This document discusses the credit structure for farmers and the Indian economy. It outlines several formal and informal sources of rural credit, including self-help groups, National Bank for Agriculture and Rural Development (NABARD), and microfinance institutions. NABARD was established to regulate cooperative banks and regional rural banks to increase credit flow to rural areas. While self-help groups are village-based organizations that provide small loans to members, microfinance institutions give loans to small businesses and entrepreneurs lacking access to traditional banks. The document concludes with suggestions to increase credit availability and reduce risks such as contract farming and involving NGOs to organize loan disbursement.

1. THE FARMERS DEVELOPMENT
IN CREDIT STRUCTURE VIS-À-
VIS INDIAN ECONOMY
BONAM HAVILAH
CO-OPERATIVE MANAGEMENT
MBA 3RD SEMESTER

2. INTRODUCTION
• Strengthening agriculture is critical for facing the
challenges of rural poverty, food insecurity,
unemployment and sustainability of natural resources.
• Agricultural development strategy must address not only
farmers but also those in Marketing, Trade, Processing
and agri-business.
• Rural credit system assumes importance because most
Indian rural families have inadequate savings to finance
farming and other economic activities.
• Role of NABARD is overall development of India in
general rural and agricultural .
- Rural infrastructure development fund

3. SCOPE & CONCEPT
• There is considerable unmet demand for rural credit.
• Local money lenders assistance in credit make weaker
sections remained poor.
• Credit needs of non farm sector enterprise is to be a
challenge to the rural financial institutions (RFI’s).
• Uncovered micro finance ( 70% of poor out of the
scheme).
• RFI’s charging higher interest rate from farmers than
financial institutions from urban.

4. SOURCES OF CREDIT
Two sources:
• INFORMAL SOURCES :
Non governmental sources such as Family,
Friends, Money lenders, Traders etc…
• FORMAL SOURCES :
Government owned institutions – Commercial
bank, Regional rural bank, co-operative banks, Micro-
Finance Institutions, Self help groups , etc..

5. MAJOR CONTRIBUTERS
SELF HELP GROUPS :
• Village based financial intermediary usually composed of
10-20 members of the same area.
• Members make small regular saving contributions and
lend at a very low rate of interest.
• These are non-profit organizations and work for the
welfare of the members.
• Main objective is to empower women.
• Building blocks of the rural and village economy.

6. NATIONAL BANK FOR AGRICULTURE AND RURAL
DEVELOPMENT
• Established on 12th July 1982 by a special act of the
parliament.
• It is an apex body to co-ordinate rural financing system.
• Its main focus was to uplift rural India by increasing the
credit flow.
• It regulates the co-operative banks and the RRB’s.

7. MICRO FINANCE INSTITUTIONS :
• Provide financial services to micro entrepreneur’s and
small business which lack access to banking and related
services due to the high transaction costs.
• Give loans to poor rural people at low interest rate.

8. CONCLUSION & SUGGESTIONS
INCREASING CREDIT FLOW AND REDUCING RISK :
• Organizing and linking farmers with contractors under
contract farming arrangements and in building credit
delivery.
• Involving NGO’s (or) rural educated youths in organizing
farmers in groups scrutinizing application, disbursement
of loan and effective reducing lending cost.
• The insurance premium is also subsidized to cover risk
apart from group lending.
• To encourage the flow of institutional credit for rural,
non farm activities.
• Introduce rural credit card scheme.