Tamil Nadu has topped in disbursement of agriculture credit by giving away loans worth ₹1,63,289 crore out of a total of ₹10,33,183 crore distributed across the country till December 31 this fiscal. The South Indian State led from the front in disbursing agricultural loans last year too with disbursal of ₹1,90,222 crore.

In a written reply in the Lok Sabha earlier this week, Finance Minister Nirmala Sitharaman said Andhra Pradesh (₹1,06,303 crore) and Uttar Pradesh (₹77,349 crore) were second and third in agricultural credit disbursals. Interestingly, Kerala, which is not a major agricultural State, came fourth.

12.55 crore loan accounts

Agricultural credit disbursed through cooperative banks, regional rural banks and commercial banks are meant to meet short-term credit requirements of farmers for agricultural and allied activities.


According to the Minister, there are around 12.55 crore agricultural loan accounts in the country as per data available for 2018-19. Out of these, 9.31 crore accounts belong to small and marginal farmers. A little more than 50 per cent of the agricultural credit was made available to small and marginal farmers. This is nearly three-fourths of total agricultural loan accounts in the country, she said.

The agriculture sector gets 18 per cent of the overall target of 40 per cent set aside for priority sector lending. Out of the 18 per cent, a sub-target of 8 per cent is earmarked for small and marginal farmers. A short-term crop loan of up to ₹3 lakh is available to farmers with interest subvention and with additional incentives so that the effective rate of interest comes down to 4 per cent, Sitharaman said.

Access to credit

Participating in an Agriculture Summit organised by BusinessLine on February 28, a key Nabard official had said that only 45 per cent of the small and marginal farmers get institutional credit even though they account for nearly 85 per cent farmers in the country. According to Nabard AGM Niraj Kumar Verma, 75 per cent of farm credit in the country is distributed by commercial banks, 13 per cent by cooperative banks and 12 per cent regional rural banks.

If small farmers are to be served better, there is a need to improve the credit delivery through cooperative banks and regional rural banks as they have better access to small farmers, Verma had said.