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.

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.

Programmes of the Department for RFIs

A. 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. 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.

B. 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.

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

NABARD introduced a scheme in the year 2020 to support, encourage and incentivize the efforts by RCBs for setting up Business Diversification & Product Innovation Cells (BDPICs) in StCBs for giving impetus for product innovation and business diversification. During FY 2021-22, NABARD has sanctioned 7 proposals with a TFO of Rs.577.5 lakh and grant assistance of Rs. 462 lakh from the CDF. The cumulative assistance stands at Rs.1732.50 lakh and Rs.1386.00 lakh respectively. The disbursement made during the year 2022-23 was Rs.114.99 lakh and cumulative Disbursement stood at Rs.182.43 lakh.

D. Scheme of Financial Assistance for Training of Cooperative Banks Personnel (SOFTCOB)

A major assistance of CDF is going towards training related activities through SOFTCOB. During 2020-21 , 2021-22 and 2022-23 the Cooperative Training Institutions (CTIs) have conducted as many as 4252 programmes covering more than one lakh participants from different tiers of the cooperatives. During 2020-21, conducting programmes through online-mode was approved which was continued. Many institutions have conducted both off-line and on-line programmes during the year 2022-23.

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 FY 2022-23
• 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.

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 2022-23, Rs.33.63 crore (as on 31/03/2023) has been disbursed under CDF (cumulatively Rs.293.65 crore) for various promotional programmes conducted for different tiers of both Short Term and Long Term Cooperative Credit Structure.

B. Committee on National Policy on Cooperation

A National level committee has been constituted on 2nd September 2022 under the chairmanship of Shri Suresh Prabhakar Prabhu, consisting of experts of the cooperative sector, representatives from National/ State/ District/ Primary level cooperative societies, Secretaries (Cooperation) and RCSs from States/UTs, officers from Central Ministries/ Departments, Chariman, NABARD etc. to formulate the New National Cooperation Policy.

The Committee has been mandated for drafting the new National Cooperation Policy Document in line with the co-operative principles to provide an enabling framework to realise the vision of 'Sahakar se Samriddhi', strengthen the cooperative movement in the country and promote cooperative-based economic development model.

C. Model byelaws for PACS

Model byelaws for PACS have been prepared and circulated by GoI amongst states for their adoption as per the respective State Cooperatives Act to enable PACS to undertake more than 25 business activities like dairy, fishery, setting up of godowns, LPG/ Petrol/ Green energy distribution agency, banking correspondents, CSC, etc. This has elicited very good response and a large number of PACS are adopting it across the country to ensure their financial revival.

D. PACS as Common Service Centres (CSC)

A Memorandum of Understanding (MoU) has been signed between Ministry of Cooperation, Ministry of Electronics and Information Technology, NABARD and CSC e-Governance Services India Limited to enable PACS to provide services offered by Common Service Centres (CSC) to improve their viability, provide e-services at village level and generate employment. Training program under the project is now being taken up and NABARD is actively supporting this.

E. National Cooperative Database

Preparation of an authentic and updated data repository of cooperatives in the country has been initiated by Ministry of Cooperation, GoI to facilitate stakeholders in policy making and implementation.

F. Central Plan for Strengthening Cooperative movement in the country

There are still 1.6 lakh Panchayats without PACS and nearly 2 lakh Panchayats without any dairy cooperative society in our country.

On 15 February 2023, the Union Cabinet has approved a central plan for strengthening cooperative movement in the country and deepening its reach up to the grassroots.

The plan aims to establish a viable PACS in each uncovered Panchayat, viable dairy cooperatives in each uncovered Panchayat/village and viable fishery cooperatives in each coastal Panchayat/village as well as Panchayat/village having large water bodies, and strengthen the existing PACS/dairy/fishery cooperatives through convergence of various schemes of Ministry of Fisheries, Animal Husbandry & Dairying by leveraging the ‘whole-of-Government’ approach.

Initially, 2 lakh PACS/ Dairy/ Fishery cooperatives would be established in next five years. The action plan for implementation of the project shall be prepared by NABARD, National Dairy Development Board (NDDB) and National Fishery Development Board (NFDB).

