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 CHAPTER-V

DEVELOPMENTAL ROLE OF NABARD

Besides the various roles played by the NABARD, as

enumerated in the earlier chapters, this bank also plays developmental

role in the progress of rural economy of the country. This role has been

adumbrated in the present chapter

Rural Infrastructure Development Fund (RIDF)

Origin of RIDF

First we discuss here the origin of RIDF and evaluation of its

performance. In respect of NABARD the basic concept was thought

under the 8th Five Year Plan. In this plan the development of rural

infrastructure was limited due to the lack of resources. State

governments in an attempt to develop and maintain rural infrastructure

had been facing the severe resource crunch. Apart from this, the

commercial banks which were to channelise at least 18 per cent of their

total lending to agriculture were unable to fulfil their commitment. In

this background, the Government of India announced in the budget of

1995-96 the setting up of a Rural Infrastructure Development Fund

(RIDF) within the NABARD for financing of ongoing rural

infrastructure projects.

The fund was to receive contribution from scheduled

commercial banks excluding foreign banks operating in India to the

extent of shortfall in agricultural lending in the priority sector target

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subject to a maximum of 1.5 per cent of the net bank credit. NABARD

is to place demand on the banks on a pro-rata basis from time to time

depending on the anticipated disbursement for financing approved

projects. Since then the scheme has been continued with the

announcements in the successive Union Budgets. Till the financial year

April 2000, there have been six tranches of the fund with enhanced

contributions.

The first RIDF was set up in 1995-96 with the NABARD for

the financing of rural infrastructure projects to be implemented at the

ground level through institutions like Panchayati Raj Institutions, Self

Help Groups and Non Government Organisations. The Government of

India through RIDF has a major policy change during the year

1999-2000. Till now only state governments were implementing this

project of credit.

Terms and Conditions

The major terms and conditions regarding RIDF were settled.

After setting of projects through PRIs, SHGs, NGOs and the state

governments, the major terms and conditions regarding RIDF were

described in the following way:

Projects to be implemented by State Governments

The loan under this project sanctioned and provided to the state

governments continued to be secured by means of irrevocable letter of

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authority (mandate) secured by a state government in favour of the

Reserve Bank of India (RBI) authorising the latter to deposit their

account with RBI and pass on the proceeds to the National Bank, in

case of default.

Project to be implemented by PRIs, SHGs and NGOs

These institutions have also the same terms and conditions

applicable as state government departments. The security norms for

loans in respect of projects to be implemented are as under :

1. Usual mandate to be executed by a state government, if the

state government agrees to borrow on behalf of the PRIs, SHGs

and NGOs.

2. Guarantee against defaults by the state government

accompanied by a mandate, if the borrower is the PRIs, SGHs

and NGO, subjected to enabling provisions in the relevant Act,

Rules and Bye Laws of the borrowing institution.

3. Charges on the assets and income of the borrowing institution,

subject to enabling provision in case the National Bank is

satisfied as to the adequacy of the income likely to be

generated and also of the financial, managerial and

organisational soundness of the institution.

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4. The National Bank had also agreed to constitute State/District

Level Sanctioning Committees depending upon the flow of

proposals from PRIs/SHGs/NGOs to expedite the sanctioning

process.

Eligible Purposes of Loans

The National Bank has set up RIDF in 1995-1996 with eligible

purposes of loan. RIDF-I to RIDF-VI were started from time to time.

The major contribution was in rural roads and bridges for improving

connectivity which accounted for 52 per cent share of total amount and

followed by 42.7 per cent on irrigation and the rest 5.3 per cent covered

soil conservation, water seed development, drainage improvement,

rural market yards, forest management, rubber plantation, public health,

flood protection, primary school and rural drinking water. Village

hacets, godowns and seed farms.

