In this essay we will discuss about Agricultural Credit in India. After reading this essay you will learn about: 1. Meaning of Agricultural Credit in India 2. Types of Agricultural Credit in India 3. Sources 4. Disbursement in Recent Years 5. Problems 6. Suggestions 7. Conclusion. 


  1. Essay on the Meaning of Agricultural Credit 
  2. Essay on the Types of Agricultural Credit
  3. Essay on the Sources of Agricultural Credit in India
  4. Essay on the Disbursement of Agricultural Credit in Recent Years
  5. Essay on the Problems of Agricultural Credit in India
  6. Essay on the Suggestions for Removing Limitations of Agricultural Credit in India
  7. Essay on the Conclusion to Agricultural Credit 

Essay # 1. Meaning of Agricultural Credit:

Agricultural credit is considered as one of the most basic inputs for conducting all agricultural development programmes. 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.

After independence the Government adopted the institutional credit approach through various agencies like co-operatives, commercial banks, regional rural banks etc. to provide adequate credit to farmers, at a cheaper rate of interest. Moreover, with growing modernisation of agriculture during post-green revolution period the requirement of agricultural credit has increased further in recent years.

Essay # 2. Types of Agricultural Credit:

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:

(a) Short Term Credit:


The Indian farmers require credit to meet their short term needs viz., purchasing seeds, fertilisers, 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:

This type of credit includes credit requirement of farmers for medium period ranging between 15 months and 5 years and it is required for purchasing cattle, pumping sets, other agricultural implements etc. Medium term credits are normally larger in size than short term credit.

(c) Long Term Credit:

Farmers also require finance for a long period of more than 5 years just for the purpose of buying additional land or for making any permanent improvement on land like sinking of wells, reclamation of land, horticulture etc. Thus, the long term credit requires sufficient time for the repayment of such loan.

Essay # 3. Sources of Agricultural Credit in India:

In India, agricultural credit are being advanced by different sources. The short term and medium term loan requirements of Indian farmers are mostly met by moneylenders, co-operative credit societies and Government. But the long-term loan requirements of the Indian farmers are also met by moneylenders, land development banks and the Government.


Nowadays, the long term and short term credit needs of these institutions are also being met by National Bank for Agricultural and Rural Development (NABARD).

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.

Table 7.15 shows the contribution of these different sources to the total agricultural credit in India since 1951- 52 to 1996.

Borrowing of Cultivators

It can be revealed from Table 7.15 that among all the different non-institutional sources the contribution of money lenders was highest and that was to the extent of 69.7 per cent. But its contribution gradually came down to 49.2 per cent in 1961-62 and then to 7.0 per cent in 1996. Total contribution of non-institutional source towards agricultural credit has gradually declined from 92.7 per cent in 1951-52 to 25.0 per cent in 1996.

The share of institutional sources to the total agricultural credit which was 7.3 per cent in 1951-52 gradually increased to 18.7 per cent in 1961-62 and then to 75.0 per cent in 1996. Out of these institutional sources, co-operatives contributed 40 per cent and commercial banks contributed 30.0 per cent of the total farm credit in 1996.

I. Non-Institutional Sources:

(i) Moneylenders:

From the very beginning moneylenders have been advancing a major share of farm credit.

Moneylenders are of two different types:

(a) Professional moneylenders

(b) Agriculturist moneylenders.

These moneylenders were supplying a major portion of agricultural credit (69.7 per cent in 1951-52) and indulged into malpractice like manipulation of accounts and charged exorbitant rate of interest on their loan- often 24 per cent and over.

Due to all these factors the share of moneylenders in total farm credit has declined sharply from 69.7 per cent in 1951-52 to 36.1 per cent in 1971 and then to only 16.1 per cent in 1981 and then to 7.0 per cent in 1995-96.


(ii) Traders and Commission agents:

Traders and commission agents are also advancing loan to the agriculturist for productive purposes before the maturity of crops and then force the farmers to sell their crops at very low prices and charge heavy commission. This type of loans is mostly advanced for cash crops.

The share of these traders in farm credit increased gradually from 5.5 per cent in 1951-52 to 8.8 per cent in 1961- 62 and then sharply declined to 5.0 per cent in 1996. Thus its importance has been declining in recent years.

(iii) Relatives:


Cultivators are also normally borrowing fund from their own relatives in times of their crisis both in terms of cash or kind. These loans are a kind of informal loans and carry no interest and are normally returned after harvest.

