Rural Infrastructure Development Fund

Rural Infrastructure Development Fund (RIDF)

Rural Infrastructure Development Fund (RIDF)

The primary role of the National Bank for Agriculture and Rural Development (NABARD) is to facilitate growth and also partners in the promotion of rural infrastructures. NABARD also helps the Indian Agricultural industries on import and export. It also supports any research and development that is made for rural areas. It provides technical support for rural area development projects and other activities. Rural Infrastructure Development Fund (RIDF) is one among the activity of NABARD.

Objectives of RIDF

The main aim of Rural Infrastructure Development Fund (RIDF) is to provide loans to State Governments to enable them to complete the rural infrastructure projects which are ongoing. RIDF was initially created out of commercial banks along with a sum amount of Rs 2,000 crore. From then, the total sum amount of the allocation has reached Rs 3, 20,500 crores, which also includes Rs 18,500 crore under Bharat Nirman (plan for creating basic rural infrastructure). NABARD also gives financial level assistance to State Governments from RIDF for more than 30 activities. Some commercial banks also help in funding to a certain period of time.

Role of RIDF

  • The primary role or activity of RIDF is to assist the government in identifying the important projects and in listing them according to their priority.
  • Sanction of projects from the priority list, which is done by the sanctioning committee of NABARD.
  • It helps and provides the fund support that is needed and also in cost-effective ways.
  • Monitors the entire process and evaluates them finally.
  • Associates, along with the Government for timely delivery.

Sanctioning of RIDF Projects

  • Through announcements that are made in Union Budget.
  • There are different parameters through which allocation is made for each State.
  • Some of the parameters are previous sanctions, the Level of payments made, rural population, and Infrastructure and Geographical land area.
  • Each State Governments prepare separate reports and send to NABARD for approval.
  • NABARD reviews the projects; a separate sanction committee is present in the head office which sanctions the project.
  • If the project is cost-effective and is feasible, the sanction committee sanctions the project.

Appraisal of Projects

  • The primary process is to find the risk factors and to analyse them.
  • The competency level of the project is identified.
  • Cost-effective and period of the project is taken into account.
  • Maintaining the Quality level throughout the project, without any security failures is ensured.

Project Requirements

  • Details for all expenses that are to be made throughout the project, which includes quality maintenance, maintenance cost, establishment cost, all the hardware components that are required.
  • Cost level escalation will not be allowed in most cases.
  • Construction flow and arrangements are required.
  • Economic analysis is made.
  • Source of funding and the techniques to be used for construction is required in a report format.
  • Photographs of the project land along with pictures of any similar projects executed.
  • Basic flowcharts or drawings of the detailed plan.

Eligible Sectors

In the current situation, there are 37 activities that are eligible under RIDF as approved by GoI. They are listed as 3 categories:

The list of activities are provided in the below: ELIGIBLE ACTIVITIES - Eng

Percentage of Interest

The current rate of Interest in RIDF is 6.5%. The rate of interest that is to be paid to the bank, which has placed its deposit with NABARD and also the loans that are to be paid out by NABARD from RIDF have been linked to the Bank rate that is prevailing at that point of time.

Loan Repayment Period

The loan amount can be repaid in yearly installments within seven years from the date of which loan was sanctioned. There is also grace time provided with a period of two years.

Penalty Interest

Late payments or penalty interest should be paid at the same rate that is applicable to that of the principal amounts.

Security for Loan

A written letter from the party is submitted with all other documentary proofs that are registered with RBI or any other Commercial Bank. Acceptance from State Government to the terms and conditions of sanction which is also mentioned in the duplicated copy of the sanction letter.

Monitoring of RIDF Projects

Project monitoring is done to ensure the quality levels, smooth functioning, and implementation of the proposed techniques. Ensure regular field visits of the District officers are made. Funds sources are monitored, and the flow of cost along with time will be monitored on a regular basis.

There are various levels in which projects are monitored. Some of them are:

  • Monitoring for the flow of the project.
  • Critical issues that arise in due time after the start of the project.
  • Cost evaluation and flow.
  • Slow-moving modules of the project.
  • Selection of proper samples for the project.
  • Projects with different loan amounts are monitored separately.
  • The smooth functioning of the components that are used.

Other Related Guides

Prime Minister’s Rural Development Fellowship Prime Minister’s Rural Development Fellowship The Prime Minister’s Rural Development Fellowship (PMRDF) is an initiative of the Ministry of Rural Dev...
How to get Nabard Subsidy for Dairy Farming How to get Nabard Subsidy for Dairy Farming Dairy farming is a largely unorganized sector in India and a major source for livelihood in rural areas. ...
Food Processing Fund – NABARD Food Processing Fund - NABARD A strong and vibrant food processing industry can help reduce food waste, improve value and serve as a strong link in t...
National Agroforestry Policy National Agroforestry Policy Agroforestry is a land use system which integrates trees and shrubs on rural landscapes for enhancing productivity, prof...
Revenue Insurance Scheme for Plantation Crops (RIS... Revenue Insurance Scheme for Plantation Crops (RISPC) The Revenue Insurance Scheme for Plantation Crops (RISPC) is launched by the Department of Comm...

Post by Arnold Thomas

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.