A study on institutional credit to agriculture sector in india



Does the institutional framework matter for agricultural credit in India?

Realizing the importance of agricultural credit in fostering agricultural growth and development, the emphasis on the institutional framework for agricultural credit is being emphasized since the beginning of the planned development era in India.

What is the annual growth rate of institutional agricultural credit?

Flow of agricultural credit T able 3. Compound annual growth rates of institutional agricultural credit in real terms (Per cent) 1970s. It was attributed to the nationalization of the priority sector of agriculture. Later on, agricultural the 1990s. From 2000 onwards, it has registered a growth rate of 25 per cent per annum. Similarly, the

What is the share of institutional agencies in agricultural credit supply?

The share of institutional agencies in the total agricultural credit supply was only 7.0 per cent in 1951, which jumped to 66.3 per cent in 1991. The next decade witnessed a slight decline in its share and it fell to 64.3 per cent in 2002-03 (Kumar, et. al. 2010).

What are the outstanding issues in agricultural credit disbursement in India?

This emphasizes the importance of solving outstanding issues in the context of agricultural credit disbursement in India. In agricultural credit, one of the major concerns of the lending institutions is to cover credit risks involved in extending loans to the farmers.


What are the institutional sources of agricultural credit in India?

Three institutional sources of agricultural credit are:Co-operative Credit Societies,Commercial Banks, and.Regional Rural Banks.

What is institutional credit in agriculture?

It aims to provide short-term crop loans up to ₹3 lakh to farmers at an interest rate of 7% per annum. Lending institutions – PSBs and private sector commercial banks offer interest subvention of 2 % by the government. The policy came into force with effect from 2006-07.

What do you understand by agriculture credit system explain the institutional agricultural credit facilities in India?

Types of agricultural credit Short term credit: The Indian farmers require credit to meet their short term needs viz., purchasing seeds, fertilizers, paying wages to hired workers etc. for a period of less than 15 months. Such loans are generally repaid after harvest.

What are the three institutional sources of agricultural credit?

ANS: Three Institutional sources of credit are:Cooperative Credit Society.Commercial Bank.Regional Rural Banks.

What is the importance of agriculture credit in India?

The basic role of credit in Agriculture is to provide capital to acquire any kind of productive assets, land and/or machinery. Credit provides the means for many farmers to adjust their operations to keep up with the constant changes and, by doing so, to improve their operations.

What is meant by institutional credit?

Agriculture credits provided by government institutions are called institutional credit. RRBs, Commercial Banks, Cooperative Banks, Micro Finance Institutions are those Institutions who provide agriculture credit. Sources of Institutional Credit.

Which of the following is an example of institutional source of agricultural credit?

Sources of agricultural credit can be broadly classified into institutional and non-institutional sources. Non-Institutional sources include moneylenders, traders and commission agents, relatives and landlords, but institutional sources include co-operatives, commercial banks including the SBI Group, RBI and NABARD.

Why agricultural credit is important?

Credit is vital to agricultural businesses because it gives farmers access to capital that might not otherwise be available to them. It helps them secure the seeds, equipment, and land they need to operate a successful farm.

What is AgrICulture credit in India?

Agricultural credit is considered as one of the most basic inputs for conducting all agricultural development programs. After independence, the Government adopted the institutional credit approach through various agencies like co-operatives, commercial banks, regional rural banks etc.

Which is the biggest institutional source of agricultural credit?

In India the active primary agricultural credit societies (PACS) cover nearly 86 per cent of the Indian villages and account for nearly 36 per cent of the total rural population of the country. (ii) Government:Another important source of agricultural credit is the Government of our country.

What are the types of agricultural credit in India?

Considering the period and purpose of the credit requirement of the farmers of the country, agricultural credit in India can be classified into three major types, namely, short term, medium term and long term credit.

What are the sources of agriculture finance in India?

The two major sources of finance in agriculture are institutional and non- institutional sources. Institutional sources consist of the government and co-operative societies, commercial bank including the Regional bank, Lead bank.

Shradhajali Sinha

The institutional credit has been conceived to play a pivotal role in the agricultural development of India. A large number of institutional agencies are involved in the disbursement of credit to agriculture. However, the persistence of money lenders in the rural credit market is still a major concern.


The institutional credit has been conceived to play a pivotal role in the agricultural development of India. A large number of institutional agencies are involved in the disbursement of credit to agriculture. However, the persistence of money lenders in the rural credit market is still a major concern.

What is KCC in agriculture?

KCC covers post-harvest expenses, produce marketing loan, consumption requirements of farmer household, working capital for maintenance of farm assets and activities allied to agriculture, investment credit requirement for agriculture, and allied activities.

What is the NABARD bank?

