Rural Credit

1. Rural Credit – Definition
   Rural credit refers to financial assistance provided to farmers and rural households for agricultural and allied activities.
2. Importance of Rural Credit
   It supports crop production, asset creation, and poverty alleviation in rural areas.
3. Formal vs Informal Credit
   Formal credit is provided by banks and cooperatives; informal credit comes from moneylenders and relatives.
4. Sources of Rural Credit
   Banks, cooperatives, SHGs, microfinance institutions, and NGOs provide rural credit.
5. Institutional Credit
   Institutional credit includes commercial banks, RRBs, and cooperative societies.
6. Non-Institutional Credit
   Non-institutional sources include landlords, traders, and informal moneylenders.
7. Short-Term Credit
   Short-term credit finances crop production and working capital needs.
8. Medium-Term Credit
   Medium-term credit is used for minor irrigation, livestock, and farm machinery.
9. Long-Term Credit
   Long-term credit finances land development, plantations, and rural infrastructure.
10. Priority Sector Lending (PSL)
    PSL mandates banks to allocate a portion of credit to agriculture and rural development.
11. Agricultural Credit Target
    NABARD and RBI set annual credit targets for agriculture and allied activities.
12. Kisan Credit Card (KCC)
    KCC provides farmers with timely and hassle-free credit for crop and working capital needs.
13. SHGs and Microfinance
    SHGs promote group-based lending, enhancing financial inclusion.
14. Credit Flow to Marginal Farmers
    Priority is given to small and marginal farmers to reduce dependence on informal sources.
15. Interest Subsidy Schemes
    Government provides interest subvention on crop loans to reduce farmer burden.
16. Crop Insurance and Credit
    Crop insurance reduces risk for borrowers and ensures timely loan repayment.
17. Role of Cooperatives
    Cooperative societies act as intermediaries for credit distribution in villages.
18. Role of RRBs
    Regional Rural Banks provide tailored credit to small farmers and rural entrepreneurs.
19. Challenges in Rural Credit
    Delayed disbursement, low repayment capacity, and lack of awareness hinder credit flow.
20. NABARD’s Role
    NABARD refinances banks, develops institutions, and monitors credit flow to rural sectors.
21. Credit Planning
    Effective credit planning aligns loan disbursement with crop cycles and rural needs.
22. Priority Sector Schemes
    Schemes focus on agriculture, allied activities, micro-enterprises, and housing.
23. Impact on Rural Economy
    Adequate credit enhances productivity, income, and employment in rural areas.
24. Digital Platforms in Rural Credit
    Technology improves loan disbursement, monitoring, and transparency.
25. Rural Credit and NABARD                                                                               NABARD ensures structured, timely, and inclusive credit flow for rural development.