The National Bank for Agriculture and Rural Development (NABARD) is the apex development bank for agriculture and rural development. It was set up on 12th July, 1982 by merging the Agricultural Credit Department and Rural planning and credit Cell of the Reserve bank of India and the entire undertaking of Agricultural Refinance and Development Corporation.

NABARD has been entrusted with three types of functions, namely (1) the credit functions, (2) the development functions, and (3) the regulatory functions:

Credit Functions: It provides through the banking system all kinds of productive and investment credit to agricultural small scale industries, cottage and village industries, handicrafts, and other allied economic activities. It provides different types of refinance (i.e. short term, medium term, and long term) the eligible institutions namely (a) State co-operative banks (b) Regional Rural Banks, (c) Sate and Development Banks (excluding short term), (d) Commercial banks (only long term) and other financial institutions approved by the Reserve Bank. NABARD has prescribed lower rates of interest on the refinance provided by it and the rates payable by the ultimate borrowers.

Development Functions: It coordinates the operations of rural credit agencies, develops expertise to deal with agricultural and rural problems, assists Government, Reserve Bank and other institutions in rural devilment efforts, acts as agent to Government and Reserve Bank in relevant areas. It provides facilities for training and research, assists the state Governments to enable them to contribute to the share capital of eligible institutions.

Regulatory Functions: The banking Regulations Act 149 empowers the NABARD to undertake inspections of Regional Rural banks and Co-operative banks (other than primary co-operative banks). If any such bank seeks permission of the Reserve bank for opening branches, etc., it will have to obtain the recommendation of NABARD.

Resources: Besides the National Rural Credit (Long Term Operations) Funds and the National Rural Credit (Stabilization) Fund, the NABARD is authorized to raise resources by issue of bonds and debentures guaranteed by the Central Government and also to borrow from the Reserve Bank, Central Government or any other organization approved by the Central Government. It can also raise funds externally trough the Government of India.

Organization NABARD is managed by a Board of directors comprising the chairman, managing Director, experts in Rural Economies, experts from Co-operative and Commercial Banks, three Directors of the Reserve Bank, three directors from Government of India and two directors representing the State Governments.

National Housing Bank (NHB):

National Housing Bank is the latest apex bank set up in India. It is a statutory corporation established under the National Housing Bank Act, 1987 as a wholly owned subsidiary of the Reserve Bank of India, which has subscribed its entire share capital of Rs 100 crores. The Bank started functioning on 9th July, 1988 with its head office in New Delhi.

Functions: The Bank is the apex housing finance institutions in the country and has been entrusted with the following functions:

1. The bank’s primary responsibility is to promote and develop specialized housing finance institutions or mobilizing resources and extending credit for housing.
2. The bank is empowered to extend refinancing facilities to housing finance institutions and to Scheduled banks. The bank has also been given the power to inspect the books and accounts of any housing finance institution to which it has given financial assistance.

3. Its other functions include:

(a) To provide guarantee and underwriting facilities to housing finance institutions.
(b) To formulate scheme for mobilization of resources and extension of credit for houses (including that for the economically weaker sections of society which may be supported by subsidies).
(c) To provide guidelines to housing finance institutions to ensure their growth on sound lines.
(d) To provide technical and administrative and administrative assistance to the housing finance institutions to the housing finance institutions and to coordinate with various agencies connected with housing.

The Bank will also provide advisory services to the Central and State governments, local authorities and other concerned agencies on all matters concerning housing.

Resources: The Bank is empowered to raise resources through issue of bonds and debentures. It can borrow from the Central Government and other approved institutions and accepts deposits of long term duration. In addition, the Bank can also borrow in foreign currency from banks and financial institutions in India and abroad. It can also avail of short term loans fixed periods up to 18 months from Reserve Bank of India, also long term loans from the recently established National Housing Credit (Long Term Operations) Fund by Reserves Bank.

Collection of Credit Information: The Bank is also authorized to collect credit and other information from housing finance institutions, Central and State Governments, local authorities etc., to publish to same.

Power to Regulate Corporate Housing Finance institutions: The Housing Bank is also empowered to exercise control over the Corporate Housing Finance Institutions, which was hitherto exercised by the Reserve Bank.