INDI LEISA - Leisa India

INTERVIEWNABARD is set up by the Government of India as adevelopment bank with the mandate of facilitatingcredit flow for promotion and development ofagriculture and integrated rural development. Themandate also covers supporting all other alliedeconomic activities in rural areas, promotingsustainable rural development and ushering inprosperity in the rural areas.Dr. Venkatesh Tagat is theChief General Manager, Karnataka Region.Strength lies in buildingempowered communitiesWhat is the role of NABARD in agricultural credit?It is an apex institution handling matters concerning policy,planning and operations in the field of credit for agriculture andfor other economic and developmental activities in rural areas.Essentially, it is a refinancing agency for financial institutionsoffering production credit and investment credit for promotingagriculture and developmental activities in rural areas. Itcoordinates the rural financing activities of all the institutionsengaged in developmental work at the field level and maintainsliaison with the government of India, State governments, theReserve Bank of India and other national level institutionsconcerned with policy formulation. It functions as a regulatoryauthority, supervising, monitoring and guiding cooperative banksand regional rural banks.In Karnataka, NABARD has been playing the role of ensuringadequate credit flows to farmers, rural groups and enterprises, toscale up production or activity. These include means andinstruments like providing additional financial resources,refinancing etc.What have been the ways of reaching the smallholders with credit?We have been following two models in reaching the unreached.One is the SHG - Bank Linkage Model wherein the SHGs arefinanced directly by the banks. The other is the - JLG - BankLinkage Model wherein the JLGs are financed by banks.For NABARD, financial inclusion means credit and other financialservices, building skills of these organized groups like SHGs,farmer clubs in handling technologies as well as markets. Besidesfacilitating training programmes to organize themselves to availcredit, help potential individuals to become entrepreneurs inassociation with institutes like RUDSETI. Also, the trainings arenot only focused on recipients but also banking staff dealing withcommunities.It is also believed that bank loans are alwayspackages, not giving need based flexibility to theborrower?It is not entirely true. Kisan credit cards were meant for thatpurpose. They combined agricultural loan, personal accident coveras well as consumer loan, with a certain cash credit limit. However,instead of using them judiciously, as an after thought are beingused for borrowing the total amount. In fact, payment in time isencouraged by certain states to charge zero percent (Tamil Nadu)when repayment is done in time.What has been the most effective way of reachingthe poor and why?It is definitely through the SHGs. SHGs are small, cohesive andparticipative groups of the poor, who pool their thrift regularlyand use it to make small interest bearing loans to members and inthe process learn the nuances of financial discipline. Subsequentlythey graduate to access bank credit to augment their resources forlending to their members in need of financial assistance for meetingtheir credit needs. Over the years the pooled resources of the SHGsbecome a sizeable corpus, which complimented by higher volume20LEISA INDIA • JUNE 2010