<–2/”>a >68.84% of the Population in India is rural based and majority of them depends on agriculture for a living. Enhanced and stable Growth of the agriculture sector is important as it plays a vital role not only in generating purchasing power among the rural population by creating on-farm and off-farm EMPLOYMENT opportunities but also through its contribution to price stability and Food Security.The share of agriculture and allied sectors in Gross Bank Credit was about 13 per cent despite rise in credit flow to agriculture in absolute terms. The heavy dependency of farmers on moneylender is partly on account of denial or limited access to Bank Services.
The Rural Finance Market comprises of:
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(i) Organized or formal system;
(ii) Unorganized or informal segment.
The Organized or formal segment consists of the Reserve Bank of India (RBI), National Bank for Agriculture and Rural Development (NABARD), Public and Private Sector Commercial Banks, Regional Rural Banks (RRB), Land Development Banks (LDB), State Cooperative banks (SCB), Central Cooperative Banks (CCB), Primary Agricultural Cooperative Banks (PACB), Central and States Governments, Life Insurance Corporations (LIC), Post Office Saving Banks, etc
Main sources of Unorganized or informal segment are as follows:-
Money Lenders: There are two Types of money lenders in rural areas. a) agricultural money lenders and b) professional money lender. Agricultural money lender’s main occupation is farming and money lending is secondary one. Professional money lender’s main profession is money lending. Although the reliance on money lender by rural poor declined over the years, the credit disbursed by money lenders still forms a major portion of the total credit obtained by the farmers.
Land Lords:Small farmers and tenants rely on land lords for finance to meet out their productive and unproductive expenses. This SOURCE OF FINANCE has all the defects associated with money lenders. Interest rates are exorbitant. Often small farmers are forced to sell out their lands to these land lords and they become land less labourers.
The enactment of the Cooperative Credit Societies Act 1904 was the first effort made by the Government in the country to institutionalize agricultural credit by promoting the cooperatives in a corporate form.After India attained Independence in August, 1947, cooperatives assumed a great significance in POVERTY removal and faster socio-economic growth. With the advent of the planning process, cooperatives became an integral part of the Five Year Plans. As a result, they emerged as a distinct segment in our national economy.In the First Five Year Plan, it was specifically stated that the success of the Plan would be judged, among other things, by the extent it was implemented through cooperative organisations.
State Cooperative Bank at the apex level in each State, the Central Cooperative Bank at the District level and Primary Agricultural Credit Societies / Primary Agricultural Cooperative Banks / Large Sized Agricultural Multi-Purpose Societies / Farmers Service Societies at the base level serves the structural development of Cooperative Societies in India.
The cooperatives have been operating in various areas of the economy such as credit, production, processing, ,Marketing, input distribution, housing, dairying and textiles. In some of the areas of their activities like dairying, urban banking and housing, sugar and handlooms, the cooperatives have achieved success to an extent but there are larger areas where they have not been so successful.
The failure of cooperatives in the country is mainly attributable to: dormant membership and lack of active participation of members in the management of cooperatives. Mounting overdues in cooperative credit institution, lack of mobilisation of internal Resources and over-dependence on Government assistance, lack of professional management. bureaucratic control and interference in the management, political interference and over-politisation have proved harmful to their growth. Predominance of vested interests resulting in non-percolation of benefits to a common member, particularly to the class of persons for whom such cooperatives were basically formed, has also retarded the development of cooperatives. These are the areas which need to be attended to by evolving suitable legislative and policy support.
National Bank for Agriculture and Rural Development (NABARD) was established through an Act of Parliament in 1982. NABARD was set up as an apex Development Bank with a mandate for facilitating credit flow for agriculture, rural industries and all other allied economic activities.
