Friday, November 19, 2021
Agricultural credit
Agricultural credit refers to the financial support provided to farmers and agricultural businesses to meet their various financial needs, such as purchasing seeds, fertilizers, equipment, machinery, and other inputs necessary for farming operations. It plays a crucial role in the agricultural sector, enabling farmers to enhance productivity, invest in modern technology, and improve their overall agricultural practices.
Types of Agricultural Credit:
1. Short-Term Credit: Short-term credit is typically provided for agricultural activities within a farming season. It covers the costs of seeds, fertilizers, pesticides, labor, and other inputs. Short-term credit is usually repaid after the harvest.
2. Medium-Term Credit: Medium-term credit is extended for a period ranging from one to five years. Farmers use this type of credit for activities such as purchasing machinery, equipment, and vehicles. Repayment is spread over a few years to ease the financial burden on the farmers.
3. Long-Term Credit: Long-term credit is provided for long-duration investments like land development, construction of storage facilities, and irrigation projects. The repayment period for long-term credit typically extends beyond five years.
Sources of Agricultural Credit:
1. Commercial Banks: Commercial banks provide a significant portion of agricultural credit to farmers. They offer various loan products tailored to the specific needs of farmers, including crop loans, term loans, and agricultural gold loans.
2. Regional Rural Banks (RRBs): RRBs are financial institutions that cater to the credit needs of rural and agricultural sectors. They are owned by the central government, state government, and sponsor banks (commercial banks).
3. Cooperative Banks: Cooperative banks, including cooperative credit societies and cooperative agricultural and rural development banks, provide credit to farmers. These banks are often community-based and operate in rural areas.
4. Microfinance Institutions (MFIs): MFIs offer small loans, often referred to as microloans, to farmers and agricultural entrepreneurs. These loans are aimed at promoting financial inclusion among small and marginalized farmers.
5. Government Initiatives: Many governments implement schemes to provide subsidized agricultural credit to farmers. These initiatives often involve providing credit at lower interest rates, waivers on interest for timely repayments, and other incentives to encourage borrowing.
Importance of Agricultural Credit:
1. Increased Productivity: Access to credit enables farmers to invest in high-quality seeds, fertilizers, and technology, leading to increased agricultural productivity.
2. Crop Diversification: Farmers can explore new crops and agricultural practices with the financial support provided by agricultural credit, leading to crop diversification and reduced dependency on a single crop.
3. Risk Mitigation: Agricultural credit helps farmers manage risks associated with weather fluctuations, pests, and diseases by allowing them to adopt modern farming practices and technologies.
4. Rural Development: Providing credit to farmers stimulates economic activities in rural areas, contributing to overall rural development and poverty reduction.
5. Food Security: Enhanced agricultural productivity, facilitated by agricultural credit, ensures a stable food supply, contributing to national food security.
Agricultural credit, therefore, plays a vital role in supporting the agriculture sector, empowering farmers, and fostering economic growth in rural communities.
Regional rural bank
- Regional Rural Bank was established in 1975, it is an important institution providing credit for the bank's agriculture.
- No Regional Rural Bank has been opened since 1987 on the recommendation of the Kelkar Committee, the contribution of institutional credit in the agriculture sector has increased to more than 65%.
- Commercial banks (74%) contribute the most to the total credit given by institutional institutions to the agriculture sector, followed by cooperative banks (17%) and regional rural banks (9%) respectively.
- According to the central policy, it is mandatory for private and public banks to provide 40% of any decision given by them to the priority sector.
- It has been made mandatory to provide 18% of the total credit allocated in the primary sector to the agriculture sector.
National Agricultural Insurance Scheme
- In the year 1999-2000, this scheme was started with Ravi Fasal, it was started in place of Comprehensive Crop Insurance Scheme.
- The main objective of this scheme is to compensate the farmer for the loss of crops due to natural calamities like drought, flood, hailstorm, storm, fire, insect diseases etc. A total of 70 crops under Kharif and Rabi crops are covered under his purview. has been brought
- This scheme is for all farmers, in this a subsidy of 10% is given to small and marginal farmers in premium payment.
- Which is borne equally by the central and state government, some state governments are also giving more than 10% subsidy to the farmers.
Weather Based Crop Insurance Scheme
- Weather based Kharif is being run in the year 2007-08 on a pilot basis. The objective of this scheme is to provide insurance cover to the farmers against weather events adversely affecting the yield.
- The crops and the reference unit area are notified by the state governments before the sowing season.
- Each unit is linked to the reference meteorological station of the area on the basis of which the claims are settled.
- The payments are made on the basis of fluctuations in the weather measured by a meteorological station, the claims are settled on a session basis and the farmers are not required to report the loss or submit a claim.
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