Ag credit essay

Essay # 1. Meaning of Agricultural Credit: Agricultural credit is considered as one of the most basic inputs for conducting all agricultural development programmes. In India there is an immense need for proper agricultural credit as Indian farmers are very poor.

Such loans are generally repaid after harvest. This type of credit includes credit requirement of farmers for medium period ranging between 15 months and 5 years and it is required for purchasing cattle, pumping sets, other agricultural implements etc. Medium term credits are normally larger in size than short term credit.

The share of commercial banks in total institutional credit to agriculture is almost 69.0 per cent in 2006-2007. As per the recommendations of working Group on Rural Banks the Regional Rural Banks (RRBs) were established in 1975 for supplementing the commercial banks and co-operatives in supplying rural credit.

Another important source of agricultural credit is the Government of our country. These loans are known as taccavi loans and are lend by the Government during emergency or distress like famine, flood etc. The rate of interest charged against such loan is as low as 6 per cent.