1. NABARD can accept the short-term deposits from public.
2. NABARD depends on the general line of credit received from the Reserve Bank of India to finance the agricultural credits.
Which of the statements given above is/are correct?
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Let me explain the concept of NABARD (National Bank for Agriculture and Rural Development) and analyze the given statements.
About NABARD
NABARD is India's apex development bank focused on agriculture and rural development. It was established in 1982 under the NABARD Act, 1981.
Analysis of Statement 1
"NABARD can accept short-term deposits from public" - This statement is incorrect. Unlike commercial banks, NABARD does not accept deposits from the general public. Its primary sources of funds include borrowings from Government of India, RBI, and international financial institutions.
Analysis of Statement 2
"NABARD depends on the general line of credit received from the Reserve Bank of India to finance agricultural credits" - This statement is correct. NABARD does receive funds from RBI through various mechanisms including the National Rural Credit (Long Term Operations) Fund and National Rural Credit (Stabilization) Fund to provide refinance support for agricultural credit.
Final Answer
Only statement 2 is correct. NABARD does not accept deposits from the public but does depend on RBI's credit lines for agricultural financing.
Related Topics
Indian Banking System: Understanding the structure of India's banking system including development banks like NABARD.
Agricultural Finance: How agricultural credit is organized and distributed in India through various institutions.
Rural Development Institutions: The role of specialized institutions in promoting rural economic development.
Key Formulae/Concepts
Refinance Mechanism: NABARD provides refinance support to banks for their agricultural lending activities using funds from RBI and other sources.
Development Banking: Specialized banks that focus on specific sectors rather than general commercial banking activities.