1) Agriculture is an important sector for the Indian economy, contributing approximately 17.2% to national GDP and employing 58% of the population. However, agricultural growth has often fallen short of targets. 2) The paper analyzes issues in agricultural financing in India, finding that credit delivery to the agriculture sector remains inadequate. Commercial banks remain hesitant to lend to small and marginal farmers. 3) An efficient agro-infrastructure can optimize resource use, increase farm incomes, widen markets, and create employment. Agriculture is financed through commercial banks, regional rural banks, and cooperatives.

1. “Paradigm Shift In Marketing And Finance Spectrum Of Business In India”
Topic : Agro-Rural Financing : Emerging Dimensions
Ashok Sengupta*, Shaukat Ali,*
Agriculture, like all sectors of the economy, needs finance for its development. This paper
attempts to analyze the issues in agricultural finance in India. The analysis reveals that the credit
delivery to the agriculture sector continues to be inadequate. It appears that the banking system is
still hesitant on various grounds to purvey credit to small and marginal farmers. If the recent
exponential increase in food prices is an indication, India faces the risk of food crisis.
Agriculture is defined as the science and practice of activities relating to, processing, marketing,
distribution, utilization, and trade of food, feed and fiber. Agriculture remains an important
sector; it is highly diverse, its contribution in National GDP is approximately 17.2% and it
supports the majority of its population for livelihood. Agriculture growth is likely to be about 3.5
% per annum during the 11th five year plan (2007-12).
Farmers have inadequate savings to finance farming and other economic activities. An efficient
agro-infrastructure helps in the optimization of resource use, output management, increase in
farm incomes, widening of markets, growth of agro-based industry, addition to national income
through value addition, and employment creation. Agriculture finance is disbursed through
multiagency networks consisting of Commercial Bank (CBs), Regional Rural Banks (RRBs) and
Corporative.
Keywords: Agriculture, Finance, Infrastructure, GDP, Rural, Marketing, Commercial Bank,
Regional Rural Banks.
*Asst.Professor, Braj Institute Of Management & Technology, Aligarh

2. INTRODUCTION
Agriculture has been a way of life and continues to be the single most important livelihood of the
masses. Agricultural policy focus in India across decades has been on self-sufficiency and self-
reliance in foodgrains production. Considerable progress has been made on this front. Foodgrains
production rose from 52 million tonnes in 1951-52 to 244.78 million tonnes in 2010-11. The
share of agriculture in real GDP has fallen given its lower growth rate relative to industry and
services. However, what is of concern is that growth in the agricultural sector has quite often
fallen short of the Plan targets. During the period 1960-61 to 2010-11, food grains production
grew at a compounded annual growth rate (CAGR) of around 2 percent. In fact, the Ninth and
Tenth Five Year Plans witnessed agricultural sectoral growth rate of 2.44 per cent and 2.30 per
cent respectively compared to 4.72 percent during Eighth Five Year Plan. During the current
Five Year plan, agriculture growth is estimated at 3.28 per cent against a target of 4 per cent.
CONTRIBUTION OF AGRICULTURE IN INDIAN ECONOMY
Agriculture including allied activities, accounted for 14.5 per cent of gross domestic product
(GDP) at 2004-05 prices, in 2010-11 as compared to 14.7 per cent in 2009-10. Notwithstanding
the declining trend in agriculture’s share in the GDP, it is critical from the income distribution
perspective as it accounted for about 58 per cent employment in the country according to Census
2001. Hence growth in agriculture and allied sectors remains a ‘necessary condition’ for
inclusive growth. In terms of composition, out of the total share of 14.5 per cent that agriculture
and allied sectors had in GDP in 2010-11, agriculture alone accounted for 12.3 per cent, followed
by forestry and logging at 1.4 percent and fishing at 0.7 per cent . Reasonable growth in
agriculture is important both from the nutritional point of view as well as to control food prices
and overall headline inflation.

