credit structure

1. THE FARMERS DEVELOPMENT
IN CREDIT STRUCTURE VIS-À-
VIS INDIAN ECONOMY
BONAM HAVILAH
CO-OPERATIVE MANAGEMENT
MBA 3RD SEMESTER

2. INTRODUCTION
• Strengthening agriculture is critical for facing the
challenges of rural poverty, food insecurity,
unemployment and sustainability of natural resources.
• Agricultural development strategy must address not only
farmers but also those in Marketing, Trade, Processing
and agri-business.
• Rural credit system assumes importance because most
Indian rural families have inadequate savings to finance
farming and other economic activities.
• Role of NABARD is overall development of India in
general rural and agricultural .
- Rural infrastructure development fund

3. SCOPE & CONCEPT
• There is considerable unmet demand for rural credit.
• Local money lenders assistance in credit make weaker
sections remained poor.
• Credit needs of non farm sector enterprise is to be a
challenge to the rural financial institutions (RFI’s).
• Uncovered micro finance ( 70% of poor out of the
scheme).
• RFI’s charging higher interest rate from farmers than
financial institutions from urban.

4. SOURCES OF CREDIT
Two sources:
• INFORMAL SOURCES :
Non governmental sources such as Family,
Friends, Money lenders, Traders etc…
• FORMAL SOURCES :
Government owned institutions – Commercial
bank, Regional rural bank, co-operative banks, Micro-
Finance Institutions, Self help groups , etc..

5. MAJOR CONTRIBUTERS
SELF HELP GROUPS :
• Village based financial intermediary usually composed of
10-20 members of the same area.
• Members make small regular saving contributions and
lend at a very low rate of interest.
• These are non-profit organizations and work for the
welfare of the members.
• Main objective is to empower women.
• Building blocks of the rural and village economy.

6. NATIONAL BANK FOR AGRICULTURE AND RURAL
DEVELOPMENT
• Established on 12th July 1982 by a special act of the
parliament.
• It is an apex body to co-ordinate rural financing system.
• Its main focus was to uplift rural India by increasing the
credit flow.
• It regulates the co-operative banks and the RRB’s.

7. MICRO FINANCE INSTITUTIONS :
• Provide financial services to micro entrepreneur’s and
small business which lack access to banking and related
services due to the high transaction costs.
• Give loans to poor rural people at low interest rate.

8. CONCLUSION & SUGGESTIONS
INCREASING CREDIT FLOW AND REDUCING RISK :
• Organizing and linking farmers with contractors under
contract farming arrangements and in building credit
delivery.
• Involving NGO’s (or) rural educated youths in organizing
farmers in groups scrutinizing application, disbursement
of loan and effective reducing lending cost.
• The insurance premium is also subsidized to cover risk
apart from group lending.
• To encourage the flow of institutional credit for rural,
non farm activities.
• Introduce rural credit card scheme.