NABARD was established with an aim of building an empowered and financially inclusive rural India through specific goal oriented departments which can be categorized broadly into three heads: Financial, Developmental and Supervision. Through these initiatives we touch almost every aspect of rural economy. From providing refinance support to building rural Infrastructure-2/”>INFRASTRUCTURE; from preparing district level credit plans to guiding and motivating the banking Industry in achieving these targets; from supervising Cooperative Banks and Regional Rural Banks (RRBs) to helping them develop Sound banking practices and onboarding them to the CBS platform; from designing new development schemes to the implementation of GoI’s development schemes; from training handicraft artisans to providing them a marketing platform for selling these articles.
The Regional Rural Banks (RRBs) were established in 1975 with the objective to create an alternative channel to ‘cooperative credit structure’ with a view to ensure sufficient institutional credit for rural and agriculture sector. The RRBs are integral segment of the Indian banking system with focus on serving the rural areas. As on date 82 RRBs are functioning in the country.
RRBs are jointly owned by Government of India, the State Government concerned and the Sponsor Banks. The issued capital of RRBs is subscribed by Central Government, State Government and sponsor banks in the proportion of 50%, 15% and 35%, respectively.
The functions of the RRB are as follows:
(1) Granting of loans and advances to small and marginal farmers and agricultural labourers, whether individually or in groups, and to co-operative societies, agricultural processing societies, co-operative farming societies, primarily for agricultural purposes or for agricultural operations and other related purposes;
(2) Granting of loans and advances to artisans, small entrepreneurs and persons of small means engaged in trade, commerce and industry or other productive activities within its area of co-operation; and
(3) Accepting deposits.,
Agricultural credit is a type of loan that is used to finance agricultural activities. It can be used to purchase land, equipment, Livestock, or other inputs needed to produce crops or livestock. Agricultural credit can also be used to finance WORKING CAPITAL needs, such as the purchase of seed, fertilizer, and other supplies.
There are a number of different types of agricultural credit, including short-term loans, medium-term loans, and long-term loans. Short-term loans are typically used to finance seasonal needs, such as the purchase of seed and fertilizer. Medium-term loans are typically used to finance longer-term needs, such as the purchase of equipment or livestock. Long-term loans are typically used to finance the purchase of land or other major assets.
There are a number of different sources of agricultural credit, including commercial banks, government agencies, and non-profit organizations. Commercial banks are the largest source of agricultural credit, followed by government agencies. Non-profit organizations, such as credit unions and cooperatives, also provide agricultural credit.
There are a number of requirements that borrowers must meet in order to qualify for agricultural credit. These requirements vary depending on the type of loan and the lender. However, most lenders require borrowers to have a good credit history, a steady income, and collateral.
There are a number of benefits to agricultural credit. Agricultural credit can help farmers to purchase the inputs they need to produce crops or livestock. It can also help farmers to finance working capital needs. Agricultural credit can also help farmers to weather financial shocks, such as droughts or floods.
There are also a number of risks associated with agricultural credit. Agricultural credit is a secured loan, which means that the lender has the right to seize the collateral if the borrower defaults on the loan. Agricultural credit is also a risky Investment, as the value of agricultural assets can fluctuate significantly.
There are a number of challenges associated with agricultural credit. One challenge is that agricultural credit is often expensive. This is because agricultural loans are considered to be high-risk loans. Another challenge is that agricultural credit is often difficult to obtain. This is because there are a limited number of lenders who offer agricultural credit.
There are a number of regulations that govern agricultural credit. These regulations are designed to protect borrowers and lenders. The regulations cover a variety of topics, such as interest rates, loan terms, and collateral requirements.
There are a number of policies that support agricultural credit. These policies are designed to make agricultural credit more affordable and accessible to farmers. The policies include a variety of programs, such as direct loans, loan guarantees, and interest subsidies.
There are a number of programs that provide agricultural credit. These programs are designed to meet the specific needs of farmers. The programs include a variety of loans, grants, and technical assistance.
There are a number of institutions that provide agricultural credit. These institutions include commercial banks, government agencies, and non-profit organizations. The institutions offer a variety of loans, grants, and technical assistance.