3. a) Performance Of The Agriculture Sector During The Current Five Year Plan
(2007-2012)
The average annual growth in agriculture and allied sectors realized during the first four years of
the Eleventh Plan Period, i.e. 2007-08 to 2010-11, is 3.5 per cent against the targeted growth rate
of 4 per cent. Agriculture and allied sectors recorded
Agriculture Sector: Key Indicators
(per cent)
2009-10 2010- 2011-1
S. no Item @ 11* 2 **
GDP – share and growth (at 2004-05
1 prices)
Growth in GDP in agriculture & allied
sectors 1 7 2.5
Share in GDP - Agriculture and allied
sectors 14.7 14.5 13.9
Agriculture 12.4 12.3
Forestry and logging 1.5 1.4
Fishing 0.8 0.7
2 Share in total Gross Capital Formation in
the Country (per cent at 2004-05 prices)
Share of agriculture & allied sectors in total
Gross Capital Formation 7.1 7.2
Agriculture 6.6 6.6
Forestry and logging 0.1 0.1
Fishing 0.5 0.5
3 Employment in the agriculture sector as
share of total workers as per census 2001 58.2
Notes: @ Provisional Estimates *Quick Estimates **Advance Estimates
GROSS CAPITAL FORMATION IN AGRICULTURE AND ALLIED SECTORS

4. As a proportion of the value added by agriculture to GDP, Gross Capital Formation (GCF) in
agriculture and allied sectors rose to 20.1 per cent in 2010-11 from 13.5 per cent in 2004-05 at
2004-05 prices this is a positive trend. However, the share of agriculture and allied sectors’ GCF
in overall GCF of the economy at 2004-05 prices shows a mixed trend during the same period.
GCF in Agriculture and Allied Activities (Figures in crore at 2004-05
prices)
Agriculture & allied
Year activities GCF/GDP in agriculture
GCF GDP & allied activities
2004-05 76096 565426 13.5
2005-06 86604 594487 14.6
2006-07 92057 619190 14.9
2007-08 105741 655080 16.1
2008-09 127127 655689 19.4
2009-10 131139 662509 19.8
2010-11 142254 709103 20.1
AGRICULTURE CREDIT
Settled agriculture in India has had a long history because of the fertile plains of Northern India
irrigated by the Indus, the Ganga-Jamuna river systems and the Brahmaputra in the East.
Southern India has its own river systems and has, moreover, been characterised by its impressive
history of sophisticated water management systems: perhaps among the most developed
historically. As a consequence of this natural fertility and abundant availability of water,

5. ironically, population density grew early in India, and along with those different degrees of
poverty. These problems began to engage the attention of even the British colonial government
as early as the 1870s: the practice of extending institutional credit to agriculture can be traced
back to that period when farmers were provided with such credit by the Government during
drought years. Thinking to do with credit cooperation began in the latter part of the nineteenth
century. Finally, the Cooperative Societies Act was passed in 1904 and cooperatives were seen
as the premier institutions for disbursing agricultural credit. With the intermittent failure of the
monsoons and other customary vicissitudes of farming, rural indebtedness has been a serious and
continuous characteristic of Indian agriculture. Because of the high risk inherent in traditional
farming activity, the prevalence of high interest rates was the norm rather than an exception, and
the concomitant exploitation and misery that often resulted. Development of rural credit systems
has therefore, been found to be intrinsically very difficult and, as we will see, an issue of
continuing official concern for over a century. These problems began to engage the attention of
even the British colonial government as early as the 1870s:the practice of extending institutional
credit to agriculture can be traced back to that period when farmers were provided with such
credit by the Government during drought years. Thinking to do with credit cooperation began in
the latter part of the nineteenth century. Finally, the Cooperative Societies Act was passed in
1904 and cooperatives were seen as the premier institutions for disbursing agricultural credit.
The early years of the twentieth century were characterised by continuous official attention to the
provision of rural credit: a new Act was passed in 1912 giving legal recognition to credit
societies and the like (a precursor of micro-finance);the Maclagan Committee on Cooperation in
India issued a report in 1915 advocating the establishment of provincial cooperative banks,
which got established in almost all provinces by 1930 thus giving rise to the 3-tier cooperative
credit structure; the Royal Commission on Agriculture further examined the program of rural
credit in 1926-27; Sir Malcolm Darling submitted another report on cooperative credit to the
Government of India in 1935,just before the founding of the Reserve Bank of India. This
continuing concern reflected the intrinsic problems of extension of rural credit which, to some
extent, find resonance even today. It was then reported that in many provinces credit over dues to
these credit cooperative institutions constituted 60 to 70 per cent of the outstanding principal
due. During 2010-11, credit growth continued its momentum to reach the peak rate of 24.2 per
cent by end December 2010. The pick-up in credit reflected the improved demand conditions

