Question

Answer in brief.

1) Explain the non-institutional and institutional sources of Agricultural Credit in India.



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Answer 1

Answer:

Sources of agricultural credit can be broadly classified into institutional and non- institutional sources. Non-Institutional sources include moneylenders, traders and commission agents, relatives and landlords, but institutional sources include co- operatives, commercial banks including the SBI Group, RBI and NABARD.

Answer 2

Institutional sources

The main motive of Institutional credit is to assist the farmers in raising their agricultural productivity and maximizing their income. Institutional credit is also not exploitative in character. The following are some of the important institutional sources of agricultural credit in India.

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Non-institutional sources

• Money Lenders: From the very beginning, money lenders have been advancing a major share of farm credit. The money lenders were supplying a major portion of the agricultural credit(69.7% in 1951-52) and indulge in mal-practice like manipulation of accounts and charged a huge rate of interest from their loan.
• Traders and commission Agents: Traders and Commission Agents are also advancing loan to the Agriculturist for productive purposes before the maturity of crops at very low prices and charge heavy commission.
• Relatives: Cultivators are also normally borrowing fund from their own relatives in times of their crisis both in terms of cash or kind.