In the last financial year, commercial banks accounted for 72% of total credit disbursed, followed by cooperative banks (13%) and RRBs (15%).
The government is expected to set an agriculture credit target of Rs 22,000 crore for the next financial year, a 10 per cent increase over the current year’s target and possibly exceed, sources said.
Of the current year’s agricultural credit target of Rs 20,000 crore, commercial banks, cooperative banks and regional rural banks (RRBs) have disbursed Rs 16,370 crore, or 81 per cent of the target in first three quarters of FY24.
“Credit demand and disbursement for agriculture and related sectors are very encouraging,” an official said.
In FY23, agriculture credit growth was “strong” with disbursements of Rs 21.55 trillion, 16% higher than the target of Rs 18.5 trillion. During FY23, agriculture credit worth Rs 1.19 trillion (12%) was provided to allied sectors such as livestock, dairy, poultry and fisheries, out of a total disbursement of Rs.18,500 billion. In the current financial year, a sub-target of Rs 2,930 crore in credit has been given to the livestock sector.
In the last financial year, commercial banks accounted for 72% of total credit disbursed, followed by cooperative banks (13%) and RRBs (15%).
However, despite the growth of agricultural credit, there are still institutional challenges such as disparities in credit flows between regions, lack of land records, especially for cultivators and farmers. tenant farmer. Besides, loan waivers announced by state governments have created willful defaulters, an official note said. In fiscal year 2023, agricultural credit flows to the southern region accounted for 48% of total disbursement while this region only accounted for 17% of the country’s total planted area. The Northern region receives about 17% of total credit flows to agriculture and related sectors, compared to a total cultivated area of over 20%.
However, the eastern region received only 8% of the total agricultural credit flow in the last financial year, compared to the cultivated area of 12%. “The proportion of agricultural credit in the Northeast, East, Central and West regions is not commensurate with the proportion of the corresponding regions in the total crop area due to limited credit absorption capacity,” notes for know.
It also identifies factors such as limited reach of financial institutions, lack of financial literacy and infrastructure bottlenecks that explain regional disparities in credit disbursement. According to officials, in the total credit disbursed to agriculture, the share of small and marginal farmers in the total account increased from 48.6 million (57%) to 116.6 million (76%) during the period. period from FY15 to FY22. Total loans to small farmers increased from Rs 3.4 trillion to Rs 10.59 trillion during the same period, implying that capital investment and training are also progressing in the agricultural sector.
Under the Modified Interest Subsidy Scheme (MISS) of the Ministry of Agriculture, farmers holding Kisan Credit Cards (KCC) are entitled to borrow up to Rs 300 at 7% interest per annum to meet their working capital needs. Surname. Currently, of the 73.6 million KCC holders, 23.7 million are in agriculture-related fields.
This program provides an additional interest subsidy of 3% for quick loan repayment, thereby reducing the effective interest rate to 4%. The Agriculture Ministry in FY23 released Rs 17,997 crore under MISS to RBI and Nabard against the revised estimate of Rs 19,700 crore for 2022-23.
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