6. associated with stronger industrial recovery and growth. Since January 2011, credit growth,
however, has been decelerating, though it remained above the Reserve Bank of India’s indicative
trajectory of 20 per cent for the year. A target of 40 per cent of adjusted net bank credit
(ANBC) or credit-equivalent amount of off balance sheet exposures (OBE), whichever is
higher as on 31 March of the previous year, has been stipulated for lending to the priority sector
by domestic SCBs in the public and private sectors. Within this, sub-targets of 18 per cent and 10
percent of ANBC or credit-equivalent amount of OBE, whichever is higher, have been stipulated
for lending to agriculture and the weaker sections respectively.
FLOW OF AGRICULTURAL CREDIT
The Indian banking system disbursed credit of ` Rs 4,46,779 crore to the agricultural sector as
against a target of ` Rs 3,75,000 crore in 2010-11, thereby exceeding the target by around 19 per
cent. Commercial banks and RRBs together extended credit to 104.96 lakh new farmers during
2010-11 and cooperative banks to 22.30 lakh new farmers, thus taking the total number of new
farmers brought under the banking system to 127.26 lakh. The total number of agricultural loan
accounts financed as of March 2011 was 5.50 crore. The credit flow to agriculture during
2011-12 by commercial banks, cooperative banks, and RRBs together was` RS 2,62,129 crore
till October 2011, amounting to 55 per cent of the annual target of ` Rs 4,75,000 crore
DIRECT INSTITUTIONAL CREDIT TO AGRICULTURE AND ALLIED
SECTOR (SHORT TERM)
(Rupees crore)
Year Loans Issued Loans Outstanding

7. Co- Co-
SCBs RRBs Total SCBs RRBs Total
operatives operatives
2000-01 18556 10704 3095 32355 18168 15442 3692 37302
2001-02 21670 12661 3810 38141 21540 18882 4812 45234
2002-03 23629 16825 4834 45288 24518 23211 6495 54224
2003-04 29326 24134 6133 59593 30808 31982 7664 70454
2004-05 31887 29978 9883 71748 32481 42798 10980 86259
2005-06 35624 45644 12816 94084 34140 59971 13877 107988
12307
2006-07 40796 65245 17031 2 37764 76006 18707 132477
13601
2007-08 47390 68243 20377 0 43696 96152 22748 162596
10776 17863 12628
2008-09 48022 6 22851 9 45686 5 26652 198623
2009-10 61951 - 30529 - 54970 - 33663 -
DIRECT INSTITUTIONAL CREDIT TO AGRICULTURE AND ALLIED SECTOR
(LONG TERM)
(Rupees crore)
Year Loans Issued Loans Outstanding
Co- Co-
SCBs RRBs Total SCBs RRBs Total
operatives operatives

8. 1534
2000-01 8739 5736 871 6 27967 22828 3557 54352
1561
2001-02 8899 5977 736 2 30570 26224 3474 60268
1988
2002-03 10411 8431 1045 7 34546 30593 3766 68905
2383
2003-04 10723 12069 1042 4 40595 36121 4058 80774
3355 10479
2004-05 13122 18389 2043 5 46341 52721 5730 1
4993 13145
2005-06 12499 34955 2484 8 48187 75632 7632 1
6644 15343
2006-07 13223 50021 3198 2 51679 93012 8745 6
5894 10664 13908
2007-08 10253 45229 3461 3 21970 4 10468 2
6733 12983 15890
2008-09 10765 52924 3648 7 18359 4 10715 8
2009-10 12987 - 4111 - 21510 - 12619 -
SCBs : Schedule Commercial Banks
RRBs :- Rural Regional Banks
INDIRECT INSTITUTIONAL CREDIT TO AGRICULTURE AND ALLIED SECTOR

9. Year Loans Issued Loans Outstanding
Co- Co-
RRB RR
operative SCBs REC Total operative SCBs REC Total
s Bs
s s
11257
2000-01 91337 3967 . 4109 99413 79567 18825 . 14185 8
12326
2001-02 84092 7990 . 4722 96803 89092 18238 . 15936 6
13311
2002-03 92152 6261 . 6607 105019 92920 23690 . 16506 6
14913
2003-04 93566 8936 . 6017 108519 102307 28520 . 18305 2
16726
2004-05 114132 21728 . 7441 143301 110132 36071 . 21062 5
20167
2005-06 122067 27751 . 7489 157307 119932 57175 . 24564 1
25021
2006-07 135740 38766 . 10733 185239 136392 82564 . 31262 8
28004
2007-08 145778 40278 . 12953 199009 147982 93443 . 38615 0
11070
2008-09 . 73721 . 17157 . . 2 . 50653 .
14555
2009-10 . . . 21132 . . 4 . 65979 .
2010-11 . . . 24519 . . . . 81725 .
Structure of Agricultural Rural Credit System in India
GOVERNMENT OF INDIA
RESERVE BANK OF INDIA
NABARD

