Dissertation

On

“Significance of NABARD in Development of Agriculture in

Bihar”

Submitted To:

Prof. Dipti Mukharji

GLBIMR, Greater Noida

Submitted By:

Abhishek Kumar

Roll no-04

PGDM (2009-11)

G. L. Bajaj Institute of Management and Research

Plot No.-3, Knowledge Park-III, G.B. Nagar, Greater Noida

UP-201306

1

ACKNOWLEDGEMENT

I take this opportunity to express my deep sense of gratitude to all those who have contributed

significantly by sharing their knowledge and experience in the completion of this Dissertation

Report.

I am extremely thankful to Prof. Dipty Mukherjee – my internal faculty guide under whose able

guidance this project work was carried out. I thank her for her continuous support and mentoring

during the tenure of the Dissertation report. Finally, I would also like to thank all my dear friends

for their cooperation, advice and encouragement during the long and arduous task of carrying out

the preparing this dissertation report.

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Table of Contents

Page No,

1. Introduction 4-11

2. Objective of Study 12

3. Limitation of Study 13

4. About NABARD 14-18

5. Agriculture in Bihar 19-24

6. Source and uses of fund 25-32

7. Microfinance Initiatives by NABARD 33-36

8. Agricultural Debt Waiver and Debt Relief Scheme 2008 37-44

9. State Level Banker's Committee of Bihar 45-53

10. Research Methodology 54

11. Analysis 55-56

12. Finding and Conclusion 57

Bibliography 59

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Chapter 1

Introduction

Agriculture in India is the means of livelihood of almost two thirds of the work force in the

country. It has always been INDIA'S most important economic sector. The 1970s saw a huge

increase in India's wheat production that heralded the Green Revolution in the country. The

increase in post -independence agricultural production has been brought about by bringing

additional area under cultivation, extension of irrigation facilities, use of better seeds, better

techniques, water management, and plant protection.

Dependence on India agricultural imports in the early 1960s convinced planners that India's

growing population, as well as concerns about national independence, security, and political

stability, required self-sufficiency in food production. This perception led to a program of

agricultural improvement called the Green Revolution, to a public distribution system, and to

price supports for farmers. The growth in food-grain production is a result of concentrated efforts

to increase all the Green Revolution inputs needed for higher yields: better seed, more fertilizer,

improved irrigation, and education of farmers. Although increased irrigation has helped to lessen

year-to-year fluctuations in farm production resulting from the vagaries of the monsoons, it has

not eliminated those fluctuations.

Nontraditional crops of India, such as summer mung (a variety of lentil, part of the pulse family),

soyabeans, peanuts, and sunflowers, were gradually gaining importance. Steps have been taken

to ensure an increase in the supply of non-chemical fertilizers at reasonable prices. There are 53

fertilizer quality control laboratories in the country. Realizing the importance of Indian

agricultural production for economic development, the central Government of India has played

an active role in all aspects of agricultural development. Planning is centralized, and plan

priorities, policies, and resource allocations are decided at the central level. Food and price

policy also are decided by the central government. Thus, although agriculture in India is

constitutionally the responsibility of the states rather than the central government, the latter plays

a key role in formulating policy and providing financial resources for agriculture. Expansion in

crop production, therefore, has to come almost entirely from increasing yields on lands already in

some kind of agricultural use.

4

The monsoons, however, play a critical role in Indian agriculture in determining whether the

harvest will be bountiful, average, or poor in any given year. One of the objectives of

government policy in the early 1990s was to find methods of reducing this dependence on the

monsoons.

The Department of Agriculture has a chief role to play in formulating policies based on crops,

seasonal growth and importing technology to enhance the fertility of soil.

There are special schemes for loans available for farmers. The government is backing the efforts

of many farmers and their families. Education and newspapers are reaching the rural lands and

today’s farmer is recognized as an important player in providing the basic food for the entire

country.

Agriculture in India is improvising with collaboration in technology using tractors, fertilizers and

also new methods to aid farming. Barren lands are researched and guidelines for funding the

same are being allocated. Exhibitions on Rabi and kharif crops and model schemes are allocated

to precisely boost sales and also promote export of local produce.

Rain fed farming, banking loans, education for the farmer are the chief initiatives by the

Government to develop the life of rural farming lands. Agriculture is also looked with the motive

of maintaining the ecological balance. Harvest preservation, marketing for agriculture produce,

tertiary market up gradation is some of the plans followed by the agricultural department of

India.

It has to be understood that the life of a farmer goes beyond tilling and yielding crops. Their

standard of living has to be uplifted by small scale industries set up which will increase their

income. Other facilities like shelter, drainage system, education and alternative employment will

secure their future. The change is accepted well by farmers as India still believes in the phrase,

‘Jai Jawan Jai Kisan’.

The spectacular story of Indian agriculture is known throughout the world for its multi-functional

success in generating employment, livelihood, and food, nutritional and ecological security.

Agriculture and allied activities contribute about 30% to the gross domestic product of India.

 

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With arable land area at 168 million hectares, India ranks second only to the U.S. in size of

agriculture. A well-developed agricultural research system, a significant area of almost 60

million hectares under irrigation and an increasing productivity in major crops enable Indian

agriculture to become a globally competitive player. The United Nations estimates that with

assured irrigation, India's food grains output can increase SIX times within five years- enough to

feed two planet Earths!

Achievements of Indian Agriculture:

India is the largest producer of wheat in the world

India is the largest producer of Rice in the world

India is among the largest vegetable oil economies in the world

India is the largest producer of Tea in the world

India is the second largest producer of Fruits in the world

India is the largest producer of Milk in the world

India is the largest producer of Coffee in the world

India is the largest producer of Cotton in the world

Indian Agriculture by its sheer size can dictate global markets directly and indirectly. Majority of

rural population still is dependent on agriculture for their livelihood and over 600 million farmers

involved in agriculture related activities.

India has 52% of cultivable land and varied climates. With sunshine round the year it’s the

world’s best country to grow crops round the year. Due to Urbanization and rapid growth in the

metropolis there is increased demand in the food supply. Too many layers of middlemen, weak

supply chain, lack of proper information to the farmers, are some of the factors leadings to

wastage and inefficiencies in food supply chain and gives opportunity to improve by using IT

and collaborations though “Farm to Fork Strategy”.

Agriculture Growth Rate in India GDP had been growing earlier but in the last few years it is

constantly declining. Still, the Growth Rate of Agriculture in India GDP in the share of the

country's GDP remains the biggest economic sector in the country. 

6

India GDP means the total value of all the services and goods that are produced within the

territory of the nation within the specified time period. The country has the GDP of around US$

1.09 trillion in 2007 and this makes the Indian economy the twelfth biggest in the whole world. 

The growth rate of India GDP is 9.4% in 2006- 2007. The agricultural sector has always been an

important contributor to the India GDP. This is due to the fact that the country is mainly based

on the agriculture sector and employs around 60% of the total workforce in India. The

agricultural sector contributed around 18.6% to India GDP in 2005. 

Agriculture Growth Rate in India GDP in spite of its decline in the share of the country's GDP

plays a very important role in the all round economic and social development of the country. The

Growth Rate of the Agriculture Sector in India GDP grew after independence for the government

of India placed special emphasis on the sector in its five-year plans. Further the Green revolution

took place in India and this gave a major boost to the agricultural sector for irrigation facilities,

provision of agriculture subsidies and credits, and improved technology. This in turn helped to

increase the Agriculture Growth Rate in India GDP. 

The agricultural yield increased in India after independence but in the last few years it has

decreased. This in its turn has declined the Growth Rate of the Agricultural Sector in India GDP.

The total production of food grain was 212 million tones in 2005- 2006 and the next year it

declined to 174.2 million tones. Agriculture Growth Rate in India GDP declined by 5.2% in

2007- 2008. The Growth Rate of the Agriculture Sector in India GDP grew at the rate of 1.7%

each year between 2008- 2009 and 2009- 2010. This shows that Agriculture Growth Rate in

India GDP has grown very slowly in the last few years. 

Agriculture Growth Rate in India GDP has slowed down for the production in this sector has

reduced over the years. The agricultural sector has had low production due to a number of factors

such as illiteracy, insufficient finance, and inadequate marketing of agricultural products. Further

the reasons for the decline in Agriculture Growth Rate in India GDP are that in the sector the

average size of the farms is very small which in turn has resulted in low productivity. Also the

Growth Rate of the Agricultural Sector in India GDP has declined due to the fact that the sector

has not adopted modern technology and agricultural practices. Agriculture Growth Rate in India

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GDP has also decreased due to the fact that the sector has insufficient irrigation facilities. As a

result of this the farmers are dependent on rainfall, which is however very unpredictable.  

Agriculture Growth Rate in India GDP has declined over the years. The Indian government must

take steps to boost the agricultural sector for this in its turn will lead to the growth of Agriculture

Growth Rate in India GDP.

Bihar, with its bountiful natural resources of fertile soil, abundant water, varied climate and rich

cultural and historical heritage is one of the most fascinating states of India. The farmers are

intelligent and hard working. Therefore agriculture has been described as the core competence of

Bihar by the Hon’ble President of India.

Agriculture is the vital source of wealth in Bihar. 76% of its population is engaged in agricultural

pursuits. Bihar’s productive contribution in food grain, fruit, vegetables, spices and flowers can

increase manifold with improved methods and system management.

