Which of the following Financial Institutions receive short-term and medium-term credit from NABARD?

A. Reserve Bank of India
B. Co-operative Banks
C. Land Development Banks
D. Regional Rural Banks

Choose the correct answer from the options given below:

Correct option is B

NABARD (National Bank for Agriculture and Rural Development) provides short-term and medium-term credit to various financial institutions that cater to the needs of the agricultural and rural sectors. The institutions that receive such funding from NABARD include:

1. Co-operative Banks – NABARD refinances State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) for agricultural credit. These banks provide short-term and medium-term loans to farmers and rural enterprises.

2. Land Development Banks (LDBs) – NABARD supports LDBs by providing refinancing for medium-term and long-term loans that are used for agricultural and rural infrastructure development. These banks play a significant role in financing land improvement, irrigation, and farm mechanization.

3. Regional Rural Banks (RRBs) – NABARD refinances RRBs to ensure that rural communities have access to credit facilities for agriculture, small-scale industries, and rural development projects. These banks function under the joint ownership of the Government of India, the concerned State Government, and a Sponsor Bank.

Since Reserve Bank of India (RBI) does not receive credit from NABARD, the correct answer is B, C, D only.

Information Booster:

• NABARD was established in 1982 as a specialized financial institution for rural credit and development.
• It provides short-term credit (up to 12 months) to Co-operative Banks and RRBs for seasonal agricultural operations.
• Medium-term credit (1–5 years) is given for purposes such as recovery from natural calamities and farm improvements.
• NABARD provides long-term credit (more than 5 years) through Land Development Banks to support agricultural productivity.
• Co-operative Banks, Land Development Banks, and RRBs play a crucial role in India’s rural credit system and act as the backbone of agricultural financing.
• NABARD also promotes self-help groups (SHGs) and microfinance programs in rural areas.

Additional Knowledge:

Reserve Bank of India (RBI)

• RBI is the central bank of India and does not receive any financial support from NABARD. Instead, RBI regulates NABARD and other financial institutions.
• NABARD itself was created by divesting RBI’s agricultural credit functions to focus on rural financing.
• RBI acts as a regulator and does not engage in direct agricultural or rural financing.

Thus, RBI is not eligible for credit from NABARD.