AGRICULTURAL CREDIT
To procure all other inputs such as seeds, fertilizers, agricultural labor for tilling/sowing, every
farmer needs money. In India there is an immense need for proper agricultural credit as Indian
farmers are very poor.
From the very beginning the prime source of agricultural credit in India was moneylenders.
Types of agricultural credit
a) 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.
b) Medium term credit
For period ranging between 15 months and 5 years
It is required for purchasing cattle, pumping sets, other agricultural implements etc.
c) Long term credit
For a long period of more than 5 years for the purpose of buying additional land or
for making any permanent improvement on land.
Sources of Agricultural Credit
Apart from the moneylenders, cooperative credit sources and the government. Nowadays, the
long term and short term credit needs of institutions are also being met by National Bank for
Agricultural and Rural Development (NABARD).
Sources of agricultural credit can be broadly classified into –
A. Institutional sources – co-operatives, commercial banks including the SBI group, RBI and
NABARD etc.
B. Non-institutional sources – moneylenders, traders and commission agents, relative and
landlords etc.
Credit facility to farmers
Kissan credit card:-
This scheme was launched in 1998 with the aim of providing short-term formal credit
to farmers.
Owner cultivators as well as tenant farmers can avail loans to meet their agricultural
needs under this scheme at attractive rate of interest.
Investment loan:-
Loan facility to the farmers is available for investment purpose in the areas viz. irrigation,
agricultural mechanization, land development, plantation, horticulture and post-harvest
management.
Interest subvention scheme
It aims at providing short term credit to farmers at the subsidized interest rate.
The policy came into force with effect from Kharif 2006-07.
Problems regarding agricultural credit
Insufficient volume of rural credit
Inadequate amount of sanction
Lesser attention of poor farmers
Growing overdue
Inadequate institutional coverage
Red tapism-cumbersome rules and formalities.
Way forward
Co-operative credit societies should be organized to make it efficient and purposeful for
delivering the best in terms of rural credit.
Eliminating middlemen existing between credit agencies and borrowers.
RBI should arrange sufficient fund so that long term loans can be advanced to the
farmers.
The banks should adopt procedural simplification for credit delivery.
Lenders should also monitor the actual utilization of loans
