Parliament Passes NABARD (Amendment) Bill, 2017 (Download PDF)

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Parliament has passed the National Bank for Agriculture and Rural Development (Amendment) Bill, 2017 with the approval of Rajya Sabha. Lok Sabha already passed the bill in August 2017 allowing Union Government to increase capital of NABARD from ₹ 5000 crore to ₹ 30,000 crore.

NABARD Schemes

What Are the Key Features of the Bill?

  1. The Bill allows Union Government to increase capital of NABARD from ₹ 5000 crore to ₹ 30,000 crore.
  2. It allows Union Government to increase the capital more than ₹ 30,000 crores in consultation with the Reserve Bank of India (RBI) , if necessary.
  3. The Bill provides that Union Government alone must hold at least 51 % capital share of NABARD.
  4. The bill transfers share capital held by RBI valued at ₹ 20 crore to Union Government.
  5. The Bill replaces terms ‘small-scale industry’ and ‘industry in tiny and decentralised sector’ with terms ‘micro enterprise’ , ‘small enterprise’ and ‘medium enterprise’ as defined in MSME Development Act, 2006.
  6. It allows NABARD to provide financial assistance to banks if they provide loans to the MSMEs.
  7. The Bill substitutes references to provisions of the Companies Act, 1956 with references to the Companies Act, 2013.
  8. It includes provisions dealing with definition of a government company and qualifications of auditors.

Why is the Share of RBI Being Transferred to Union Government?

  • Currently RBI holds 0.4 % of paid-up capital of NABARD and remaining 99.6 % is held by Union government and this causes conflict in RBI՚s role as banking regulator and shareholder in NABARD.

What is NABARD?

  • The NABARD Act establishes NABARD for providing and regulating facilities like credit for agricultural and industrial development in the rural areas.
  • National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India, headquartered at Mumbai entrusted with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas” .

- Published/Last Modified on: February 12, 2018

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