Paper

Agricultural Credit by Commercial Banks in India: Need for Creating Enabling Environment

Examining the role of rural credit policy in alleviating rural poverty
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This paper reviews the performance of Indian commercial banks in the agriculture sector during 2001-10.

Credit acts as a catalyst in agricultural and rural development. The paper examines whether Indian commercial banks achieved their credit targets and managed their non-performing assets during 2001-10. It suggests that agricultural credit should focus on:

  • Investing in rural infrastructure to improve transport, communication, storage, processing and marketing facilities;
  • Establishing state of the art agri-meteorology;
  • Expanding irrigation and reclaiming wastelands;
  • Strengthening agricultural education, research and extension services;
  • Capacity-building of farmers to bridge gap between potential and actual yield;
  • Development and use of genetically engineered seeds, micro-irrigation systems, greenhouse technology and integrated nutrient and pest management techniques;
  • Farm mechanization;
  • Remote sensing technology.

The paper recommends that credit policy should facilitate creation of an enabling environment to increase credit absorption capacity of geographical areas and farmers. This would improve credit flow to agriculture and achieve inclusive rural growth.

About this Publication

By Patel, A.
Published