National Bank for Agriculture and Rural Development (NABARD) NABARD is a development bank focussing primarily on the rural sector of the country. It is the apex banking institution to provide finance for Agriculture and rural development. Its headquarter is located in Mumbai, the country’s financial capital.

Why are credit agencies paying less attention to rural farmers?

As a result, credit agencies are paying less attention to the credit needs of poor farmers, while credit agencies are paying more attention to the creditworthiness of relatively well-off farmers.

What are the main objectives of RRBs?

The main objectives of RRBs are. To provide credit and other facilities to the small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs in rural areas. To check the outflow of rural deposits to urban areas and reduce regional imbalances and increase rural employment generation.

What is financial inclusion?

Financial exclusion must also be defined clearly; this is an exercise that will highlight what needs to change and provide insights into appropriate solutions. It refers to the obstacles or constraints that keep people from using financial services. It can range from not having a bank account to financial illiteracy.

What is the credit system in India?

In India, the institutional credit system continues to fall short of the country’s rising needs. Cooperative credit institutions such as primary agricultural credit societies, land development banks, commercial banks, and regional rural banks have not been able to reach all of the country’s rural farmers.

How many farmers own less than 2 hectares of land?

According to the most recent agricultural census, 87% of agricultural households own less than or equal to two hectares of land. This means that 87% of farmers are small or marginal, according to the Reserve Bank of India’s description. The size of one’s income is proportional to the size of one’s landholdings.

What is the purpose of research methodology?

The objectives of proposed work are to find the credit facilities and impact on a developing economy . It’s a descriptive and Analytical type of work. It is an attempt to understand and differentiate the significance of agriculture credit in rural development as well as the farmers’ development. The study would be predominantly based on secondary as well as primary research. Primary information will be collected from different previous resources like- farmers, institutional & non- institutional credit agencies, RBI reports, books & journals, previous research finding & literature. Research instrument will include as trend analysis & time series to show the financial status of institutional agriculture credit agencies. A coefficient of co-relation is the tool to show the relation between agriculture inputs and productivity. Some other appropriate tools are used by researchers which will be suitable on the basis of objectives of study.

What are the problems faced by farmers in obtaining and repayment of agriculture credit?

R.Subramanian (2017) analyzed the problem faced by the farmers in obtaining and repayment of agriculture credit and that farmer facing so many problems such as non availability of loan on time, expensive and long procedure, inadequate loan amount, document expenses etc. On the other hand after getting loan from agriculture credit institution farmers not repayment of their loan due to crop failure, failure of monsoon, lower yield, increase input cost, family size, higher rate of interest and willful default etc. Nwafor Grace o (2018) examined the loan repayment behavior of farmers. The behavior of farmers was depending on the socio-economic variable. Socio-economic variables include household income, household earning, occupation, loan diversion, unwillingness to repay etc. He also studied about some factors which are related to the institutional credit agencies. He included the shortage of trained managers, lack of understanding of the approaches of cooperation, excessive government control, inadequate financing and lack of trust among members. On the other hand he also studied about some factors which are related to the cooperatives societies. It includes unprofitable scale of operations, defective management, and shortage of skill manpower, dishonest staff, administrative bottleneck and corrupted staff. The educational qualification of farmers will increase N 14254.74 repayment ability, farm size will increase around N 3765.25 repayment ability and loan application cost will N 3.25 reduction in repayment ability of farmers.

How does agriculture contribute to the Indian economy?

Thus agriculture is the backbone of Indian economy. India ranks second worldwide in farm outputs. The history of agriculture in India can be dated back to Indus valley civilization and even before that in some places of southern India. In agriculture farmer play an important role. A farmer is a person engaged in agriculture, raising living organism for food or raw material. A farmer might own farmed land or might work as a labourer on land owned by others. Farmers are utilizing their own saving for production and development of agriculture land. But in India most of the farmers are small; they have limited resources of income. If they use their saving to produce agriculture product and development of agriculture land, they become vulnerable. Therefore institutional agricultural credit is an important way for development of Indian farmers.

What is the purpose of reviewing literature?

Review of literature is an essential part of the research which provides researcher a more capable to understand in depth knowledge of the problem of the study. In this section the researcher reviewed the related literature in this regard in various heads.

Why is agriculture loan important?

Agriculture loan is important part of the agriculture produce. Agriculture loan helps the farmers to purchase seeds, fertilizers, agriculture equipment and development of agriculture land and non-agriculture activities. This proposed study would be useful for farmers, banks and government. This proposed study is important because it helps to identify how the farmers utilize credit for agriculture and other purposes. It also helps to show the growth of institutional agricultural credit in the terms of credit and loan disbursement amount. It helps government, ministry of finance, banking institution and other financial institution to make their future plan on the basis of loan amount and loan disbursement. This proposed study is also important for farmers because it helps to create awareness and provide information about the government policies and programs for development of farmers.


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