The eligible projects are implemented by state governments

through proposals received and appraised for technical feasibility and

financing viability and found fit by the ROS. After that reports

scrutinised are sanctioned by a project sanctioning committee which is

a sub-committee of the Board of Directors of NABARD. The progress

of RIDF in completion of projects as on March 31, 2000 is shown in

the following table:

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Table 5.1
Cumulative Sanctioned and Disbursements under Different tranches
with rate of interest of RIDF (As on 31st March 2000)

RIDF Corpus No. of Amount Amount Amount Per cent of

Tranch (Rs.in Projects sanctioned Phased disbursed disbursement
crores) upto upto 31 Sanction Phasing
31 March March 2000 CoU CoIj6
2000 ------- x 100 ------- x 100
CoU CoU

1 2 3 4 5 6 7 8

RIDF-I 2000 4167 1891.71 1891.71 1691.47 89.4 89.4

(13.58) (18.50) (27.85)
RIDF-II 2500 8189 2601.03 2601.03 1876.91 72.2 72.2
(18.67) (25.44) (30.90)
RIDF-III 2500 14395 2671.28 2671.28 1412.48 52.9 52.9
(19.17) (26.12) (23.25)
RIDF-IV 3000 6294 3118.29 2162.44 675.55 21.7 31.2
(22.38) (21.15) (11.12)
RIDF-V 3500 118192* 3650.77 898.91 418.03 115 46.5
(26.20) (8.79) (6.88)

13500 151237 13933.08 10225.37 6074.44 43.6 59.4

(100) (100) (100)

* included one lakh shallow tubewells in Assam

excluding schemes withdrawn
Sources: Annual Reports of NABARD, 1999-2000.

In Table 5.1, total corpus amounted for Rs.13500 crores and

total number of projects was 151237. The amount sanctioned upto 31st

March 2000 was Rs. 13933.08 crores. The amount sanctioned in

RIDF-I was 13.58 per cent of total amount which slowly increased upto

26.20 of last RIDF-V. In column 5, the total amount phased upto 31st

March 2000 was 10225.37 crores. The tranch-wise percentage was

18.50 in RIDF-I and increased in next to 25.44 and 26.12 and again

decreased to 21.15 and 8.79 in IV and V RIDF. In column No.6 amount

sanctioned upto 31st March 2000 indicates a distinct figure which has
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fluctuated very sharply. The rate of interest is almost same in all

tranches from I to IV only marginally less in RIDF-V project that was

accordingly to performance and purposewise. The progress is shown in

the following table:

Table 5.2
Purposewise Projects Sanctioned Under RIDF

Purpose RIDF hags RIDF hags RIDF RIDF %age RIDF hags Total hags
I Shan II Shan III Shan IV Share V Shan Shan
Irrigation
No. 4076 97.8 3893 473 8868 61.6 439 73 101751 86.1 119027 782
Amount 1777.06 93.9 123432 473 94035 353 925 29.7 107721 293 595434 42.7
Rural Bridge*
No. 17 0.4 386 4.7 1390 9.7 759 12.1 799 0.7 3351 22
Amount 24.82 13 369.88 14.1 385.09 14.4 548.84 173 575.81 15.7 1904.44 13.7
Rural Rond*
No. 19 03 3874 47.4 4030 283 4811 76.4 11715 9.9 24449 162
Amount 339 03 88833 343 120331 45.1 1443.11 462 179135 49.1 5329.89 383
Other*
No. 55 13 36 0.4 107 0.7 285 43 3927 33 4410 2.9
Amount 86.44 43 108.60 43 141.83 53 20134 63 20630 5.7 744.71 53
Trading
No. 4167 10 8189 100 14395 100 6294 100 118192 100 151237 100
Amount 1891.71 100 2601.03 100 267138 100 311829 100 3650.77 100 13933.08 100

Sources; Annual Reports of NABARD.

Other purposes include watershed management, flood

protection, rural market yards, CADA drainage, cold storage, fisheries,

forest development, interval water ways and primary school, rubber

plantation, public health, farms and rural drinking water.

