Understanding the NABARD (Amendment) Bill, 2017

The National Bank for Agriculture and Rural Development (NABARD) is a key financial institution in India that focuses on agricultural and rural development. To strengthen the governance and regulatory framework of NABARD, the Parliament passed the NABARD (Amendment) Bill, 2017, which came into effect on 2 January 2018.

This amendment brought about several changes, one significant change being related to the capital structure and shareholding pattern of NABARD. Previously, both the Union Government and the Reserve Bank of India (RBI) held shares in NABARD. However, the amendment stipulated a specific minimum shareholding requirement for the Union Government.

Key Provision of the NABARD (Amendment) Bill, 2017

A crucial provision of the NABARD (Amendment) Bill, 2017, is the mandate that the Union Government alone must hold a minimum percentage of the capital share of NABARD.

According to the provisions of the Act, the minimum capital share to be held by the Union Government in NABARD is specified as \(51\%\).

This amendment effectively consolidated the ownership primarily with the Union Government, allowing the RBI to exit its shareholding in NABARD. This move was also aimed at aligning NABARD's ownership structure more closely with that of other government-owned financial institutions.

Therefore, as per the NABARD (Amendment) Bill, 2017, the Union Government must hold at least \(51\%\) of the capital share of NABARD.

Revision Table: Key NABARD Amendment Provisions

Additional Information on NABARD and Government Holding

NABARD was established on 12 July 1982, based on the recommendations of the B. Sivaramman Committee. It serves as the apex developmental bank for agriculture and rural development in India.

• NABARD provides financial assistance to various rural and agricultural activities.
• It supervises regional rural banks (RRBs) and state cooperative banks.
• It plays a significant role in institution building for the rural financial sector.
• The shift in ownership structure, as mandated by the 2017 amendment, aimed at providing clearer control and potentially streamlining policy implementation concerning agricultural finance.

Government shareholding in key financial institutions is often determined by policy objectives, ensuring alignment with national priorities, especially in sectors like agriculture which are vital for the economy.