Agriculture Refinance and Development Corporation: Role, Functions, and Impact

Agriculture Refinance and Development Corporation: Role, Functions, and Impact

Introduction

The Agriculture Refinance and Development Corporation (ARDC) was established to enhance rural credit availability and support agricultural development in India. The corporation played a vital role in financing agricultural and rural infrastructure projects before it merged with NABARD (National Bank for Agriculture and Rural Development) in 1982.

This article delves into ARDC’s objectives, key functions, impact on agriculture, and how its role evolved under NABARD.

Objectives of ARDC

ARDC was formed with the following primary objectives:

Providing Refinance Support – Ensuring adequate credit availability for agricultural and rural projects by refinancing banks and financial institutions.

Developing Rural Infrastructure – Financing projects related to irrigation, farm mechanization, dairy farming, fisheries, and horticulture.

Strengthening Rural Credit Institutions – Supporting cooperative banks, regional rural banks (RRBs), and commercial banks in their lending operations.

Enhancing Agricultural Productivity – Encouraging farmers to adopt modern farming techniques and high-yield crop varieties.

Reducing Dependence on Informal Lending – Providing institutional credit to reduce reliance on moneylenders and high-interest informal credit sources.

Key Functions of ARDC

1. Refinancing Agricultural Loans

ARDC provided long-term refinance to banks and financial institutions, enabling them to offer low-interest loans to farmers for:

Land development and irrigation projects

Farm equipment and mechanization

Animal husbandry and fisheries

2. Financing Large-Scale Agricultural Projects

The corporation extended credit for large-scale agricultural development projects, including:

Rural electrification and irrigation facilities

Cold storage and warehousing infrastructure

Soil conservation and afforestation programs

3. Strengthening Cooperative and Rural Banks

By refinancing loans to cooperative banks, commercial banks, and RRBs, ARDC helped in expanding institutional credit in rural areas.

4. Encouraging Adoption of Technology in Agriculture

Loans refinanced by ARDC were used to modernize farming practices, facilitating:

Purchase of tractors, harvesters, and modern irrigation systems

Investment in scientific storage and food processing units

Impact of ARDC on Indian Agriculture

Increased Agricultural Credit Flow – ARDC played a crucial role in improving the availability of long-term agricultural credit, benefitting millions of farmers.

Expansion of Irrigation Facilities – Loans refinanced by ARDC contributed to large-scale irrigation projects, reducing dependence on monsoon rainfall.

Boost to Rural Industrialization – Credit provided for food processing, warehousing, and cold storage enhanced agribusiness growth.

Strengthening of Rural Financial Institutions – The corporation’s refinancing support led to the expansion and stability of rural banking networks.

Reduction in Farmers’ Dependence on Informal Lenders – By improving access to institutional credit, ARDC helped in reducing exploitative moneylending practices.

Evolution into NABARD

In 1982, ARDC was merged into the National Bank for Agriculture and Rural Development (NABARD). This merger aimed at consolidating rural credit institutions and providing a comprehensive approach to agricultural financing. NABARD continues the legacy of ARDC by:

Providing refinance support for agricultural and rural development projects

Strengthening cooperative banks and RRBs

Implementing rural infrastructure development programs

The Agriculture Refinance and Development Corporation (ARDC) played a foundational role in shaping India’s rural credit system. By refinancing agricultural loans and promoting rural infrastructure, ARDC significantly contributed to agricultural growth and farmer welfare. Its integration into NABARD has further strengthened agricultural financing, ensuring sustainable rural development and enhanced financial inclusion for farmers.