Bihar has a total geographical area of about 93.60 lakh hectare, out of which only 56.03 lakh

hectares is the net cultivated area and gross cultivated area being 79.46 lakh hectares. About

33.51 lakh hectare net area and 43.86 lakh hectare gross area receive irrigation from different

sources. Principal food crops are paddy, wheat, maize and pulses. Main cash crops are

sugarcane, potato, tobacco, oilseeds, onion, chilies and jute and. Bihar has notified forest area of

6,764.14 sq km, which is 7.1 per cent of its geographical area.

The principal agricultural crops are rice, paddy, wheat, jute, maize and oil seeds. Cauliflower,

cabbage, tomato, radish, carrot, beat etc. are some of the vegetables grown in the state.

Sugarcane, potato and barley are some of the non-cereal crops grown. The entire agricultural

operations are divided into two crop seasons Kharif and Rabi. The Kharif season starts from the

third week of May and lasts till the end of October followed by the Rabi season.

Though endowed with good soil, adequate rainfall and good ground water availability Bihar has

not get realized its full agricultural potential. Its agricultural productivity is one of the lowest in

the country, leading to rural poverty, low nutrition and migration of labour. This road map is

aimed to trigger processes of development in agriculture and allied sector.

8

The state is endowed with rich biodiversity. Agriculture provides ample supply of raw materials

for the establishment of Agro based industries. Bihar is the third largest producer of vegetables

and fourth largest producer of fruits in the country. It is the largest producer of Litchi, Makhana,

Guava, Lady’s finger in India. The state already exports Litchi, Basmati rice and snow pea. It has

competitiveness in maize, rice and fruit such as banana, mango, litchi and vegetables like onions,

tomato, potato and brinjal. High, stable and regular supply of agricultural produce provides

adequate opportunity for marketing and food processing industries.

The National Bank for Agriculture and Rural Development (NABARD) was set up in July 1982.

It became the apex institution to play a pivotal role in the sphere of policy planning and

providing refinance facilities to rural financial institutions and for augmenting their resource

base.

The paper analyses the role and function of NABARD in rural development. Purpose wise

disbursement of funds under Investment Credit and RIDF during the year 2007-8 is also

analysed. It also throws a light on NABARD's past and present performance and its major

achievements for the year 2007-08.

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. The

balance sheet size also increased from Rs.81220 crore to Rs.98706 crore & profit after tax from

Rs.856 crore to Rs.1226 crore. In short we can say that NABARD is providing rural India all

round assistance and proved to be an institution where "Growth with Social Justice" exists.

Purpose wise Disbursements under investment Credit during 2007-08

Sector/Purpose/Activity Amount (Rs. In Lakh) % to Total Disb.

Agriculture    

Minor irrigation 40368 4.46%

Land development 46214 5.11%

Farm Mechanization 174765 19.32%

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Plantation & Horticulture 34182 3.78%

SGSY Farm Sector 13242 1.46%

SC/ST -AP-Farm Sector 1648 0.18%

Other Agriculture 45717 5.05%

  356136 39.37%

Allied to Agriculture    

Fisheries 2545 0.28%

Dairy Development 60587 6.70%

Poultry 21629 2.39%

Storage/Market Yard 13628 1.51%

Wasteland Development 639 0.07%

  99028 10.95%

NFS    

SGSY Non Farm Sector 12616 1.39%

SC/ST -AP-Non Farm Sector 404 0.04%

Non Farm Sector 274795 30.38%

  287815 31.82%

Others    

Non conventional energy 98 0.01%

Self Help Group 161550 17.86%

  161648 17.87%

TOTAL DISBURSEMENT 904627 100.00%

The

purpose

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wise disbursement for the year 2007-08 shows that total of Rs.9, 04,627 was disbursed for

various purposes like agriculture and allied activities, non farm sector etc. and maximum 32% is

allotted to agriculture sector. 

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Chapter 2

Objective of Study

To assess the role of NABARD in agriculture sector of Bihar.

To know the various Depth scheme of agriculture sector.

To know the contribution of co – operative & non – cooperative bank in

agriculture sector.

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Chapter 3

Limitations of the Study

1. The study is limited only to the analysis of different schemes and its suitability to

different investors.

2. The study is based on secondary data available from monthly fact sheets, websites and

other books, as primary data was not accessible.

3. The study is limited by the detailed study of various schemes.

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Chapter 4

About NABARD

The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural

Development (CRAFICARD), set up by the Reserve Bank of India (RBI) under the

Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the

National Bank for Agriculture and Rural Development (NABARD). The Indian Parliament

through the Act 61 of 1981 approved the setting up of NABARD. The Bank which came into

existence on 12 July, 1982, was dedicated to the service of the Nation by the Hon’ble Prime

Minister, Smt Indira Gandhi on 5 November, 1982.

NABARD is set up by the Government of India (GoI) as a development bank with the mandate

for facilitating credit flow for promotion and development of agriculture, small-scale industries,

cottage and village industries, handicrafts and other rural crafts. It also has the mandate to

support all other allied economic activities in rural areas, promote integrated and sustainable

rural development and secure prosperity of rural areas, as also for matters connected therewith

and incidental thereto.

It’s subscribed and paid-up Capital was Rs.100 crore which was enhanced to Rs. 500 crore,

contributed by the Government of India (GOI) and RBI in equal proportions. Currently it is Rs.

2000 crore, contributed by GoI (Rs.550 crore) and RBI (Rs.1450 crore).

The Management of NABARD vests with the Board of Directors. The Board of Directors of

NABARD comprises the Chairperson, Managing Director, representatives of RBI, GoI, State

Governments and Directors nominated by the GoI.

NABARD is a specialized financial institution in the field of agriculture and rural development.

It has been designed specifically as an organizational device for providing undivided attention,

forceful direction and pointed focus, to the credit problems of rural sector. Half of NABARD’s

capital was contributed by RBI and other half by the government. It has enough financial

resources to support agricultural and rural development programs.

14

NABARD operates through its Head Office at Mumbai, 28 Regional Offices located in the State

Capitals, a Sub Office at Port Blair and 1 special cell located at Srinagar and 360 District

Offices. NABARD has on its roll around 2968 professionals supported adequately by a number

of other staff.

State Co-operative Banks (SCB’s):

The SCB’s are a link between the co-operative organizations with the RBI, NABARD and

the state governments. They have to co-ordinate, control and regulate the working of Central

Co-operative Banks (CCB’s) and also provide financial and other resources and investment

channels to the CCB’s.

District Central Co-operative Banks (DCCB’s):

The DCCB’s are responsible to finance the Primary Agriculture Credit Societies (PACS) and

other regional co-operative societies. Membership of DCCB’s is open to all types of co-

operative societies and individuals. DCCB’s are governed by a board of 12-15 in number,

elected by members generally for a period of 3 years.

Primary Agriculture Credit Societies (PACS):

PACS are the societies which provide credit to the borrowers for short and medium term

credit for agriculture and allied activities. They cover generally a small area of 200 hectares.

PACS also provide backward and forward integration.

Structure of NABARD

15

Role of NABARD

Facilitating credit flow for agriculture, rural infrastructure and rural development.

Promoting and supporting policies, practices and innovations conducive to rural

development.

Strengthening rural credit delivery system through institutional development.

It prepares, on annual basis, rural credit plans for all districts in the country; these plans form

the base for annual credit plans of all rural financial institutions.

It undertakes monitoring and evaluation of projects refinanced by it.

Objectives

The rural financial system in the country calls for a strong and efficient credit delivery system,

capable of taking care of the expanding and diverse credit needs of agriculture and rural

development. More than 50% of the rural credit is disbursed by the Co-operative Banks and

Regional Rural Banks. NABARD is responsible for regulating and supervising the functions of

Co-operative banks and RRBs. In this direction NABARD has been taking various initiatives in

association with Government of India and RBI to improve the health of Co-operative banks and

Regional Rural Banks.

Functions of NABARD

a) Credit:

Credit Planning -

Preparation of district-wise credit plans annually that indicate exploitable

potential available for development through bank credit under agriculture,

allied activities, Rural Non-Farm Sector etc.

Preparation of State Focus Paper based on district credit plans.

Monitoring the flow of ground level credit.

Issuing policy and operational guidelines to rural financial institutions (RFIs).

Financial Services -

16

Refinancing RFIs for providing loans for investment and production purposes in

rural areas.

Loans to State Governments for strengthening of cooperatives and also

developing physical and social infrastructure in rural areas.

Support for micro-credit innovations of Non-Governmental Organizations

(NGOs) and other non-formal agencies.

Monitoring and Evaluation of financed projects, models and practices in credit

delivery.

b) Promotion and Development:

Institutional development of client organizations.

Capacity building in partner institutions.

Supporting experimentation with new development models and practices in credit

delivery.

Dissemination of innovative products and ideas.

Supporting Research and Development (R & D).

Assisting RBI / GOI in formulation of policies relating to rural credit.

Promotion of rural non-farm sector.

Promotion of Kisan Credit Card (KCC) Scheme.

Promotion of micro-credit innovations.

Consultancy Services.

c) Supervision:

On-site inspection of cooperative banks (Co-operative Banks) and Regional Rural

Banks (RRBs).

Off-site surveillance of the health of Co-operative Banks and RRBs.

Apart from the role of a development bank, NABARD undertakes certain supervisory

functions in respect of Coop Banks and RRBs under the Banking Regulation Act. The

objective of NABARD’s supervision is to assess financial and operational soundness

and managerial efficiency of these banks and their compliance with banking

regulations. NABARD has constituted a Board of Supervision as an Advisory

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Committee to the Board of Directors of NABARD, which gives directions and

guidance in respect of policies and on matters relating to supervision and inspection.

