The establishment of the National Bank for Agriculture and Rural Development (NABARD) was the result of the growing recognition by the Government of India that institutional credit plays a crucial role in the development of agriculture and the rural economy. Since independence, policymakers realized that rural development could not be achieved without providing adequate and timely credit to farmers, rural artisans, small entrepreneurs, and other rural communities.
To review the existing arrangements for agricultural and rural credit, the Reserve Bank of India (RBI), at the request of the Government of India, constituted the Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) on 30 March 1979. The committee was headed by Shri B. Sivaraman, a former member of the Planning Commission and a distinguished administrator. The committee was entrusted with the responsibility of examining the institutional credit structure and suggesting measures to strengthen rural financing in the country.
The committee submitted its interim report on 28 November 1979. The report emphasized the need for a specialized apex development financial institution that could provide focused attention to agriculture and rural development. It observed that the existing arrangements were fragmented and inadequate for addressing the growing credit and developmental needs of rural India. Therefore, the committee recommended the creation of a separate institution that would exclusively deal with agricultural finance, rural development, refinancing, policy planning, and supervision of rural financial institutions.
Acting on these recommendations, the Government of India decided to establish a new apex institution for rural credit and development. The proposal was approved by Parliament through the National Bank for Agriculture and Rural Development Act, 1981 (Act No. 61 of 1981).
As a result, NABARD was formally established on 12 July 1982. It was created by transferring the agricultural credit functions of the Reserve Bank of India and the refinancing functions of the Agricultural Refinance and Development Corporation (ARDC), which had been established earlier to provide refinance support for agricultural projects. Thus, NABARD became the single apex institution responsible for agricultural and rural development finance in India.
The institution was formally dedicated to the nation by the then Prime Minister, Indira Gandhi, on 5 November 1982. At the time of its establishment, NABARD had an initial capital of ₹100 crore, reflecting the Government’s commitment to strengthening the rural financial system.
Over the years, NABARD expanded significantly in size, scope, and responsibilities. It became the apex refinancing institution for agriculture and rural development, the principal agency for rural infrastructure financing, and the supervisory authority for Regional Rural Banks (RRBs), State Cooperative Banks (StCBs), and District Central Cooperative Banks (DCCBs). Its role also expanded into areas such as microfinance, self-help groups, watershed development, tribal development, rural entrepreneurship, and financial inclusion.
The capital base of NABARD has increased substantially since its inception. From an initial capital of ₹100 crore in 1982, its paid-up capital grew to ₹14,080 crore as of 31 March 2020. Following changes in the shareholding pattern between the Government of India and the Reserve Bank of India, NABARD is now fully owned by the Government of India. The institution currently has an authorized share capital of ₹30,000 crore.
Since its establishment, NABARD has played a transformative role in India’s rural economy by ensuring the flow of credit to agriculture, strengthening rural financial institutions, promoting financial inclusion, and supporting sustainable rural development. Today, it stands as India’s premier development bank for agriculture and rural development and remains a key pillar of the country’s rural financial architecture.