Editorial Made as simple – 9th Feb, 2018



National Bank for Agriculture and Rural Development (NABARD) Act, 1981 was enacted to establish a development bank to provide and regulate credit and other facilities in order to promote and develop agriculture, small-scale industries, cottage and village industries, handicrafts, and allied economic activities in rural areas.
The amendments passed by Parliament to the NABARD Act, 1981 to boost the rural economy and recognise the vital role of MSMEs, as defined under the MSME Development Act of 2006.

Reasons for amending the Act:
• NABARD needed to be provided with additional equity from time to time to enable it to meet its objectives for rural development.
• Certain existing commitments of NABARD relating to the long-term irrigation fund and enhanced refinance support to cooperative banks required urgent infusion of equity.
• The current authorised capital of NABARD is fully paid-up, there was a need to increase it to enable the Central government to infuse additional equity as and when required

The NABARD (Amendment) Bill, 2017 provides for empowering the Central government to increase the authorised capital of NABARD from ₹5,000 crore to ₹30,000 crore in consultation with the RBI. The amendments primarily seek to transfer the RBI’s balance equity of ₹20,000 crore in NABARD to the Central government.