Questions and Answers
What must the staff of NABARD do regarding fidelity and secrecy?
Which statement is true regarding the transfer of staff from RBI to NABARD?
What is the term of the Chairman as stated in the guidelines?
What legal protection is offered to actions taken under the NABARD Act?
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Which of the following is a disqualification for directors?
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What rights do NABARD employees have upon transfer from ARDC?
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What is the maximum penalty for wilfully making false statements under the NABARD provisions?
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What is the maximum term allowed for directors appointed under specific clauses of section 6?
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Under what condition can the National Bank repossess loans given to State cooperative banks?
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What happens to a director if they become an MP or MLA?
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Which fund is established under section 46A of the RBI Act, 1934, and transferred to the National Bank?
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How many DMDs are appointed by the Central Government as Whole Time Directors?
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Which committee is NOT mentioned under Sec. 13 Constitution of Committees?
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What type of credit does the National Bank NOT provide loans for?
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Which of the following is an eligible security for loans made under section 21?
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What is the maximum fixed period for loans provided under the conversion loan for production credit?
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Which of the following is NOT a support ratio for RRB under the NRC (Stabilisation) according to the NB Act?
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What is the minimum repayment duration for loans rescheduled for artisans and small-scale industries?
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For what purpose can the National Bank provide guarantees according to Section 32?
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What is the requirement for a loan to be eligible for assistance under Section 24 for Investment Credit?
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Under which section can the National Bank provide direct loans for special circumstances?
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What is the maximum duration for loans provided under Section 30 as stated in the NB Act?
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Which of the following does NOT receive assistance from the National Bank for Investment Credit?
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What is the primary role of the National Bank as per Section 38?
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What is the initial capital of NABARD as stated in the establishment section?
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Which of the following is NOT part of the composition of the Board of Directors of NABARD?
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How much authorized capital does NABARD currently have?
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Who has the authority to increase the capital of NABARD?
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What function does the Board of Directors of NABARD NOT perform?
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What criteria determine the number of directors elected by shareholders in NABARD?
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Which entity must approve the establishment of offices of NABARD outside India?
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Which group of experts is included in NABARD's Board of Directors?
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What is one function that the National Bank (NB) may perform under the law?
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Which of the following is NOT considered one of the subsidiaries promoted by the NB?
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What power does the National Bank have concerning securitization of debt?
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What is the primary purpose of the Research and Development Fund established by the NB?
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What is required of the auditors regarding the NB’s accounts?
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What is the function of the National Bank's Reserve Fund?
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Which section allows the NB to provide credit information to certain financial institutions?
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For what duration does the National Bank transfer surplus funds to the Research and Development Fund initially?
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What does the National Bank need to do with the balance sheet and accounts by June 30 each year?
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Which section outlines the incidental powers of the National Bank?
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Study Notes
National Bank for Agriculture and Rural Development Act, 1981
- The Act establishes the National Bank for Agriculture and Rural Development (NABARD) aimed at fostering rural economy in India.
- NABARD's initial capital was ₹100 crore, while the authorized capital is currently ₹30,000 crore with a paid-up capital of ₹17,080 crore.
- Government of India (GoI) can increase NABARD's capital capacity through notification.
Establishment and Management
- NABARD can establish offices in India and abroad with Central Government (CG) approval in consultation with the Reserve Bank of India (RBI).
- Governance consists of a Board of Directors (BoD) including a Chairman, experts in rural development, RBI directors, CG officials, and elected directors based on shareholding.
- The Chairman and Managing Director (MD) are appointed for a term of 5 years and are eligible for reappointment; other directors have terms not exceeding 3 years.
Disqualifications and Vacancies
- Directors may be disqualified if declared insane, convicted of moral turpitude offenses, declared insolvent, or if they cease to be a Member of Parliament or Legislative Assembly.
- Casual vacancies in the office of MD may be filled by GoI in consultation with RBI.
Committees and Advisory Council
- NABARD's operational committees include the Audit Committee, Risk Management Committee, and Board of Supervision.
- An Advisory Council is established to support NABARD's functions.
Functions and Powers
- NABARD coordinates rural credit operations and provides training and consultancy in agriculture and rural development.
- It manages funds for long-term operations, stabilization, and conducts research and development efforts in agricultural sectors.
Borrowings and Financial Management
- NABARD can issue bonds, borrow from both the RBI and central government, and receive deposits from various scheduled banks and institutions.
- International borrowings require prior CG approval.
Credit Functions
- NABARD provides several credit products including production and marketing credit, loans for agricultural operations, and other rural development activities.
- Financial assistance and loans are available to state co-operative banks and rural banks for strengthening rural finance.
- Support ratios vary: 60% by NABARD, 15% by State Government, and 25% by State Co-operative Banks (StCBs) for certain loans.
Security and Guarantees
- NABARD ensures the credit it provides is backed by appropriate guarantees, primarily government-backed, preventing risks of default.
- Direct loans may be provided by NABARD, subject to exceptional circumstances documented in writing.
Help for State Governments and Institutions
- NABARD assists state governments and local undertakings by extending loans for establishing rural financial infrastructures.
Funds and Accounts
- NABARD is mandated to establish multiple funds including research and development, stabilization, and reserve funds for operational sustainability.
- Audits of NABARD’s accounts are conducted by qualified auditors and reports submitted to the government and RBI.
Miscellaneous Provisions
- NABARD is obligated to maintain confidentiality regarding its operations and requires fidelity from its workforce.
- The Act also defines the terms of employment and compensation for its staff, particularly those transferred from the Agricultural Refinance and Development Corporation (ARDC).
Conclusion
- The National Bank for Agriculture and Rural Development Act plays a crucial role in enhancing agricultural credit and rural development in India through structured governance, strong financial management, and broad-ranging assistance programs.### Declaration of Fidelity and Secrecy
- Staff members are required to declare fidelity and secrecy as outlined in the first schedule of the act.
Validity of Board Proceedings
- Proceedings of the Board are not subject to challenge.
- Acts can remain valid despite any disqualification of a director or defects in appointment.
Director Appointment Agreements
- Agreements with the National Bank regarding director appointments will take precedence (referenced in amendment 18 of 2013).
Legal Protection for Actions Under the Act
- Legal actions cannot be pursued against NABARD, its directors, officers, or authorized personnel for damages resulting from activities carried out under the act or other laws.
Director Indemnity
- Provisions for indemnifying directors are established.
Offences and Penalties
- A penalty of up to three years of imprisonment is imposed for willfully submitting false statements.
- Specific offences by companies are outlined under the act.
Application of the Bankers’ Books Evidence Act
- The Bankers’ Books Evidence Act of 1891 is applicable to the National Bank.
Liquidation Provisions
- No general law for company winding up applies to the National Bank.
- The National Bank cannot enter liquidation without a directive from the Central Government.
Regulatory Powers of the Board
- The Board has the authority to create regulations.
Amendments to Existing Enactments
- Various amendments to specific enactments are permitted.
Addressing Difficulties
- The act includes provisions to remove difficulties that may arise in its implementation.
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Description
Explore the National Bank for Agriculture and Rural Development Act, 1981. This quiz covers preliminary definitions and the establishment of the bank, highlighting key sections and their implications. Test your understanding of this important legislation.