There are a number of markets for agricultural credit. These markets include the commercial banking market, the government lending market, and the non-profit lending market. The markets provide a variety of loans, grants, and technical assistance.
There is a growing body of research on agricultural credit. This research is designed to improve our understanding of agricultural credit and its impact on farmers and the agricultural economy. The research covers a variety of topics, such as the demand for agricultural credit, the supply of agricultural credit, and the impact of agricultural credit on farm performance.
There is a growing need for agricultural credit Education. This education is designed to help farmers understand the risks and rewards of agricultural credit. The education also covers topics such as how to apply for agricultural credit and how to manage agricultural debt.
There is a growing need for agricultural credit extension. This extension is designed to help farmers access agricultural credit. The extension also provides farmers with technical assistance on how to manage agricultural debt.
There is a growing need for agricultural credit advocacy. This advocacy is designed to improve the availability and affordability of agricultural credit. The advocacy also works to protect the rights of agricultural borrowers.
There is a growing need for agricultural credit sustainability. This sustainability is designed to ensure that agricultural credit is available to farmers in the long-term. The sustainability also works to reduce the risks associated with agricultural credit.
Agricultural credit has a significant impact on farmers and the agricultural economy. Agricultural credit can help farmers to purchase the inputs they need to produce crops or livestock. It can also help farmers to finance working capital needs. Agricultural credit can also help farmers to weather financial shocks, such as droughts or floods.
The future of agricultural credit is uncertain. The future of agricultural credit will depend on a number of factors, such as the availability of government support, the demand for agricultural credit, and the interest rates.
What is a loan?
A loan is a sum of money that is borrowed from a lender and is expected to be repaid with interest.
What is a mortgage?
A mortgage is a loan that is secured by real property, such as a house or apartment. The borrower agrees to make monthly payments to the lender, and the lender agrees to hold the property as collateral until the loan is repaid.
What is a car loan?
A car loan is a loan that is used to purchase a car. The borrower agrees to make monthly payments to the lender, and the lender agrees to hold the car as collateral until the loan is repaid.
What is a student loan?
A student loan is a loan that is used to finance education expenses. The borrower agrees to make monthly payments to the lender, and the lender agrees to hold the loan as collateral until it is repaid.
What is a personal loan?
A personal loan is a loan that is used for general expenses, such as medical bills, home repairs, or travel. The borrower agrees to make monthly payments to the lender, and the lender agrees to hold the loan as collateral until it is repaid.
What is a credit card?
A credit card is a plastic card that allows the holder to borrow money from the card issuer to pay for goods and services. The holder is expected to repay the borrowed money, plus interest, over time.
What is a credit score?
A credit score is a number that represents a person’s creditworthiness. It is calculated based on a number of factors, including the person’s payment history, the amount of debt they owe, and the length of their credit history.
What is a credit report?
A credit report is a document that contains information about a person’s credit history. It includes information about the person’s debts, their payment history, and their credit score.
What is a debt consolidation loan?
A debt consolidation loan is a loan that is used to pay off multiple debts. The borrower takes out one loan to pay off all of their other debts. This can help to simplify the borrower’s finances and lower their monthly payments.
What is a bankruptcy?
Bankruptcy is a legal process that allows a person to discharge their debts. This means that the person is no longer legally responsible for repaying their debts. Bankruptcy can be a last resort for people who are struggling to repay their debts.
What is a foreclosure?
Foreclosure is a legal process that allows a lender to take possession of a property that has not been paid for. This can happen if the borrower defaults on their mortgage loan.
What is a deed in lieu of foreclosure?
A deed in lieu of foreclosure is an agreement between a borrower and a lender in which the borrower agrees to give the lender the property in exchange for the lender forgiving the debt. This can be a way for borrowers to avoid the negative consequences of foreclosure.
What is a short sale?
