tel No. : (0522) 2421187, 2421137 2421055 Fax No.: (0522) 2421176, 2421047 E mail : bird@sancharnet.in bird@bsnl.in MANGALORE Regional Training College Manjusha Building Above Automatrix Showroom Post Box No. 1117, Bejai Mangalore - 575 004 Tel No. : (0824) 2225836, 2225844 Fax No.: (0824) 2225835 E mail : rtc.mangalore@nabard.org

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 : nbtc@sify.com

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LIST OF ABBREVIATIONS
AACS ACSTI/s ADWDR AIBP APEDA APMC ARF ATMA BAIF BLBC B.R. Act BIRD BRAMHA CAB CAGR CAS CAT CBP CDF CEO CISS CD CLA CRIDA CP CPIO CRR CSA CSO DAP DCCB DDM DRIP ERR FC FCI FIF FITF FIP FIPF FRP As Applicable to Co-operative Societies Agricultural Co-operative Staff Training Institute/s Agriculture Debt Waiver and Debt Relief Scheme Accelerated Irrigation Benefit Programme Agricultural and Processed Food Products Export Development Authority Agriculture Produce Marketing Committee Automatic Refinance Facility Agriculture Technology Management Agency Bharatiya Agro Industries Foundation Block Level Bankers Committee Banking Regulation Act Bankers Institute of Rural Development Business Revitalisation and Managing Human Aspirations College for Agriculture Banking Compount Annual Growth Rate Common Accounting System Capacity Building for Adoption of Technology Capacity Building Phase Co-operative Development Fund Chief Executive Officer Capital Investment Subsidy Scheme Certificate of Deposits Central Loan Assistance Central Research Institute for Dryland Agriculture Commercial Paper Central Principal Information Officer Cash Reserve Ratio Co-operative Societies Act Central Statistical Organisation Development Action Plan District Central Co-operative Bank District Development Manager District Rural Industries Project Economic Rate of Return Farmers Club Food Corporation of India Financial Inclusion Fund Financial Inclusion Technology Fund Full Implementation Phase Farm Innovation and Promotion Fund Fair and Remunerative Price MoFPI MoRD MFI MI MIS MITTRA MoA MEPA mF MFDEF ha. HRD HO HWG ICAR IDP IGWDP ILR IMF IRV IT JLG JLTC KCC KfW KVK LPA LT LTCCS MEDP FRR FTTF GCF GCFA GDCF GDI GDP GFCE GFCF GLC GoI GTZ Financial Rate of Return Farmers Technology Transfer Fund Gross Capital Formation Gross Capital Formation in Agriculture Gross Domestic Capital Formation Gross Domestic Investment Gross Domestic Product Gross Fixed Consumption Expenditure Gross Fixed Capital Formation Ground Level Credit Government of India Deutsche Gesellschaft fur Technische Zusammenarbeit Hectare Human Resource Development Head Office Handloom Weavers Group Indian Council of Agricultural Research Integrated Development Plan Indo-German Watershed Development Programme Internal Lendable Resources International Monetary Federation Individual Rural Volunteer Information Technology Joint Liability Group Junior Level Training Centre Kisan Credit Card Kreditanstalt fur Wiederaufbau (German Development Bank) Krishi Vigyan Kendra Long Period Average Long-term Long-Term Co-operative Credit Structure Micro-Enterprise Development Programme Micro-Enterprise Promotion Agency Micro-Finance Micro-Finance Development and Equity Fund Micro-Finance Institution Minor Irrigation Management Information System Maharashtra Institute of Technology Transfer for Rural Areas Ministry of Agriculture/Memorandum of Agreement Ministry of Food Processing Industries Ministry of Rural Development

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MoU MSP MSME MT NABARD Nabcons NAIS NBSC NBTC NER NFSM NGO NHM NIMC NPA NPK NRC (LTO) NREGS NRRDA NSSO ODI OSAO p.a. PACS PCARDB PDS PFCE PLP PLI PLR PPID PRI PUCB PWCS R&D RBI REDP RFA RFI RIDF RNFS

Memorandum of Understanding Minimum Support Price Micro Small and Medium Enterprises Medium-term/Metric Tonne National Bank for Agriculture and Rural Development NABARD Consultancy Services National Agricultural Insurance Scheme National Bank Staff College National Bank Training Centre North-Eastern Region National Food Security Mission Non-Governmental Organisation National Horticulture Mission National Implementing and Monitoring Committee Non-Performing Asset Nitrogen Phosphorous Potash National Rural Credit (Long-Term Operations) National Rural Employment Guarantee Scheme National Rural Roads Development Agency National Sample Survey Organisation Organisation Development Intervention Other than Seasonal Agricultural Operations per annum Primary Agriculture Credit Society Primary Co-operative Agriculture and Rural Development Bank Public Distribution System Private Final Consumption Expenditure Potential Linked Credit Plan Primary Lending Institution Prime Lending Rate Pilot Project for Integrated Development Panchayati Raj Institution Primary Urban Co-operative Bank Primary Weavers Co-operative Society Research and Development Reserve Bank of India Rural Entrepreneurship Development Programme Revolving Fund Assistance Rural Financial Institution Rural Infrastructure Development Fund Rural Non-Farm Sector

RO RIF RPF RRB RSVY RTC RUDSETI SAA SAMIS SAO SC/ST SCARDB SCB SCC SDC SDP SEWA SF/MF SFP SGSY SHG SHPI SLBC SLR SME SMP SO SSI ST STCCS TDF TE TFO TOR TOT TPDS UT VDP VWC WBCIS WDC WDF WPI WTO WUA

Regional Office Rural Innovation Fund Rural Promotion Fund Regional Rural Bank Rashtriya Sam Vikas Yojana Regional Training Centre Rural Development and Self-Employment Training Institute Service Area Approach Service Area Monitoring and Information System Seasonal Agricultural Operations Scheduled Caste/Scheduled Tribe State Co-operative Agriculture and Rural Development Bank State Co-operative Bank Swarozgar Credit Card Swiss Agency for Development and Cooperation Skill Development Programme Self-Employed Womens Association Small Farmers/Marginal Farmers State Focus Paper Swarnjayanti Gram Swarozgar Yojana Self-Help Group Self-Help Promoting Institution State Level Bankers Committee Statutory Liquidity Ratio Small and Medium Entreprise Statutory Minimum Price Sub-office Small Scale Industry Short-term Short-Term Co-operative Credit Structure Tribal Development Fund Training Establishment Total Financial Outlay Terms of Reference Training of Trainers Targeted Public Distribution System Union Territory Village Development Programme Village Watershed Committee Weather Based Crop Insurance Scheme Women Development Cell Watershed Development Fund Wholesale Price Index World Trade Organisation Water Users Association

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