Union Cabinet approves proposal for amendments to NABARD Act, 1981

The proposed increase in the authorized capital of NABARD will allow the organisation to respond to the commitments it has undertaken.

Mar 23, 2017 13:18 IST
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NABARDThe Union Cabinet, chaired by the Prime Minister Narendra Modi, on 22 March 2017 approved the proposal for Amendments to the National Bank for Agriculture and Rural Development (NABARD) Act, 1981.

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Key Highlights

• Amendments to National Bank for Agriculture and Rural Development Act, 1981 include provisions that enable Union Government to increase the authorized capital of NABARD from Rs 5000 crore to Rs 30000 crore.
• It also proposes to increase the authorised capital beyond Rs 30000 crore in consultation with RBI, as deemed necessary from time to time.
• It also proposes the transfer of 0.4 per cent shareholding of RBI in NABARD to the Union Government. The shareholding of RBI amounts to Rs 20 crore.
• The proposed amendments also include changes in the long title and certain Sections to bring Medium Enterprises and Handlooms in NABARD’s mandate.   

Comment
The proposed increase in the authorized capital of NABARD will allow the organisation to respond to the commitments it has undertaken, particularly in respect of the Long Term Irrigation Fund and the recent Cabinet decision regarding on-lending to cooperative banks.

It will also enable NABARD to augment its business and enhance its activities to facilitate promotion of integrated rural development and securing prosperity of rural areas including generation of more employment.

The transfer of entire shareholding in NABARD held by RBI to the Union Government will remove the conflict in RBI's role as banking regulator and shareholder in NABARD.

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