A high level Inter-Ministerial Committee (IMC) under the chairmanship of Home & Cooperation Minister with Minister of Agriculture and Farmers Welfare; Minister for Fishery, Animal Husbandry and Dairying; Secretaries concerned; Chairman NABARD, NDDB and Chief Executive NFDB, as members has been constituted and empowered to take necessary steps, including suitable modifications in the guidelines of the schemes identified for convergence, for smooth implementation of the plan. Committees at National, State and District levels have also been constituted to ensure focused and effective execution of the action plan.

G. Study on "Reforms, Restructuring and Innovations in ARDBs"

Ministry of Cooperation, Government of India requested NABARD to conduct a Study on "Reforms, Restructuring and Innovations in ARDBs". NABARD has engaged NABCONS to conduct the study and it has commenced.

H. 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 2022-23, 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.

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.

Details of the schemes/ Programmes

a. Capacity Building Programmes - SOFTCOB

A major assistance of CDF is going towards training related activities through SOFTCOB. In the past three years, the CTIs have conducted as many as 4252 programmes covering more than one lakh participants from different tiers of the cooperatives. During 2022-23, a grant of Rs.1561.61 lakhs has been utilized by CTIs in 21 states.

b. Business Diversification & Product Innovation Cells in State Cooperative Banks (BDPIC)

With fast changing rural landscape and consequential changes in rural credit needs and emerging new credit delivery mechanisms, the rural credit cooperatives need to keep in pace with competing rural financial institutions for growth in business and efficiency of business operations. It is necessary to diversify their business portfolio by developing new models for potential activities and new product innovations.

Against this background, it has been decided to introduce a new scheme to support, encourage and incentivise the efforts by Rural Cooperative Banks for setting-up "Business Diversification & Product Innovation Cell" for giving impetus for product innovation and business diversification.The objective of setting up Business Diversification & Product Innovation Cell in StCBs is to support their efforts to integrate new products into existing product lines based on external and internal business environment. While emphasizing the focus on development of financial and non-financial products, the scheme intends to innovate products for the entire structure viz., StCBs, DCCBs and PACS. So far, 21 BDPI cells have been sanctioned in StCBs with total grant assistance of Rs.1386 lakhs. The disbursement made during the year 2022-23 was Rs. 114.99 lakh & cumulative Disbursement was Rs.182.43 lakh.

c. Scheme for Comprehensive Support Plan for NER including Sikkim, Jammu & Kashmir and Andaman & Nicobar Island

The objective of the scheme is to provide a separate package of assistance in a project mode to meet the special requirement of the NE region including Sikkim, Andaman and Nicobar Islands and J&K so as to facilitate improved performance of these institutions in terms of better credit delivery and widening the scope of services being provided by PACS for ensuring their viability. The scope of assistance may cover broadly the activities covered under CDF which include the areas like Infrastructure Assistance to PACS (no civil construction, purchase of vehicle), Capacity building of PACS personnel, Exposure Visit, establishment of PACS Development Cell/Business Development Cell in StCB, Conduct of Member Awareness Programme, Support for developing PACS as MSC, enabling PACS to provide a range of services and generate additional income.

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. The project is under implementation and NABARD has committed Rs.252 crore under this Central scheme.

e. Transformation of Primary Agricultural Co-operative Society (PACS) as Multi Service Centre (MSC) - Support from CDF

Against the backdrop of recent reforms by GoI in APMC Act, Essential Commodity Act, Contract Farming Act and COVID 19 led reverse migration necessitating creation of investment opportunities for rural youth in agriculture and also with the proposed Agriculture Infrastructure Fund (AIF) scheme under Aatmanirbhar Bharat initiative of GoI, for establishing decentralized farm-gate post- harvest management infrastructure wherein PACS have been included as one of the eligible institutions for interest subvention, it is envisaged that PACS can now play a major role in physical and financial supply chain of commodities by working as spokes to the Gramin Agriculture Markets (GrAMs). In the above context, it has been decided to graduate all the potential PACS for conversion as MSC over a period of three years commencing from the year 2020-21 by providing special long term refinance facility through StCBs at 3%. 3055 PACs in the country have been identified by StCBs, to create quality infrastructure (capital assets) and increase their business portfolio in tune with the needs of members. Subsequent to sanction of loan facility by 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 from CDF.

f. Scheme on Extension of Grant Support for Publication to Rural Credit Cooperative Institution:

