Amendments to the National Bank for Agriculture and Rural Development Act, 1981

banks in India

The proposal for amendments to National Bank for Agriculture & Rural Development Act, 1981 has been approved by the Union Cabinet. The decision on proposed amendments was taken in a meeting of Union Cabinet held in New Delhi, chaired by country’s Prime Minister Narendra Modi.

NABARD is India’s apex development bank, established in the year 1982 on Shivaraman Committee’s recommendations to implement the National Bank for Agriculture & Rural Development Act, 1981. The bank focuses on rural areas in India and is headquartered in Mumbai, Maharashtra, with branches all over India. It is also a member of the Alliance for Financial Inclusion and India’s central banking institution, Reserve Bank of India (RBI), is a majority stake holder in NABARD.

Approved Amendments to National Bank for Agriculture & Rural Development Act, 1981:

  1. Amendments in 1981Act have been made to upsurge NABARD’s authorized capital to Rs. 30,000 crore, from existing Rs. 5,000 crore, and to further increase the capital beyond Rs. 30,000 crore in consultation with the RBI.
  2. The amendments also includes changes in certain sections and long title, in order to bring Medium and Handloom Enterprises in mandate of NABARD.
  3. It also mentions transferring of RBI’s 0.4% equity in NABARD, which amount to Rs. 20 crores to the Union Government.


  1. Increase in NABARD’s authorized capital will enable it to respond better to the commitments it has undertaken, in terms of the decision of the government on-lending to cooperative banks and Long Term Irrigation Fund (LIF).
  2. It will also enable NABARD in enhancing its activities and in enlarging its business, thus easing promotion of securing prosperity of rural areas and integrated rural development by creating more employment.
  3. The transfer of RBI’s entire shareholding in NABARD to the Union Government will eliminate the conflict in the role of RBI as a shareholder in NABARD and as banking regulator.


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