Saturday, August 8, 2009


Availability of credit has been the main hindrance in development of agriculture in India.The banking system is still hesitant on various grounds to purvey credit to the small and marginal farmers.Less availability of credits makes it difficult to adopt modern techniques which in turn renders agriculture unremunerative and land unprofitable.Despite government policy of financial inclusion,most of the farmers in India are still deprived of adequate and timely availability of credit.

Though there has been instruction to the domestic banks to reserve 40% of the Net Bank Credit for the priority sector lending and 18% out of that amount for agriculture by RBI,banks over the years have failed in achieving the target. The Rural Infrastructure Development Fund was set up in 1996 to solve the credit availability crisis.The Commercial Banks make contributions to the fund for failing to achieve their target for Priority Sector Lending.The Kisan Credit Card scheme launched in 1998-99 however was a laudable effort by the government to make credit available at farmers' doorstep.The scheme facilitated short term loan availability for seasonal agricultural operations and other agricultural inputs.In addition to that Personal Accident Insurance of Rs 50,000/ against annual premium of just Rs 15/ is being offered along with the cards.So far the performance of Cooperative banks has been commendable in issuing credit cards whereas commercial banks lag behind their targets.The performance of the Regional Rural Banks has been below par.Updation of land records and sensitisation of bank staff through training programmes are needed to add to the spread of the scheme.

However there were crying needs for loans for investment and working capital requirements for the farmers.To take care of the need Swarojgar Credit Card Scheme was launched in 2003.It must be noted that Non-Institutional credits which accounted for more than 90% after the independence have decreased considerably in the past 50 years and presently accounts for little more than 30% of the total agricultural credits.Moreover,till the liberalisation of economy started, cooperative banks were leading in credit delivery.But past one and a half decades has seen drastic change of the scenario with the commercial banks now leading in credit delivery by handsome margin.Another aspect of credit delivery in India is the dominance of short term credit over long term ones.Present short term credits account for more than 65% of the total credits.The accessibility to institutional credits is much higher in Southern India than rest parts of India and Tamil Nadu leads the way.


  1. to add further initiatives like no frills account ,microfinancing and National agriculture insurance schsme(executed by national agricultural insurance corporation) are few steps taken by RBI and Government to cater crdit needs of farmers.

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  4. This blog is not for i have to delete such posts.