National Bank for Agriculture Act Overview
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Questions and Answers

What is the maximum term for a director appointed under clause (b) or clause (c) of sub-section (1) of section 6?

  • Exclusively renewable term
  • 2 years
  • 3 years (correct)
  • 5 years

    • Which of the following is NOT a valid reason for disqualification of a director?

  • Adjudicated insolvent
  • Declaring unsound mind by a competent court
  • Convicted of a financial crime (correct)
  • Absence from Board meetings

    • What happens to a director who is elected or nominated as a Member of Parliament or a Member of Legislative Assembly?

  • He immediately ceases to be a director (correct)
  • He becomes a special adviser
  • He may retain his position through a vote of confidence
  • He remains a director until his term ends

    • Which of the following committees is established under Sec. 13?

    <p>Risk Management Committee of the Board</p> Signup and view all the answers

    For which of the following is the National Bank empowered to grant loans without immovable property as security?

    <p>For marketing and distribution of agricultural inputs</p> Signup and view all the answers

    What is the primary purpose of the National Bank as stated in the functions outlined?

    <p>Supporting agricultural operations and rural development</p> Signup and view all the answers

    What must the borrowing institution provide when obtaining a loan or advance from the National Bank?

    <p>A declaration specifying the purpose of the loan</p> Signup and view all the answers

    Which funds are transferred to the National Bank under section 18?

    <p>National Agricultural Credit (LTO) Fund and National Agricultural Credit (Stabilisation) Fund</p> Signup and view all the answers

    What type of bonds or financial instruments is the National Bank authorized to issue for borrowing purposes?

    <p>Bonds, debentures, and other financial instruments</p> Signup and view all the answers

    Who has the authority to appoint a new Managing Director during the MD's absence?

    <p>The Central Government after consulting with the RBI and the Board</p> Signup and view all the answers

    What is the maximum time period within which a member of the RBI staff can apply for appointment to NABARD if not appointed under subsection (3)?

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

    Which of the following statements about the transfer of staff between NABARD and RBI is NOT true?

    <p>RBI can transfer any member of its staff at any time after six months.</p> Signup and view all the answers

    What obligation do staff members of NABARD have regarding fidelity and secrecy?

    <p>They are required to make a declaration of fidelity and secrecy.</p> Signup and view all the answers

    Which provision protects NABARD and its employees from legal suits for actions taken under the act?

    <p>Section 53</p> Signup and view all the answers

    In terms of staff transfer from RBI to NABARD, which condition regarding service is established?

    <p>Staff are entitled to the same gratuity pension as RBI staff.</p> Signup and view all the answers

    What was the initial capital of NABARD as stated in the establishment provisions?

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

    Which body has the authority to determine the increase of NABARD's capital?

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

    How many directors from the RBI are part of the Board of Directors (BoD) of NABARD?

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

    In what manners are additional directors elected based on equity subscription in NABARD?

    <p>Equity subscribed more than 10% and less than 25% elects 3 directors.</p> Signup and view all the answers

    What is the current authorized capital of NABARD as mentioned in the establishment provisions?

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

    Which of the following does NOT comprise the composition of the BoD in NABARD?

    <p>Experts in corporate finance</p> Signup and view all the answers

    What is the maximum repayment period for conversion loans for production credit under Sec. 22?

    <p>7 years</p> Signup and view all the answers

    Which of the following locations can NABARD's offices be established?

    <p>Any place in India with previous approval of the CG</p> Signup and view all the answers

    What description matches the role of NABARD as outlined in the preliminary chapter?

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

    What percentage of support is provided to RRBs under the NRC (Stabilisation Fund)?

    <p>70%</p> Signup and view all the answers

    Which of the following institutions is NOT eligible for loans without security according to Sec. 28?

    <p>Non-Governmental Organization</p> Signup and view all the answers

    What is the minimum repayment period for loans rescheduled for small-scale industries under Sec. 23?

    <p>18 months</p> Signup and view all the answers

    Under Sec. 24, what is the maximum duration for loans provided for agriculture or rural development?

    <p>7 years</p> Signup and view all the answers

    What percentage of support is provided by the state government to StCBs under the NRC (Stabilisation)?

    <p>15%</p> Signup and view all the answers

    Which section prohibits the National Bank from granting loans against its own bonds?

    <p>Sec. 37</p> Signup and view all the answers

    According to Sec. 25, what condition must be met for a StCB to receive a loan guarantee?

    <p>Full government guarantee</p> Signup and view all the answers

    What is the repayment period for direct loans as per Sec. 30?

    <p>Not exceeding 25 years</p> Signup and view all the answers

    What is the primary function stated in Sec. 38 for the National Bank?

    <p>Coordinating operations in rural credit</p> Signup and view all the answers

    What does Sec. 38 (A) specifically relate to?

    <p>Promotion of subsidiaries in consultation with the Reserve Bank</p> Signup and view all the answers

    Which of the following is a function that the National Bank is permitted to perform under Sec. 39?

    <p>Executing functions necessary for discharging its powers</p> Signup and view all the answers

    What is the major focus of the Research and Development Fund established under Sec. 44?

    <p>Funding agricultural and rural development initiatives</p> Signup and view all the answers

    Under what condition does Sec. 47 state that the National Bank shall transfer surplus funds?

    <p>After making provisions for bad debts and depreciation</p> Signup and view all the answers

    Which section describes the auditing process of the National Bank?

    <p>Sec. 48</p> Signup and view all the answers

    What additional contribution is expected from the RBI and CG annually as stated in Sec. 43?

