NABARD’s Rural Economic Conditions and Sentiments Survey reveal expanded formal credit access and rising rural household consumption.
Institutional Architecture for Rural Credit
- Apex Body: NABARD coordinates rural finance, supervising cooperative networks and 28 Regional Rural Banks (RRB) with over 22,000 branches.
- Delivery Channels: Scheduled Commercial Banks (rural branches increased 35% to 56,193 by July 2025) and computerization of grassroots Primary Agricultural Credit Societies (PACS) undergoing digital transformation.
- Priority Sector Lending (PSL): RBI mandates banks to allocate 18% of Adjusted Net Bank Credit to agriculture (10% sub-target for small and marginal farmers).
- Ground Level Credit: GLC targets reached ₹32.50 lakh crore for FY26 (including ₹5 lakh crore to allied sectors).
- Key Initiatives:
- Modified Interest Subvention Scheme (MISS) provides short-term credit to farmers at affordable interest rates through KCC.
- Budget 2025-26 raised KCC limits to ₹5 lakh.
- The Prime Minister Dhan-Dhaanya Krishi Yojana (PMDDKY) converges 36 Central schemes across 100 low-performing districts.
- Modified Interest Subvention Scheme (MISS) provides short-term credit to farmers at affordable interest rates through KCC.
Significance of Rural Credit Growth
- Creation of Rural Demand: Enhances purchasing power, with 77.2% of rural households reporting increased consumption levels.
- About 51% of households rely exclusively on formal credit.
- Women Empowerment: Empowers rural women (10.05 crore mobilised into SHGs) and mitigates dependency on informal debt.
- Boosts Rural Growth: Supports farm productivity, allied sectors (dairy, fisheries) and rural entrepreneurship.
Evolution of Rural Credit System
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