NABARD undertakes on-site inspection of RRBs, SCBs and DCCBs on a two-year

cycle basis. Inspection of SCARDBs and apex non-credit cooperatives are undertaken

on a voluntary basis. Off-site surveillance of Coop Banks and RRBs are also

undertaken on an on-going basis.

Chapter 5

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Agriculture in Bihar

Bihar, with its bountiful natural resources of fertile soil, abundant water, varied climate and rich

cultural and historical heritage is one of the most fascinating states of India. The farmers are

intelligent and hard working. Therefore agriculture has been described as the core competence of

Bihar by the Hon’ble President of India.

Agriculture is the vital source of wealth in Bihar. 76% of its population is engaged in agricultural

pursuits. Bihar’s productive contribution in food grain, fruit, vegetables, spices and flowers can

increase manifold with improved methods and system management.

Bihar has a total geographical area of about 93.60 lakh hectare, out of which only 56.03 lakh

hectares is the net cultivated area and gross cultivated area being 79.46 lakh hectares. About

33.51 lakh hectare net area and 43.86 lakh hectare gross area receive irrigation from different

sources. Principal food crops are paddy, wheat, maize and pulses. Main cash crops are

sugarcane, potato, tobacco, oilseeds, onion, chilies and jute and. Bihar has notified forest area of

6,764.14 sq km, which is 7.1 per cent of its geographical area.

19

Bihar is located in the eastern part of the country (between 83°-30' to 88°-00' longitude). It is an

entirely land–locked state, although the outlet to the sea through the port of Kolkata is not far

away. Bihar lies mid-way between the humid West Bengal in the east and the sub humid Uttar

Pradesh in the west which provides it with a transitional position in respect of climate, economy

and culture. It is bounded by Nepal in the north and by Jharkhand in the south. The Bihar plain is

divided into two unequal halves by the river Ganga which flows through the middle from west to

east.

Bihar with a geographical area of about 94.2 thousand square km is divided by river Ganges into

two parts, the north Bihar with an area of 53.3 thousand square km and the south Bihar having an

area of 40.9 thousand square km. Based on soil characterization, rainfall, temperature and terrain,

four main agro-climatic zones in Bihar have been identified. These are: Zone-I, North Alluvial

Plain, Zone-II, north East Alluvial Plain, Zone-III a South East Alluvial Plain and Zone-III B,

South West Alluvial Plain, each with its own unique prospects.

The principal agricultural crops are rice, paddy, wheat, jute, maize and oil seeds. Cauliflower,

cabbage, tomato, radish, carrot, beat etc. are some of the vegetables grown in the state.

Sugarcane, potato and barley are some of the non-cereal crops grown. The entire agricultural

operations is divided into two crop seasons Kharif and Rabi. The Kharif season starts from the

third week of May and lasts till the end of October followed by the Rabi season.

Though endowed with good soil, adequate rainfall and good ground water availability Bihar has

not get realized its full agricultural potential. Its agricultural productivity is one of the lowest in

the country, leading to rural poverty, low nutrition and migration of labour. This road map is

aimed to trigger processes of development in agriculture and allied sector.

The state is endowed with rich biodiversity. Agriculture provides ample supply of raw materials

for the establishment of Agro based industries. Bihar is the third largest producer of vegetables

and fourth largest producer of fruits in the country. It is the largest producer of Litchi, Makhana,

Guava, Lady’s finger in India. The state already exports Litchi, Basmati rice and snow pea. It has

competitiveness in maize, rice and fruit such as banana, mango, litchi and vegetables like onions,

20

tomato, potato and brinjal. High, stable and regular supply of agricultural produce provides

adequate opportunity for marketing and food processing industries.

Farmer’s willingness to accept modern cultivation technologies and contract farming practices

provide encouraging trends for investment in Agriculture sector. Necessary legislative changes to

promote contract farming and private investment in marketing are being undertaken. Agricultural

growth in the state is supported by institutional infrastructure of Rajendra Agricultural

University, Pusa (Samastipur) and its network of KrishiVigyan Kendra, ICAR eastern zone

complex at Patna, National Research Centers for Litchi, Makhana and Pan. Small Farmer’s Agri-

business Consortium (SFAC) and Agricultural Technology Management Agency (ATMA) are

others institutions supporting Agricultural growth in the State. Public sector Agricultural

extension system is creating enabling ground for Public–Private partnership for rapid

Agricultural growth in the state.

Agri-clinics will be encouraged to carry standard seeds, fertilizers, agricultural information to the

farmers. They will be the carrier of the public programs to the farmers. Extension system will

forge relationship with agri-clinics for creating synergy of the extension efforts. The expert

services of the agri-clinics will be gainfully utilized in conducting training/demonstration and

their services will be treated at par with the services of agriculture scientists. To make the

program of agri-clinics viable for the banking sector and to make them more attractive for

agriculture graduates convergence of all programs will be created there. They will get preference

in allocation of seed/fertilizer shops, outsourcing of block level soil labs, etc.

Krishi Vigyan Kendras will continue to receive prime attention in view of their utility as centre

of excellence in spreading agricultural knowledge to the rural masses. They will also be

encouraged to cater to post harvest handling of the agricultural products and develop

entrepreneurial skill among the rural youth. The KVK’s will function in FIVE MISSION

MODE, viz. on honey bee, seed production including seed villages, conservation agriculture,

integrated farming and vermi-compost.

21

Extension reforms will receive attention through Agriculture Technology Management Agency.

ATMA will be established in all the districts of Bihar. The objective of convergence, farming

system, group extension approach and increased use of ICT in agricultural extension will be

pursued. Sustainability of the agriculture extension will also be explored. Public-private

partnership in agriculture extension will be encouraged. Effort will be made to bring every

farmer into the ambit of agriculture technology training in 5-year period.

The strategy will be to reach information, technology and services to the farmers in the quickest

possible time. The emphasis of ICT will be more on developing application software and

providing useful services to the farmers in the villages. Farmer useful services will be integrated

with information and non-agricultural services and emphasis will be laid on one point solution to

the farmers’ problems.

Use of quality Seed:

Seed is the most critical input in modern agriculture. It is the carrier of the modern technology.

There is an apparent need to step up investment in both public & private sector .The prevailing

seed replacement rate which is less than 10% in case of rice and wheat cannot sustain higher

productivity growth rate. Therefore the objective of the seed production programmed involve

increase the seed replacement rate, promotion of hybrid seeds and crop varieties, which are new

and adapted to the agro-climatic conditions of the state. Seed production on Government farms

will be revived. Bihar RajyaBeej Nigam will be encouraged to undertake seed multiplication for

recently released public sector varieties to make them timely available to the farmers at

reasonable cost. Pusa Seed Society will be encouraged to improve supply of quality seed to the

farmers. While the seed production under public sector will be revived, seed production through

farmers’ direct participation under seed-village program will be the corner stone of the strategy

during 11th’ plan. Bihar RajyaBeej Nigam and Pusa Seed Society will be encouraged to buy-

back seeds produced under seed village and provide processing & marketing support. Private

seed companies will be encouraged to ensure availability of latest technology to the farmers and

also to ensure fair competition with public sector seed companies for the benefit of the farmers.

22

Marketing and Processing:

Any target for production can be achieved only if the farmers get proper price for their produce.

Hence the success of this agriculture development strategy is dependent upon taking appropriate

measures in the fields of marketing and processing. Agriculture marketing has been in the public

domain with explicit limitations. Therefore the Agriculture produce market committee act has

been abolished. Private sector and cooperative sector will be encouraged to establish market,

enter into buy-back arrangement and purchase directly from the farmers. Contract farming will

be encouraged, particularly for fruits and vegetables. The expansion of market facilities and

better realization to the farmers will be the core of the market reforms. Farmers will be organized

along the enterprises to establish economy of scale and to act as collective voice to safeguard

their interest. This will include excursions into processing and marketing centres of excellence in

the country, formation of farmer interest group and federating them at the various levels. Co-

operative marketing shall be encouraged in the area of fruits and vegetables on lines of milk or

dairy. Efforts will be made to make farmers aware of the market demand of the agricultural

commodities Extension will be made market oriented and efforts shall be made to make crop

planning market oriented. Agriculture market information regarding price, arrival will be widely

disseminated. Market yards and rural hats will be left to farmer groups for organized marketing

in the state. Private sector participation in the development of modern and specialty market will

be encouraged. Terminal market will be established in strategic locations.

Risk management: 

Agriculture is prone to natural disasters, particularly flood in north Bihar and drought in south

Bihar. Risk of natural disasters will be minimized through use of appropriate crop technology

and extending crop insurance to all farmers. Insurance cover will be extended to horticultural and

cash crops. Seed bank will be maintained to quickly restore supply of seed material. Human

resource will be developed to quickly react and restore normalcy in case of a natural disaster.

23

Seasons:

Cold weather season (December to February), Hot weather season (March to May), Southwest

monsoon (June to September) and Retreating southwest monsoon - October to November.

Soil:

There are three major types of soil in Bihar i.e. Piedmont Swamp Soil - found in northwestern

part of West Champaran district. Terai Soil - found in northern part of the state along the border

of Nepal. Gangetic Alluvium - the plain of Bihar is covered by gangetic alluvium (both new as

well as old).