The rural banking scenario has been fast changing in terms new approaches, new products, new service delivery mechanisms, new regulations, etc. and it is increasingly necessary that the personnel of rural credit cooperatives keep abreast of such developments for their business growth and sustainability. Publication from an important source of information and is a tool to spread awareness and share experiences especially at local level. The publications of cooperative credit institutions build up corporate enthusiasm and support on going education. The attempts of these institutions in this direction have been sporadic. From our experience, it has been observed that some of the publications brought out by these institutions are newsletter, occasional souvenirs, manuals, etc.; which helps the staff of cooperatives in enhancing their knowledge. Keeping in view the above, NABARD has decided to extend support to the extent of Rs. 1.00 lakh ot the StCBs / DCCBs / PACSs / SCARDBs for the following publications by these institutions from CDF.

• i. Periodical newsletters.
• ii. Subject specific manuals.
• iii. Publications of success stories/ best practices.
• iv. Online news letters.
• v. Statistical publications.

The publications by Cooperatives may also cover following contents

• i. Performance of rural credit cooperatives.
• ii. New guidelines / regulatory prescriptions form NABARD / RBI / GoI / State Govt.
• iii. Important developments in banking industry including technology interventions.
• iv. Success stories / projects / best practices in rural credit.
• v. Important information such as Unit Costs / Scale of Finance, Scheme guidelines, etc.

PACS Development Cells (PDCs)

PACS Development Cells (PDC) are set up in DCCBs/StCBs to undertake capacity building, handholding, develop new models/avenues for income generation, guidance, exposure visits, and other suitable interventions as may be necessary to equip these ground level entities deliver financial and non-financial services efficiently to their members. The PDCs, currently established and functional in 94 DCCBs/StCBs, have assisted 2,556 PACS operating in 20 States. During the year 2022-23, an amount of Rs.6.66 lakhs has been disbursed for the functional PDCs in 4 States.

Centre for Professional Excellence in Cooperatives ( C-PEC)

To develop a cadre of professionals with necessary technical competencies in the rural cooperative credit structure, C-PEC has been created at BIRD, Lucknow as an independent nodal centre for coordinating the training efforts of various Cooperative Training Institutes (CTIs) in the domain of banking operations and delivery of financial services. During the year 2022-23, 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.

Centrally Sponsored Scheme for Computerization of Primary Agricultural Credit Societies (PACS)

On 29 June 2022, the Cabinet Committee on Economic Affairs has approved a scheme for Computerization of Primary Agricultural Credit Societies (PACS) with the objective of increasing efficiency of PACS, bringing transparency and accountability in their operations; facilitating PACS to diversify their business and undertake multiple activities/ services.

This project proposes computerization of about 63,000 functional PACS over a period of 5 years with a total budget outlay of Rs. 2,516 crore with Government of India share of Rs. 1,528 crore. The shares of State Governments and NABARD in the cost of implementation of project are ?736 crore and ? 252 crore, respectively.

The Primary Agricultural Cooperative credit societies (PACS) constitute the lowest tier of the three-tier Short-term cooperative credit (STCCS) in the country. The other two tiers viz. State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) were automated by NABARD and brought on Common Banking Software (CBS).

However, majority of PACS have so far been not computerized and are still functioning manually resulting in inefficiency and trust deficit. Though, in some of the states, stand-alone and partial computerization of PACS has been done there is no uniformity in the software being used by them and they are not interconnected with the DCCBs and StCBs. Therefore, it has been decided by GoI to computerize 63,000 functional PACS throughout the Country and bring them on a common platform at National level and have a Common Accounting System (CAS) for their day-to-day business.

The project comprises of development of cloud based common software with cyber security and data storage, providing hardware support to the PACS, digitization of existing records including maintenance support and training.

A National level Monitoring and Implementation Committee (NLMIC) has been constituted under the chairmanship of Secretary, Ministry of cooperation with representatives from NABARD, State governments, NITI Aayog and StCBs to guide and monitor the implementation of the project. State level Implementation & Monitoring Committee (SLIMC) and District Level Implementation & Monitoring Committee (DLIMC) will oversee the implementation of the project and provide feedback to the NLMIC.

NABARD will be responsible for implementation of the project at Central level under the guidance and directions of NLMIC and Ministry of Cooperation.

Contact Information

Shri J. S. Upadhayay

E-mail Address: idd@nabard.org

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