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targets, are required to deposit into RIDF such amounts as may be allocated
to them by the Reserve Bank of India” (
The Economic Survey 2008-09
, p.100).
Thus, against the corpuses indicated in the Union budget speeches (with no
funds from the budget whatsoever), the RBI assesses the agricultural credit
shortfall of each bank in the preceding year and allocates the amount of the
given RIDF tranche for the current year amongst the banks in proportion to the
bank’s shortfall in agricultural credit target. While the total size of each tranche
is not known, what is not public knowledge is the bank-wise apportionment of
the tranche amount.
However, the processes involved in the operation of RIDF are rather
hazy, not clearly explained in official literature. We have built an account of the
processes based on official documents and discussions with senior officials
of NABARD: what is this creative idea of an RIDF, how does it get concretised,
and what are the actual size of funds involved? The answers to questions are
on the following lines.
First, as described earlier, the Finance Minister indicates in each year’s
budget speech an aggregate amount which is the size of the corpus for the
relevant tranche of RIDF. As shown in Table 6.1, at the end of March 2013, 19
such tranches have been created and funds allocated. The aggregate allocation
has touched
`
1,74,000 crore. This is a notional fund in existence only in the
imagination of the Finance Minister. A Corpus commonly understood as a
concrete accumulation of funds does not exist in reality either in the balance
sheet of NABARD where it has been instituted or in the Annual Financial
Statement of the Government of India (Government Financial Statement is
of course not concerned with it). Not even the commercial banks who are
supposed to contribute to the Corpus from out of their shortfalls in agricultural
credit targets of 18% of net bank credit, have any definitive amount spelt out
in their balance sheets as contribution to the RIDF Corpus or in any of their
publications, least of all in any bank balance sheet except probably hidden under
priority sector advances; in reality it should be considered as a commitment, a
contingent liability until it is called upon to fulfil it.
Notwithstanding the above situation, RIDF is a reality and has grown
to be a sizeable sum. In practice, it has turned out to be a very creative and
innovative idea of extracting development finance from commercial banks
which are resource rich and which fail to fulfil certain social obligations; they
are allowed to leverage public deposits precisely for serving the credit needs of
the society.