Fertile Land:

The topography of Bihar can be easily described as a fertile alluvial plain occupying the

Gangetic Valley. The plain extends from the foothills of the Himalayas in the north to a few

miles south of the river Ganges as it flows through the State from the west to the east. Rich

farmland and lush orchards extend throughout the state. Following are the major crops: Paddy,

Wheat, Lentils, Sugarcane, Jute (hemp, related to the marijuana plant, but a source of tough

fibers and "gunny bags"). Also, cane grows wild in the marshes of West Champaran. The

principal fruits are: Mangoes, Banana, Guava and Litchis. This is one the very few areas outside

China which produces litchi.

24

Chapter 6

Source and uses of Funds

Sources of Fund 2010 2009 Net Uses of Funds 2010 2009 Net

Accretion Utilization

Capital

Reserve & Surplus

NRC(LTO) Fund

NRC (Stabilization)

Fund

Deposits

Bonds and

Debentures

Borrowings from

GoI Borrowings

from

Commercial Banks

2000

10674

14417

1566

505

20004

147

500

2000 0 Cash and Bank Balances

Collateralized Borrowing

9535 1139 and Lending Obligation

14016 401 Investment in

a) GOI Securities

1555 11

b) ADFC Equity

482 23 c) AFC Equity

d) SIDBI Equity

23704 -3700 e) AICI Ltd.

f) NCDEX Ltd. & MCX

Ltd.

354 -207

g) Nabcons

9628

0

1991

15

1

48

60

15

5

905

13975 -4347

0 0

1555 436

15 0

1 0

48 0

60 0

6 9

5 0

1005 -100

Total 136292 118176 18116 Total 13629

2

118176 18116

Short Term (ST) Credit:

25

Seasonal Agricultural Operations (SAO) -

In order to ensure availability of timely credit to farmers, banks follow production-

oriented system of lending. The system has features like assessment of credit needs based

on area under cultivation and crop wise scales of finance, extending credit for purchase of

agricultural inputs, etc.

Refinance is provided for production purposes at concessional rates of interest to SCBs

and RRBs by way of sanction of credit limits. Each withdrawal against the sanctioned

credit limit is repayable within 12 months. Refinance is provided to Coop Banks for

financing production and marketing activities of industrial cooperative societies engaged

in one or more of the 22 approved broad groups of cottage and SSIs.

Marketing of Crops -

Refinance facility is extended to Coop Banks and RRBs for meeting the marketing credit

requirements of farmers with a view to reducing incidences of distress sale and enhancing

their holding capacity. Each withdrawal against the sanctioned credit limit is repayable

within a maximum period of 12 months.

Distribution of agricultural inputs -

In order to ensure timely supply of agricultural inputs a line of credit is made available to

Coop Banks and RRBs for financing Apex/Primary Societies for stocking and

distribution of agricultural inputs by way of sanction of yearly limits. Each drawal is

repayable within a period of 120 days.

Financing industrial societies -

Refinance is provided to Coop Banks for financing production and marketing activities of

industrial cooperative societies engaged in one or more of the 22 approved broad groups

of cottage and SSIs.

Weavers’ finance -

Given the importance of handloom sector in rural employment generation, refinance is

extended to meet the working capital requirements of primary weavers’ societies and

26

procurement, stocking, distribution and marketing activities of Apex Weavers’ societies

and SHDCs.

Financing handicrafts sector -

Rural craftsmen are provided support by financing SHnDCs through SCBs and CBs for

production, procurement and marketing of handicraft goods.

Pisciculture -

Refinance is extended to Coop Banks and RRBs for meeting working capital

requirements of fishermen engaged in Inland and Marine fishery activities.

New line of credit for ST agricultural /allied and marketing activities -

A new line of credit is extended to Coop Banks for financing agricultural/allied and

marketing activities against security of gold/security other than charge on crops.

2002 2003 2004 2005 2006 2007 2008 20090

100020003000400050006000700080009000

Refinance support for short term credit

sanctions

27

Medium Term credit:

Medium Term (Conversion) Loans -

When crop loss on account of natural calamities is substantial, affecting the farmers’

ability to repay production credit dues to banks, refinance by way of medium term loans

is granted to Coop Banks and RRBs to enable them to convert the ST loans of farmers

into medium term loans. The repayment period of the converted loan is three years,

which may go up to a maximum of 7 years in case of recurring calamities.

Medium Term (Non - Schematic) Loans -

Refinance is provided to SCBs and RRBs for financing farmers to acquire productive

assets for certain approved agricultural investment purposes.

Investment Credit:

Investment credit leads to capital formation through asset creation. It induces upgrading of

technology resulting in increased production, productivity and incremental income to farmers

and entrepreneurs.

Eligible Institutions:

NABARD provides refinance support to SCARDBs/ SCBs/ RRBs/ CBs/ Scheduled

Primary Urban Cooperative Banks/ North East Development Finance Corporation Ltd.

(NEDFi) etc. against their Investment Credit in the Rural Sector.

Eligible Purposes:

Major purposes covered are Farm Mechanization, Minor Irrigation, Plantation/

Horticulture, Animal Husbandry, Storage/Market Yards, Fisheries, Post Harvest

Management, Food/Agro Processing, Non Farm Sector including rural industries,

microfinance, purchase of land (for Small/Marginal Farmers, share croppers etc.), Rural

Housing and disbursements under Poverty Alleviation programmers like SGSY and SC/

ST Action Plan, etc. Hi-tech projects and Agri Export Zones have been identified as

thrust areas and NABARD assists in techno-financial appraisal of such projects besides

providing refinance. During 2003-04 refinance support has been extended to new

28

activities like financing of diesel generator sets in Madhya Pradesh and LPG kits to rural

areas all over the country.

Criteria:

The necessary conditions to be satisfied for sanctioning investment credit include

technical feasibility and financial viability of the project as also its capacity to generate

incremental income to the ultimate borrowers thereby enabling them to have a reasonable

surplus after repayment of loan installments. The period of loan ranges between 3 and 15

years depending on the purpose for which it is provided.

2002 2003 2004 2005 2006 2007 2008 20090

100020003000400050006000700080009000

Refinance support for investment Credit

sanctions

Direct Credit:

Loans to State Governments -

Supporting Cooperatives -

In order to strengthen the owned funds position of co-operative credit institutions

NABARD provides loans to State Governments to contribute to the share capital of

these institutions.

29

Rural Infrastructure Development -

With the objective of assisting State Governments in the completion of ongoing rural

infrastructure projects and taking up new projects, the Rural Infrastructure

Development Fund (RIDF) was set up in NABARD in 1995-96 with contributions by

way of deposits received from CBs. The shortfall in agri/priority sector lending

deposited by CBs with NABARD forms the corpus of RIDF. The total corpus of

RIDF, covering RIDF I (1995- 96) to IX (2003-04), is Rs.34000 crore. Sanctions

under all tranches of RIDF as on 31 March 2004 were Rs.34678.07 crore and

disbursements Rs. 21067.17 crore.

Anticipated Benefits -

It is anticipated that the projects sanctioned up to 31 March 2004 under RIDF would

result in:

-Creation of additional irrigation potential in 85.52 lakh ha.

-Addition of 152483 km of rural road network & 296000 meter bridge length.

-Contribution to the GDP to the tune of Rs. 9712 crore.

-Generation of recurring employment of 44.59 lakh jobs and non recurring

employment of 12095 lakh person days due to increased irrigation.

-Generation of non-recurring employment expected from non-irrigation projects:

14354 lakh person days.

Co-financing -

To ensure substantial credit flow to agriculture and rural sector and to instill confidence

in banks for financing hi-tech/export oriented agriculture projects involving large

financial outlays/sunrise technologies, etc., NABARD has entered into agreements for

co-financing with 12 CBs on a risk- sharing basis. During 2003-04, 7 projects were

sanctioned under this agreement in areas such as floriculture, organic farming, milk

processing, ethanol production, infrastructure development and forestry, involving total

financial outlay of Rs. 118.90 crore and NABARD’s support of Rs. 35.97 crore.

Bulk lending / Revolving Fund Assistance -

NABARD provides Bulk lending facilities to NGOs. As on 31 March 2004, 32 agencies

have been sanctioned assistance of Rs. 27.32 crore against which Rs.15.20 crore has been

disbursed.

30

Thrust Areas:

Kisan Credit Card:

As a pioneering credit delivery innovation, KCC Scheme aims at provision of adequate

and timely support from the banking system to the farmers for their cultivation needs

including purchase of inputs in a flexible and cost effective manner. As on 31 March

2004, cumulatively 413.79 lakh cards were issued to the farmers by Coop Banks, CBs

and RRBs. A Personal Accident Insurance Scheme is available to KCC holders to cover

them against accidental death/permanent disability.

2002 2003 2004 2005 2006 2007 2008 20090

200400600800

100012001400160018002000

Sources

31

2002 2003 2004 2005 2006 2007 2008 20090

200

400

600

800

1000

1200

1400

1600

1800

2000

32

Uses

Chapter 7

Microfinance Initiatives

The SHG Bank Linkage Programmed started as a pilot project in 1992-93 for linking 500 Self

Help Groups (SHGs) with banks with the objective of extending formal banking services to the

unreached rural poor by evolving a supplementary credit delivery strategy in a cost effective

manner. Today, it covers 10.79 lakh SHGs, making it the largest microfinance programmed in

the world in terms of sustainability and outreach.