The importance of this source of farm credit is also declining as its share of agricultural credit has already declined from 14.2 per cent in 1951-52 to 8.7 per cent in 1981 and then to 3.0 per cent in 1995-96.

(iv) Landlords:

In India, small as well as marginal farmers and tenants are also taking loan from the landlords for meeting their financial requirements. This source has been following all the ill-practices followed by money-lenders, traders etc.


Sometimes landless workers are even forced to work as a bonded labour. The share of this source to rural credit has increased from 3.3 per cent in 1951-52 to 14.5 per cent in 1961-62 and then sharply declined to 8.8 per cent in 1981 and then to 10.0 per cent in 1995-96.

Thus, the non-institutional sources of farm credit have been facing serious loopholes like exorbitant rate of interest, loan for unproductive purposes, non-repayment of loan etc.

II. Institutional Sources:

The main motive of institutional credit is to assist the farmers in raising their agricultural productivity and maximising their income. Institutional credit is also not exploitative in character. The following are some of the important institutional sources of agricultural credit in India.

(i) Co-operative Credit Societies:

The cheapest and the best source of rural credit in India is definitely the co-operative finance. 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. The share of co-operatives in the total agricultural credit increased to nearly 40 per cent in 1996 as compared with only 3 per cent in 1951-52.

In 1993-94 nearly 88,000 primary agricultural credit societies (PACS) of India provided Rs 6461 crore as short term and medium term loans to the farmers. In 2006-2007, the same loan has increased to Rs 42,480 crore, which was financed by co-operative banks.


But these co-operatives have a long way to go. In some states like Bihar, West Bengal, Orissa and Rajasthan the co-operative movement did not spread much of its net world. Even in some places the working of the co-operatives had been wrecked hopelessly by unscrupulous and dishonest members leading to large scale sufferings of huge number of needy farmers.

(ii) Land Development Banks:

Land development banks are advancing long term co-operative credit for 15-20 years to the farmers against the mortgage of their lands for its permanent improvement, purchasing agricultural implements and for repaying old debts. The number of state land development banks (SLDBs) increased from 5 in 1950-51 to 19 as on June 1986 which again consisted of 2447 Primary Land Development Banks (PLDBs) branches.

The amount of loan sanctioned annually by these PLDB branches has increased from Rs 3 crore in 1950-51 to Rs. 2039 crore in 1993-94. But benefits from these land development banks could not reach to small farmers and only the big landlords have been taking all advantages out of it. At present there are 19 central and 733 primary LDBs. In 1997, these banks advanced loan worth Rs 1,744 crore.

(iii) Commercial Banks:

In the initial period, the commercial banks of our country have played a marginal role in advancing rural credit. In 1950-51, only 1 per cent of the agricultural credit was advanced by the commercial banks. But after the nationalisation of commercial banks in 1969, the commercial banks started to extend financial support both directly and indirectly and also for both short and medium periods.


With the help of “village adoption scheme” and service area approach the commercial banks started to meet the credit and other requirements of the farmers. They also sponsored various regional rural banks for extending credit to small and marginal farmers and rural artisans just to save them from the clutches of village moneylenders.

Till 1969, direct advances by the commercial banks were restricted to only Rs 44 crore. But as on March 2007 the amount of loan has increased to Rs 1,40,382 crore. During 2006-2007 commercial banks along with Regional Rural Banks extended nearly 79.1 per cent of the total institutional farm credit in our country.

Again in 1999-2000, disbursements of agricultural advances by public sector banks under Special Agricultural Credit Plan (SACP) were Rs 19,755 crore.

Commercial banks are finding difficulty in advancing loans to the farmers particularly in respect of lending techniques, security, recovery etc. and are expected to overcome these gradually. But the commercial banks are not very much interested to advance loan to small and marginal farmers and as on March 1997 their farm credit was restricted to only 13.5 per cent of total bank credit.

The share of commercial banks in total institutional credit to agriculture is almost 69.0 per cent in 2006-2007.

(iv) Regional Rural Banks:


As per the recommendations of working Group on Rural Banks the Regional Rural Banks (RRBs) were established in 1975 for supplementing the commercial banks and co-operatives in supplying rural credit. Since 1975 these Regional Rural Banks are advancing direct loans to small and marginal farmers, agricultural labourers and rural artisans etc. for productive purposes.