A short sale is a sale of a property for less than the amount owed on the mortgage. This can happen if the borrower is unable to make their mortgage payments. The lender may agree to a short sale in order to avoid the costs of foreclosure.
What is a refinance?
A refinance is a process of taking out a new loan to pay off an existing loan. This can be done to lower the interest rate on the loan, to extend the term of the loan, or to consolidate multiple loans into one loan.
What is an adjustable-rate mortgage (ARM)?
An ARM is a type of mortgage loan in which the interest rate can change over time. The interest rate on an ARM is typically tied to an index, such as the prime rate. This means that the interest rate on an ARM can go up or down, depending on changes in the index.
What is a fixed-rate mortgage (FRM)?
An FRM is a type of mortgage loan in which the interest rate stays the same for the life of the loan. This means that the monthly payments on an FRM will be the same for the life of the loan.
What is a balloon payment?
A balloon payment is a large payment that is due at the end of a loan term. Balloon payments are often used in loans with shorter terms, such as 5-year or 7-year loans.
What is a prepayment penalty?
A prepayment penalty is a fee that is charged to borrowers who pay off their loan early. Prepayment penalties are often used in loans with low interest rates.
What is a home Equity loan?
A home equity
Question 1
Which of the following is not a type of agricultural credit?
(A) Short-term credit
(B) Medium-term credit
(C) Long-term credit
(D) Agricultural insurance
Answer
(D) Agricultural insurance is not a type of agricultural credit. It is a type of agricultural risk management.
Question 2
Which of the following is the main purpose of agricultural credit?
(A) To finance the purchase of agricultural inputs
(B) To finance the production of agricultural products
(C) To finance the marketing of agricultural products
(D) To finance the storage of agricultural products
Answer
(A) The main purpose of agricultural credit is to finance the purchase of agricultural inputs. This includes things like seeds, fertilizer, and pesticides.
Question 3
Which of the following is the main source of agricultural credit in developing countries?
(A) Commercial banks
(B) Development banks
(C) Microfinance institutions
(D) Government-sponsored credit programs
Answer
(D) The main source of agricultural credit in developing countries is government-sponsored credit programs. These programs are designed to provide farmers with access to credit at affordable rates.
Question 4
Which of the following is the main challenge facing agricultural credit in developing countries?
(A) High interest rates
(B) Lack of collateral
(C) Inefficient credit delivery systems
(D) All of the above
Answer
(D) All of the above are challenges facing agricultural credit in developing countries. High interest rates make it difficult for farmers to repay their loans. Lack of collateral makes it difficult for farmers to obtain loans in the first place. Inefficient credit delivery systems make it difficult for farmers to access the credit they need.
Question 5
What are some of the benefits of agricultural credit?
(A) It can help farmers to increase their production.
(B) It can help farmers to improve their yields.
(C) It can help farmers to diversify their crops.
(D) All of the above
Answer
(D) All of the above are benefits of agricultural credit. Agricultural credit can help farmers to increase their production, improve their yields, and diversify their crops.
Question 6
What are some of the risks associated with agricultural credit?
(A) Default risk
(B) Interest rate risk
(C) Commodity price risk
(D) All of the above
Answer
(D) All of the above are risks associated with agricultural credit. Default risk is the risk that a borrower will not repay their loan. Interest rate risk is the risk that interest rates will rise, making it more expensive for borrowers to repay their loans. Commodity price risk is the risk that the price of agricultural commodities will fall, making it less profitable for farmers to repay their loans.
Question 7
What are some of the ways to mitigate the risks associated with agricultural credit?
(A) Use collateral
(B) Insure against risk
(C) Diversify the loan portfolio
(D) All of the above
Answer
(D) All of the above are ways to mitigate the risks associated with agricultural credit. Using collateral can help to reduce the risk of default. Insuring against risk can help to reduce the risk of interest rate risk and commodity price risk. Diversifying the loan portfolio can help to reduce the risk of default and interest rate risk.