National Bank for Agriculture and Rural Development Act, 1981

1. Short Title

(I) This Act may be called the National Bank for Agriculture and Rural Development Act, 1981.

(II) It extends to the whole of India.

2. Establishment and Incorporation

(I) There shall be established for the purpose of this Act, a bank to be known as the National Bank for Agriculture and Rural Development.

(II) The Bank shall be body corporate with the name foresaid having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract and may, by that name sue and be sued.

3. Capital

(I) The capital of the National Bank shall be one hundred crores of rupees.

(II) The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank of India in equal proportions.

4. Management

(I) The general superintendence, direction and management of the affairs and business of the National Bank shall vest in a Board of Directors, which shall exercise all powers and do all acts and things, which may be exercised or done by the National Bank.

(II) The Board, in discharging its functions shall act on business principles with due regard to public interest.

5. Board of Directors

(I) The Board of Directors of the National Bank shall consist of the following namely-

(a) a chairman,

(b) two directors from amongst experts in rural economics, rural development, handicrafts, and other rural crafts, village and cottage industries and small scale industries, 

(c) three directors out of whom two shall be persons with experience in working of Co-op.banks and one shall be a person with experience in the working of commercial banks,

(d) three directors of from among the directors of the Reserve Bank,

(e) three directors from amongst the officials of the Central Government,

(f) two directors from amongst the officials of the State Governments,

(g) a managing director.

(II) The Chairman and other directors shall be appointed by the Central Government in consultation with the Reserve Bank .

(III) Where the Central Govt. is satisfied, it may appoint one or more whole time directors and such whole time director may be a member of the board.

6. Term of Office

(I) The chairman shall hold office for such term not exceeding five years,

(ii) a director appointed under clause (b) or clause (c) of subsection (1) and section(6) shall hold office for a term not exceeding three years,

(III) The central Govt. may, in consultation with the Reserve Bank, remove the chairman or any other director before the expiry of his term of office after giving him a reasonable opportunity of showing cause against the proposed removal.

7. The Managing Director and any whole-time director appointed under subsection (3) of section (6) shall hold office for a term not exceeding five years.

8. Meetings of Board

(I) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed,

(II) The chairman of the Board shall preside over the meeting. If for any reason the chairman is unable to attend any meeting, any other director nominated by him shall preside over the meeting.

9. Committees of National Bank

(I) The Board may constitute an Executive Committee of such members of directors as be prescribed/necessary.

(II) The Executive Committee shall discharge such functions as may be prescribed or may be delegated to it by the Board.

(III) The Board may constitute such other committees, whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons as it thinks fit for such purposes as it may decide.

  1. Advisory Council

(I) The Board may constitute an Advisory Council consisting such number of directors and such other persons who have special knowledge of agricultural credit, co-operation and rural economics, small scale industries, village and cottage industries, handicrafts and other crafts.

(II) The Advisory Council shall advise the National Bank in such matters as may be referred to the council by the National Bank.

(III) The member of Advisory Council shall hold office for a term not exceeding five years and receive such fees and allowances as may be prescribed for attending the meetings of the Advisory Council.

11. Transfer of assets and liabilities

(I) On such date as the Central Government, in consultation with the Reserve Bank by notification, appoint, the entire undertaking of Agricultural Refinance and Development Corporation, including all business, property, assets and liabilities, rights and interests, privileges and obligations shall stand transferred to and vest in the National Bank.

(II) The compensation for the transfer of the undertakings of the corporation to the National Bank, the National Bank within six months from the date appointed, pay to the shareholders of the corporation a sum equal to the total paid up capital of the corporation.

12. Dissolution of the corporation

On the date appointed under subsection (1) of section (16)-

(a) The corporation shall stand dissolved and,

(b) The Agricultural Refinance and Development Corporation Act, 1963 shall stand repeated.

13. Transfer of Business of Reserve Bank

(i) On such date as the Central Govt. may, in consultation with the Reserve Bank, the assets and liabilities with the Reserve Bank relating to-

  1. The National Agricultural Credit (Long term operations) Fund established and maintained under 

  2. section 46-A of the Reserve Bank Act 1934, and

  3. The National Agricultural Credit (stabilization) Fund established and maintained under section 46-B of the Reserve Bank of India Act 1934 shall stand transferred to the National Bank.

(ii) The loans and advances which the Reserve Bank has granted to State Co-operative Banks and Regional Rural Banks, which Reserve Bank may specify by general or special order, shall become and be deemed to be loans and advances granted by the National Bank under section (21) and the National Bank shall repay to the Reserve Bank, the amount of such loans and advances.

14. Borrowings by the National Bank

The national bank may, for the purpose of carrying out its functions under this Act-

  1. Issue and sell bonds and debentures carrying interest, which may be guaranteed by the central government at such rates as may be fixed by the central govt. in consultation the Reserve Bank.]

  2. Borrow money from the Reserve Bank repayable on demand or on the expiry of fixed periods not exceeding 18 months on such terms and conditions as may be specified by the Reserve Bank.

