Difference Between NABARD and RBI

The Reserve Bank of India and the National Bank for Agriculture and Rural Development are the most important financial institutions in India. Both organizations play a critical role in the economic development of India. But their primary objectives, functions, and roles are different. RBI and NABARD both of them play an essential role in the banking system of India despite their different purposes. RBI ensures the financial system’s stability and oversees the country’s overall monetary policy On the other hand, NABARD focuses on providing banking support to the rural sector and promoting rural development.

What is RBI?

• The Reserve Bank of India (RBI) is the central bank of India and It was established under the Reserve Bank of India Act of 1934. The primary objective of RBI is to manage the country’s monetary policy and regulate the banking system to ensure financial stability.
• RBI also manages India’s foreign exchange reserves which help to maintain a stable exchange rate and support external trade and payments. It issues and manages the currency notes and coins in circulation in India.
• RBI’s current governor is Shaktikanta Das, who took charge in December 2018.

Role and Functions of RBI

1. Formulating and implementing monetary policy:  RBI is responsible for formulating and implementing monetary policy to maintain price stability and ensure adequate credit flow to the productive sectors of the economy.
2. Regulating and supervising the banking sector: RBI regulates and supervises banks, non-banking financial institutions, and other financial intermediaries to ensure financial stability, protect the interests of depositors, and maintain the soundness of the financial system.
3. Issuing currency and managing the payment and settlement systems: RBI is responsible for issuing and managing the currency in circulation and maintaining the stability and efficiency of the payment and settlement systems in the country.
4. Managing the foreign exchange reserves: RBI manages the country’s foreign exchange reserves, which are used to intervene in the foreign exchange market to maintain exchange rate stability and ensure external sector stability.

What is NABARD?

• The full form of NABARD is National Bank for Agriculture and Rural Development. It was established in 1982 under the recommendation of the Shivaraman Committee to promote rural development in India. 
• NABARD has its headquarters in Mumbai and operates through 31 regional offices and 392 district offices across India.
• It provides credit and other facilities to support activities such as crop production, animal husbandry, rural infrastructure, and cottage industries. 
• NABARD works towards developing rural markets and increasing farmers’ income by providing financial assistance and technical expertise. It operates through regional offices across India.

Role and Functions of NABARD

1. Credit Functions: NABARD provides financial help to farmers, rural entrepreneurs, and others in the rural sector through credit schemes like RIDF, FSPF, and MDF.
2. Development Functions: NABARD develops rural infrastructure and offers technical services to promote sustainable agriculture practices.
3. Supervisory Functions: NABARD supervises and regulates the functions of cooperative banks and RRBs in India.
4. Promoting Financial Inclusion: NABARD promotes financial inclusion by providing access to banking services, credit, and financial products in rural areas through initiatives like NRFIP and e-Shakti.
5. Policy and Planning: NABARD advises the government on policy matters related to agriculture, rural infrastructure, and rural finance.

Difference Between NABARD and RBI

	NABARD	RBI
Full Form	National Bank for Agriculture and Rural Development	Reserve Bank of India
Establishment	1982	1935
Function	Development of rural areas promotion of agriculture and rural industries provision of credit facilities to farmers and other rural entities supervision of cooperative and regional rural banks	Regulation of the monetary policy of the country supervision of commercial banks Control of currency and credit system
Ownership	Fully owned by the Government of India	Owned by the Government of India but functions as an independent body
Headquarters	Mumbai, Maharashtra	Mumbai, Maharashtra
Main Objective	To promote rural development through credit and developmental activities	Regulating and controlling the country’s monetary policy and ensuring financial stability
Issue of Currency	No	Yes