Till June 1996, in total 196 RRBs have been lending annually nearly Rs 1500 crore to the rural people and more than 90 per cent of these loans were also advanced to the weaker section.

At the end of 1988 these RRBs jointly advanced loan to the extent of Rs, 2,804 crore among 11 million persons lying below the poverty line. In 2006-2007, the RRBs have disbursed agricultural credit amounting to Rs 20,435 crore which is just 10.05 per cent of total institutional credit to agriculture.

(v) Government:

Another important source of agricultural credit is the Government of our country. These loans are known as taccavi loans and are lend by the Government during emergency or distress like famine, flood etc. The rate of interest charged against such loan is as low as 6 per cent.

The share of the Government in the total agricultural credit has increased from 3.1 per cent in 1951-52 to 15.5 per cent in 1961-62 but then the share declined to only 5.0 per cent in 1996. During 1990-91, the state Governments had advanced nearly Rs 350 crore as short-term loan to agriculture. But the taccavi loan failed to become very much popular due to official red tapism and corruption.

Essay # 4. Disbursement of Agricultural Credit in India in Recent Years:

In recent years, the disbursement of agricultural credit has reached a new dimension. Co-operatives, commercial banks and Regional Rural Banks (RRBs) are advancing both short-term, medium term and long term credit to Indian farmers to help them to adopt modern technology and improved agricultural practices for raising crop productivity and production.


Table 7.16 shows the disbursement of agricultural credit by the institutional sources in recent years.

Disbursement of Agricultural Credit since 1985-86

Table 7.16 reveals that total volume of agricultural credit has increased from Rs 7,005 crore in 1985-86 to Rs 10,186 crore in 1989-90 and then to Rs 4,46,779 crore in 2010-11. The target for 2011-2012 has been fixed at Rs 4, 75,000 crore.

Moreover, among the various agencies disbursing agricultural credit, the amount of loan advanced by co-operatives has increased from Rs 3,874 crore in 1985-86 to Rs 10,479 crore in 1995-96 and then to Rs 70,105 crore in 2010-11 but their share as percentage of total agricultural credit declined from 55.3 per cent to 47.5 per cent and then to 16.0 per cent respectively during the same periods.

Again the share of commercial banks and regional rural banks to the total agricultural credit has again increased from Rs 3,131 crore in 1985-86 to Rs 11,553 crore in 1995-96 and then to Rs3, 76,674 crore in 2010-11 and in percentage terms their share to total agricultural credit has also increased from 44.7 per cent to 52.4 per cent and then to 84.0 per cent respectively during the same periods.

In 2007-08, total disbursement of agricultural credit increased to Rs 2.54 lakh crore and then same figure further increased to Rs4.46 lakh crore in 2010-11 as against the target of Rs 3.75 lakh crore by exceeding the target by around 19 per cent.

The flow agricultural credit since 2003-04 has consistently exceeded the target. The target of agricultural credit flow for the year 2012-13 was fixed at Rs 5,75,000 crore, against which achievement was Rs 6,07,375 crore exceeding the target by 5.5 per cent.

Again in 2010-11, the share of commercial banks alone in total institutional credit to agriculture is almost 74.0 per cent followed by co-operative banks with a share of 16.0 per cent. Regional rural banks account for just about 10.0 per cent of total credit disbursement. It is important to highlight the continued importance of short-term credit which accounts for two-third of the total institutional lending to agriculture.

Table 7.16(a) shows the flow of institutional credit to agriculture.

Institutional Credit to Agriculture

Change in Relative Share of Sources of Institutional Credit:

The relative share of the sources of institutional credit has been changing after the nationalisation of commercial banks, which can be seen from Table 7.16(a).

Table 7.16(a) reveals the changes in relative share of sources institutional credit. It is observed that after the nationalifiation of U commercial tanks of India in 1969, the commercial banks as a whole have increased consistently its share in institutional credit to agriculture sector from 38.4 per cent in 1980-81 to 75.8 per cent in 2008-09.

Resultantly, the relative share of co-operative societies declined from 61.6 per cent in 1980-81 to 15.3 per cent in 2008-09. Again, the share of co-operative societies in institutional credit increased to the level of 18.3 per cent and the Share Of commercial banks declined to 71.2 per cent in 2012-13. However, the RRBs have been contributing about 8 to 10 per cent of total institutional agricultural credit over the same period.

