Question

NABARD facilitates

• A. Formal credit organisations in rural India.
• B. Formal credit organisations in urban India.
• C. Informal credit organisations in rural India.
• D. Informal credit organisations in urban India.

Hint:

NABARD's core mission is to promote sustainable and equitable agriculture and rural prosperity by providing refinance to formal financial institutions operating in rural areas. Its focus is strictly on the formal sector and rural development.

Answer 1

The Correct Option is A

Step 1: Understand the role and mandate of NABARD.
NABARD stands for the National Bank for Agriculture and Rural Development. It was established in 1982 as an apex development bank in India. Its primary role is to facilitate credit for the promotion and development of agriculture, small-scale industries, cottage and village industries, and other rural crafts, with a view to promoting integrated rural development and securing prosperity of rural areas.

Step 2: Analyze how NABARD fulfills its mandate.
NABARD primarily provides refinance facilities to institutions that extend credit directly to farmers and rural enterprises. These institutions are part of the formal financial system.
It refinances Commercial Banks, Regional Rural Banks (RRBs), and Cooperative Banks for their lending to the agricultural and rural sectors.
It does not directly deal with individual borrowers or informal credit providers (like moneylenders).
Its focus is exclusively on rural development, not urban areas.

Step 3: Evaluate the given options.
(1) Formal credit organisations in rural India: This aligns perfectly with NABARD's mandate to support and strengthen formal financial institutions (banks, cooperatives) that provide credit in rural areas.
(2) Formal credit organisations in urban India: NABARD's mandate is rural development, not urban.
(3) Informal credit organisations in rural India: NABARD operates within the formal financial system and aims to reduce reliance on informal credit sources.
(4) Informal credit organisations in urban India: This is outside NABARD's scope.

Step 4: Conclude the correct option.
NABARD primarily facilitates formal credit organisations in rural India.