Purposewise classification of projects indicates that the share of

irrigation in percentage terms is 42.7. Bridges and roads also have a

major share of 52 per cent. Other purposes form only 5.3 per cent of

total disbursement. The RIDF process ongoing/new projects were

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continuous and selected projected performance exhorted appraised by

appraisal mission constituted for the purpose of the monitoring through

high power committee and regular field visit by NABARD.

Table 5.3
RIDF Achievement as on 31 March 2000

RIDF-I RIDF-n JUDF-m RIDF-IV RJDF-V Total

Corpus (Rs.Gr.) 2000 2500 2500 3000 3500 13500

States (No.) 20 16 18 22 23 99

Sanction (Rs.Gr.) 1891.71 2601.03 2671.28 3118.29 3650.77 13933.08

Disbursement (Rs.Gr.) 1691.47 1876.91 1412.48 675.55 418.03 6074.44

Districts (No.) 377 348 427 388 1540

No. of Projects 4167 8189 14395 6924 118192 151237

Projects Completed 3729 4724 3888 777 30000 43118

Note: RIDF-VI with corpus of Rs.4500 crore has been announced in die Union Budget 2000-2001. Sanctions
and Disbursements amounted to Rs.459.81 crore and Rs.28.55 crore respectively as on 09 June 2000.
Source: Annual Report of NABARD, 2000.

Table 5.3 brings out vividly the achievement of all types of

RIDF. As stated earlier one of the basic objectives of NABARD has

been to assist the state governments in the completion of incomplete

projects and other new projects. This statistics is provided in the

following table.

The NABARDs objectives to assist state governments in

completion of incomplete and new infrastructure projects is shown in

the following table.

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Table 5.4

R1DF-I JUDF-n MJDF-m RIDF-IV RIDF-V Total

Irrigation 2.08 0.63 0.79 0.56 1.01 5.07

(Million ha.)
Rural Roads Length 96 16652 18504 19730 20129 75111
(Kilometres)
Rural Bridges
1. Number 17 386 1390 759 799 3351
2. Length (Meters) 24594 36021 41112 42147 143874
Value of Production 2597 931 748 693 1213 6182
(Rs.Grore)
Recurring Employment* 158.83 52.97 38.20 5635 343.70 650.05
(Million mandays)
Jobs Anticipated* 6.62 2.21 1.59 2.35 1432 27.09
(Numbers in Lakhs)

* Estimated
Sources: Annual Reports of NABARD.

Also, studies on the RIDFs role in poverty reduction in rural

areas have shown that facilities like irrigation, roads, markets, etc.
contribute towards poverty reduction. The direct effect of infrastructure

via technological improvement on poverty reduction relates to increase

in the demand for labour and thus wage rates. The increase in
productive capacity of labour reduces indirectly the incidence of
poverty. Such indirect effects are often large as they work through
chain of effects such as health effect, calorie effect and income effect.

The effect of irrigation on poverty reduction through growth

linkages of farm and non-farm sector is well documented. Recent
studies have, however, shown that the production impact of rural
infrastructure is significantly higher in rainfed areas than those in
irrigated areas as most of the rural poor live in such resource-poor
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areas. It is evident that increased investment in rural infrastructure may

help in achieving the goals of growth and poverty reduction in rural

areas.

The Shortcoming of RIDF

The National Bank objects were not achieved the progress as

per the target of several factors. In RIDF working system, delay in
obtaining necessary clearance from appropriate authorities such as
CWC, Ministry of Forest and Environment, the lack of coordination
among implementing departments are the major reasons for its slow
growth. Projects are not properly implemented due to lack of budget
provisions on account of political reasons. The above facts prove that
RIDF has primarily facilitated resources of the state government for
investment in rural infrastructure project including projects that
remained incomplete for want of resources. Therefore, through this
project there has been an accelerated creation of employment
opportunity and production base in the rural areas.

