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Parliament passes bill to raise Nabard’s capital to Rs 30,000 crore
New Delhi | January 2018
New Delhi: A bill to increase authorised capital of National Bank for Agriculture and Rural Development (Nabard) by six times to Rs30,000 crore and enable exit of Reserve Bank of India (RBI) was passed by Parliament after the government assured that there is no plan to have private holding in it.

The National Bank for Agriculture and Rural Development (Amendment) Bill, 2017, was passed on Tuesday by voice vote in the Rajya Sabha. The bill was passed by the Lok Sabha in August, 2017.

In his reply on the bill in the Rajya Sabha, minister of state for finance Shiv Pratap Shukla said, “Some members asked about private holding in Nabard. There is no proposal to have private holding in the Nabard”.

On apprehensions about RBI’s role as regulator of Nabard after passage of this bill, the minister said, “RBI is the regulator for the Nabard and it would continue to be so.” The minister told the house that the bill was supported by almost of all members of the House from all parties, including Rajeev Shukla (Congress), Ananda Bhaskar Rapolu (Congress), Anil Desai (Shiv Sena) and Vikas Mahatme (BJP).

All of these members urged the government that the poor farmers at the bottom should be able to reap benefits of the finance aid provided by the Nabard. At present the authorised capital of Nabard is Rs5,000 crore and there is a proposal to increase it to Rs30,000 crore. If there is a need to increase this authorised capital above Rs30,000 crore, then after discussions with RBI it can be increased upto Rs50,000 crore, Shukla said.

As RBI is also a regulator, its 0.4% equity will be transferred to the centre and as a result, 100% equity will come to the government. The bill also seeks to amend certain clauses in the light of reference of the Micro, Small and Medium Enterprises (MSMEs) Development Act, 2006 in the proposed legislation.

Participating in the discussion, Neeraj Shekhar of Samajwadi Party supported the bill but said Nabard should ensure that loans are provided to small and marginal farmers as well as MSMEs and not to big corporates/ farmers. Talking about non-performing assets (NPA) issues being faced by banks, he said only loans of corporates are being adjusted and not of farmers.

Shekhar also wanted to know from the government about NPAs of Nabard. N. Gokulakrishnan of AIADMK said the bill seeks to increase authorise capital of Rs30,000 crore from Rs5,000 crore. He said the role of Nabard is critical to achieve the objective of doubling farmers’ income.

Manish Gupta of All India Trinamool Congress suggested that the government should consider creating a separate fund or separate wing in Nabard to deal with the problems faced by small and marginal farmers. He said there is a need to boost investment in the agriculture sector.

Prasanna Acharya of BJD said the authorised capital of Nabard is being increased through this amendment bill. However, he said: “whatever capital we put in, unless we are able to check farmers suicides and miseries of farmers, there is no meaning to it”.

Acharya suggested that Nabard should focus on irrigation projects. Ram Nath Thakur of JD (U) supported the bill, saying that this bill is important for rural economy. He also demanded that all projects of Bihar should be taken up.

Tapan Kumar Sen, CPI(M), said perversion in distribution of rural credit should be corrected. More than 50% of farmers are out of institutional credit system, he observed. Sen said 80% of the NPAs are from big corporates, while farmers and MSMEs are paying back their loans.

He also demanded that the government should ensure that Nabard continues to have umbilical cord with RBI. Veer Singh of BSP said this bill will enable Nabard to fulfil its commitment. He said farmers, rural artisans and labourers would benefit and their income will increase.

Singh suggested that the government should focus on dairy sector. Ram Kumar Kashyap of INLD said the financial situation of Nabard will improve and loans will be provided to farmers and MSMEs. D. Raja of CPI wanted to know whether the government intends to dilute its share capital in Nabard.

He said if Nabard is privatised, it will be calamity for rural economy. T. Subirami Reddy and Rajani Patil of the Congress also took part in the discussion. Narayan Lal Panchariya of BJP also spoke on the bill. DMK leader Tiruchi Siva in the special mention urged the government not to levy goods and services tax (GST) on drilling of wells for irrigation to give relief to the farmers.