NEED /TYPES

ON basis of TIME

• Short term (< 15 months)• Medium term (15 months to 5 years)• Long term (> 5 years)

NEED /TYPES

ON basis of PURPOSE

• Productive.• Consumption needs.• Unproductive.

Constraints To Financial Services • Cheap , Adequate and Timely supply.• Small Farmers and Landless Labourers.• Uncertainty shrouding credit

requirements.• Seasonality of many agricultural activities • High information and transaction costs • Weak institutional capacity of rural-

finance providers

SOURCES OF AGRI-FINANCE

1. NON-INSITUTIONAL SOURCES.• Money Lenders.• Traders.• Commission agents.• Landlords.

2. INSITUTIONAL SOURCES.

INSITUTIONAL SOURCES• CO-OPERATIVE CREDIT SOCIETIES.

• COMMERCIAL BANKS.

• REGIONAL RURAL BANKS.

• NATIONAL BANK FOR AGRICULTURE & RURAL DEVELOPMENT. (NABARD)

SHARE OF SOURCES

Total Credit to AgricultureIn Crore

05-06 06-07

CO-OPERATIVE CREDIT SOCIETY

SCARDBs: State Co-operative Agriculture and Rural Development Banks.PCARDBs: Primary Co-operative Agriculture and Rural Development Banks.Source: Report on trend and Progress of banking in India. RBI

Evaluation of co-operatives• Heavy dependence on outside funds• Problem of high level of Overdues• High level of NPAs• Substantial losses• PACS are too small in size to economical &

viable.• Greater benefits to Larger landowner• Regional disparities in distribution of credit• Domination of government.

“Co-operation has failed but Co-operation must succeed”

• In 2005-06 Co-operatives provided Rs. 39,404 crore of rural credit

• 21.8 % of total 1,80,486 crore institutional credit to agriculture provided that year.

REFORMS

• Revival and restructure of CCS.• Financial restructuring & assistance.• To make co-operatives truly democratic &

member driven.• Regulatory control of the RBI• NABARD-as implementing & Pass through

agency.

COMMERCIAL BANKS

• Less Concentration on Primary Sector.• Nationalization of banks.

During 2005-06 Commercial banks provided rural credit of Rs. 1,25,859 crore.

69.7 % of total 1,80,486 crore institutional credit.

REVIEW

• Rapid Expansion and Diversification.• Large no. of small advances.• Reduction of margin available.• Bad recovery position.• Multi-alternative credit system.• Decline in credit deposit ratio.• Reduction of loan to small farmers.

REGIONAL RURAL BANKS

• Local feel + Business organization.• Low cost low profile credit institution.• Staff from the neighboring area.

• 2006-07, RRBs provided 27,964 crore as credit to Agriculture sector.

• 8.5% of total institutional credit to agriculture.

PROBLEMS OF RRBs

• Organizational Problem.

• Problems of recovery• Mounting losses leading to Non-

Viability.

• Management Problems.

REFORMS

Relative Share

2005-062004-05

Per cent

• Apex bank for rural credit.

• Provides credit to SCBs & RRBs.

• Assistance to state government.

• Inspecting Co-operatives, RRBs.

• Maintains a R&D funds.

• Rural Infrastructure Development Fund

(RIDF)

• Microfinance Innovation.

• Kisan Credit card scheme.

• Credit monitoring arrangement.

• Refinance under SGSY.

• Co-operative development fund (CDF)

• Supervision

“Take up one idea. Make that one idea your life - think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success, that is the way great spiritual giants are produced.”

- Swami Vivekananda