Partners -

The social intermediation for forming and nurturing SHGs is handled by a large number

of NGOs and several community based organizations like Farmers’ Clubs, local bodies,

field level workers of government agencies and bank staff. The major partners are banks

(504 nos.), NGOs and other agencies (2800 nos.).

Achievements as on 31 March 2010

Physical -

- 3, 61,731 new SHGs financed by banks during the year 2003- 04. 1, 71,669 existing

SHGs provided with repeat finance.

- 1.67 crore poor families i.e. approximately 8.09 crore people estimated to have been

assisted through bank credit up to 31 March 2004.

- Approximately 90 % of SHGs are exclusively women groups.

Financial -

- Bank loan of Rs. 1855.53 crore disbursed during the year 2003-04 to new SHGs and

Rs. 697.79 crore to existing SHGs.

- Cumulatively Rs. 3904.20 crore bank loan disbursed to SHGs.

- Average bank loan per SHG works out to Rs. 36,180.

- Over 95% on-time repayment of loans.

Financial Support from NABARD –

Rs. 705.94 crore provided as refinance support during 2003-04 taking the cumulative

refinance to Rs.2124.74 crore.

33

Direct Loan Fund Support by NABARD to NGOs, microfinance Institutions (mFIs),

SHG Federations and other agencies was Rs. 8.74 crore taking the cumulative Loan Fund

support to Rs.27.32 crore up to March 2004.

Grant assistance amounting to Rs. 4.73 crore was sanctioned to 221 NGOs for promotion

and linkage of 37268 SHGs. Cumulatively, grant amount of Rs 15.12 crore was

sanctioned to 785 NGOs as on 31 March 2004 for promotion and linkage of 115,279

SHGs.

Grant support of Rs. 116.03 lakh was extended to 28 DCCBs for promoting and linking

14750 SHGs. Cumulatively, grant amount of Rs. 124.03 lakh was extended to 29 DCCBs

as on 31 March 2004 for promoting and linking 15550 SHGs.

Grant support of Rs. 64.89 lakh was extended to 23 RRBs functioning as SHPI for

promoting and linking 7895 SHGs. Cumulatively, grant support of Rs.275.76 lakh was

extended to 90 RRBs as on 31 March 2004 for promoting and linking 35,045 SHGs

respectively.

Grant support of Rs.2.43 lakh was extended to 119 Farmers’ Clubs for promoting and

linking. SHGs. Cumulatively, grant amount of Rs.24.95 lakh was extended to 612 clubs

as on 31 March 2004 for promoting 6994 and linking 4281 SHGs.

Grant support of Rs. 7.65 lakh was extended to DCCBs and RRBs for promoting and

linking 600 SHGs through Individual Rural Volunteers (IRVs). Cumulatively grant

support stood at Rs. 24.90 lakh for associating 185 IRVs for financing and linking 1850

SHGs. Against this 652 SHGs have been formed and 274 credit linked.

Capacity Building Support -

During the year 2009-10, training programmers covering 2, 44,007 participants were

organized in association with identified training partners. These include -

4635 awareness creation and capacity building programmers. Training Programmers

organized for 1, 59,082 SHG members to inculcate skills for managing thrift and

credit.

34

In addition programmers also conducted for 26,273 bankers, 7362 functionaries of

NGOs, 5958 government officers, 312 faculty members of training institutions, 1303

elected members of Panchayati Raj Institutions.

Exposure visits to banks and institutions pioneering microfinance initiatives.

2005 2006 2007 2008 20090

200000

400000

600000

800000

1000000

1200000

No. of SHGs Linked during the yearCumulative number of SHGs credit linked

Microfinance Development Fund (FDF) -

MFDF was constituted in NABARD with a corpus of Rs.100 crore - Rs 40 crore each by

NABARD and RBI and Rs. 20 crore from 11 CBs identified by RBI – for scaling up

various mF initiatives with special focus on capacity building under the SHG-bank

linkage programmed. NABARD replenishes the entire expenditure from mFDF during

the year from its profits, thereby enabling the opening balance of the fund to be retained

at Rs. 100 crore each year. During the year, a sum of Rs. 7.05 crore was utilized from the

fund for various initiatives taken by NABARD in this area.

35

2002 2003 2004 2005 2006 2007 2008 20090

10000

20000

30000

40000

50000

60000

70000

80000

Chart Title

36

Working Capital

Chapter 8

Agricultural Debt Waiver and Debt Relief Scheme 2008

 

Scope

 

The Scheme will cover direct agricultural loans extended to marginal and small

farmers and other farmers by Scheduled Commercial Banks, Regional Rural Banks, Cooperative

Credit Institutions (including Urban Cooperative Banks) and Local Area Banks (hereinafter

referred to compendiously as lending institutions) as indicated in the Guidelines. The Scheme

shall come into force with immediate effect.

 Direct Agricultural Loans: It means Short Term Production Loans and Investment Loans

provided directly to farmers for agricultural purposes. This would also include such loans

provided directly to groups of individual farmers (for example Self Help Groups and Joint

Liability Groups), provided banks maintain disaggregated data of the loan extended to each

farmer belonging to that group.

Short Term Production Loan: It means a loan given in connection with the raising of crops which

is to be repaid within 18 months. It will include working capital loan, not exceeding Rs. 1 lakh,

for traditional and non-traditional plantations and horticulture.

Investment Loan means

investment credit for direct agricultural activities extended for meeting outlays relating to

the replacement and maintenance of wasting assets and for capital investment designed to

increase the output from the land, e.g. deepening of wells, sinking of new wells,

installation of pump sets, purchase of tractor/pair of bullocks, land development and term

loan for traditional and non-traditional plantations and horticulture; and

Investment credit for allied activities extended for acquiring assets in respect of activities

allied to agriculture e.g. dairy, poultry farming, goatery, sheep rearing, piggery, fisheries,

beekeeping, green houses and biogas.

37

Co-operative Credit Institution means a co-operative society that -

Provides short-term crop loans to farmers and is eligible for interest subvention from the

Central Government; or

Carries on banking activities regulated or supervised by RBI or NABARD; or

Is part of the Short-Term Cooperative Credit Structure or Long-Term Cooperative Credit

Structure in a State or Union Territory?

Marginal Farmer means a farmer cultivating (as owner or tenant or share cropper) agricultural

land up to 1 hectare (2.5 acres).

Small Farmer means a farmer cultivating (as owner or tenant or share cropper) agricultural land

of more than 1 hectare and up to 2 hectares (5 acres).

Other Farmer means a farmer cultivating (as owner or tenant or share cropper) agricultural land

of more than 2 hectares (more than 5 acres).

Explanation:

The classification of eligible farmers as per the above landholding criteria under the

Scheme would be based on the total extent of land owned by the farmer either singly or

as joint holder (in the case of an owner-farmer) or the total extent of land cultivated by

the farmer (as tenant or share cropper), at the time of sanction of the loan, irrespective of

any subsequent changes in ownership or possession.

In the case of borrowing by more than one farmer by pooling their landholdings, the size

of the largest landholding in the pool shall be the basis for the purpose of classification of

all farmers in that pool as marginal farmer or small farmer or other farmer.

In the case of a farmer who has obtained investment credit for allied activities where the

principal loan amount does not exceed Rs. 50,000, he would be classified as small and

marginal farmer and, where the principal amount exceeds Rs. 50,000, he would be

classified as other farmer, irrespective in both cases of the size of the land holding, if any.

Direct agricultural loan taken under a Kisan Credit Card would also be covered under this

Scheme subject to these Guidelines.

38

A short-term production loan and an investment loan taken by a farmer shall be counted

as two distinct loans and the Scheme will apply to the two loans separately. Likewise, in

the case of a farmer who has taken two investment loans for two separate purposes, the

two loans shall be counted as two distinct loans and the Scheme will apply to the two

loans separately.

Eligible Amount

1. The amount eligible for debt waiver or debt relief, as the case may be (hereinafter

referred to as the eligible amount), shall comprise of:

a. In the case of a short-term production loan, the amount of such loan (together with

applicable interest):

i. Disbursed up to March 31, 2007 and overdue as on December 31, 2007 and

remaining unpaid until February 29, 2008;

ii. Restructured and rescheduled by banks in 2004 and in 2006 through the special

packages announced by the Central Government, whether overdue or not; and

iii. Restructured and rescheduled in the normal course up to March 31, 2007 as per

applicable RBI guidelines on account of natural calamities, whether overdue or

not.

b. in the case of an investment loan, the installments of such loan that are overdue (together

with applicable interest on such installments) if the loan was:

i. Disbursed up to March 31, 2007 and overdue as on December 31, 2007 and

remaining unpaid until February 29, 2008;

ii. Restructured and rescheduled by banks in 2004 and in 2006 through the special

packages announced by the Central Government; and

iii. Restructured and rescheduled in the normal course up to March 31, 2007 as per

applicable RBI guidelines on account of natural calamities.

Explanation: In the case of an investment loan disbursed up to March 31, 2007 and

classified as non-performing asset or suit filed account, only the installments that were

overdue as on December 31, 2007 shall be the eligible amount.

39

2. The following loans shall not be included in the eligible amount:

a. Advances against pledge or hypothecation of agricultural produce other than standing

crop; and

b. Agricultural finance to corporate, partnership firms, societies other than cooperative

credit institutions (referred to in Para 3.4, and any similar institution.

3. Nothing contained in this Scheme shall apply to any loan disbursed by a lending

institution prior to March 31, 1997.

 

Debt Waiver

In the case of a small or marginal farmer, the entire eligible amount shall be waived.

