THE FARMERS DEVELOPMENT IN CREDIT STRUCTURE VIS-À-VIS INDIAN ECONOMY

BONAM HAVILAH CO-OPERATIVE MANAGEMENT

MBA 3RD SEMESTER

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

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.

SOURCES OF CREDITTwo 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..

MAJOR CONTRIBUTERSSELF 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.

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.

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.

CONCLUSION & SUGGESTIONSINCREASING 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.