1. Genesis

The rural financial system in the country needs a strong and efficient credit delivery system, capable of taking care of the expanding and diverse credit needs for agriculture and rural development. Rural Cooperative Banks (RCBs) and Regional Rural Banks (RRBs) are two important institutions involved in delivery of rural credit.

Institutional Development Department (IDD) has been at the forefront in this direction, engaging directly and indirectly with Rural Financial Institutions (RFIs) since the inception of NABARD. It has been initiating various projects and programmes to encourage development of a strong rural financial eco-system, in a sustainable manner. The Department undertakes these initiatives to improve the health of RCBs and RRBs in association with Government of India (GoI), Reserve Bank of India (RBI) and State Governments and Sponsor Banks for RRBs.

2. Core Functions of the Department

A. Development of RCBs:

a. Developmental Initiatives:

• Policy support to GoI in matters relating to RCBs.
• Review and monitoring of functioning of RCBs through systematic data collection, analysis of data and highlighting issues that require redressal through reforms.
• Assisting GoI in taking remedial measures to improve the health of weak banks through various reform measures such as Recapitalisation / Restructuring and other reforms.
• Preparation of Policy notes for GoI, RBI, Parliamentary Committees and various other agencies.
• Review of operations of Short-term (ST) & Long-term (LT) rural cooperatives.
• Support through Cooperative Development Fund (CDF) for RCBs, Cooperative Training Institutes (CTIs) for Capacity Building of Human Resources, Special package for development of Credit Cooperatives in North Eastern States, J&K, Sikkim and Andaman & Nicobar Islands; CDF-Scheme to provide Stimulus Grant Support for PACS Computerisation.
• CDF-Support for setting up Business Diversification & Product Innovation (BDPI) Cells in Rural Cooperative Banks (RCBs).
• CDF Grant Support to undertake various promotional measures for transforming PACS as MSCs.
• CDF-Scheme on Extension of Grant Support for Publications to Rural Credit Cooperative Institutions.
• Coordination with RCBs, State Governments, GoI and other stake holders on matters relating to Cooperatives.
• Convening of periodical meets of Registrars of Cooperative Societies (RCS) and CEOs of State Cooperative Banks (StCBs) and State Cooperative Agriculture and Rural Development Banks (SCARDBs).
• Publication of statistical statements relating to performance of RCBs.

b. HR Initiatives:

• Support to RCBs in streamlining procedures, upgrading technology and human resource development
• Professionalization of senior and middle level executives
• Providing financial support for training institutes of Cooperative banks under the Scheme of Financial Assistance for Training of Cooperative Banks Personnel (SOFTCOB)
• Conduct of Organisation Development Intervention (ODI) programmes through reputed training institutes
• Providing accreditation to Cooperative Training Institutes through Centre for Professional Excellence in Co-operatives (C-PEC) established in BIRD, Lucknow
• Developing and implementing Corporate Governance Index Return for putting-in place good governance in Rural Cooperative Banks (RCBs).
• In view of the COVID related movement restrictions, Cooperative Training Institutions and Training Establishments of NABARD were allowed to conduct more on-line training programmes for personnel of Cooperatives.

B. Development of Regional Rural Banks

a. Development Initiatives:

• Review the performance of RRBs on half-yearly basis
• Dealing with matters relating to recapitalization of RRBs
• Providing Statutory Auditors panel to RRBs
• Providing guidance to the Government on the matters relating to amendment of RRB Act
• Dealing with matters relating to Parliamentary Committee and Standing Advisory Committee legislation on HR matters
• Bringing out statistical publications on RRBs and conduct of Studies
• Support to various Committees

b. HR Initiatives:

• Committee-based appointment of RRB Chairmen
• Appointment and monitoring of Nominee Directors of NABARD on the Board of RRBs
• Guiding the Government on matters relating to recruitment and policy matters of RRBs
• Coordinating the recruitment process in RRBs through Institute of Banking Personnel Selection (IBPS) & Common Written Examination (CWE)
• Advising GoI on issues relating to amendment of Appointments and Promotional Rules (APPR) and Service Regulations.
• Monitoring implementation of Pension Scheme in RRBs as per directions of GOI.
• Conducting Joint Consultative Committee Meetings

