On 2 January 2018, Parliament Passed NABARD (Amendment) Bill, 2017. The Bill seeks to increase the capital of NABARD from Rs 5,000 crore to ______.
Rs. 30,000 crore
Understanding the NABARD (Amendment) Bill, 2017 and Capital Increase
The question asks about the increase in the authorized capital of the National Bank for Agriculture and Rural Development (NABARD) as per the NABARD (Amendment) Bill, 2017, which was passed by Parliament on January 2, 2018.
NABARD is a development financial institution in India, primarily focused on the agricultural and rural sectors. Its activities include providing credit for agriculture and rural development, supervising cooperative banks and Regional Rural Banks (RRBs), and promoting rural development through various programs.
The original NABARD Act of 1981 set the authorized capital of NABARD at Rs. 100 crore, which could be increased up to Rs. 5,000 crore by the central government in consultation with the Reserve Bank of India (RBI). Over time, the authorized capital was increased to Rs. 5,000 crore.
The NABARD (Amendment) Bill, 2017 sought to address several aspects, including increasing the authorized capital significantly to empower NABARD to expand its financial activities and support for the rural economy more effectively.
Key Provisions of the NABARD (Amendment) Bill, 2017
The bill included important changes to the NABARD Act, 1981. One of the most significant provisions was related to the authorized capital. The Bill proposed to:
- Increase the authorized capital of NABARD substantially.
- Transfer the equity shareholding of the Reserve Bank of India in NABARD to the Government of India.
The increase in authorized capital was aimed at strengthening NABARD's financial position and enabling it to take on larger roles in financing rural infrastructure and agriculture.
Analyzing the Capital Increase
The NABARD (Amendment) Bill, 2017 proposed to increase the authorized capital of NABARD from the existing Rs. 5,000 crore to a much higher figure. The purpose was to provide NABARD with greater financial flexibility and capacity to raise funds from the market.
Let's look at the options provided:
- Rs. 30,000 crore
- Rs. 10,000 crore
- Rs. 20,000 crore
- Rs. 40,000 crore
According to the provisions of the NABARD (Amendment) Bill, 2017, the authorized capital was proposed to be increased to Rs. 30,000 crore. The Bill also allows for further increase in authorized capital up to Rs. 50,000 crore by the Central Government in consultation with RBI, if needed.
Conclusion
The NABARD (Amendment) Bill, 2017 significantly increased the authorized capital of NABARD from Rs. 5,000 crore to Rs. 30,000 crore. This move was intended to bolster NABARD's financial strength and capacity to support agricultural and rural development initiatives across the country.
| Aspect | Details (Before Amendment) | Details (After Amendment Bill, 2017) |
|---|---|---|
| Authorized Capital | Rs. 5,000 crore | Rs. 30,000 crore (with potential for further increase up to Rs. 50,000 crore) |
| Equity Shareholding | RBI and Government of India | Primarily Government of India (RBI's share transferred to GoI) |
Revision Table: NABARD Amendment Bill 2017 Key Points
| Feature | Description |
|---|---|
| Bill Name | NABARD (Amendment) Bill, 2017 |
| Passed By Parliament | January 2, 2018 |
| Initial Authorized Capital | Rs. 5,000 crore |
| Increased Authorized Capital | Rs. 30,000 crore |
| Maximum Potential Capital | Rs. 50,000 crore (with GoI approval) |
Additional Information: Role of NABARD
NABARD plays a crucial role in India's rural economy. Some of its key functions include:
- Refinance Facilities: Providing refinance to financial institutions that finance rural operations.
- Direct Lending: In some cases, providing direct loans, especially for rural infrastructure projects.
- Supervision: Supervising cooperative banks and Regional Rural Banks to ensure their health and sound banking practices.
- Development Initiatives: Promoting initiatives related to rural development, watershed development, tribal development, etc.
- Research and Development: Undertaking research in agriculture and rural development and disseminating findings.
The increase in capital through the NABARD (Amendment) Bill, 2017, strengthens its ability to perform these functions more effectively and contribute further to the growth of agriculture and rural sectors.
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