Despite phenomenal increase in the volume of overall agricultural credit, there is a serious problem of over-dues which has been inhibiting credit expansion on the one hand and economic viability of the lending institutions especially the cooperatives and the RRBs, on the other hand. The waiver of agricultural loans in 1990 has further aggravated the problem of recovery.

In order to strengthen the co-operative credit structure of the country, the National Bank for Agricultural and Rural Development (NABARD) is contemplating an institutional strengthening programme. The Government has also introduced certain measures for revitalising the co-operatives on the recommendations of the Agricultural Credit Review Committee (1989).

These measures include amendment to state co-operative laws, augmenting the reserve base of the Primary Agricultural Credit Societies (PACS), holding elections of co-operative bodies, revitalising PACS by business development planning and formulating Deposit Insurance Guarantee Scheme for PACS.

In view of the increase in prices of agricultural inputs and with a view to enabling the NABARD to extend adequate credit support for the rabi crop operations, Reserve Bank of India has also announced additional lines of credit for short-term agricultural operations in January 1993.

Measures taken in 1998-99 to Improve Credit Flow to Agriculture:

In order to improve the flow of credit to agriculture, the Government has introduced the following measures in 1998-99:

(i) Procedural simplification for credit delivery has been made (as per R.V. Gupta Committee Report) through rationalisation of internal returns of banks.

(ii) More powers have been delegated to branch managers to raise the credit flow to agriculture.

(iii) Introduction of composite cash credit limit to farmers, introduction of new loan products with saving components, cash disbursement of loans, dispensation of no due certificate and discretion to banks on matters relating to margin security requirements for agricultural loans above Rs 10,000.

(iv) Introduction of at least one specialised agricultural bank in each state to cater to the needs of high tech.

(v) Introduction of cash credit facility.

(vi) Insuring Kisan Credit cards to farmers to draw cash for their production needs on the basis of the model scheme prepared by NABARD.

(vii) The Government has made arrangement for hassle free settlement of disputed cases of over dues.

(viii) To augment Rural Infrastructural Development Fund (RIDF) with a corpus of Rs 10,000 crore with NABARD to finance rural infrastructure development projects by states.

Thus the flow of institutional credit for agriculture and allied activities which was Rs 31,956 crore in 1997-98 is estimated to have increased to Rs 64,000 crore in 2001-02. The total credit now from all agencies is projected to reach the level of Rs 82,073 crore by 2002-03.

The total credit now to agriculture during the period 1997-2002 is likely to be of the order of Rs 2,33,700 crore which is close to the Ninth Plan projection of Rs 2,29,750 crore.

For the Tenth Plan period (2002-07) the credit flow into agriculture and allied activities from all banking agencies is projected at Rs 7,36,570 crore, which is more than three times the credit flow during the Ninth Plan.

Farm Credit Package:

The Government of India announced the “Farm credit package” in June 2004 which aimed at doubling the flow of institutional credit for agriculture in the ensuing three years. Accordingly, the credit to the farm sector got doubled during two years, i.e., from Rs 86,981 crore in 2003-04 to Rs 1, 80,486 crore in 2005-06, as against the stipulated time period of three years.

The credit flow continued to increase at Rs 2, 29,401 crore in 2006-07 and then to Rs 3, 84,514 crore in 2009-10 and finally to Rs 6, 07,375 crore in 2012-13.

Steps Taken to Raise Credit Flow to Agriculture:

In recent years, the Government has taken some definite steps for raising the credit flow to agricultural sector.

The following measures have been taken by the government for improving agricultural credit flow and bringing down the rate of interest on farm loans:

(i) Targeting:

Targeting practice is followed for raising the flow of agricultural credit. Accordingly, agricultural credit flow target for 2013-14 was fixed at Rs 7, 00,000 crore and achievement was Rs 7, 30,765 crore (Provisional) as against Rs 6, 07,375 crore in 2012-13. Agricultural credit flow target for 2014-15 has been fixed at Rs 8, 00,000 crore.

(ii) Crop Loans:

Arrangement has been made to provide crop loan to formers. Accordingly, farmers have been availing of crop loans up to a principal amount of Rs 3, 00,000 at 7 per cent rate of interest. The effective rate of interest for farmers who promptly repay their loans is 4 per cent annum during 2014-15.

(iii) Discouraging Distress Sale:

In order to discourage distress sale of crops by farmers, the benefit of interest subvention has been made available to small and marginal farmers having Kishan Credit Cards for a further period of up of six months (post-harvest) against negotiable were house receipts (NWRs) at the commercial rates.