Supervision of Banks

The NABARD has been supervising functioning of and

statutory responsibility of conducting inspections of State Cooperative
Banks, District Central Co-operative Banks and Regional Rural Banks
under the provision of the Banking Regulation Act, 1949. The sizeable
expansion of business coupled with growing network of branches of
RRB and co-operative cells for greater supervision and closer watch
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over the operation of the banks. Some of the areas of concern are the
rising cost of management and operations often affecting financial
viability, lacunae in the system of internal checks and controls resulting
in inadequacy in the maintenance of books of accounts and records and
other operational deficiencies. There have also been important
development such as introduction of prudential norms, deregulation of
interest rates of co-operative banks and RRBs and opening up of more
avenues for investment of their surplus funds. These have necessitated

a review of the existing inspection strategies:

The National Bank has tried to sharpen the focus of inspection

by adopting CAMELSC approach. An expert committee headed by Sh.
U.K. Sharma, ED (Retd.) RBI was constituted by the National Bank
and its recommendations have been accepted by NABARD. Some of
the recommendations which were already in vogue are being
continuously monitored by introducing off-site surveillance system,
supplementary appraisals to complement the on-site inspections have
been introduced and board of supervision (for SCBs, DCCBs and
RRBs) in the National Bank has been set up. The recommendations
with regard to extending capital adequacy norms to Cooperative Banks
and RRBs are being examined in consultation with the Reserve Bank of
India. Regarding recommendation in respect of constituting State Level
Audit Committees for improving the quality and content of audit, the
National Bank is pursuing the matter with the state governments.
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Necessary emphasis is laid on the timely and adequate compliance of

the inspection findings by the institutions concerned to further make the

system of supervision meaningful and effective. Whenever compliance

of inspection findings is inadequate, discussions are held with the Chief

Executives of the banks concerned and of necessary guidance is

provided for finalising action plans to redress deficiencies within a time

frame. NABARD has supervisory functions also which are shown in

the following table:

SUPERVISORY FUNCTION

SUPERVISION
I

Inspection of Statutoty functions Other functions

Banks

On-site* inspection on * Recommendation for issue of * Implementing the decisions of die

a periodical basis (once bank/branch licence. Board of Supervision (BOS) - a
in two or three years) * Recommendation for inclusion of banks committee of the Board of Directors of
in Second Schedule to RBI Act, 1934. NABARD.
Recommendation for exemption from * Capacity building of inspecting officers
application of Section 11(1) of B.R. through review meets / workshops,
Act, 1949 (As applicable to Cooperative sensitisation and exposure programmes.
Societies) for cooperative banks. * Monitoring the Action Flans for the
* Monitoring of compliance with relevant banks not complying with the
provisions of B.R. Act 1949 and RBI provisions of Section 11 (1) of B.R.
Act, 1934 by banks. Act, 1949.
*
Follow-up action on Inspection reports * Providing policy guidance to the banks
including evaluation of quality of on supervisory related matters.
compliance - internalisation of findings. * Bringing out awareness / literature /
*
Recommendations to RBI for opening manual / guidelines for the banks.
of currency chests. * Audit classification of banks.
Recommendation to RBI for
authorisation for opening and operating
NRI accounts.
Monitoring - review of frauds in
cooperative banks/RRBs
+ Providing guidelines for strengthening
tire internal control systems and
procedures in banks
Monitoring of complaints against
banks/bank staff.
*
Liasioning with RBI/GOI/ State
Government

@ - Statutory inspection in respect of SCBs, CCBs and RRBs

- Voluntary inspection in respect of SCARDBs, PCARDBs and Apex Non-Credit Societies
Sources : Rural Credit and NABARD : March 2000, p.35.
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The chart shows the different kinds of functioning of

NABARD. The objective of inspection is the maintenance of a sound

banking system in the country in conformity with the banking laws and

regulations. Most of the recommendations have been accepted and

implemented for meaningful and effective control. Necessary emphasis

is laid on the timely and adequate compliance of the inspection finding

by the institution concerned.

Board of Supervision

The first meeting of Board of Supervision was held on 21st

March 2000 to consider the recommendations of the expert committee.

