ROLE OF INSTITUTIONAL FINANCING IN RURAL DEVELOPMENT WITH

SPECIAL REFERENCE TO NABARD A CASE STUDY OF TELANGANA

REVIEW OF LITERATURE:

Dr. Twinkle Prusthi and Ashish 1 in the present study attempted to

evaluate the role of NABARD in reducing poverty in Uttar Pradesh. From the

discussions defined based on the research it is observed that NABARD is

performing outstandingly on form through farm and non-farm lending for

rural areas to improve individuals productivity and bring them out of

ferocious poverty cycle. The provision of financial loans from NABARD is not

only restricted to rural development programmes but also prescribed rules

and regulations from time to time to monitor and achieve the well defined

goals of the programme. By, the findings of the research levy a positive

impact and say that NABARD is playing a imperative role in transforming

the rural India.

Tajinder Kaur 2 explored the facts about the role of NABARD in developing

rural areas in India. From the research, it has been observed that NABARD

is working for the 360 degree development of rural India. Every Year the

financial assistance received by NABARD and the disbursement made out of

it are increasing. Shortly, it can be said that the NABARD is providing rural

INDIA all round assistance and proved to be an institution where Growth

with social justice exist.

1 Dr. Twinkle Prusthi and Ashish (2011), Role of NABARD in Poverty Alleviation: An
Empirical Study of UttarPradesh, International Journal of Multidisciplinary Research.
Vol: 1, Issue: 3, pp: 34-48.
2 Tajinder Kaur (2016), Role of NABARD in Rural Development, SOOPAN-II. Vol: 1, Issue:

1, pp: 49-59.
Dr. Anoop Kumar and Dr. Anupam 3 aimed to assess the working process

and improvement of NABARD with respect to the projects for developing

rural infrastructure. From the study and results, as a matter-of-fact

NABARD is functioning effectively in developing rural infrastructure by

playing a constructive role in ensuring the coordination between states and

financial institutions that are involved in rural development which is soft

and result oriented; the researchers opined that even though there is scope

for development of micro infrastructure in rural areas but there is no

existing mechanism for integrating development of intra-village

infrastructure.

B M Desai 4 opined that in India rural institutional finance is extended not

only to the agricultural production sub-system but also for agricultural

inputs sub-system and agricultural produce marketing and processing sub-

system. The researcher identified three main objectives for the system of

institutional financing for the agriculture and rural areas are (1) promoting

growth, (2) ensuring better quality, and (3) making financial operations

viable. Here, the researcher discussed the rationale for institutional finance,

its role and functions, and policy support required for undertaking its multi-

functional role effectively. The conclusion based on the findings narrates

that financial institutions including RBI and NABARD need to take action on

a priority basis to forge effective and efficient backward and forward linkages

of APS with AIS and AMPS by (a) altering the scope of direct as well as

3 Dr. Anoop Kumar Singh and Dr. Anupam Vidyarthi (2015), Role of NABARD in Rural
Infrastructure Development, IJARIIE, Vol: 1, Issue: 3, pp: 442-447.
4 B M Desai (1989), Objectives and Role of Institutional Finance for Agriculture and Rural

Development, VIKALPA, Vol: 14, No: 2, pp: 25-33.

indirect rural credit (b) promoting more flexible refinance and/or temporary

credit accommodation especially for working capital credit for the three sub-

systems.

M. Radhakrishna 5 in the present study aimed to portray the role of

microfinance institutions in developing the conditions of the rural people. In

South India the growth of microfinance institutions are high in comparison

with other parts in India. Depending on the review of the previous studies

the researcher preached that it is the responsibility of central government

and RBI in which they have to improve the occupation ratio of microfinance

institutions in all over India which results in the growth of rural people and

strengthen their economical status and improve their livelihood.

Veerpaul and Amritpal 6 had undertaken a study to identify the prototype

of regional distribution of institutional agricultural credit by commercial

banks and growth of agricultural. And here, this study tries to find how

commercial banks have been succeeded in reducing the regional gaps in the

supply of farm finance.