10. COMMERCIAL REGIONAL RURAL
BANKS RURAL CO-OPERATIVE
CREDIT INSTITUTIONS BANKS
LONG-TERM CREDIT
STRUCTURE SHORT-TERM CREDIT
STRUCTURE
STATE CO-OPERATIVE STATE CO-OPERATIVE BANKS
AGRICULTURE AND RURAL
DEVELOPMENT BANKS
DISTRICT CENTRAL CO-
OPERATIVE
BANKS
PRIMARY CO-OPERATIVE
AGRICULTURE AND RURAL
DEVELOPMENT BANKS PRIMARY AGRICULTURAL
CREDIT
SOCIEITES
DEPOSITORS AND BORROWERS
TYPES OF CREDIT
1) Rural Housing Finance :-

11. This finance is provided by banks and other Regional Rural Banks in the rural areas for
providing better housing and infrastructure facilities in rural areas. E.g. ICICI Bank,
Mahindra Finance, HDFC Bank etc.
2) Rural Micro- Financing :
Microfinance is the provision of financial services to low-income clients or solidarity
lending groups including consumers and the self-employed, who traditionally lack access
to banking and related services. More broadly, it is a movement whose object is "a world
in which as many poor and near-poor households as possible have permanent access to an
appropriate range of high quality financial services, including not just credit but also
savings, insurance, and fund transfers. Those who promote microfinance generally
believe that such access will help poor people out of poverty. Microfinance is a broad
category of services, which includes microcredit. Microcredit is provision of credit
services to poor clients. Although microcredit is one of the aspects of microfinance.
3) Rural Development Finance :
Rural development finance is the finance provided for the overall development of rural
area. Rural development financing finances economic development and job creation in
the rural areas.
4) Rural Agricultural finance :
Rural agricultural financing is the most important part of financing among the different
types of financing as 78% of Indian financing population depends on agriculture for their
livelihood.
TYPES OF MICRO FINANCE USED BY POOR PEOPLE
HOUSE HOLD FINANCIAL
GOAL

12. Healthcare, Retirement, Irrigation, Food security
replacement migration, farm transportation, ,health
cost after flood equiptment, wells, livestock, treatment,
etc home microentreprise festivals, social
upgardation, self s , home obligation,
insurance renovation, emergencies etc
schooling, and
education
Demand and Fund transfer
Medium time
short time and cheques
Various Pension plan or deposits
Insurance Plan deposits
long term deposit
Longer term
Emergency Loan Short term loan
loan
for working
capital
MICRO FINANCE PRODUCTS
SOURCES OF AGRO – RURAL FINANCE

13. A) Commercial Banks
Commercial banks are now slowly coming to appreciate the business potential in
financial inclusion and also the need for better involvement. RRBs that are expected to
function with the social heart of cooperatives and financial acumen of commercial banks
have a significant role to play in financial inclusion, especially in the post-amalgamation
scenario. The vast postal network, leveraging on their immense outreach, could also be an
effective vehicle for purveying financial services. Currently, there are 33,478 commercial
bank branches in rural and semi-urban centers in the country. Out of these, there are
about 12,340 branches in the rural and semi urban areas of the Central, Eastern and
North-Eastern Regions, where the majority of the financially excluded population live. It
is understood that each branch of Grameen Bank in Bangladesh services at least
4,000-5,000 borrowers, with 6-7 field officers per branch. Given the existing staff
strength, it should be possible for commercial banks (including RRBs) to provide access
to credit to at least 250 hitherto excluded households per annum at each of their existing
rural and semi-urban branches. For this, banks will have to strengthen their staff and use
a variety of delivery mechanisms.
Usage of banking services by Indian households (HHs)
Source: Census of India 2001
% % of % of
Total of Rural Total Urban Total

