The Government of India has implemented a series of policy measures to enhance institutional credit flow to the agriculture sector, with a particular focus on underserved segments such as small and marginal farmers. The government sets annual Ground Level Credit (GLC) targets for agriculture and allied sectors, which banks must meet during the financial year. These targets are defined at the regional and agency levels, covering institutions such as scheduled commercial banks, regional rural banks, and cooperative banks. Since 2021–22, separate credit targets have also been introduced for allied sectors, including dairy, fisheries, and animal husbandry, to ensure focused financial support. Under the Priority Sector Lending guidelines issued by the Reserve Bank of India, banks are required to allocate at least 18% of their Adjusted Net Bank Credit to agriculture, with a 10% sub-target specifically for small and marginal farmers.
The government has also strengthened credit access through schemes such as the Kisan Credit Card (KCC), which provides affordable and timely credit for agricultural inputs and allied activities. Under the Modified Interest Subvention Scheme (MISS), farmers can avail short-term loans at a concessional interest rate of 7%, which effectively falls to 4% for those who repay promptly due to an additional 3% incentive. To further ease access to finance, the collateral-free loan limit for short-term agricultural loans has been increased from Rs. 1.60 lakh (US$ 1,742) to Rs. 2 lakh (US$ 2,176) per borrower from January 1, 2025. Additional initiatives such as the PM Dhan Dhaanya Krishi Yojana (PM-DDKY) and financial support through NABARD aim to expand credit availability, strengthen rural financial institutions, and improve liquidity for farmers during cropping and harvesting seasons.
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