The Board of Supervision was set up in November, 1959. The main

objective of the Board of Supervision is to give directions and guidance

in respect of policies and on matter relating to supervision and

inspection, review the inspection, funding of banks and suggest

appropriate measures, identifying the emerging issues in the

functioning of co-operative banks and RRBs, suggest measures for

strengthening the supervisory system in the National Bank.

The Board gives special focus to review the working of Banks

under the NABARDs supervisory jurisdiction, especially those whose

owned funds have been eroded owing to high level of accumulated

losses, provisions for NPAs and also focuses the co-operative structure

of individual states and their problems and taking up the matter with
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the state government concerned.

Inspection of Banks

The NABARD has been inspecting the concerned banks and

institutions since 1982-83. The process of inspection continues year to

year. The details of inspection of Banks by NABARD is shown in the

following table.

Table 5.6
Inspection of Banks by NABARD

Year No. ofBanks Banks/Institutions No. of Total

under purview SCBs CCBs SLDBs RRBs Others Banks No. ofBanks
by Inspection Pro inspected
by NABARD grammed
1982-83 NA 4 131 1 29 7 NA 172
1983-84 NA 12 143 8 57 7 NA 227
1984-85 NA 21 197 10 78 9 NA 315
1985-86 NA 9 180 12 104 12 NA 317
1986-87 NA 18 178 7 86 12 320 301
1987-88 617 11 176 12 102 9 324 310
1988-89 623 13 130 5 71 9 252 228
1989-90 623 13 167 7 76 10 353 273
1990-91 621 NA NA 9 NA NA 329 304
1991-92 NA NA NA NA NA NA 227 227
1992-93 NA 9 128 10 77 7 NA 231
1994 NA 7 191 7 80 NA NA 285
1995 NA 9 171 9 91 12 NA 274
1996 NA 7 181 15 95 4 NA 302
1997 NA 12 175 12 96 12 NA 311
1998 NA 16 186 6 93 1 NA 302
1999 NA 11 174 13 102 8 NA 198
2000 NA 14 175 14 90 2 NA 285
Total 186 2683 157 1327 121 4862
NA. - Not available
Sources; Annual Reports of NABARD.

The year-wise report on the banks/institution shows concern for

rectification of the deficiencies and also revealed that the financial and

systemic weaknesses continued to exist in their functioning. The main

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causes of weaknesses in these banks are related to high level of loan

delinquencies, lack of operational flexibility and autonomy and
non-viability. The overall weakness in financial health, specially in
co-operative banks, may be attributed to the poor resources base, high
transaction cost coupled with low margins, improper evaluation,
stagnant resource base, inefficient loan supervision, mounting overdue,
lack of proper check and controls, inefficient management, politicising
and red tappism in bureaucracy. Although the RADs financial position
ability has improved due to recapitalisation by Govt, of India. Now,
through inspection, banks have been given some better result in their
performance.

Vikas Volunteer Vahini (VVV) Programme

Vikas Volunteer Vahini Programme commonly known as VW

programme has been initiated by NABARD as a part of its Institutional
Development Function. Banks and NGOs were motivated and
encouraged to launch this grass root level information forum popularly
known as VW Programme.

VW Programme was launched on a pilot basis in 6 districts of

^tes in 1983 with the following aims and objectives.

To inculcate change in rural borrowers attitude and behaviour

|| institutional credit and proliferating the five principles of

pent through credit which are:

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(i) Qedit must be used in accordance with the most suitable

method of science and technology.

(ii) Full respect of terms and conditions of credit and

techno-economic norms.

(iii) Increase in productivity and income by working with

skill.

(iv) Saving a part of additional income earned by credit.

(v) Timely and regular repayment of loan instalments so as

to recycle credit.

(b) A VW Farmers club shall consist of farmers who have

practised successfully, the above five principles of development
through credit and who have volunteered to disseminate these
principles amongst the other rural people, besides the other villagers
possessing technical knowledge. The local bankers, government
officials and NGO representatives are special invitees to the club
meeting.