 

Debt Relief

In the case of other farmers, there will be a onetime settlement (OTS) Scheme under which the

farmer will be given a rebate of 25% of the eligible amount subject to the condition that the

farmer pays the balance of 75% of the eligible amount; Provided that in the case of revenue

districts listed in Annexure-I, other farmers will be given OTS rebate of 25% of the eligible

amount or Rs. 20,000, whichever is higher, subject to the condition that the farmer pays the

balance of the eligible amount.

 

Implementation

 

Every branch of a scheduled commercial bank, regional rural bank, cooperative credit

institution, urban cooperative bank and local area bank covered under this Scheme shall

prepare two lists, one consisting of small and marginal farmers who are eligible for debt

waiver and the second consisting of other farmers who are eligible for debt relief under

this Scheme. The lists shall include particulars of the landholding, the eligible amount

and the amount of debt waiver or debt relief proposed to be granted in each case. The lists

shall be displayed on the notice board of the branch of the bank/society on or before June

30, 2008.

40

A farmer classified as small farmer or marginal farmer will be eligible for fresh

agricultural loans upon the eligible amount being waived.

A farmer classified as other farmer eligible for OTS relief shall give an undertaking

agreeing to pay his share (that is eligible amount minus the amount of OTS relief) in not

more than three installments and the first two installments shall be for an amount not less

than one-third of his share. The last dates of payment in the case of three installments will

be September 30, 2008; March 31, 2009 and June 30, 2009.

The undertaking shall be in such form as may be prescribed by RBI/NABARD.

The amount of OTS relief (i.e. the Central Government’s share) will be credited to the

account of the other farmer upon the farmer paying his share in full.

In the case of a short-term production loan, the other farmer will be eligible for fresh

short-term production loan upon paying one-third of his share.

In the case of an investment loan (for direct agricultural activities or allied activities),

the other farmer will be eligible for fresh investment loan upon paying his share in full.

Reserve Bank of India shall be the nodal agency for the implementation of the Scheme in

respect of scheduled commercial banks, urban cooperative banks and local area banks.

NABARD shall be the nodal agency in respect of regional rural banks and cooperative

credit institutions.

 

Interest and Other Charges

 

The lending institutions shall not charge any interest on the eligible amount for any

period after February 29, 2008. However, in the case of another farmer who defaults in

paying his share of the eligible amount on or before June 30, 2009 and becomes

ineligible for OTS relief, the bank may charge interest for the period after June 30, 2009.

Installments of investment credit which fall overdue after 31-Dec-2007 shall be

recovered by the lending institutions along with the applicable interest. Lending

institutions may, however, in appropriate cases, reschedule these installments in

accordance with the normal policy of the lending institution concerned.

 

41

Notwithstanding anything contained in this Scheme, the amount of interest that a lending

institution may claim as reimbursement from the Central Government under this Scheme

shall not, in any case, exceed the principal amount of the loan.

Ministry of Finance will issue supplemental instructions to the lending institutions in

respect of all incidental and ancillary matters including instructions on interest and other

charges that shall not be claimed by the lending institutions from the farmer or the

Central Government.

Certificate of Debt Waiver or Debt Relief

In the case of small and marginal farmers, upon waiver of the eligible amount, the

lending institution shall issue a certificate to the effect that the loan has been waived and

specifically mention the eligible amount that has been waived.

In the case of other farmers, upon granting OTS relief, the lending institution shall issue a

certificate to the effect that the loan account has been settled to the satisfaction of the

lending institution and specifically mention the eligible amount, the amount paid by the

farmer as his share and the amount of OTS relief.

The certificate shall be in such form as may be prescribed by RBI/NABARD and upon

issuing the certificate the lending institution shall take an acknowledgement from the

farmer.

 

Monitoring

There shall be constituted a National Level Monitoring Committee consisting of -

1. Secretary, Department of Financial Services, Ministry of Finance – Chairperson

2. Secretary, Department of Agriculture and Cooperation, Ministry of Agriculture

3. Deputy Governor, Reserve Bank of India

4. Chairman, NABARD

5. Chairman and Managing Director of two public sector banks

6. Chairman of two Regional Rural Banks; and

7. Managing Director of two State Level Cooperative Banks to monitor the implementation

of the Scheme

42

TABLE - 5 (a)District-wise consolidated details in respect of amount reimbursable under

Agricultural Debt Waiver & Debt Relief 2008

SL DistrictsNo. of Farmers 

BenefitedAmount Reimbursable

(Amt in Lakhs)

SF/MF of Total SF/MF of Total

1. Aurangabad 23,647 2,948 26,595 4,360.78 439.82 4,800.60

2. Bhojpur 32,876 2,388 35,264 7,047.91 621.06 7,668.97

3. Buxar 51,257 1,956 53,213 7,528.82 449.92 7,978.74

4. Gaya 35,257 2,741 37,998 6,119.14 328.11 6,447.25

5. Jehanabad 9,286 876 10,162 1,578.84 126.36 1,705.20

6. Kaimur 23,413 3,539 26,952 5,557.24 1,413.85 6,971.09

7. Lakhisarai 9,719 1,358 11,077 2008.00 188.88 2,196.88

8. Nalanda 37,700 862 38,562 4,815.23 94.64 4,909.87

9. Nawadah 24,379 754 25,133 3930 154.61 4,084.61

10. Patna 47,759 1,891 49,650 10,415.31 475.92 10,891.23

11. Rohtas 62,174 5,675 67,849 10,272.09 1,629.62 11,901.71

12. Darbhanga 25,755 889 26,644 4,253.56 255.81 4,509.37

13. East Champaran 55,441 3,770 59,211 9,333.34 743.62 10,076.96

14. Gopalganj 32,241 1,621 33,862 5,489.57 247.76 5,737.33

15. Madhubani 34,339 1,269 35,608 6,939.97 459.04 7,399.01

16. Muzaffarpur 41,426 2,351 43,777 7,379.36 670.36 8,049.72

17. Samastipur 40,160 2,301 42,461 7,068.02 617.56 7,685.58

18. Saran 39,818 2,148 41,966 7,536.28 438.14 7,974.42

19. Sitamarhi 33,379 1,417 34,796 6,196.02 414.58 6,610.60

20. Siwan 50,627 974 51,601 7,248.37 194.79 7,443.16

21. Vaishali 51,874 1,037 52,911 8,833.15 238.26 9,071.41

22. West Champaran   53,605 7,696 61,301 9,398.20 1072.2 1,0470.4

23. Katihar 64,022 2,701 66,723 13,321.71 767.36 14,089.07

24. Kishanganj 26,689 615 27,304 4,595.98 105.57 4,701.55

25. Madhepura 29,057 1,855 30,912 4,499.78 470.85 4,970.63

26. Purnea 75,501 3,130 78,631 13,279.00 793.33 14,072.33

27. Saharsa 20,417 893 21,310 3,700.07 312.55 4,012.62

28. Supaul 21,848 1,013 22,861 3,945.32 350.45 4,295.77

29. Banka 45,846 2,116 47,962 6,365.14 333.71 6,698.85

30. Begusarai 50,237 1,817 52,054 8,073.17 405.65 8,478.82

31. Bhagalpur 34,433 3,417 37,850 7,135.16 636.21 7,771.37

32. Jamui 18,666 1,743 20,409 2,781.95 287.55 3,069.50

43

33. Khagaria 25,319 1,817 27,136 4,018.50 460.48 4,478.98

34. Munger 18,318 1,344 19,662 2,883.12 225.36 3,108.48

35. Sheikhpura 11,153 625 11,778 1,667.50 80.33 1,747.83

36. Araria 41,999 2,005 44,004 8,886.05 479.5 9,365.55

37. Sheohar 949 91 1,040 145.98 11.26 157.24

 38. Arwal 6,517 605 7,122 1,189.46 64.27 1,253.73

  TOTAL 13,07,103 76,248 13,83,351 2,29,797.09 17,059.3 2,46,856.43

Chapter 9

44

State Level Banker's Committee of Bihar:

Convenor - State Bank of India

Performance of all Banks up to March 2009 under the Annual Credit Plan 2008-09

Sector/Scheme

Banks with Lead Bank Responsibilities RRBs

Others

AGTSBI PNB CBI CAN UC

OBOB

UNION

Nos. of Lead Districts

7 12 10 1 4 2 2 ** ** 38

ACP Achievement (%)

90.30

84.08

99.88

106.10

66.12

90.36

96.37 68.16 59.91 77.45

Share in Targets (%)

25.06

11.97

9.86 3.57 3.23 2.64 1.67 17.02 24.98 100

Contribution (%)

29.01

12.70

12.99

4.87 2.76 3.08 2.07 14.96 17.35 100

PMRY-2007-08 (%)

                   

SGSY-Achievement (%)

25.54

23.95

31.93

25.95 25.40

26.96

54.06 52.07 24.54 34.67

KCC-Achievement (%)

72.45

62.67

80.16

67.99 22.26

77.39

53.14 64.83 39.15 59.80

Performance of all Banks up to March 2008 under the Annual Credit Plan 2007-08

Sector/Scheme

Banks with Lead Bank Responsibilities RRBs

Others

AGTSBI PNB CBI CAN UC

OBOB

UNION

Nos. of Lead Districts

7 12 10 1 4 2 2 ** ** 38

ACP Achievement (%)

96.23

83.85

87.52

110.46

76.56

71.17

102.65 72.73 67.37 82.16

Share in Targets (%)

