The functions of Finance Department are
(a) to mobilise resources through various instruments to meet the fund requirements of NABARD
(b) remittance of funds to Regional Offices and client institutions (Commercial Banks, Regional Rural Banks, State Cooperative Agriculture and Rural Development Banks, State Cooperative Banks, District Central Cooperative Banks and State Governments directly or through Regional Offices
(c) investment of temporary surpluses and other funds in appropriate avenues. These activities are carried out within the framework of regulatory and other guidelines.
A. Mobilisation of Resources
Resources are mobilised as per Bank’s requirements through a mix of instruments of various types and tenure (Bonds1, Certificate of Deposits2, Commercial Papers3, Term Deposits, Corporate Borrowings, Term Money Borrowings4, RIDF5 deposits, STCRC6 deposits etc.). Of the bond issuances, three bonds were issued to retail investors, viz., Capital Gains Bonds7, NABARD Rural Bonds8 and Bhavishya Nirman Bonds9. These issues are now not open for fresh investments.
Bonds, Certificate of Deposits and Commercial Papers are issued after obtaining ratings from one of the approved credit rating agencies viz., CRISIL, ICRA or CARE. Bhavishya Nirman Bonds, which are zero coupon bonds with a tenure of 10 years, were rated by at least two credit rating agencies. NABARD’s issuances received ‘AAA’ or equivalent (the highest) ratings from the credit rating agencies.
The names and addresses of these agencies are given below:
1) CRISIL Limited
CRISIL House, Central Avenue,
Hiranandani0 Business Park
Powai, Mumbai – 400 076
2) ICRA Limited
3rd floor Electric Mansion,
Appasaheb Marathe Marg,
Mumbai 400 025
3) Credit Analysis & Research Ltd.
4th Floor, Godrej Coliseum
Somaiya Hospital Road,
Mumbai- 400 022
Phone : 022-6754 3534.
The bonds issued to institutional investors are listed on NSE while Bhavishya Nirman Bonds are listed on BSE.
Registrar and Transfer Agents
The servicing of retail instruments (viz., Capital Gains Bonds, NABARD Rural Bonds and Bhavishya Nirman Bonds) is done by M/s.UTI Infrastructure Technology And Services Ltd., who are Registrars and Transfer Agents. The Corporate Bonds are serviced by M/s Datamatics Financial Services Ltd.
Investors may contact the following persons in case of need :
For Retail Instruments related queries
Shri Sunil Bhoite
M/s.UTI Infrastructure Technology and Services Ltd.
Plot No. 3, Sector 11, CBD Belapur
Navi Mumbai, (India)-400614
For Corporate Bond related queries
Shri Amit Banerjee
M/s Datamatics Financial Services Ltd.
Plot No.A16 & 17, MIDC,
Part B Cross Lane, Andheri (East),
Mumbai – 400 093
Phone : 022-66712001-06/ 66712200
The following persons could also be contacted in case of need :
For Retail issuances (Capital Gains Bonds, NABARD Rural Bonds & Bhavishya Nirman Bonds) :
For Corporate issuances :
IDBI Trusteeship Services Ltd. are the Trustees for Bonds and Bhavishya Nirman Bonds. Their address and contact details are as under :
Smt. Brindha Venkatraman
IDBI Trusteeship Services Ltd.
Asian Building, Ground Floor,
17, R.Kamani Marg, Ballard Estate,
Mumbai 400 001
Hedging10 of foreign currency loans, (Loans availed from KfW11 for Umbrella Programme on Natural Resource Management (UPNRM) is done through banks with whom International Swaps and Derivatives Association (ISDA)12 agreements have been entered into.
B. Remittance of Funds
The remittance of funds to Regional Offices and client institutions directly or through Regional Offices is looked after by the following persons of Finance Department:
Remittance of funds for Loaning Operations :
Remittance of funds for meeting Administrative Expenses :
The main function of the Treasury wing of the Finance Department is to ensure availability of adequate liquidity resources, i.e. cash, for the business operations and administrative functions of the Bank. The Treasury also invests the Bank’s temporary surpluses and other funds in various instruments in accordance with the provisions of NABARD Act, RBI guidelines and directions given by the Investment Committee (consisting of Executive Directors) and the Board of Directors.
b. Instruments for investment
• Money Market instruments which are mainly short-term, marketable, liquid, low-risk debt securities. These are Treasury Bills13 (including Cash Management Bills), Money Market Mutual Funds14, Commercial Papers 3, Certificates of Deposits 2.
• The Venture Capital Fund should be SEBI registered and should furnish a copy of certificate of registration with SEBI. Should also comply with all applicable Rules and Regulation for operation of the fund.
• Collateralised Borrowing and Lending Obligation (CBLO)15
• Government Securities16 (Central Government and State Government)
• Deposits with banks
• Corporate Bonds (NCDs)17
• Equity Shares
• Other products such as Bills Rediscounting18, Units of Venture Capital Funds, Reverse Repo.
