NABARD update , Agriculture Credit In India To Cross
Agriculture Credit In India To Cross Rs 31.5 Lakh Crore: NABARD , Due to increased formalisation of the rural credit system, credit extended to the agriculture sector by commercial banks and regional rural banks is set to cross Rs 31.5 lakh crore in the financial year 2025-26, a senior NABARD official has said.
In the financial year 2024-25, NABARD disbursed loans worth over Rs. 28.98 lakh crore through commercial banks, cooperative banks and regional rural banks. About 60% of this was for short-term crop loans and the rest was used for investment loans in agriculture and allied sectors.
“We expect the total agricultural credit flow to be around Rs 31.5 lakh crore in the current financial year,” NABARD Deputy Managing Director Ajay K. Sood told Financial Express.
He further said that despite the rapid growth in credit flow to agriculture and allied sectors, NABARD is trying to address regional imbalances in credit flow by formulating Potential-Based Loan Plans (PLPs).
“We are working with banks to improve the credit culture in North-East India. For this, support is being provided in the form of social guarantees, special funds and insurance products,” said Sud.
Currently, banks are increasing the flow of formal credit in priority sectors such as crop loans and term loans for agriculture and allied industries, following a potential-based credit plan for each district.
Sud also said that discussions are underway to provide special refinancing facilities for ‘aspirational districts’, where interest rates will be lower. Along with this, discussions are also underway to provide financial assistance to small farmers.
In January 2025, NABARD Chairman Shaji KV said that the share of the informal sector is decreasing as agricultural credit flows increase. He said, “The average annual growth rate of agricultural credit flows in the last 10 years has been 13%, which is in double digits.” Commercial banks typically provide 75% of the total credit flow, with the rest being channeled through cooperative and regional rural banks.
Under the Enhanced Interest Subsidy Scheme (MISS), farmers holding Kisan Credit Card (KCC) can avail loans of up to Rs 3 lakh at an interest rate of 7% per annum to meet their working capital requirements. Under the scheme, an additional 3% interest subvention is available for timely repayment, which reduces the effective interest rate to 4%.
However, for 2025-26, the government has announced that the agricultural loan limit is being increased to Rs. 5 lakh per annum. The MISS also includes post-crop loans against Negotiable Warehouse Receipts (NWR) for small farmers holding KCC.
There are currently 77.1 million active KCC holders. Out of this, 1.24 lakh KCCs have been issued for fisheries and 44.4 lakh for animal husbandry. If the short-term loan is taken for related activities other than crop cultivation, then the loan amount is limited to Rs. 2 lakh.
Recently, NITI Aayog member Ramesh Chand said that state governments need to set a benchmark for distributing agricultural credit based on their agricultural output. This will ensure that short-term crop loans provided at low rates are not concentrated in just a few states or used for non-agricultural purposes.
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