5 M. Radhakrishna (2012), Performance of Microfinance Institutions in India,

International Journal of Computer Science and Information Technology & Security, Vol: 2,
No: 4, pp: 806-814.
6 Veerpaul Kaur Maan and Amritpal Singh (2013), Role of NABARD and RBI in Agricultural

Sector Growth, International Journal of Emerging Research in Management &

Technology, Vol: 2, Issue: 3, pp: 39-44.
Satyasai and Badatya 7 analyzed the performance of Credit Cooperative

Institutions on the basis of borrowings and lending operations, cost

structure, financial viability, etc. and found that cooperative system in

general had failed to perform its functions properly. In this study, the

researchers recommended the cooperative institutions to diversify their

business and also to overcome internal (rising transaction cost, declining

business level, mismanagement of over-dues) and external (excessive

bureaucratization, politicization) weakness.

Karnati Lingaiah and C. Anjana Devi 8 expressed that agricultural credit

is one of the most crucial inputs in all agricultural development

programmes7. Institutional credit has been adopted to provide cheaper and

sufficient credit to farmers from 1950 onwards. The major policy in the

sphere of agricultural credit has been its progressive institutionalization for

supplying agriculture and rural development programmes with adequate

and timely flow of credit to assist weaker sections and under developed

areas- saying the functions of NABARD, they indicate that NABARD provides

short-term, medium term and long term and credit to State Cooperative

Banks, Regional Rural Banks, Land Development Banks and other financial

institutions approved by Reserve Bank of India. They add that NABARD

inspects in the functioning of the above mentioned banks and institutions

and maintains a research and development fund to promote research in

agriculture and rural development. NABARD also provides purpose-wise

7 Satyasai and Badatya (2000), Restructuring Rural Cooperative Institutions, Economic

and Political Weekly, Vol: 35, Issue: 5, Mumbai.
8 Karnati Lingaiah and C. Anjana Devi (1996), NABARD and Rural Credit: A Profile,

Southern Economist, Vol: 34, No: 21, pp: 23-24.

refinance assistance to different schemes like Minor Irrigation Land

Development, Farm Mechanization, Plant Horticulture, Poultry, Sheep

Breeding, Piggery, Fisheries and Dairy Development.

S.C.Vetrivel and S.Chandra 9 conceptualized the framework of

microfinance institutions in India. The discussions held after analysis

reveals that these microfinance institutions are capable enough in

contributing their efforts to solve the derisory housing and urban services as

an essential part of poverty mitigation programmes. The challenge lies in

finding the level of flexibility in the credit instrument that could make it

match the multiple credit requirements of the low income borrowers without

imposing unbearably high cost of monitoring its end-use upon the lenders.

The researchers opined that providing multi-purpose loans or composite

credit for income generation, housing improvement and consumption

support might be a promising solution for people located in rural areas.

Gomathy M 10 aimed to overview the financial inclusion and rural

development in India by prioritizing with main objective that is to know the

participation of banks in rural development for financial inclusion and to

examine the difficulties involved in the adoption and enhancement of

financial inclusion. In this study, it was defined that financial inclusion is a

delivery of credit and other financial services at an affordable cost to the

9 S.C. Vetrivel and S. Chandra Kumaramangalam (2010), Role of Micro Finance

Institutions in Rural Development, International Journal of Information Technology and
Knowledge Management, Vol: 2, No: 2, pp: 435-441.
10 Gomathy M (2015), An Overview of Financial Inclusion and Rural Development in India,

IOSR Journal of Business and Management, Vol: 17, Issue: 8, pp: 06-11.
immeasurable sections of the disadvantages and low income groups. In this

study the findings portrays that the banks and financial institutions must

create awareness among poor and low income groups on financial services

providing by them for sustainable development of rural areas as well. It was

noticed that the target for National Rural Financial Inclusion Plan (NRFIP) is

to provide access to comprehensive financial services to at least 50% (55.77

million) of the excluded rural cultivator and non cultivator households,

across different states by 2012 through rural/semi urban branches of

commercial banks and regional rural banks.