(c) Club members choose amongst themselves the chief volunteer

who shall work as a link between villagers and bank/govemment
officials in the area of club jurisdiction.

(d) Ensuring quality of lending by propagating the principles of

development through credit.

(e) Inculcating repayment ethics

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(f) Village Development Promotion by way of participation of

banks and rural borrowers.

Club activities of VW programme shall comprise of

preparation of feasible village development plan, preparing and

motivating beneficiaries to take up various development activities

through bank loans, motivating borrowers for prompt repayment,

arranging of demonstrations of new technologies and extension

activities and identification of non credit related problems and taking
suitable action with concerned authorities.

NABARD supports VW club by way of grant towards

maintenance expenses to bank/voluntary agency sponsoring the farmers

club, conducting seminars for exchange of experiences at district/state
level and conducting club level training programmes via meet and

match workshop, one club - one NFS, womans development and

livelihood programme.

Present Position VW Farmers Club

On March 31, 2000 there were 4354 clubs spread over 385
districts covering 22 states and two union territories all over die
country. Out of these 4354 farmers club 333 are being jointly

maintained by banks and VAS/NGOs including Agriculture

Universities and Krishi Vigyan Kendras.
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Satellite Clubs

Apart from usual VW farmers clubs, there emerged a need for

setting up of need based specific VW clubs. Resultantly women
clubs, artisan clubs, small farmers clubs, weaker sections clubs
were launched during the year 1996-97 to suit the requirements of sub
groups of the community and to cater to their specific problems. The
satellite clubs are to be set up under a federal club within the service
area of bank branch. Satellite clubs are to be formed in cluster of 3 to 5
Commercial Bank branches and 6 to 10 RRB branches to ensure
effective monitoring. There were 147 satellite clubs as on 31st March
1999 covering 9 states.

Role of DDM/DDOs

DDM/DDOs help the banks in running the day to day activities

of VW clubs on desired lines and provide guidance in identifying
potential for income and employment generating activities. They help
banks in conducting various training programmes at club level and
collect success stories and circulate to other VW clubs within district
and other clubs. They motivate banks and NGOs for formation of new
farmers clubs and satellite clubs.

There is a target to increase the number of VW clubs to

10,000 by 31.3.2005. Dormant clubs would be revived and cross
country study visits shall be undertaken by VW clubs volunteers and
thereby increasing on-site exposure. VW clubs are finally designed to
 199

be SHPI groups.

Promotional Programmes of NABARD for Rural Non-Farm

Sector

NABARD has identified Financing of Rural Non-Farm Sector

(RNFS) as one of the thrust areas because RNFS bears great potential
for creating employment opportunities for the rural work force which is
growing at the rate of 2.5 per cent per annum. RNFs is supported by
many promotional programmes.

The objective of promotional programmes for RNFS is to

generate and enhance opportunities for livelihood both in terms of
income and employment in rural areas in a sustainable, demonstrative
and cost effective manner.

NFS promotional programmes are eligible for assistance

provided the following conditions are satisfied.

1. Facilitate establishment or modernisation of rural non-farm

enterprises through promotional and marketing support, supply
of market information technology transfer supply of raw
materials, training and extension and other similar services
with assured linkage to credit or prospect thereof.

2. Create sustainable employment opportunity in rural areas in a

cost effective manner.

3. Improve or facilitate efficient credit delivery.

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Promotional schemes of NABARD can be classified into

following broad categories.

(i) Promotional scheme for strengthening credit innovation.

(ii) Promotional scheme for developing entrepreneurs.
(iii) Promotional scheme for supporting promotional organisations.
(iv) Area programmes

(i) Promotional Scheme for Strengthening Credit Innovation

NABARD gives training to officers of Primary Lending

Institutions (PH) in its own training institutes and other institutions
funded by it. NABARD also gives assistance to NGOs for training,
holding workshops, seminars etc. to further the linkage programme.
NABARD gives refinance support to Commercial Banks, Regional
Rural Banks and Cooperative Banks which in turn give bulk loans to
NGOs. NGOs provide easy access and timely credit to the poor who are
still not reached by banking system. This reduces cost of transaction
and improves credit dispensation system.

