Talking rural and agricultural finance: the Indian example
Agriculture is a major source of subsistence all around the world, particularly for most of poor people living developing countries' rural areas. Around 500 million smallholders farming households rely on agricultural production for their livelihood. This represents 2.5 billion people, which is the largest segment of those living on less than $2 a day. According to the World Bank's IFC, the agriculture sector contributes about 40% of worldwide employment. To feed the 2050 population, a 100% food production increase will be required in developing countries. Investment in agriculture is crucial to trigger global economic growth. Still, for many, access to finance represents a challenge, which is yet primordial to improve their productions and adopt more efficient technologies.When rural finance aims at providing financial services in rural areas, to everyone, regardless of their income level; agricultural finance is specifically dedicated to agricultural activities. The main obstacles are however the dispersed demand and weak infrastructures in certain parts of the world.
NABARD: the world's largest micro-finance project
In this regard, India created in 1982 the National Bank for Agricultural and Rural Development (NAVARD). It aims at developing financial institutions in the country through policy, planning and operations in the field of credit for agriculture and economic activities in rural areas. In these parts of India, Nabard plays a crucial role: it facilitates credit flow for promotion and development of agriculture, cottage and village industries. Institutional credit aims at building an empowered and financially inclusive rural India through financial initiatives and supervision. The world's largest micro-finance project touched millions of rural lives since it was created. Branches all over the country allow to develop and implement the government's financial inclusion policy. They provide assistance when it comes to agriculture, to spearhead the development of villages through financing key economic activities.NABARD introduced social enterprises and innovation in rural areas. It particularly focuses on crop productivity initiatives, soil and water conservation, but also intend to maintain a certain heritage and tribal way of life.
A digital push
With the government’s aim to build a cashless India, NABARD provides subsidies to rural financial institutions for the development of rural card acceptance infrastructure and the issue of chip and pin cards through cooperative banks.