(THE GIST OF PIB) Linking all Farmers to Institutional Credit

[February-2021]

Linking all Farmers to Institutional Credit

• Government has enhanced the agricultural credit target to Rs 16.5 lakh crore in FY22 focusing more on ensuring increased credit flows to animal
• husbandry, dairy, and fisheries.

About:

• Institutional credit has been conceived to play a pivotal role in the agricultural development of India.
• A large number of formal institutional agencies like Co-operatives, Regional Rural Banks, Scheduled Commercial Banks (SCBs), SHGs, etc. are
• involved in providing credit.
• Being more affordable, institutional credit has direct bearing on cost of production.
• Agricultural credit has nearly doubled to Rs.13.92 lakh crore during 2013-14 to 2019-20.

Issues related to agricultural credit:

• Share of non-institutional credit still is around 30%.
• Skewed agency shares in institutional credit with more dependence on SCBs.
• Regional Disparity.

Steps taken to increase Institutional credit:

• Interest Subvention Scheme, through which short term crop loans of upto Rs.3 lakh are provided to farmers at an effective interest rate of 4% per annum.
• Kisan Credit Card enabling farmers to get credit to purchase crop seeds, fertilisers, diesel and other inputs at 4% interest.
• Priority Sector Lending.

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Courtesy: PIB