law: National Bank for Agriculture and Rural Development Act, 1981 
  Chapter VI: Credit
  
  Functions of the National Bank 
  21. Production and
  
  marketing credit.- 
  1.     
  
    The
  
  National Bank may provide by way of refinance, loans and advances, repayable on
  
  demand or on the expiry of fixed period not exceeding eighteen months, to State
  
  co-operative banks, central co-operative banks, regional rural banks, or to any
  
  financial institution or to any class of financial institutions, which are
  
  approved by the Reserve Bank in this behalf, for financing-
               
  
   i.        
  
    agricultural
  
  operations or the marketing of crops, or
              
  
   ii.        
  
    the
  
  marketing and distribution of inputs necessary for agriculture or rural
  
  development, or
             
  
   iii.        
  
    any
  
  other activity for the promotion of or in the field of agriculture or rural
  
  development, or
             
  
   iv.        
  
    bona
  
  fide commercial or trade transactions, or
              
  
   v.        
  
    the
  
  production or marketing activities of artisans or of small-scale industries,
  
  industries in the tiny and decentralised sector, village and cottage industries
  
  or of those engaged in the field of handicrafts and other rural crafts.
  2.     
  
    The
  
  National Bank may make loans and advances under sub- section (1) against the
  
  security of-
               
  
   i.        
  
    stocks,
  
  funds and securities other than immovable property, in 326 which a trustee is
  
  authorised to invest trust money by any law for the time being in force;
              
  
   ii.        
  
    promissory
  
  notes supported by documents of title to goods, such documents having been
  
  transferred, assigned or pledged to the borrowing institution as security for a
  
  loan or advance made for any of the purposes specified in sub-section (1):
  Provided that the National Bank may, whenever
  
  it considers it necessary so to do, accept, in lieu of the actual assignment of
  
  any such security in favour of the National Bank, a declaration in writing from
  
  the borrowing institution,-- (a) stating that it holds such documents such
  
  documents of title to goods as may be set out in the declaration; and (b)
  
  containing such other particulars as may be required by the National Bank.
  1.     
  
  
  2.     
  
  
  3.     
  
    Notwithstanding
  
  anything contained in sub-section (2), the National Bank may in its discretion
  
  grant a loan or advance-- (a) to any State co-operative bank or central
  
  co-operative bank if the loan or advance is fully guaranteed for repayment of
  
  principal and interest by Government; (b) to any State co-operative bank which
  
  is a scheduled bank, if the loan or advance is secured either by a bill of
  
  exchange or promissory note executed by the central co-operative bank and
  
  assigned in favour of the State co-operative bank.
  4.     
  
    Notwithstanding
  
  anything contained in sub-sections (2) and (3), the National Bank may also make
  
  loans and advances repayable on demand or on the expiry of fixed periods not
  
  exceeding eighteen months against promissory notes of a State co-operative bank
  
  or a regional rural bank or an institution approved under sub-section (1):
  
  Provided that the borrowing institution furnishes a declaration in writing,
  
  setting out the purpose for which it has made loans and advances and such other
  
  particulars as may be required by the National Bank.