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NABARD: why it was created, the Act, the committee and its capital
Understand
Before 1982, rural credit in India was handled by two bodies. The RBI looked after agricultural credit through its own departments, and the Agricultural Refinance and Development Corporation (ARDC) gave refinance for long-term farm investment. Credit for farming, rural industry and village development was therefore split between institutions, and no single agency planned, financed and monitored rural credit as a whole. To fix this, a committee called CRAFICARD (Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development) was set up on 30 March 1979 under B. Sivaraman, a former Member of the Planning Commission. On its interim report, Parliament passed the NABARD Act, 1981 (Act 61 of 1981), and NABARD was established on 12 July 1982. It took over the agricultural credit functions of the RBI and the refinance functions of ARDC. Prime Minister Indira Gandhi dedicated it to the nation on 5 November 1982. NABARD is a development bank (विकास बैंक): it does not take deposits from the public like a commercial bank. It raises money from bonds, borrowings and special funds, and uses it to refinance, lend to State Governments and promote rural development. Its head office is in Mumbai.
Rule
Committee: CRAFICARD, constituted 30 March 1979, chaired by B. Sivaraman.
Law: NABARD Act, 1981 (Act 61 of 1981); NABARD established on 12 July 1982; dedicated to the nation on 5 November 1982.
Took over: the agricultural credit functions of the RBI and the refinance functions of ARDC.
Section 4 of the original Act fixed capital at ₹100 crore, with power to raise it (later up to ₹5,000 crore by the 2000 amendment).
The NABARD (Amendment) Bill, 2017 (passed by Rajya Sabha on 2 January 2018) let the Centre raise authorised capital to ₹30,000 crore, moved the RBI's remaining ₹20 crore stake to the Government, and required the Centre alone to hold at least 51%.
Today NABARD is wholly owned by the Government of India; it is regulated by the RBI as an All India Financial Institution (AIFI).
Head office: Mumbai; regional offices in the States/UTs; training establishments include the Bankers Institute of Rural Development (BIRD — Lucknow, Mangaluru, Kolkata) and the National Bank Staff College, Lucknow.
Current position
As on 31 March 2026, NABARD's paid-up capital was ₹17,080 crore, 100% held by the Government of India, against authorised capital of ₹30,000 crore (Annual Report 2025-26).
Effective: 31 Mar 2026Source (opens in a new tab)
Current position
As of 11 October 2026, NABARD's Chairman is Shaji Krishnan V, serving since December 2022 (NABARD profile page).
Effective: Dec 2022Source (opens in a new tab)
Example
Think of NABARD as a 'bank for rural banks'. A farmer in Nashik never opens an account with NABARD. He borrows ₹1.5 lakh from his district cooperative bank or RRB, and that bank in turn draws cheaper funds from NABARD. One apex body therefore supports thousands of rural branches.
Common mistake
Act year vs setting-up year: the Act is of 1981; NABARD was established on 12 July 1982. Do not mark 1981 as the establishment year.
CRAFICARD was chaired by B. Sivaraman, not by Narasimham or another committee chair from banking reforms.
NABARD took over functions of the RBI and ARDC; it did not take over the State Bank of India or any commercial bank.
The RBI is no longer a shareholder: its stake moved to the Government after the 2017-18 amendment.
NABARD is a development bank and an AIFI, not a scheduled commercial bank; it does not accept savings deposits from the public.