NABARD establishes Technical Monitoring and Evaluation

Cells in RRBs, SLDBs, and SCBs to enable these banks to have their
own professionally qualified staff for carrying out project appraisal,
monitoring and evaluation of NFS activities. NABARD provides
assistance by way of grant for a period of 5 years towards salary of key
personnel of the cell and upto 10 per cent of this towards salaries of
supporting staff.
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NABARD focuses greater attention on economic development

of rural women and also to improve the flow of credit to women by
establishment of women development cells through SCBs, RRBs, SLBs
and DCCBs. NABARD gives 50 per cent of pay and allowances of one
or more lady officers posted to the cell subject to maximum of
Rs.75,000 per cell per annum.

(ii) Promotional Scheme for Development of Entrepreneurs

NABARD establishes Training cum Production Centres (TPCs)

for imparting skills and technology to the rural artisans and
entrepreneurs for self employment with a comprehensive support
programme covering raw material supply, common facilities, quality
control and marketing under common brand name. This is done
through voluntary agencies, promotional agencies, government
corporations and joint sector companies with good track record.
NABARD gives financial assistance by way of grant cum revolving
fund assistance for capital items like workshed, raw material depot,
sales outlets, plant and machinery equipment and tools, transport
vehicle etc. Grant may also cover training expenses of one or two
professionals for managing the TPC and deficit in cash flow
projections.

NABARD has long term plan to switch over to the incentive

based Rural Entrepreneurship Development Programme (REDPs) in all
states. The incentive is proposed to be linked to the quantum of loan
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sanctioned by the commercial banks to the trained entrepreneur. By the

end of March 99, NABARD has sanctioned 1364 REDPs to 246
agencies in twenty states with a total grant assistance of Rs. 534 lakhs.
The average success rate of programme is 50 per cent. The quantum of
incentive is as below:

Table 5.7

Sr. Amount of loam Incentive per Maximum incentive (25 participants

No. sanctioned by bank participants (RsJ assumed to be trained (RsJ
for unitfRsJ

1 Upto Rs.25,000 2000 50,00

2 Rs.25001 to Ra.2,00,000 2500 62,500
3 Above Rs.2 lakh 3000 75,000

Incentive @ Rs.500 per unit can be given to self-financed units with a minimum investment of Rsl0,000/- in plant and
machinery by the trained entrepreneur. The implementing agency has to conduct dm REDP in conformity with our
policy and approach, document die experience and submit periodical progress report to NABARD.
(Source: Circular No. NBDPO NFS/1905/REDP/720/99-2000 dated 17 January 2000)

NABARD seeks to achieve upgradation and refinement of

technical skill of Master Craftsmen (trainers) and rural entrepreneurs
(by Master Craftsmen) by way of training of and by Master Craftsman.
Assistance is provided for expenses towards machinery, tools,
equipments, honorarium for master craftsmen, stipend for trainees etc.
through voluntary agencies and government promotional organisations
etc.

NABARD provides special training to rural entrepreneurs to

improve their production efficiency and linking them to
procurement/marketing agencies. NGOs and governments promotional
organisations provide market oriented training for rural artisans.
Assistance is provided for tools and equipments, stipend to trainees,
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other training costs and costs of creating common facilities.

(iii) Promotional Scheme for Supporting Promotional Organisation

NABARD aims at establishing Artisan Guilds by way of

collaboration among a cluster of producers so as to enhance their
bargaining power through collective action in purchase of raw
materials, processing, sales of goods and sharing of technology etc.
These Guilds could be promoted by reputed voluntary organisations,
promotional bodies or directly by artisans themselves coming together.
Financial assistance from NABARD is provided by way of Grant
towards cost of conduct of household survey, common facilities,
workshed and godown and working capital for one cycle.