14. No. HHs HHs HHs
19.1 13.8
Total No. of HHs 9 100 3 72 5.36 28
No. of HHs which use banking services 6.8 35.5 4.16 32.1 2.65 49.5
DEPOSITS AND CREDIT OF SCHEDULE COMMERTIAL BANKS ACC TO
POPULATION GROUP.
(Amount in Rupees Lakh)
DEPOSITS CREDIT
POPULATION
GROUP No. of No. of Amount No. of Amount
Offices Accounts Accounts Outstanding
1 2 3 4 5
2241,54,85
RURAL 32,320 0 420337,72 361,92,714 249276,96
(37.2 ) (30.5) (9.2) (30.5) (7.5)
1894,57,20
SEMI-URBAN 20,601 6 614047,18 268,75,601 319972,87
(23.7) (25.8) (13.5) (22.7) (9.6)
1523,22,83
URBAN 17,964 1 944992,24 160,19,694 558531,01
(20.7) (20.7) (20.7) (13.5) (16.7)
1689,34,25 2581651,9
METROPOLITAN 16,075 4 1 395,59,873 2217388,48
(18.5) (23.0) (56.6) (33.3) (66.3)
7348,69,14 4561029,0 1186,47,88
ALL-INDIA 86,960 1 5 2 3345169,32
(100.0) (100.0) (100.0) (100.0) (100.0)
Note : Amount In bracket are in %.

15. POPULATION GROUP-WISE OUTSTANDING CREDIT OF SCHEDULED
COMMERCIAL BANKS ACCORDING TO PLACE OF SANCTION AND UTILISATION
MARCH 2010
(Amount in Rupees Lakh)
AS PER PLACE OF
AS PER PLACE OF SANCTION UTILISATION
No. of Amount Credit No. of Amount Credit
POPULATION
GROUP Accounts Outstanding Deposit Accounts Outstanding Deposit
Ratio Ratio
1 2 3 4 5 6
RURAL 361,92,714 249276,96 59.3 370,73,602 385149,55 91.6
SEMI-URBAN 268,75,601 319972,87 52.1 270,47,387 367859,45 59.9
URBAN 160,19,694 558531,01 59.1 162,41,797 593615,08 62.8
METROPOLITAN 395,59,873 2217388,48 85.9 382,85,096 1998545,24 77.4
1186,47,88
ALL-INDIA 1186,47,882 3345169,32 73.3 2 3345169,32 73.3
B) Rural cooperative credit institutions
Rural Cooperative Banking and Credit Institutions play an important role in meeting the growing
credit needs of rural India. The volume of credit flowing through these institutions has increased.
The performance of these institutions, however (apparent in the share of total institutional credit
and the indicators of their financial health), has been less than satisfactory and is deteriorating

16. rapidly. The Government of India, which is committed to reviving and revitalising the rural
cooperative credit structure (CCS) and attributes high priority and urgency to it, felt it necessary
to commission a fresh review. The Union Government constituted a Task Force to formulate a
practical and implementable plan of action to rejuvenate the rural cooperative credit structure.
The cooperative banks/credit institutions constitutes the second segment of Indian banking
system, comprising of about 14% of the total banking sector asset (March 2007).
• Bulk of the cooperative banks operates in the rural regions with rural coop banks accounting
for 67% of the total asset and 67% of the total branches of all cooperative banks.
• Share of rural cooperatives in total institutional credit was 62% in 1992-93, 34% in 2002-03
and 53% in 2006-07.
• Cooperative banks have an impressive network of outlets for institutional credit in India,
particularly in rural India (1 PACS per 7 villages).In March 2007, there were 97,224 PACS in
rural India against 30,393 branches of commercial banks (more than 3 times of outlet of coop
banks).
• In March 2007, there were 102 savings A/C and 113 cooperative bank members per 1000 rural
in India.
• Cooperative banks (both rural and urban) cater to small and marginal clients.
By the end of 2008, there were around 31 State Cooperative Banks, 371 DCCBs and 94,950
PACS. There were 717 Long Term Rural Cooperative Credit Institutions (LTCCIs) comprising
20 SCARDBs and 697 PCARDBs.