• Any other instrument, approved by RBI as eligible instrument for Financial Institutions like NABARD to invest
• The investments are made both in primary and secondary markets.
c. Investment in Venture Capital Funds
Encouraging entrepreneurship, innovation, growth and investment in agriculture and rural development.
• Agriculture, agro-processing and rural area focused funds.
• At least 200% of NABARD's commitment shall be invested by the fund in projects that help agriculture and rural development.
• The Venture Capital Fund should be in venture capital activities for at least 05 years in India, shown good performance in earlier funds.
• For Venture Capital Funds with less than 05 years' experience, the promoter organisation should have been in venture capital business for at least 10 years and demonstrated good performance.
• In case of start up VCs, the selection will be based on (a) size of VCF (b) profile of other investors (c) track record of promoters and their experience in the field (d) commitment already received by the fund from contributors other than sponsors, which should not be less than 25% of proposed corpus, before approaching NABARD.
(iii) Checklist for proposal submission
• SEBI Registration Certificate
• Private Placement Memorandum
• Past performance details - IRR generated for exits and in multiples of investment
• Firm commitments received
• Deals in pipeline
Contact details of the official engaged in Treasury Operations:
|Shri S. Sankaranarayanan
Functions of Finance Department
|Duties of officers and employees
||Officers: Supervisory and financial:
1. Mobilisation of funds (Bonds, CDs, Corporate Borrowings, etc).
2. Authorising inter-bank payments, inter-bank investments, viz; Term deposits, Mutual Fund instruments, etc. discharging TDRs on maturity.
3. Obtaining and utilising financial data for the purpose of funds management, including investment/ accounting etc.
4. Approving financial transactions entered into by Front Office with counterparties and confirmation of the same.
5.Transacting business with RBI and other banks.
6. Compliance with RBI Inspection and concurrent audit observations.
7. Approving financial transactions in respect of release of refinance / subsidy to banks.
8. Front Office functions of Treasury management- viz; dealing in Govt. Securities, Repo transactions, T-Bills, Bills Re-discounting Scheme (BRDS), short term deposits, etc; Financial powers for investments delegated at different levels.
9. Fixing of exposure limits for investments for different FIs. review of investment strategies, inflation forecasting and views on interest rates.
(i) Data entry
(iii) Providing logistics support
|Procedure followed in the decision making process, including channels of supervision and accountability
||Where financial transactions are involved, approvals/sanctions are obtained from officers in terms of delegated powers. 3 to 4 levels of supervision/checking is ensured before a transaction is put through. Decisions affecting policy or practice are generally taken at the highest level in the hierarchy. Accounting software provides for 4 levels of checking and approval, besides accountability. Decisions involving profitability of bank are taken at Board/ALCO level. All decisions taken are subject to review by the Statutory Auditors appointed by GOI as well as by RBI inspection. The Investment committee meeting conducted every week reviews the investment portfolio.
|Norms set by it for the discharge of its functions
||Functions performed within the framework of rules and regulations stipulated from time to time. Adequate safeguards positioned for financial transactions. Norms followed on the basis of accounting standards prescribed by the ICAI, provisions of NABARD Act, Income Tax Act, etc.
|Rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions
||Functions, procedures, accounting, etc. carried out in terms of instructions set out in the Loaning Operations and Administrative Expenses Manual, Expenditure Rules and Delegation of powers. On-line accounting and software for maintenance of Books of accounts prescribed. Instructions issued by RBI from time to time, on-line support from NDS of RBI and CCIL.
|A statement of the categories of documents that are held by it or under its control
||Cheque books, Share certificates/ Fixed Deposit Receipt of companies/ subsidiaries of NABARD, etc.
|Particulars of any arrangement that exists for consultation with, or representation by, the members of the public in relation to the formulation of its policy or implementation thereof
||Formal and Informal meetings with Financial Institutions conducting business with the bank.
|Budget allocated to each of its agency, indicating the particulars of all plans, proposed expeditures and reports on disbursements made.
||Resource/ business budget prepared and approved by the Board. Utilisation of budget monitored through periodical returns.
|Manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes
||Under the Capital Investment Subsidy Scheme for Rural Godown and Cold storages as well as for other subsidy related programmes funds are received at HO from the respective Govt. agencies. On the basis of applications received from ROs, subsidy is released to RRBs and Cooperative Banks through our ROs and for Commercial Banks, their current a/c with RBI, Mumbai, is credited with the subsidy amount. The beneficiaries of these programmes are individuals, companies etc.
|Particulars of recipients of concessions, permits or authorisations granted
|Details in respect of the information, available to or held by it, reduced in an electronic form
||- Release of refinance
- Release of subsidy
- Loan ledgers
- Loaning operations
- Bank's investment-wise and security-wise accounting statements.
|Particulars of facilities available to citizens for obtaining information
||Formal / informal modes of communication, NABARD website, through our DDMs at district level.
|Such other information as may be prescribed and thereafter updated publications every year.
A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest.
