The Union Cabinet today approved the proposal for augmenting the capital base of National Bank for Agriculture and Rural Development (NABARD) by infusing Rs.3,000 crore as Government equity in two instlaments of Rs.1,000 crore in 2011-12 and Rs.2,000 crore during 2012-13.This would raise the paid up capital to Rs.5,000 crore.
Presently, the authorised capital of NABARD is Rs.5,000 crore, of which, the paid up capital is Rs.2,000 crore. The Government of India holds 99% share capital of NABARD. As per RBI’s guidelines the outstanding total resources mobilised at any point of time by a Financial Institution should not exceed 10 times its Net Owned Funds (NOF). It becomes important to raise NABARD Net Owned Funds such that NABARD ability to mobilised resources from the market can be enhanced. The infusion of the additional share capital by the Government of India will increase the Net Owned Funds and thus the borrowing capacity of NABARD to enable it to extend its various activities.