(iv) Relief for Natural Calamities:

In order to provide relief to farmers on occurrence of natural calamities, interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured loan amount on account of natural calamities and such restructured loans will attract normal rate of interest from the second year onwards as per the policy laid down by the RBI.

Agricultural Credit with Interest Subvention:

On the basis of the announcements made by the Finance Minister in his Budget speech 2006-07, public sector banks, regional rural banks and rural co-operative credit institutions were advised that with effect from Khariff 2006-07, Government would provide interest rate subvention of 2 per cent per annum in respect of short term production credit up to Rs 3.0 lakh.

This provision of subvention was available to public sector banks, regional rural banks and rural co-operations on clear condition that they be made short term credit available at 7 per cent interest per annum. However, in case of RRBs and rural Co-operatives, this was applicable only to short term production credit disbursed out of their own funds and did not include such credit supported by NABARD refinance.

Again, in pursuant to the Union Budget announcement of 2010-11, the Government decided to provide interest subvention of 1.5 per cent per annum for short term agriculture loans up to Rs 3.0 lakh disbursed by public sector banks, RRBs and co-operatives.

Thus in order to relieve the farmers from the interest burden of agricultural loan the government introduced a method of interest subvention in recent years. From kharif 2006-07 to 2008-09, farmers were receiving crop loans upto principal amount of Rs 3 lakh at 7 per cent interest rate.

In the year 2009-10, Government provided an additional 1 per cent interest subvention to those farmers who repaid their short term crop loans as per schedule.

The Government raised this subvention for timely repayment of crop loans from 1 per cent to 2 per cent from the year 2010-11. Thus the effective rate of interest for such farmers will be 5 per cent per annum. In 2010-11, total disbursement of agricultural credit in likely to exceed Rs 3, 75,000 crore and for 2011- 12 target of disbursement is fixed at Rs 4, 75,000 crore.

Again in 2011-12 Budget, the Government of India proposed to provide interest subvention of 1.5 per cent per annum for short term agriculture loans up to Rs 3.0 lakh disbursed by Public Sector Banks, RRBs and Cooperatives.

The additional subvention for prompt paying farmers is proposed to be enhanced to 3 per cent per annum so that the effective interest rate changed to these farmers is 4 per cent per annum up to Rs 3.0 lakh.

The Interest Subvention Scheme for short term production credit (crop loans) which was started by the Government of India in 2006-07 was extended to private sector banks from 2013-14, Presently, the total number of such loan accounts stands at 5.72 crore.

Studies conducted by the RBI and NABARD in recent years indicate that the crop loans are not reaching intended beneficiaries and no systems and procedures are adopted at several bank branches to monitor the end-use of funds.

Again, although overall credit flow to the agriculture sector has increased over the years, the share of long term credit flow in agriculture or investment credit steadily declined from 55 per cent in 2006-07 to 39 per cent in 2011-12.

As per NSSO 70th Round data as much as 40 per cent of the finances of farmers still comes from informal sources, despite an increase in the flow of institutional credit to agriculture in recent years. Usurious money lenders account for a 26 per cent share of total agricultural credit.

Numbers of factors are responsible for sorry state of affairs in respect of farm credit. Inadequate targeting of beneficiaries and monitoring or supervision of the end use of short term crop loans for which interest subvention scheme is applicable and decline in long term or investment credit to agriculture are issues which need to be addressed without delay on priority basis.

Thus, in order to improve the flow of institutional credit agriculture, the Union Budget, 2015-16 has made some important allocations which include Rs 15,000 crore for Long Term Rural Credit Fund; Rs 45,000 crore for Short Term Co-operative Rural Credit Refinance Fund, and Rs 15,000 crore for Short Term RRB Refinance Fund.

Accordingly, the budget fixed the target of Rs 8.5 lakh crore of agricultural credit during the year 2015-16.

Essay # 5. Problems of Agricultural Credit in India:

Since independence, the institutional agricultural credit structure in Indiia was very poor. In the post-independence period, various attempts were made by the Government for enriching the institutional agricultural credit structure of the country leading to continuous growth in the base and sources of agricultural credit.

Both the co-operative sector, commercial banks and rural banks are trying simultaneously for meeting credit requirements of the farmers. Even then, there are number of problems faced by agricultural credit structure of the country which are standing on the path of development of the agricultural sector.

