National Bank for Agriculture Act Overview
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Questions and Answers

What must the staff of NABARD do regarding fidelity and secrecy?

  • Make a public statement about their roles
  • Submit a declaration in a specific form (correct)
  • Participate in regular audits
  • Undergo a security clearance process

    • Which statement is true regarding the transfer of staff from RBI to NABARD?

  • Staff who do not transfer can apply for NABARD positions (correct)
  • All staff members must consent to the transfer
  • Transfer is mandatory for all RBI staff
  • Compensation can be claimed upon transfer

    • What is the term of the Chairman as stated in the guidelines?

  • 5 years (correct)
  • 3 years
  • 4 years
  • 6 years

    • What legal protection is offered to actions taken under the NABARD Act?

    <p>No legal proceedings can be taken against NABARD employees</p> Signup and view all the answers

    Which of the following is a disqualification for directors?

    <p>Unsound mind declared by court</p> Signup and view all the answers

    What rights do NABARD employees have upon transfer from ARDC?

    <p>Their previous pay and emoluments are preserved</p> Signup and view all the answers

    What is the maximum penalty for wilfully making false statements under the NABARD provisions?

    <p>Imprisonment for three years</p> Signup and view all the answers

    What is the maximum term allowed for directors appointed under specific clauses of section 6?

    <p>Three years</p> Signup and view all the answers

    Under what condition can the National Bank repossess loans given to State cooperative banks?

    <p>If the loan is not guaranteed by the Government</p> Signup and view all the answers

    What happens to a director if they become an MP or MLA?

    <p>They shall cease to be a director</p> Signup and view all the answers

    Which fund is established under section 46A of the RBI Act, 1934, and transferred to the National Bank?

    <p>National Agricultural Credit (Long-term) Fund</p> Signup and view all the answers

    How many DMDs are appointed by the Central Government as Whole Time Directors?

    <p>Two</p> Signup and view all the answers

    Which committee is NOT mentioned under Sec. 13 Constitution of Committees?

    <p>Corporate Governance Committee</p> Signup and view all the answers

    What type of credit does the National Bank NOT provide loans for?

    <p>Commercial real estate</p> Signup and view all the answers

    Which of the following is an eligible security for loans made under section 21?

    <p>Stocks, funds, and securities</p> Signup and view all the answers

    What is the maximum fixed period for loans provided under the conversion loan for production credit?

    <p>Seven years</p> Signup and view all the answers

    Which of the following is NOT a support ratio for RRB under the NRC (Stabilisation) according to the NB Act?

    <p>20% by Sponsor Bank</p> Signup and view all the answers

    What is the minimum repayment duration for loans rescheduled for artisans and small-scale industries?

    <p>Eighteen months</p> Signup and view all the answers

    For what purpose can the National Bank provide guarantees according to Section 32?

    <p>For any transactions with borrowers</p> Signup and view all the answers

    What is the requirement for a loan to be eligible for assistance under Section 24 for Investment Credit?

    <p>Must be fully guaranteed by the State Government</p> Signup and view all the answers

    Under which section can the National Bank provide direct loans for special circumstances?

    <p>Section 30</p> Signup and view all the answers

    What is the maximum duration for loans provided under Section 30 as stated in the NB Act?

    <p>Twenty-five years</p> Signup and view all the answers

    Which of the following does NOT receive assistance from the National Bank for Investment Credit?

    <p>Large Corporates</p> Signup and view all the answers

    What is the primary role of the National Bank as per Section 38?

    <p>To coordinate operations among rural credit institutions</p> Signup and view all the answers

    What is the initial capital of NABARD as stated in the establishment section?

    <p>₹ 100 crore</p> Signup and view all the answers

    Which of the following is NOT part of the composition of the Board of Directors of NABARD?

    <p>Directors from private banking institutions</p> Signup and view all the answers

    How much authorized capital does NABARD currently have?

    <p>₹ 30000 crore</p> Signup and view all the answers

    Who has the authority to increase the capital of NABARD?

    <p>The Government of India</p> Signup and view all the answers

    What function does the Board of Directors of NABARD NOT perform?

    <p>Execution of banking transactions</p> Signup and view all the answers

    What criteria determine the number of directors elected by shareholders in NABARD?

    <p>Percentage of equity subscribed</p> Signup and view all the answers

    Which entity must approve the establishment of offices of NABARD outside India?

    <p>The Central Government</p> Signup and view all the answers

    Which group of experts is included in NABARD's Board of Directors?

    <p>Experts in rural economics and development</p> Signup and view all the answers

    What is one function that the National Bank (NB) may perform under the law?

    <p>Perform functions entrusted by other laws in effect.</p> Signup and view all the answers

    Which of the following is NOT considered one of the subsidiaries promoted by the NB?

    <p>FarmTech Innovations</p> Signup and view all the answers

    What power does the National Bank have concerning securitization of debt?

    <p>It can create trusts and transfer loans to those trusts.</p> Signup and view all the answers

    What is the primary purpose of the Research and Development Fund established by the NB?

    <p>To support research and development in agriculture and rural development.</p> Signup and view all the answers

    What is required of the auditors regarding the NB’s accounts?

    <p>They must examine the accounts and prepare a report on them.</p> Signup and view all the answers

    What is the function of the National Bank's Reserve Fund?

    <p>To be established and maintained by transferring annual profits and donations.</p> Signup and view all the answers

    Which section allows the NB to provide credit information to certain financial institutions?

    <p>Sec. 41</p> Signup and view all the answers

    For what duration does the National Bank transfer surplus funds to the Research and Development Fund initially?

    <p>Fifteen years</p> Signup and view all the answers

    What does the National Bank need to do with the balance sheet and accounts by June 30 each year?

    <p>Balance and close the accounts.</p> Signup and view all the answers

    Which section outlines the incidental powers of the National Bank?

    <p>Sec. 39</p> Signup and view all the answers

    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 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.

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