17. LOANS AND ADVANCES OF PACS, SCARDBs AND PCARDBs
(Numbers in million; Amount in
Rupees crore)
PACS SCARDBs PCARDBs
Amount
Amount Amount
Year Advanced Advanced Advanced Outstandi
Outstanding Outstanding
ng
No. of No. of No. of
Amoun Outstandi
Borro Amount Outstanding Borro Amount Outstanding Borro
t ng
wers wers wers
2000-0
1 47 25698 34522 . 2586 12596 . 1866 8276
2001-0
2 56 30770 40779 . 2746 14110 . 2045 10005
2002-0
3 64 33996 42411 . 2962 15333 . 2151 10809
2003-0
4 51 35119 43873 . 2942 16221 . 2197 11336
2004-0
5 45 39211 48785 . 2291 17404 . 2506 12633
2005-0
6 46 42920 51779 . 2907 17678 . 2296 12870
2006-0
7 48 49613 58620 . 2436 18644 . 1970 12179
2007-0
8 . 57643 65666 . 2221 18327 . 1822 11800
2008-0
9 . 58787 64045 . 2585 16279 . 2045 11229
2009-1
0 . 74935 76480 . 3205 16999 . 2465 11512
PACS:PrimaryAgricultural Credit Societies
SCARDB: State Co-operative Agricultural and Rural Development Bank
PCARDB: Primary Co-operative Agricultural and Rural Development Bank
Note : Data upto 1991-92 relate to as at end-June, and as at end-March thereafter.

18. Source : National Bank for Agriculture and Rural Development, National Federation of State Co-
operative Banks.
C) Self Help Group
A self-help group (SHG) is a village-based financial intermediary usually composed of 10–20
local women. Most self-help groups are located in India, though SHGs can also be found in other
countries, especially in South Asia and Southeast Asia.Members make small regular savings
contributions over a few months until there is enough capital in the group to begin lending.
Funds may then be lent back to the members or to others in the village for any purpose. In India,
many SHGs are 'linked' to banks for the delivery of microcredit.
D) Regional Rural bank
The Government of India set up Regional Rural Banks (RRBs) on October 2, 1975.Initially,
five RRBs were set up on October 2, 1975 which were sponsored by Syndicate Bank, State Bank
of India, Punjab National Bank, United Commercial Bank and United Bank of India. Capital
share being 50% by the central government, 15% by the state government and 35% by the
scheduled bank.
Earlier Reserve Bank of India had laid down ceilings on the rate of interest to be charged by
these RRBs. However from August 1996 the RRBs have been granted freedom to fix rates of
interest, which is usually in the range of 14-18% for advances. RRBs covered 525 out of 605
districts as on 31 March 2006. After amalgamation, RRBs have become quite large covering
most parts of the State in many cases. Assam Gramin Vikas Bank, an amalgamated RRB, covers
25 districts, the highest in the country, while five other amalgamated RRBs cover 10 or more
districts each. However, 40 RRBs covered two districts and 16 RRBs covered a single district
each in 2005-06. Increased coverage of districts by RRBs makes them an important segment of
the Rural Financial Institutions (RFI) for financial inclusion. The number of branches of RRBs
increased to 14,494 as on 31 March 2006 from 13,920 branches as on 31 March 1989. The
network of the 45 amalgamated RRBs (as on April 2007) was quite large and diverse varying
from 85 to 680 branches. The Uttar Bihar KGB, an amalgamated RRB, has 680 branches,

19. followed by Baroda Eastern UPGB with 539 branches. The branch network of stand-alone RRBs
varied between 8 and 242 as on 31 March 2006.
RRBs - Comparative position of key performance indicators
[Rs in Crore] 2006-07 2007-08 2008-09*
Parameters
No. of RRBs 96 91 86
No. of Branches 14526 14761 15158
Districts covered by 534 594 617
RRBs
Owned Fund 7285.98 8732.59 10895.73
Deposit 83143.55 99093.46 120184.46
Borrowings 9775.80 11494.00 12733.80
Investments 45666.14 48559.54 62629.45
Gross Loan (O/s) 48492.59 58984.27 67858.48
Loan Issued 33043.49 38581.97 43445.59
CD Ratio 58.32 59.52 56.46
Accumulated Losses 2759.49 2624.22 2325.59
Profit (Before Tax) 926.40 1383.68 1859.36
Loss 301.25 55.58 35.91
Tax Paid to GoI 139.66 301.12 461.14
Gross NPA 3178.01 3566.34 2804.02
Gross NPA % 6.55 6.05 4.13
Net NPA Amount 1625.41 1929.71 1114.54
Net NPA % 3.46 3.19 1.68
Recovery % 79.80 80.84 77.76
Net Worth 4526.48 6107.37 8570.04
SCHEMES FOR AGRO RURAL FINANCE:-
1) Kisan Credit Card (KCC) Scheme
The banking system has issued 1,078.36 lakh KCCs involving a total sanctioned credit limit of `
5,27,052 crore as on 31 October 2011. The share of commercial banks stood at 45.6 per cent of
the total number, followed by cooperative banks at 39.4 per cent, and RRBs at 15.1 per cent.
2) Agriculture Debt Waiver and Debt Relief (ADWDR) Scheme 2008
NABARD is the nodal agency for implementing the Agriculture Debt Waiver and Debt Relief
(ADWDR) Scheme 2008 in respect of Co-operative Credit Institutions and Regional Rural