NABARD provides training to representatives of voluntary

agencies to enable them to take up motivational and skill upgradation
programmes.

Meets of representatives, NGOs, Banks, DIC and other

development agencies is organised to familiarise them with credit and
promotional schemes of NABARD.

NABARD seeks promotion of non-farm enterprises for

creating sustainable employment opportunities in rural areas in cost
effective manner through voluntary agencies with proven track record.
The project concept, methodology and operational details are left
mainly to be framed by the concerned agency. The programme should
lead to credit flow to enterprises through banks under refinance support
 204

from NABARD. Financial assistance is in form of refinance for the

credit support and grant which will be in relation to number of
employment generated and grant covers salaries of professionals.

NABARD aims at encouraging manufacturing and processing

units, industries, export houses, marketing organisations of NGOs and
Public undertakings etc. to ancillaries and sub contract their
requirement of production, component, sub assembly or supply orders
among tiny units located in rural areas by setting up of mother units. A
mother unit is an organisation which orients the production of several
decentralised units towards a common market through MTB approach
(Materials, technology and Brand) provided by mother unit. NABARD
provides grant on selective basis towards expenditure on training for
transfer of technology, know how, upgradation of skill etc., design
development, drawing and quality control, salary of one or two
professionals for organisation and supervision of satellite units for three
to five years, compensation for a limited period towards extra cost on
transportation of goods to and from satellite units situated in rural
areas.

NABARD aims at setting up of Common Service Centres

(CSGs) through voluntary agencies, NGOs, co-op. societies and other
promotional organisations to improve the competitiveness and
bargaining power of the cluster units through the establishment of a
support system that facilitates their operations on an economic scale
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besides orienting their production and productivity towards changing

market preferences. Common service centres shall provide common
facilities of machinery equipment for cutting, welding, polishing,
finishing etc.; suppl of quality raw material, spares, tools, appliances
etc.; quality control, packaging, labelling etc.; secretarial services,
including account maintenance common diesel generator set and
transportation services. Grants are provided towards preliminary
expenses, administrative expenses and expenses on design development
and quality control.

NABARD seeks to provide assistance to Rural Women in

Non-Farm Development (ARWIND) through reputed voluntary
agencies and NGOs with proven track record in the field of rural
employment generation. NABARD aims at organising rural women
into compact groups for training in entrepreneurship, skill upgradation
etc. and enabling them to set up own enterprises individually or in
groups with credit and linkages support from banks, voluntary agencies
and NGOs. Grant upto Rs. 10,000 per woman trainee for meeting
training expenses and for setting up mother unit/common service centre
on a selective basis is provided. Revolving fund assistance way also be
given if agency is finding it difficult to arrange bank credit.

(iv) Area Programme

NABARD seeks to generate sustainable income in a selected

block/area by financing self sustaining rural industrial activities with
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the intermediation of a Nodal Agency which co-ordinates the required

linkage and support services in a systematic and integrated manner

through Area Plan Industrialisation (APRI). For this purpose,

NABARD selects Nodal Agency in consultation with the banking

system and government agencies. Nodal Agency selects a block,

conducts survey to identify rural industrial activities, prepares action

plan for 5 years and allocates it among service area bank branches.

NABARD provides 100 per cent support to participating banks. Nodal

Agency is also eligible for bank loan for undertaking support activities

For setting up of common facility centre, cost of training, technology

transfer and skill upgradation, market research and development grant

is available to Nodal Agency.

NABARD has launched District Rural Industries Project

(DRIP) to generate sustainable employment opportunities through

co-ordinated effort in financing rural non-farm enterprises and creation

of related infrastructure and also enabling promotional agencies to take

up entrepreneurship development, technological upgradation,

marketing assistance, new material supply and other common services

for the purpose. NABARD provides 100 per cent refinance to financing

banks for these projects. Grant is available to NGOs and VAS for

promotional schemes under non-farm sector.