25.37

11.98

9.84 3.60 3.25 2.66 1.68 16.59 25.03 100

Contribution (%)

30.43

10.10

10.74

4.95 3.10 2.36 2.15 15.03 21.00 100

PMRY-2007-08 (%)

73.35

49.94

56.51

62.69 57.25

52.07

66.30 ** 12.89 58.63

45

SGSY-Achievement (%)

33.40

35.93

36.77

28.65 55.25

25.56

94.75 52.73 21.62 40.14

KCC-Achievement (%)

79.30

60.80

85.30

101.42

73.92

69.45

82.49 73.92 52.83 67.81

Annual Credit Plan

Targets under Annual Credit Plan allocated by SLBC, Bihar for different Sectors

Sectors 2007-08 2008-09 2009-10 Agriculture 4879.67 7075.73 8727.17 MSME 913.06 1050.05 1321.74 OPS 2687.64 3360.06 3871.43 TPS 8480.37 11485.84 13920.34 NPS 4619.63 6005.72 7207.45 GT 13100.00 17491.56 21127.79

TARGETS UNDER ANNUAL CREDIT PLAN

Bank-WiseTargets 2007-08 2008-09 2009-10Sector Comm

BanksRRBs Co-op

BanksCommBanks

RRBs Co-opBanks

CommBanks

RRBs Co-opBanks

Agriculture

3003.58 1256.34

619.75

4355.35 1821.69

898.69

5425.14 2141.73

1160.30

MSME 793.88 107.96 11.22 913.30 124.15 12.90 1146.50 156.20 19.04

OPS 2238.01 401.97 47.66 2797.94 502.50 59.62 3240.25 528.73 102.45

TPS 6035.47 1766.27

678.63

8066.29 2448.34

971.21

9811.89 2826.66

1281.79

NPS 4204.24 406.54 8.85 5465.69 528.52 11.51 6558.66 611.73 37.06

GT 10239.71

2172.81

647.48

13531.98

2976.86

982.72

16370.55

3438.39

1318.85

Year Total: 13,100.00 Year Total: 17,491.46 Year Total: 21,127.79

PERFORMANCE UNDER ANNUAL CREDIT PLAN

46

Sector wiseSector 2006-07 2007-08 2008-09

Achievement %age Achievement %age Achievement %ageAgricultur

e2985.40 80.20 3755.25 76.96 5697.49 80.52

MSME 376.11 56.55 572.69 62.72 653.45 62.23OPS 2139.29 99.47 2384.43 88.72 2496.83 74.31TPS 5000.80 84.14 6712.37 79.15 8847.79 77.03NPS 3237.33 93.49 4055.54 87.79 4700.16 78.26GT 8,738.13 87.37% 10,767.91 82.16% 13,547.95 77.45%

PERFORMANCE UNDER ANNUAL CREDIT PLANBank wise

Targets

2006-07 2007-08 2008-09

Sector CommBanks

RRBs Co-opBanks

CommBanks

RRBs Co-opBanks

CommBanks

RRBs Co-opBanks

AGL 1915.93(84.24%)

797.07(84.91%

)

272.40(53.48%

)

2447.04(81.47%

)

952.36(75.80%

)

272.40(53.48%

)

3942.67(90.52%

)

1438.24(78.25%

)

316.58(35.23%

)

MSME 325.65(57.46%)

50.46(56.37%

)

0(0%)

496.02(62.48%

)

76.67(71.02%

)

0(0%)

590.64(64.69%

)

62.81(50.59%

)

0(0%)

OPS 1859.76(105.46%

)

279.20(78.77%

)

0.33(1.01%)

2080.68(92.97%

)

303.51(75.51%

)

0.33(1.01%)

2232.89(79.80%

)

263.77(52.49%

)

0.19(0.32%)

TPS 4101.34(89.07%)

1126.73(81.49%

)

272.73(49.52%

)

5023.74(83.24%

)

1332.54(75.44%

)

272.73(49.52%

)

6766.20(83.88%

)

1764.82(72.08%

)

316.77(32.62%

)

NPS 2998.62(96.96%)

238.71(67.68%

)

0(0%)

3807.81(90.57%

)

247.73(60.94%

)

0(0%)

4436.07(81.16%

)

264.09(49.97%

)

0(0%)

GT 7099.96 (92.24%)

1365.44(78.68%

)

272.73(47.99%

)

8831.55(86.20%

)

1580.27(78.68%

)

272.73(72.73%

)

11202.27

(82.78%)

2028.91(68.16%

)

316.77(32.23)

47

TotalAchievement

8,738.13(87.37%

)

TotalAchievement

10767.91

(82.16%)

TotalAchievement

13547.95

(77.45%)

Commercial Banks in Bihar have been the major contributors in credit extension in different

sectors under the Annual Credit Plan. Particularly under Agriculture Sectors, Commercial Banks

have been extending loans as high as about 90% of the target fixed under the ACP. The

rehabilitation package by the Government to RRBs in Bihar, and implementation of

Vaidyanathan Committee's recommendation will certainly help particularly DCCBs to step up

lending so as to enhance their shares in overall achievement under the Annual Credit Plan.

Kisan Credit Card (KCC)

Kisan Credit Card (KCC) is the flagship scheme under agricultural financing not only in Bihar

but also all over the Country. This scheme takes care of the production credit requirements of the

farmers including credit requirements for the ancillary activities like maintenance of agricultural

machineries/ equipments, electricity charges etc. Under the scheme, credit is also extended to

farmers for allied agricultural activities such as fisheries, poultry, piggery, sheep/ goat rearing

etc. What is the unique feature of the scheme is the provision of meeting the contingent needs of

the farmers to a certain extent, relating to medical expenses, expenses on education of children,

expenses relating to marriage ceremonies, births and certain religious ceremonies. This scheme is

truly a scheme for farmers. 

In Bihar, Kisan Credit Cards are helping most of the farmers to meet their credit requirements

in a greater way than any other schemes.  

In view of the unique features of the scheme, financing under the scheme is placed at the highest

level of priorities in the State, and Banks have been extending loans to farmers under the scheme

with the same letter and spirit. In SLBC Meetings, performance of Banks under KCC is a

permanent agenda item for discussion and review.

48

Hon’ble Deputy Chief Minister, Bihar’s Action Point

Special Initiatives by Banks in coordination with the State Government

Mega Credit Camps for KCC financing in Bihar

As desired by the Hon’ble Deputy Chief Minister, Bihar, Banks and the State Government

functionaries together organized Mega Credit Camps for KCC financing to farmers in the entire

State. The Camps were organized on the 27-12-2008, 29-01-2009 and 28-02-2009 respectively at

all Block Headquarters in the State. The Camps succeeded in getting overwhelming response

from farmers of the State. In some of the camps, Hon’ble Deputy Chief Minister was himself

present, adding an impetus to the initiative. Besides, the Controlling Heads of all Banks also

visited and supervised some of the camps under their administrative control

PERFORMANCE UNDER KCCBanks 2006-07 2007-08 2008-09

Target(Nos.)

Achieve-

ment

%age

Target(Nos.)

Achieve-

ment

%age

Target(Nos.)

Achieve-

ment

%age

Comm Banks

2,50,000

2,03,935

81.57

3,00,000

2,22,478

74.16

8,61,429 5,05,008

58.62

RRBs 1,90,000

1,40,071

73.72

2,28,000

1,68,529

73.92

4,78,571 3,10,257

64.83

Co-Op Banks

1,60,000

55,374 34.61

1,60,000

75,533 47.21

1,60,000 81,725 51.08

Total 6,00,000

3,99,380

66.56

6,88,000

4,66,540

67.81

15,00,000

8,96,990

59.80

The percentage overall achievement of Commercial Banks against the allocated targets under the

Annual credit Plan kept on decreasing; however in absolute terms, the financing under KCC kept

on increasing year after year

SPECIAL CAMPAIGN FOR FINANCING UNDER KCCs IN BIHAR

As suggested by the Chairman, kishan Ayog Bihar, a discussion was held on launching a special

campaign for 100% coverage under KCC in some selected districts of Bihar in line of the same

49

in Jhabua and Ratlam districts in Madhya Pradesh. All the suggestions in this regard made by the

Chairman, Kishan Ayog, Bihar, which were placed by the SLBC in its 22nd meeting on

19.11.2007, were accepted by the House for implementation in the State with effect from 1st

April 2008.

For launching the campaign in eight districts namely Madhubani, Samastipur, West

Champaran, Gaya, Rohtas, Khagaria, Purnea and Bhagalpur in Bihar, the High Level

Meeting on KCCs with the Development Commissioner, Government of Bihar on the 24th April

2008 made a detailed discussion on the matter. The following decisions were taken in the

meeting:

A Task Force on the "Special Campaign" under the Chairmanship of the Development

Commissioner, Govt. of Bihar has been constituted and notified by the Department of

Institutional Finance, Government of Bihar.

The Taskforce under the Chairmanship of the Development Commissioner, Govt. of Bihar will

meet every month in the third week to review the progress under the campaign.

Similarly, in all the selected districts Task forces have been constituted vide DIF, Government of

Bihar Notification dated 17.03.2008.

The District Taskforce under the Chairmanship of the District Magistrate will meet every month

in the second week to review the progress under the campaign. In this connection, the district

Coordinators of different Banks in the selected Districts will provide performance data in respect

of their bank-branches to the Lead District Managers.

