Role of banking sector in Indian agricultural development

Role of banking sector in the development of Indian agriculture credit facilities is very important. Institutional credits to the agriculture sector through various banks are promoting the developmental activities in the agriculture. The first Narasimham Committee of 1991, the emphasis are focused on financial soundness and operational efficiency to the rural financial institutions. Over the last 40 years, there has been a striking increase in the credit intensity of agricultural as measured by the ratio of agricultural credit to agricultural GDP. The study revealed that the share of cooperative banks in the total agricultural institutional credit has continuously decreased as against the commercial banks role has increased in the last twenty years. The study also indicated that near about 75 per cent of total institutional credit to the agricultural sector provided by the commercial banks. An analysis of term loan in the recent year indicated that Minor irrigations witnessed the highest annual growth rate. Kisan Credit Cards are provided to Indian farmers by the banking sector. Commercial and cooperative banks role in this purpose are progressive. The present study strongly recommended that commercial banks (including nationalized banks) should be increasing their branches in rural areas for providing rural credit facility.