20. Banks. NABARD has released ` Rs 25,113.92 crore towards debt waiver and ` Rs 3,986.02
crore towards Debt Relief claims as on 31 December, 2011.
3) Financing Purchase of Land For agriculture Purpose :
Objectives
• To make the small and marginal holdings economically viable
• To bring fallow lands and waste lands under cultivation
• To step up agricultural production and productivity
• To finance the share croppers / tenant farmers to purchase land to enable them to
increase income
Eligibility
(i) Small and marginal farmers i.e.. those who would own maximum of non- irrigated
or irrigated land ( including purchase of land under the scheme) as stipulated by
NABARD
(ii) Share croppers / Tenant farmers.
4) Schemes Offer by various banks in India
Allahabad Bank
• Kisan Shakti Yojana Scheme
• Farmers are free to utilise the loan at their own choice
• No margin is required
• 50% of the loan amount may be utilized for personal/domestic purposes including
repayment of debt to money lenders

21. Andhra Bank
• Andhra Bank Kisan Green card
• Coverage under Personal Accident Insurance Scheme (PAIS)
Bank Of Baroda
• Purchase of second hand tractors scheme for dry-land farming
• Working capital needs to dealers/distributors/traders of agrl. Inputs/livestock inputs
• Hiring agrl. machinery
• Development of horticulture
• Working capital for units engaged in dairy, piggery, poultry, sericulture etc.
• Financing Scheduled Caste/Scheduled Tribes for purchase of farm implements, tools, pair
of bullocks, creation of irrigation facilities.
Bank of India
• Star Bumiheen Kisan Card – for share croppers, tenant farmers and oral lessees
• Kisan Samadhan card – Kisan credit card for crop production and other related
investments
• BOI Shtabti Krishi Vikas Card – electronic card for anywhere anytime banking for
farmers
• Funding for contract farming in hybrid seed production, cotton industry, sugarcane
industry etc.
• Special schemes for SHGs and to empower women folk
• Star Swarojkar Prashikshan Sansthan (SSPS), a new initiative to provide entrepreneurial
training tofarmers
• Crop loans : Upto Rs. 3 lakhs at the rate of 7% per annum
• Collateral security: loans up to Rs. 50, 000, no collateral required, but for above Rs. 50,
000, RBI directives are followed.
Dena Bank

22. • Dena bank is most active in Gujarat, Maharashtra, Chhattisgarh and UT of Dadra and
Nagar haveli.
• Dena Kisan Gold Credit Card Scheme
• Maximum credit limit up to Rs. 10 lakh
• Provision of 10% towards domestic expenses including education of children
• Longer repayment period up to 9 years
• Loan is available for any type of investment in farm such as farm implements, tractors,
sprinklers/drip irrigation systems, oil engine, electric pump sets, etc.
• Short term crop loan up to Rs. 3 lakhs @ 7%
• Disposal of loans within 15 days of application
• No collateral up to Rs. 50, 000 for farm loans and up to Rs. 5 lakhs for setting up agri-
clinic and agri-business units.
Indian Bank
• Production Credit : Crop loans, Tie-up with sugar mills & Kisan Credit Card Scheme,
Crop loans to tenant farmers, share croppers and oral lessees
• Agricultural Investment Credit : Land development, minor irrigation, micro irrigation,
farm mechanization, plantation and horticulture
• Agricultural Structured Loans : Kisan Bike, Agri- Vendors Bike, Agri. Clinics and
Agri Business Centres
• Group Lending for Agricultural Development: Loan to joint liability groups / Self
Help Groups
• New Agricultural Avenues: Contract farming, Organic farming, rural godowns, cold
storage, medicinal and aromatic plants, bio-fuel crops etc..
Oriental Bank of Commerce
• Oriental green Card (OGC) Scheme
• Composite Credit Scheme for Agricultural lending
• Setting up of cold storages/godowns
• Financing commission agents