The Block Development Officers of all the Blocks falling under the selected eight districts have

to arrange for issuing LPCs (Land Possession Certificates) in favour of farmers Panchayat-wise

during the next three months in a continuous way.

Panchayat-wise lists of farmers with details of Rakwa (of their lands), position of their irrigated

and no-irrigated lands have to be provided to the concerned bank branches in whose service

areas the Panchayats/villages are falling.

In preparation of Panchayat-wise list of farmers, inclusion of the names of all farmers of the

Panchayat must be ensured, apart from indicating thereon against the names, if any, the KCC

facilities already availed in the past by the farmers. 

50

For facilitating financing under KCC to farmers, Land Possession Certificates should be issued

to farmers at Block levels. In this connection, the Department of Revenue and Land Reforms is

requested to arrange for issuing LPCs to 100 farmers each in the months of May & June 2008

and provide the list to the major Banks and RRBs operating in the area. Further in the months of

September and October 2008, the similar exercises will be carried out by the Department. All the

District Magistrates are also requested to make the LPCs available to farmers by organizing

camps at Block/Circle levels.

 

The National Agricultural Insurance Scheme should be implemented effectively through the

Financial Institutions in the State. The Agricultural Insurance Corporation should also take

initiatives at their own level in this regard. Sensitization programmers on the scheme should be

organized for farmers as well as Branch Managers of Banks. The Lead District Managers should

ensure the effective implementation of the scheme in their lead districts.

 

During the year 2007-08, 19 districts of the Sate have been selected for 100% financial inclusion.

Banks are to take special initiatives to complete the task by June 2008.

 

In the second meeting of the State Task Force under the Chairmanship of the Development

Commissioner, Govt.of Bihar with Banks on the 20th June 2008, four more new districts

namelySaran, Saharsa, Nalanda and Munger have been identified under the Special Campaign

under KCC, apart from the existing eight districts.

KCC TARGET FOR 2009-10

BANK-WISE TARGETS UNDER KCC FOR 2009-10

SL BANKS KCC TARGET (Nos) 2009-10  A C

1. State Bank of India 2,28,1562. Central Bank of India 1,38,4173. Punjab National Bank 1,83,5434. Canara Bank 24,8445. UCO Bank 70,474

51

6. Bank of Baroda 34,4787. Union Bank of India 17,7458. Bank of India 63,3779. Allahabad Bank 59,828

10. Andhra Bank 011. Bank of Maharastra 012. Corporation Bank 013. Dena Bank 50714. Indian Bank 6,59215. Indian Overseas Bank 1,01316. Oriental Bank of Commerce 50717. Punjab & Sind Bank 018. Syndicate Bank 6,08619. United Bank of India 25,35020. Vijaya Bank 021. State Bank Of Bikaner & Jaipur 022. State Bank of Patiala 023. ICICI Bank 024. Banaras State Bank 025. Federal Bank 026. Jammu & Kashmir Bank 51227. South Indian Bank 028. Vasya Bank Ltd. 029. IDBI 030. UTI 0

  COMM BANK -TOTAL 8,61,42931. State Co-operative Bank+LDB 1,60,00032. Bombay M, Co-op. Bank 0.000033. TUCB 0.0000

  CO-OP - TOTAL 1,60,0001. Bihar Kshetriya GraminBank 48,6302. Samastipur 23,5113. Kosi 53,1394. Madhya Bihar Kshetriya Bank 1,31,0765. Uttar Bihar Kshetriya Gramin Bank 2,22,215  RRBs - TOTAL 4,78,571  TOTAL BANKS 15,00,000

52

AGRICULTURAL CREDIT AS ON 31-03-2009

At the state level, the ratio of Agricultural Credit is at 37.10% against the national benchmark of

18%.

2006-07 2007-08 2008-09Total

Advance

Total Agl

Sector Advanc

e

% Agl Sector

Advance to Total Advance

Total Advanc

e

Total Agl

Sector Advanc

e

% Agl Sector

Advance to Total Advance

TotalAdvan

ce

Total Agl

Sector Advanc

e

% Agl Sector

Advance to Total Advance

19048.42

6223.27 32.67 21577.23 

7717.74 35.77 24051.09

9823.39 37.10

53

Chapter 10

Research Methodology

This research project drew on a wide range of academic literature that documents the

institutional design, operations, successes and failures of NABARD and the other Co-operative

Bank. This comprehensive literature survey, which has formed the core of the methodology,

yielded both qualitative and also relevant tertiary and secondary quantitative data. The data has

been further used to analyze and find out the conclusion that how NABARD helps the

agriculture sector to be benefitted the most. A des creative research carried out with specific

objective and hence it results in definite conclusions.

54

Chapter 11

Analysis

The National Bank for Agriculture and Rural Development (NABARD) was set up in July 1982.

It became the apex institution to play a pivotal role in the sphere of policy planning and

providing refinance facilities to rural financial institutions and for augmenting their resource

base.

The SCB’s are a link between the co-operative organizations with the RBI, NABARD and the

state governments. They have to co-ordinate, control and regulate the working of Central Co-

operative Banks (CCB’s) and also provide financial and other resources and investment channels

to the CCB’s.

SLBC play important role for developing the Agriculture in Bihar. There are many banks like

SBI, PNB, CBI, etc are working under SLBC for development. Various bank which responsible

for agriculture development in different districts are:

Banks Number of District

in Bihar

Contribution (%)

KCC-Achievement (%)

SBI 7 29.01 72.45

PNB 12 12.70 62.67

CBI 10 12.99 80.16

CAN 1 4.87 67.99

UCO 4 2.76 22.26

BOB 2 3.08 77.39

UNION 2 2.07 53.14

Targets under Annual Credit Plan allocated by SLBC, Bihar for Agriculture Sectors

Sectors 2007-08 2008-09 2009-10 Agriculture 4879.67 7075.73 8727.17

Targets under Annual Credit Plan Bank-Wise:

55

Targets 2007-08 2008-09 2009-10Sector Comm

BanksRRBs Co-op

BanksCommBanks

RRBs Co-opBanks

CommBanks

RRBs Co-opBanks

Agriculture

3003.58

1256.34

619.75

4355.35

1821.69

898.69

5425.14

2141.73

1160.30

Performance under annual credit plan in Agriculture Sector:

Sector 2006-07 2007-08 2008-09Achievement %age Achievement %age Achievement %age

Agriculture

2985.40 80.20 3755.25 76.96 5697.49 80.52

Chapter 12

56

Findings and Conclusion

Agriculture is the vital source of wealth in Bihar. 76% of its population is engaged in agricultural

pursuits. Bihar’s productive contribution in food grain, fruit, vegetables, spices and flowers can

increase manifold with improved methods and system management.

Bihar has a total geographical area of about 93.60 lakh hectare, out of which only 56.03 lakh

hectare is the net cultivated area and gross cultivated area being 79.46 lakh hectare. About 33.51

lakh hectare net area and 43.86 lakh hectare gross area receive irrigation from different sources.

Principal food crops are paddy, wheat, maize and pulses. Main cash crops are sugarcane, potato,

tobacco, oilseeds, onion, chilies and jute and. Bihar has notified forest area of 6,764.14 sq km,

which is 7.1 per cent of its geographical area.

The principal agricultural crops are rice, paddy, wheat, jute, maize and oil seeds. Cauliflower,

cabbage, tomato, radish, carrot, beat etc. are some of the vegetables grown in the state.

Sugarcane, potato and barley are some of the non-cereal crops grown. The entire agricultural

operations are divided into two crop seasons Kharif and Rabi. The Kharif season starts from the

third week of May and lasts till the end of October followed by the Rabi season.

NABARD is set up by the Government of India (GoI) as a development bank with the mandate

for facilitating credit flow for promotion and development of agriculture, small-scale industries,

cottage and village industries, handicrafts and other rural crafts. It also has the mandate to

support all other allied economic activities in rural areas, promote integrated and sustainable

rural development and secure prosperity of rural areas, as also for matters connected therewith

and incidental thereto.

It’s subscribed and paid-up Capital was Rs.100 crore which was enhanced to Rs. 500 crore,

contributed by the Government of India (GOI) and RBI in equal proportions. Currently it is Rs.

2000 crore, contributed by GoI (Rs.550 crore) and RBI (Rs.1450 crore).

The Management of NABARD vests with the Board of Directors. The Board of Directors of

NABARD comprises the Chairperson, Managing Director, representatives of RBI, GoI, State

Governments and Directors nominated by the GoI.

57

State Bank of India Caters to the needs of agriculturists and landless agricultural labourers

through a network of 8750 rural and semi-urban branches. Apart from the branches, there are

428 Agricultural Development Branches (ADBs) which also cater to agriculturists. We are the

leaders in agri finance in the country with a portfolio of Rs. 64,000 cr in agri advances covering

around 80 lac accounts.

Our branches have covered a whole gamut of agricultural activities like crop production ,

horticulture , plantation crops, farm mechanization, land development and reclamation, digging

of wells, tube wells and irrigation projects, forestry, construction of cold storages and godowns,

processing of agri-products, finance to agri-input dealers, allied activities like dairy , fisheries,

poultry, sheep-goat, piggery and rearing of silk worms.

58

BIBLIOGRAPHY

1. http://www.nabard.org/nabardrolefunct/nabardrole&functions.asp

2. http://www.nabard.org/introduction.asp

3. http://www.nabard.org/nabardataglance.asp

4. http://slbc.bih.nic.in/adwd-relief.htm

59