 "Growth in agri credit may top 13% in FY25: Nabard chairman Shaji KV")
Agriculture credit growth this financial year is likely to be more than 13 per cent, reaching Rs 27-28 trillion, said National Bank for Agriculture and Rural Development (Nabard) chairman Shaji KV, at a media interaction in New Delhi.
“Over the past decade, agricultural credit has consistently grown at an average rate of 13 per cent. In FY25, we anticipate reaching around Rs 27-28 trillion in agricultural credit, higher than growth rates in other sectors. Moreover, this growth reflects a more granular approach — the reliance on informal credit sources is declining significantly. This shift indicates a trend towards the formalisation of rural credit, which benefits rural communities. Accessing formal credit sources generally leads to lower interest rates, resulting in better margins for these individuals compared to relying on informal lenders,” said Shaji.
The government sets annual targets for ground-level credit (GLC) in the agriculture sector for scheduled commercial banks (SCBs), regional rural banks (RRBs), and rural cooperative banks (RCBs).
In FY24, Rs 25.1 trillion (provisional) has been disbursed, surpassing the target of Rs 20 trillion by 25 per cent.
Highlighting the issues in credit growth, the Nabard chairman said farmers will need to present their records for credit growth, which requires proper know your customer (KYC) procedures linked to their agricultural activities. However, in some areas, the lack of accessible land records remains a barrier.
“To address this, the government is digitising land records through the agri stack initiative. Nabard is partnering with this initiative, as agriculture falls under the jurisdiction of state governments. The Centre has provided a framework for the agri stack, which consists of three key layers — the farm layer (land records), the farmer layer (KYC), and the crop layer. Data from these layers will be captured in the agri stack, although states are at different maturity levels in this data collection,” he added.
Shaji further added that with digital economy flourishing due to improved internet connectivity, it's essential to integrate these rural financial institutions into this transformation.
Also Read
He said Nabard is currently working on the computerisation of primary cooperative societies under a central government scheme.
“There are about 100,000 cooperative societies, and this financial year, 67,000 of them are set to be computerised. Around 50,000 are already digitised,” he said.
“There are already indications that rural consumption has improved, with growth rates outpacing urban areas. This trend is generating significant demand in rural regions. To capitalise on this growth, it is essential to ensure that benefits reach marginalised producers. We must equip them with appropriate technology, branding, and marketing support, as well as assist them in onboarding to digital commerce. These initiatives will not only boost rural consumption but also stimulate demand. As rural consumption increases, it signifies that more people are spending, thereby sustaining demand. This is the opportunity we aim to leverage,” he added.
Talking about the strategy for kisan credit cards (KCCs), he said that the programme is to saturate not only land-owning farmers but also those with minimal land holdings. It is also for individuals involved in allied activities, such as animal husbandry and fisheries.
“Agriculture encompasses more than just crop production, and these sectors need access to subsidised credit to improve their per capita income. To support this, we are conducting a campaign in collaboration with the Department of Financial Services, involving all banks and rural financial institutions. This will ensure that the animal husbandry and fisheries sectors receive adequate credit. We are also encouraging state governments to register fish farmers, as improving registration in this area is crucial. Once farmers are registered and linked to their activities, we can effectively prompt banks to provide loans,” said the Nabard chief.
As of June 30, 2023, the KCC scheme has over 74 million active accounts, with a total outstanding credit of Rs 8.9 trillion.