  3. Borrow money from the central govt. and from any other authority, organisation or institution approved by the government.

  4. Accept from the Central Government, a State Government, a local authority, a State Land Development Bank, State Co-op bank or scheduled bank or any person approved by the Central Government in this behalf, deposits repayable after the expiry of period which shall not be less than 12 months

e) Receive gifts, grants, donations or benefactions from Government or any other sources.

15. Borrowings in Foreign Currency

i)The national bank may borrow with the previous approval of the central govt. and in consultation with the Reserve Bank foreign currency from any bank or financial institution in India or elsewhere,

ii) The central govt. may guarantee loans taken by the National Bank as to the repayment of the principal and the interest thereon.

16. Production and Marketing Credit

(1) The National Bank may provide by way of refinance, loans and advances, repayable on demand or on the expiry of fixed periods not exceeding 18 months to state co-operative banks, regional rural banks or to any financial institutions which are approved by the Reserve Bank for financing-

(a) agricultural operations or marketing of crops or,

(b) the marketing and distribution inputs necessary for agriculture and rural development, or,

(c) any other activity for the promotion of or in the field of agriculture or rural development, or ,

(d) bonafide trade or commercial transactions or,

(e) the production and marketing activities of artisans, small scale industries, village and cottage industries , handicrafts and other rural crafts.

(2) The National Bank may make loans and advances against the security of-

    1. Stocks, funds and securities other than immovable property, in which trustee is authorized to invest trusts money,

    2. Promissory notes supported by documents of titles to goods, such documents having been transferred, assigned or pledged to the borrowing institution as security for loan or advance.

(3) The National Bank in its discretion grant loan or advance-

    1. to any state co-op bank if the loan or advance is fully guaranteed by the government,

    2. to any state co-op.bank which is scheduled bank, if the loan or advance is secured either by bill of exchange or promissory note executed by the central co.op.bank and assigned in favour of the State co.op.bank.

17. Conversion Loans For Productive Credit

Where the National Bank is satisfied that owing to drought famine or other natural calamities, military operations or enemy auction, any state co.op.bank, regional rural bank or any such financial institution, requires assistance under this section, it may provide to such bank or institution such financial assistance as it may fit deem by way of making such loans and advances repayable on the expiry of fixed periods not exceeding seven years.

18. Rescheduling of Loans to Artisans Etc

Where the national bank is satisfied that owing to unforeseen circumstances the rescheduling of loans and advances made to artisans, small scale industries, village and cottage industries and those engaged in the field of handicrafts and other rural crafts has become necessary, it may provide to such by any bank or financial institution bank or institution such financial assistance as it may deem fit by way of loans and advances repayable on the expiry of fixed periods not being less than 18 months and not exceeding seven years against such securities as may be specified in this behalf by the national bank.

19. Investment Credit-Medium Term

The national bank shall provide such financial assistance as it may consider necessary by way of making to state co.op.banks, regional rural banks, loans and advances repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years against the securities as may be specified in this behalf by the national bank.

20. Other Investment Credit

(i) The national bank may provide such financial assistance as it may consider necessary for promoting agriculture and rural development by-

a) Making loans and advances by way of refinance to a state land development bank or state co.op.bank or scheduled bank or any other financial institutions approved by the reserve bank and also rescheduling the payment of such loans and advances, provided that the maximum period shall not exceed twenty-five years,

b) Purchasing and selling or subscribing to the bonds and debentures issued by any bank or institution and repayable within a period not exceeding twenty five years.

21. Loans to State Governments

The national bank may make loans and advances to state governments, repayable on the expiry of fixed periods not exceeding twenty years from the National Rural Credit (Long term operations) Fund established under section 42 for enabling them to subscribe directly or indirectly to the share capital of a co-operative credit society.

22. Other Functions of National Bank

The national bank-

(i) Shall co-ordinate its operations and the operations of other institutions engaged in the field of rural credit and maintain expert staff to study all problems related to agriculture and rural development and be available for consultations to the central government, the Reserve Bank, the State Govt. and other institutions engaged in the field of rural development.

(ii) May act as the agent for the central govt. or state governments or the Reserve Bank in the transactions of any business in respect of loans and advances.

(iii) may provide facilities for training, dissemination of information and promotion research including studies, techno-economic surveys in the field of rural banking, agriculture and rural development.

23. The National Bank shall establish and maintain a fund to be known as the National Rural Credit (Long Term Operations) Fund.

24. The National Bank shall establish and maintain a fund to be known as the National Rural Credit (stabilization) Fund.

25. The National Bank shall establish and maintain a fund to be known as the Research and Development Fund. This fund shall be expended on the matters of improvements to agriculture, agricultural operations and rural development including the provision of training and research facilities.

26. Exemption from Income Tax

The National Bank shall not be liable to pay income tax, surtax or any other tax in respect of any income, profits or gains derived or any amount received by the National Bank.


Agri.
Knowledge
(Agricultural
Laws)