The following are some of these problems:

(i) Insufficiency:

In spite of expansion of rural credit structure, the volume of rural credit in the country is still insufficient as compared to its growing requirement arising out of increase in prices of agricultural inputs.

(ii) Inadequate Amount of Sanction:

The amount of loan sanctioned to the farmers by the agencies is also very much inadequate for meeting their different aspects of agricultural operations. Considering the amount of loan sanctioned as inadequate and insignificant, the farmers often divert such loan for unproductive purposes and thereby dilute the very purpose of such loan.

(iii) Lesser Attention of Poor Farmers:

Rural credit agencies and its schemes have failed to meet the needs of the small and marginal farmers. Thus, lesser attention has been given on the credit needs of the needy farmers whereas the comparatively well-to-do farmers are getting more attention from the credit agencies for their better credit worthiness.

(iv) Growing Overdues:

The problem of over-dues in agricultural credit continues to be an area of concern. The recovery of agricultural advances to various institutions is also not at all satisfactory. In 1997-98, the recovery of agricultural advances of commercial banks, co-operative banks and regional rural banks were 63 per cent, 66 per cent and 57 per cent respectively.

Such growing over-dues have also been resulted from poor repaying capacity of farmers. As a result of that, the credit agencies are becoming wary of granting loan to farmers.

(v) Inadequate Institutional Coverage:

In India, the institutional credit arrangement continues to be inadequate as compared to its growing needs. The development of co-operative credit institutions like Primary agricultural credit societies, land development banks, commercial banks and regional rural banks, have failed to cover the entire rural farmers of the country.

(vi) Red Tapism:

Institutional agricultural-credit is subjected to red-tapism. Credit institutions are still adopting cumbersome rules and formalities for advancing loan to farmers which ultimately force the farmers to depend more on costly non-institutional sources of credit.

Essay # 6. Suggestions for Removing Limitations of Agricultural Credit in India:

For effective modernisation of agricultural sector and also to stimulate its growth pattern, a broad based and simplified rural credit structure is very much desired and important. Accordingly, Prof. Darling has rightly observed, “A proper system of agricultural credit will not only lower the rate of interest but also imply a system in which productive loans will gradually replace the unproductive ones.”

Thus, in order to remove limitations and problems of agricultural credit in India the following measures may be suggested:

(i) To monitor the taccavi loan offered by the Government in a serious manner.

(ii) Co-operative credit societies should be organised to make it efficient and purposeful for delivering the best in terms of rural credit. Moreover, these societies may be transformed into a multi-purpose society with sufficient funding capacity.

(iii) Middlemen existing between credit agencies and borrowers should be eliminated.

(iv) Reserve Bank of India should arrange sufficient fund so that long term loans can be advanced to the farmers.

(v) Power and activities of the Mahajans and moneylenders should be checked so as to declare an end to the exploitation of farmers.

(vi) The Government should introduce the credit guarantee scheme so as to provide guarantee on behalf of the farmers for getting loans.

(vii) The banks should adopt procedural simplification for credit delivery through rationalisation of its working pattern.

(viii) The Government should issue Kisan credit cards to the farmers to draw cash for their production needs on the basis of the model scheme prepared by NABARD.

(ix) In order to check the fraud practices adopted by the farmer, for getting loans from different agencies by showing same tangible security, a credit card should be issued against each farmer which will show the details about the loans taken by them from different agencies.

(x) Credit should also monitor over the actual utilisation of loans by developing an effective supervisory mechanism.

Essay # 7. Conclusion to Agricultural Credit:

From the above analysis it has been revealed that the extent of agricultural credit in India is very much inadequate and the private non-institutional sources still remained very important in supplying credit to the farmers. Further, the major problem of institutional credit faced by lending institutions, particularly the co-operatives, is the unsatisfactory huge level of over-dues ranging between 40 to 47 per cent.

This has resulted a bad health to the institutional credit and thus these lending institutions will not be able to advance more credit for meeting the growing needs of our farmers. In-spite of that, these institutional sources nowadays are advancing more than 60 per cent of the required short term production ‘credit of the Indian farmers.

But the major portion of these credits is being appropriated by the 30 per cent of the middle and affluent farmers of India. At the end of the Seventh Plan, co-operatives, commercial Banks and RRBs extended credit facilities to the extent of Rs 14000 crore as compared with only Rs 24 crore in 1960-61.