Question

Difference between direct credit and indirect credit

Answer 1

Any loan to agriculture and allied sector is called farm credit. When the borrower is directly responsible for its repayment to the lending agency, it is direct farm credit. It includes short, medium and long term loans given for agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping, etc.) directly to individual farmers without limit for taking up agriculture / allied activities except nominal members or to agencies like PACS, primary land development banks etc.

· Indirect credit refers to, funds agriculture indirectly through some intermediary agency/institutions etc. which will be responsible for repayment. So funds availed by fertilizer dealers, state corporations, FCI, warehouses will come under indirect creditor to agriculture.