Needs and Sources of Credit in Indian Agriculture

In this ppt presentation the role, need and sources of credit in Indian agriculture are listed clearly explained which will be very useful for the economics and finance students. here, we have discussed about the institutional credit agencies and non institutional credits and various government schemes.

1. NEED & source OF CREDIT IN INDIAN AGRICULTURE

2. Credit needs in Agriculture Agricultural credit is one of the most crucial inputs in all agricultural development programmes. For a long time, the major source of agricultural credit was private moneylenders. But this source of credit was inadequate, highly expensive and exploitative. To curtail this, a multi-agency approach consisting of cooperatives, commercial banks ands regional rural banks credit has been adopted to provide cheaper, timely and adequate credit to farmers .

3. The financial requirements of the Indian farmers are for, Buying agricultural inputs like seeds, fertilizers, plant protection chemicals, feed and fodder for cattle etc. Supporting their families in those years when the crops have not been good. Buying additional land, to make improvements on the existing land, to clear old debt and purchase costly agricultural machinery. Increasing the farm efficiency as against limiting resources i.e. hiring of irrigation water lifting devices, labor and machinery.

4. Role of credit in Agriculture 1. The basic role of credit in Agriculture is to provide capital to acquire any kind of productive assets, land and/or machinery.  2. 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. 3. This credit is borrowed either from Landlords or from small rural banks or from cooperatives.

5. The important factor of production, credit must play a pivotal role in agriculture by fostering an equitable distribution of the increasing agricultural income. It must be used to create productive employment for absorbing the growing numbers of underemployed in the agricultural sectors.

6. Sources of credit

7. Agricultural Finance Institutional Source Non – Institutional Source Co-operative Societies Commercial Banks Land Development Banks RRB s Government NABARD Money Lenders Land lords and others PACS State Co-operative Banks Central Co-operative Banks

8. INSTITUTIONAL CREDIT AGENCIES   Cooperative Credit Societies:- Primary Agricultural Credit Societies (PACs) : These are Organized at the Village Level. These Societies generally advance loans only for Productive Purposes The Main Objective of a PACS is to raise capital for the purpose of a giving loans. And the supporting the essential activities such as supply of agricultural inputs at cheap price, improving on land owned by members , encourage various income - augmenting such as horticulture, animal husbandry, poultry etc..

9. Central Co-operative Bank : These Cooperative are organized at the district level. The PACS are affiliated to the District Central Co- operative Banks (DCCBs). DCCBs coordinate the activities of district central Financing agencies , organize credit for PACs and carry out banking business. State Co-operative Banks : The DCCBs are affiliated to state Co-operative Banks (SCBs), Which Coordinate the activities of DCCBs. It organize provision of finance for credit worthy farmers, carry out banking business and act as leader of the co-operatives in the states.

10. Commercial Banks Commercial banks are providing both directly and indirectly. Direct finance is for agricultural operation for short and medium periods. Indirect finance refers to advance for distribution of fertilization and other inputs. Land Development Banks Land Development Banks were set up in order provide for long term finance. Previously they were called Land Mortgage Bank ; The objective of the bank is to provide long term credit to cultivators against the mortgage of their lands. These banks provide loans for :- i ) Repayment of old loans to cultivators ii) Purchase new land iii) Digging, Constructions and repairing of the well

11. Regional Rural Banks The Regional Rural Banks were set up in 1975. The main objective of the RRBs is to provide credit and other facilities particularly to the small and marginal farmers, agricultural laborers, artisans and small entrepreneurs so as to develop agriculture, trade commerce, industry and other productive activities in the rural areas. The Government Loan Schemes These are both short term as well as long term loan schemes. The loans are popularly known as “ Taccavi Loans” which are generally advanced in times of natural Calamities. The rate of interest is low. But it is not major source of agriculture finance.

12. NABARD -National Bank for Agricultural and Rural Development NABARD was set up as the government needed an apex institution to extend support and give guidance to credit institutions. NABARD was set up in July 1982 and it took over the functions of ARDC and also the functions of the RBI in relations to co-operative banks and RRBs. The Main objective of the NABARD is to look after agriculture credit. It is also has to provide refinance facilities to all banks and financial institutions landing to agricultural and rural development.

13. Functions & operations: It extends refinance to commercial banks for term loans in relation to agriculture and rural development. It offers advice and guidance to State Governments, Cooperative federations and National Cooperative Development Corporation (NCDC) and functions in close contact with Central Government in matters related to agriculture and rural development. It provides finance for production and marketing activities of rural artisans, cottage industries, small-scale industries, handicrafts etc. in the rural areas.

14. It helps in planning and operational matters related to credit for agriculture and allied activities, rural artisans, village industries and other rural development activities. It contributes to share capital and securities of eligible institutions and State Governments concerned with agriculture and rural development. It facilitates all eligible financial institutions for conversion of production loans into term loans in the times of natural calamities. It coordinates and monitors all agricultural and rural lending activities with a view to tying-up with extension and planned development activities in rural areas. It conducts training, consultancy and research relating to agricultural finance and agricultural and rural development.

15. THANKS FOR VIEWING Brought to you by: KARTHIK CHITTIBOMMA B.Sc (Ag) scholar Central Agricultural University