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NEED & source OF CREDIT IN INDIAN
AGRICULTURE
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.
The financial requirements of the Indian farmers are for,
1. Buying agricultural inputs like seeds, fertilizers, plant
protection chemicals, feed and fodder for cattle etc.
2. Supporting their families in those years when the crops have
not been good.
3. Buying additional land, to make improvements on the
existing land, to clear old debt and purchase costly
agricultural machinery.
4. Increasing the farm efficiency as against limiting resources i.e.
hiring of irrigation water lifting devices, labor and machinery.
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.
• 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.
SOURCES OF CREDIT
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
Central Co-
operative
Banks
State Co-
operative Banks
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..
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.
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
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.
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.
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.
 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.
THANKS FOR VIEWING
Brought to you by:
KARTHIK CHITTIBOMMA
B.Sc(Ag) scholar
Central Agricultural University

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Roshani Rajput.pptx

  • 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, 1. Buying agricultural inputs like seeds, fertilizers, plant protection chemicals, feed and fodder for cattle etc. 2. Supporting their families in those years when the crops have not been good. 3. Buying additional land, to make improvements on the existing land, to clear old debt and purchase costly agricultural machinery. 4. 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.
  • 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 Central Co- operative Banks State 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