2. Certificate of Deposits (CD)
Certificate of Deposits are short term money market instruments, issued at discount, for a specified amount and maturing on a specific date. These can be issued by banks and All India Financial Institutions (AIFIs). The maturity period of CDs issued by banks should not be less than 7 days and not more than one year, from the date of issue. The AIFIs can issue CDs for a period not less than 1 year and not exceeding 3 years from the date of issue.
3. Commercial Paper (CP)
Commercial Paper is a short term money market instrument, issued at discount, for a specified amount and maturing on a specific date. These have maturity of 15 days to 1 year and are issued by highly rated corporate, PDs and All India Financial Institutions.
4. Term Money Borrowings (TMB)
Term Money Borrowing is an over-the-counter product between a lender and a borrower. The eligible investors are Commercial Banks including Regional Rural Banks and Co-operative Banks. The instrument is non-transferable. The tenor of the borrowing is 03 to 06 months. The issuer is free to fix the interest rates. The minimum application amount (Face value) is Rs.10 Lakhs.
5. Rural Infrastructure Development Fund (RIDF)
Rural Infrastructure Development Fund was instituted in NABARD during 1995-96. The main objective of the Fund is to provide loans to the State Governments and State owned Corporations to enable them to complete ongoing rural infrastructure projects. Commercial Banks contribute to this fund as per allocation made by the Reserve Bank of India.
6. Short Term Cooperative Rural Credit (Refinance) Fund (STCRC)
With a view to augmenting NABARD’s resources for short term credit facilities to Cooperative Institutions, the Short Term Cooperative Rural Credit (Refinance) Fund was set up in 2008-09 with contributions by scheduled commercial banks not achieving their priority sector obligations.
7. Capital Gains Bonds
NABARD had issued Capital Gains Bonds during the period from October 2000 to March 2009 with 5/7 years tennure, under Sec 54-EC of IT Act,1961. The bonds had Semi-annual, Annual and Cumulative options for payment of interest. Semi-annual interst is payable on 01 April & 01 October every year. Due date for Annual interest payment is 01 April.
8. NABARD Rural Bonds
NABARD issued Rural Bonds under Sec. 80 C of the IT Act,1961 from January 2008 to March 2009. The bonds have maturity period of 5 years with interest payment option of Annual or Cumulative. The annual interest is being paid on 31 July of every year.
9. Bhavishysa Nirman Bonds
Bhavishya Nirman Bonds were issued during the period from March 2007 to March 2011. These are 10 year Zero coupon bonds issued under Section 2(47) & 2(48) of Income Tax Act, 1961. The bonds have face value of Rs. 20,000/- each and are issued at discounted price. The bonds do not carry any interest. The gains on maturity are treated as long term capital gains and taxed accordingly. The bonds are tradable on Bombay Stock Exchange.
Hedging means reducing or controlling risk. This is done by taking a position in the futures market that is opposite to the one in the physical market with the objective of reducing or limiting risks associated with price changes. In other words, a hedge consists of taking an offsetting position in a related security, such as a futures contract. An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.
11. KfW loans
KfW stands for Kreditanstalt fur Wiederaufbau. It is a German Development Bank which provides loans and grants to NABARD under various programmes undertaken for the development of farm sector in India.
12. International Swaps and Derivatives Association (ISDA)
International Swaps and Derivatives Associationis a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York and has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions. its membership consists of derivatives dealers, service providers and end users.
13. Treasury Bills
Treasury Bills are short-term (maturities less than one year), discounted, government securities. The present issues of T-bills are for 91-day, 180-day and 364-day. Treasury bills are sold through an auction process by RBI at a discount to its face value.
14. Money Market Mutual Funds
Money market mutual funds (such as Liquid Funds and Liquid Plus funds) invest in money market instruments. A money market fund is a mutual fund that invests solely in money market instruments. The goal of a money-market fund is to preserve principal while yielding a modest return.
15. Collateralized Borrowing and Lending Obligation (CBLO)
"Collateralized Borrowing and Lending Obligation (CBLO)", is a collateralized and secured instrument for borrowing / lending money. CBLO is a discounted instrument traded on Yield Time priority. CBLO instruments generally made available for trading are those with maturity of next seven business days and three month end dates.
16. Government Securities
Government Securities are coupon-bearing debt instruments issued by the Government of India/ State Governments. Government Securities may have a fixed or a floating coupon. The maturity of the securities can be for maximum 30 years. Government securities are issued by RBI through auction process at market-related yield. Banks, FIs, LIC, mutual funds are the major participants.
17. Non-Convertible Debentures (NCD)
Non-convertible Debentures are debt instruments issued by corporate including, PDs, PSUs and FIs. These bonds are generally issued for a specific period. The bonds may carry fixed or floating coupon and are listed on exchanges. A few institutions issue bonds which are perpetual in nature.
18. Bills Re-Discounting Scheme (BRDS)
Bills Rediscounting means the rediscounting of trade bills, which have already been purchased by/discounted with the bank by the customers. These trade bills arise out of supply of goods/services.