NABARD has announced the launch of a Cooperative Governance Index (CGI) for Rural Cooperative Banks (RCBs) as part of its 2023-24 annual report. The CGI will serve as a crucial tool to evaluate and enhance the corporate governance standards within these cooperative banks, aiming to ensure transparency and accountability across the sector.
The pilot phase will begin in FY2025 with 69 State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs), followed by a broader roll-out. The report emphasizes NABARD’s commitment to the continuous monitoring of Regional Rural Banks (RRBs) to ensure that they meet their viability targets.
It will also focus on the promotion of technology adoption among RRBs and RCBs, enhancing their service offerings in the digital age. NABARD is dedicated to improving the skills of personnel in both cooperatives and RRBs and strengthening weaker StCBs and DCCBs through strategic turnaround plans.
NABARD plans to set up a shared services entity for cooperative banks, providing tech-led Core Banking Solutions Plus services, on par with scheduled commercial banks. This initiative is expected to enhance cost efficiency and operational effectiveness in delivering financial solutions to rural financial institutions (RFIs).
Additionally, NABARD is developing policy guidelines for working capital financing, including the creation of short-term working capital products tailored to prospective entrepreneurs, especially those interested in setting up food processing units outside designated food parks. The report highlights NABARD’s exploration of collaboration opportunities with commercial banks, RRBs, and cooperative banks to extend working capital finance assistance.
The report provides insights into NABARD’s ongoing support through the Cooperative Development Fund (CDF). As of March 2024, Rs 326.9 crore has been disbursed from the CDF, with a remaining balance of Rs 200 crore. The CDF is predominantly used for training cooperative bank personnel under the Scheme of Financial Assistance for Training of Cooperative Banks Personnel (SOFTCOB), with Rs 1,480 lakh utilized during FY2024.
NABARD’s focus on business diversification and innovation is evident in its support for Business Diversification and Product Innovation Cells (BDPICs) in StCBs. By March 2024, 21 BDPICs were operational, with Rs 13.9 crore sanctioned. Furthermore, NABARD is aiding Primary Agricultural Credit Societies (PACS) in their transformation into multi-service centers, with a significant share of Rs 252 crore from the CDF allocated for this initiative.
The report also details NABARD’s efforts in digitizing 63,000 PACS over five years, with 18,000 already digitized as of February 2024. This digital transformation is set to enhance transaction speed, access to payment services, and supervision for rural stakeholders.
NABARD’s financial impact is further underscored by its Rs 9.1 lakh crore balance sheet as of March 2024, reflecting a 13.6% growth over the previous fiscal year. The institution also mobilized Rs 1,040.5 crore through India’s first AAA-rated rupee-denominated social bonds in FY2024, aligning investments with social impact.
The report highlights NABARD’s significant contributions to rural infrastructure, with cumulative sanctions reaching Rs 8.2 lakh crore, including Rs 61,000 crore during FY2024. The Rural Infrastructure Development Fund has notably improved rural landscapes by creating irrigation potential, constructing roads and bridges, and generating employment.
Looking forward, NABARD’s vision is encapsulated in its Five-Year Strategic Plan, ‘Pragati 1.0,’ and the repositioning initiative ‘UNNATI,’ aimed at enhancing internal capabilities.