3. Programmes of the Department for RFIs

A. PACS Development Cell (PDC)

PACS Development Cells (PDCs) have been created in RCBs to support PACS in business diversification through guidance in preparing Business Development Plans, capacity building and develop new models of business for PACS. The PDCs, currently established and functional in 94 DCCBs/StCBs, have assisted 2,556 PACS operating in 20 States. During the year 2021-22, an amount of Rs. 0.14 crore lakhs has been disbursed for the functional PDCs in 4 States.

B. PACS as MSC

Department of Refinance, NABARD, introduced Special Refinance Facility for transforming all the potential PACS as Multi Service Centres (MSCs) over a period of 3 years commencing from the FY 2020-21, by providing concessional refinance to StCBs at 3% to support PACS to create quality infrastructure (capital assets) and increase their business portfolio in tune with needs of members. Under this line of credit, NABARD has envisaged transformation of 35,000 PACS in 3 years commencing with the transformation of 5,000 PACS in FY 2020-21 and for subsequent years 15,000 PACS each during FY2021-22 and FY2022-23. The ultimate interest rate to be charged from PACS will not be more than 1% over & above the interest rate charged by NABARD and will be shared by StCB & CCB as per the mutually agreed terms. Repayment period of refinance will be up to 7 years. Subsequent to sanction of loan facility by Department of Refinance, NABARD, PACS can seek grant support towards accompanying measures not exceeding 10% of the loan component subject to a maximum of Rs.2.00 lakh per PACS.

C. PACS Computerisation – Support by NABARD

NABARD sanctioned 6 projects covering 6 States viz., Andhra Pradesh, Bihar, Uttarakhand, Uttar Pradesh, Rajasthan and Telangana with total project outlay of Rs.30.00 crore under its newly introduced scheme of PACS Computerization, wherein it was decided to provide a stimulus grant support up to Rs.5.00 crore to State Government/Cooperative Banks which are willing to provide a matching grant.

D. Central Sector Scheme for Computerisation of 63000 PACS

NABARD is the implementing agency of the centrally sponsored project of Ministry of Cooperation, GoI for computerization of 63000 functional PACS in the country. Its a Rs.2516 cr project spread over 5 years with the motive of having a ERP / a common national level software for PACS which is able to present the national level data for these PACS, which captures all the multi dimensional activities of PACS – credit or non credit and convert them into vibrant Multi purpose service centres.

Business Diversification and Product Innovation Cells (BDPICs) in Rural Cooperative Banks (RCBs)

As against the newly introduced scheme to support, encourage and incentivise the efforts by Rural Cooperative Banks for setting-up BDPIC for giving impetus for product innovation and business diversification. During FY 2021-22, NABARD has sanctioned 3 proposals received from the Himachal Pradesh, Mizoram and Tamil Nadu RO with a TFO of Rs.247.50 lakh and grant assistance of Rs. 198.00 lakh from the CDF. The cumulative assistance stands at Rs.1155.00 lakh and Rs.924.00 lakh respectively. The disbursement made during the year 2021-22 was Rs. 56.69 lakh and cumulative Disbursement stood at Rs.67.44 lakh.

