NABARD is established as a development Bank, in terms of the Preamble of the Act, "for providing and regulating Credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto." NABARD is an apex institution, accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India.

Reserve Bank of India (RBI) was established in 1935 inter alia, with a mandate to set up a special Agricultural Credit Department (ACD) with expert staff. ACD(RBI) when started functioning initiated different measures to develop a healthy rural credit structure and provided guidance to State Governments and Cooperative Credit Structure. As part of these continuing measures Agricultural Refinance Corporation (ARC) was established in 1963 to support investment credit needs for agricultural development. Consequent to undertaking of development and promotional functions, ARC was renamed as Agricultural Refinance and Development Corporation (ARDC) in 1972.

RBI, at the instance of Government of India (GOI) appointed a Committee under the Chairmanship of Shri B. Sivaraman, to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) in 1979. The CRAFICARD reviewed the need of integrating short-term, medium-term and long-term agriculture credit structure. The CRAFICARD recommended the establishment of 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 was established with an initial capital of Rs. 100 crore. The capital is enhanced to Rs.2000 crore subscribed by Govt. of India and Reserve Bank of India.

NABARD took over the functions of the erstwhile Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of RBI and Agricultural Refinance and Development Corporation (ARDC).

As mentioned earlier NABARD is an apex institution, accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India. In particular NABARD:

1. serves as an apex refinancing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas;

2. takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc.;

3. co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation; and

4. undertakes monitoring and evaluation of projects refinanced by it.

5. It promotes research in the fields of rural banking, agriculture and rural development

NABARD's refinance is available to State Land Development Banks (SLDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations or co-operative societies, production credit is generally given to individuals.

NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in the capitals of all the states/union territories.It has 320 District Offices across the country and one special Cell at Srinagar. It also has 5 training establishments.

NABARD has taken a creative initiative to bring about an attitudinal change amongst the borrowers in their outlook towards the concept of credit through the launching of VVV Programme. The VVV Programme was conceptualized as an experiment in social engineering reflecting NABARD's concern for reducing the mounting overdues at ground level. The VVV Programme was inaugurated by the late Hon'ble Prime Minister Smt Indira Gandhi on 5 November, 1982 while dedicating National Bank to the nation. The programme aims at propagating the message of "Development through Credit" and Repayment Ethics.

1. Credit must be used in accordance with the most suitable methods of science and technology.

2. The terms and conditions of the credit (or techno-economic parameters) must be fully respected.

3. Work must be done with skill so as to increase productivity and income.

4. A part of the additional income created by credit must be saved.

5. Loan instalments must be repaid in time and regularly so as to recycle credit.

Initially launched in 3 States (Gujarat, Orissa and Tamil Nadu) in 1983 it has since taken roots in as many as 28 States and 2 Union Territories. As on 31 March 2003, there were 8472 Clubs in 449 districts covering 17475 villages in the country. Some of the VVV Clubs have acted as Self Help Promoting Institutions (SHPIs) and promoted 10726 Self Help Groups (SHGs) as on 31 March, 2003. Financial support is provided by NABARD for opening and maintenance of Clubs and for organizing various training programmes under the aegis of Farmers Clubs

[Source: Website of NABARD]