    <p>Contribution to the National Rural Credit (Stabilisation)</p> Signup and view all the answers

    What types of securities can the National Bank issue based on loans as per Sec. 38 (B)?

    <p>Debt obligations, trust certificates, and other instruments</p> Signup and view all the answers

    What does Sec. 46 mandate regarding the preparation of the National Bank's balance sheet?

    <p>It must be prepared in a prescribed form and manner.</p> Signup and view all the answers

    In Sec. 40, what options are provided to the National Bank regarding deposits and investments?

    <p>Can deposit with RBI and scheduled banks and invest in various market instruments</p> Signup and view all the answers

    What document must the National Bank furnish to the Central Government and Reserve Bank as mentioned in Sec. 49?

    <p>Returns as required</p> Signup and view all the answers

    Study Notes

    National Bank for Agriculture and Rural Development Act, 1981 Overview

    • The Act establishes the National Bank for Agriculture and Rural Development (NABARD), applicable throughout India.
    • Key terms defined include agriculture, rural areas, cooperative banks, and management structure.

    Establishment and Capital

    • NABARD can set up offices across India and internationally with approvals from the Central Government (CG) and Reserve Bank of India (RBI).
    • Initial capital was ₹100 crore, with an authorized capital of ₹500 crore; current authorized capital stands at ₹30,000 crore with ₹17,080 crore paid-up capital.

    Management Structure

    • General management vested in a Board of Directors (BoD) that includes a Chairman, experts in rural economics, directors from RBI, Central and State Governments, and elected directors based on shareholding.
    • Appointment terms are set, including a 5-year term for the Chairman and Managing Director, eligible for reappointment.
    • Directors may not hold office if they are declared unsound of mind, convicted of offenses, or in personal insolvency.

    Committees and Advisory Council

    • Various committees are established such as Audit Committee, Risk Management Committee, and Board of Supervision.
    • An Advisory Council is created to provide additional guidance.

    Transfer of Functions and Business

    • Assets and liabilities from the Agricultural Refinance and Development Corporation (ARDC) are transferred to NABARD.
    • National Agricultural Credit Funds maintained under the RBI Act are also transferred to NABARD.

    Borrowing Powers

    • NABARD can borrow through multiple channels including bonds, loans from RBI, and grants from the Central Government.
    • It is authorized to borrow in foreign currency with approvals from CG and in consultation with RBI.

    Credit Functions

    • NABARD provides credit for agricultural production, marketing, and rural development initiatives.
    • Loans can be guaranteed by the government or secured through promissory notes and other financial instruments.
    • Significant support ratios exist for state cooperative banks (StCBs) and regional rural banks (RRBs) under National Rural Credit (Stabilisation and Long Term Operations) Funds.

    Investment and Direct Loans

    • Financial assistance is provided for investments in rural infrastructure and development projects, with loans repayable over set periods.
    • NABARD can grant loans directly in exceptional cases, beyond refinancing arrangements.

    Funds and Audit Management

    • NABARD manages several funds, including Long Term Operations (LTO) and Stabilisation Funds, supported by the annual contributions from the RBI and Central Government.
    • A Research and Development Fund and Reserve Fund are established for specific purposes aligned with the Act’s objectives.
    • Annual audits are conducted by qualified auditors, with obligations to report to the Central Government and RBI.

    Staff Management

    • NABARD is authorized to appoint staff and define their terms of service, retaining the ability to utilize RBI staff as necessary.
    • Employees from ARDC are considered NABARD staff with the same benefits.

    Miscellaneous Provisions

    • The Act establishes obligations surrounding fidelity and confidentiality among NABARD’s staff and functions.

    Conclusion

    • The NABARD Act, 1981 lays a comprehensive framework for the establishment and management of an institution aimed at promoting rural development and agricultural credit through structured governance, diverse funding mechanisms, and strategic financial operations.### Declaration and Appointment
    • Staff must declare fidelity and secrecy as per the specified schedule in the Act.
    • Section 52 ensures that defects in the appointment of the Board members do not invalidate their actions or proceedings.
    • Proceedings of the Board cannot be questioned based on a director's disqualification or defects in appointment.
    • Section 52(A) states that any agreement with the National Bank regarding director appointments will take precedence.

    Protection and Indemnity

    • Section 53 offers protection against legal actions for damages resulting from actions taken under this Act by NABARD, its directors, officers, or authorized persons.
    • Section 54 provides indemnity to Directors, safeguarding them from personal liability during their service.

    Penalties and Offences

    • Section 56 imposes a penalty of up to three years of imprisonment for willfully making false statements.
    • Section 57 addresses offences committed by companies under this Act.

    Financial Regulations

    • Section 58 confirms that the Bankers’ Books Evidence Act, 1891 applies to the National Bank, ensuring regulatory compliance regarding financial records.

    Winding Up Provisions

    • According to Section 59, the National Bank cannot be placed in liquidation except by directive from the Central Government, overridden by standard company liquidation laws.

    Regulatory Authority

    • Section 60 grants the Board authority to create regulations for operational governance.
    • Section 61 pertains to amendments of certain existing enactments for consistency with this Act.
    • Section 62 authorizes measures to resolve any difficulties arising in the application of this Act.

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    Description

    Explore the foundational aspects of the National Bank for Agriculture and Rural Development Act of 1981 in this quiz. Chapter 1 covers preliminary definitions while Chapter 2 discusses the establishment and capital of the bank. Test your understanding of key terms and concepts related to this significant legislation.

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