E. Recapitalisation of RRBs

• NABARD makes an assessment for recapitalisation of RRBs annually for those RRBs which do not comply with mandatory requirement of 9% CRAR, keeping in view the anticipated internal accrual to capital through profit/loss and amortisation of pension liability. Based on the assessment made by NABARD, the recapitalization assistance may be provided by GoI, State Govt. and Sponsor Banks to RRBs for meting out CRAR level at 9% stipulated by RBI. Rs. 10,890 crore capital infusion has been sanctioned to 22 RRBs to be infused in 2 years viz. during FY 2021-22 and FY 2022-23. This will be shared by the Central Government, State Government, and the Sponsor Banks in the proportion of 50%, 15% and 35% respectively.
• While approving the first dose of capital infusion for RRBs during FY 2021-22, the Government of India had indicated that subsequent recapitalisation support of 25% will be provided to the RRBs by 31 March 2023, upon demonstrable improvement in the operational and governance reforms as per the Viability Plans.
• The viability plan is to implement comprehensive reforms in functioning of RRBs in spheres of business diversification, NPA management, cost rationalisation, technology adoption, corporate governance, HR development, etc. NABARD will be playing an anchor role in turning around the RRBs by providing centralised services in the fields of technology adoption , capacity building, product innovation etc..
• All 43 RRBs including the recapitalized RRBs are implementing their Viability Plans, for improving their financial strength and operational efficiency, including technology adoption. The impact of the recapitalization is already visible in the financial results of the banks for FY 2021-22 and for HY ended 30 September 2022.
• A ‘dashboard’ RRB ????? has been developed by NABARD jointly with the DFS, GoI through an external agency for a continuous on-line monitoring of the financial performance of the RRBs under the ‘Viability Plans’ and a comprehensive monitoring of their overall financial performance under different parameters.

F. GOI's Revival Package for STCCS- Cooperative Revival and Reforms

The Government of India (GoI) appointed a Task Force under the Chairmanship of Prof. A. Vaidyanathan in 2004 to analyse the problems faced by the rural cooperative institutions and to suggest an action plan for their revival. Based on the Task Force recommendation, a revival package was announced, by GOI in January 2006 which encompassed:

• a. Legal and institutional reforms
• b. Measures to improve the quality of management
• c. Financial assistance to bring the system to an acceptable level of health.

NABARD was the Implementing Agency for implementing the Revival package with a financial outlay of Rs.13,596 crore with GoI share of Rs.9,245.28 crore. 23 out of 25 States implemented the Revival Package. Common Accounting System (CAS) and Management Information System (MIS) was introduced in PACS as part of the package.

G. Monitoring of Progress & MIS

The department regularly monitors the health of RFIs through ENSURE, an online platform for submission of data by RCBs and RRBs.

4. Other Initiatives:

A.Cooperative Development Fund (CDF)

CDF was established on the basis of a decision taken by the Board of Directors in its 69th meeting held on 2nd February 1993 under the provisions of section 45 of NABARD Act, 1981 with an initial corpus of Rs.10 crore. Thereafter, the corpus of the fund has been augmented through contribution from NABARD’s annual profit. The objectives of the CDF are:

• i. To support the efforts of the ground level cooperative credit institutions, viz, PACS and weak RCBs, on selective basis in mobilising resources.
• ii. Human Resource Development for achieving better working results and improvement in viability as well as introduction of and improvements in systems and procedures in cooperative credit institutions.
• iii. Building up of better Management Information System (MIS).
• iv. Conduct of special studies for improving functional efficiency.

During the year 2021-22, Rs.30.53 crore (as on 31/03/2022) has been disbursed under CDF (cumulatively Rs.260.01 crore) for various promotional programmes conducted by different tiers of both Short Term and Long Term Cooperative Credit Structure.

B. Centre for Professional Excellence in Cooperatives (C-PEC)

NABARD, in collaboration with GIZ, has established “Centre for Professional Excellence in Cooperatives (C-PEC), in BIRD, Lucknow in the year 2009 for supporting Cooperative Training Institutes (CTIs) in STCCS to impart quality training in banking and delivery of financial services. During the year 2021-22, C-PEC had conducted 04 certification courses examinations, inducted 87 Institutional and 2289 Individual members increasing the total membership to 12,400 which comprised of 49 CTIs, 30 StCBs, 276 DCCBs, 01 RCS office, 01 Union, 02 SCARDB, 5685 PACS and 6356 individuals.

Contact Information

Shri J. S. Upadhayay

E-mail Address: idd@nabard.org

Information under RTI - Section 4(1)(b)