23. Punjab National Bank
• PNB Kisan Sampuranrin Yojana
• PNB Kisan Icha Purti Yojana
• Growing potatoes/fruits against pledge of cold storage receipts
• Self propelled Combine Harvestors
• Development of Forestry nursery
• Wasteland development
• Mushroom/Prawn culture and mushroom spawn production
• Purchase nad maintenance of milch animals
• Dairy Vikas Card Scheme
• Schemes for pisciculture, piggery, bee-keeping etc.
State Bank of Hyderabad
• Crop loans and Agrl. Gold loans
• Marketing of agricultural produce
• Cold storage/private warehouse
• Minor irrigation & Dug well scheme / development of old well scheme
• Land development finance
• Purchase of tractor, power tiller and implements
• Purchase of Agrl. Land/fallow/wastelands
• Vehicle loans for farmers
• Drip irrigation and sprinklers
• Self Help Group
• Agri Clinics and Agri Business Centres
• Yuva Krishi Plus Scheme
State Bank of India
• Crop loan Scheme (ACC)
• Storing produce in their own premises and renewal of loans for next season
• Kisan Credit Card Scheme

24. • Land Development Schemes
• Minor Irrigation Schemes
• Purchase of combine Harvestor
• Kisan Gold Card Scheme
• Krishi Plus Scheme- for customized hiring of tractor to rural youth
• Arthias Plus Scheme – for Commission agents
• Broiler Plus Scheme – Broiler farming
• Lead Bank Scheme
Syndicate Bank
• Syndicate Kisan Credit card (SKCC)
• Solar Water Heater Scheme
• Agri-clinics and Agri-business centres
Vijaya Bank
• Loans to Self Help groups
• Vijaya Kisan Card
• Vijaya Planters Card
• KVIC Margin Money Scheme for Artisans and Village Industries
CONCLUDING REMARKS
In India, the rural finance institutions have some regulatory restrictions as they cannot accept
deposits. This makes them dependent on the government loans and donations for their working
capital. If they are allowed to accept deposits from their customers then they will be able to
generate their own sources of funds which they can disburse. This will enhance their lending
capacity. Since borrowing is often riskier than saving. Another aspect is that the rural financial
institutions in India are not well regulated. The proper regulation should be there since this
market is now developing at rapid speed. There should be collaborations between banks and
rural finance institutions which will help both, the banks and the rural finance institutions. The
banks will be able to lend to priority sector described by RBI and the rural finance institutions
will get easy funding. With the loaning facilities other financial services should also be given

25. focus like micro-insurance, micro-deposits etc. According to a 1998 World Bank study report
1,000 clients of the rural finance institution Grameen Bank in Bangladesh were escaping poverty
every month. In the year 2007 more than 100 million people received a microloan. For rural
finance institutions the arrangement of funds is not the only problem but the human resource i.e.
finding training attracting and retaining the staff is also a major concern. There should be more
focus on the literacy of the borrowers to make them more aware and also to make the proper use
of the loan taken. The focus should not be only on rural segment but the urban people who are
BPL (Below Poverty Line) should also have access to the rural finance facility. The growth in SHGs is
very good in India but it is still not growing in comparatively underdeveloped states like Jharkhand,
Himachal Pradesh, Uttar Pradesh and Madhya Pradesh than the states like Maharashtra, Bihar,
Assam and Rajasthan. These states with low growth but high need should be given more priority.
And this also shows that this is alsorelated with literacy. Further there is a need of an
independent regulator who will monitor cases of abuses.
SELECTED REFERENCES
1. Government of India, Economic Survey, various issues.
2. Verma S B Book : Rural Management, New Delhi, Deep & Deep publication 2011
3. Role Of Commercial Bank, Chapter 4, Financial Report NABARD
4. Reserve bank of India, Publication: Basic Statistical Returns Of Scheduled Commercial
Banks In India, , March 2010, Volume 39
5. http://www.icrier.org/pdf/Mandira%20Sarma.pdf
6. http://finmin.nic.in/the_ministry/dept_fin_services/banking/rrbkeyindicator.pdf
7. Strategies and Structures for Commercial Banks in Microfinance Glenn D. Westley Inter-
American Development Bank Washington, D. C. Sustainable Development Department

26. 8. Reserve bank of India, journal.
9. Role of Banks In Agriculture & Rural Development, ICAI journal
10. Annual Report of NABARD.
11. Report on Federation of State Cooperative Finance
12. Indian budget 2012.
13. Cherunilam Francis : Business Environment, New Delhi, Himalaya Publication Pvy
Ltd ,2011