Impact of kisan credit card scheme on credit distribution in agricultural sector in India

Many policy measures were undertaken to bring financial inclusion in agricultural sector in India. But they were not able to cater the credit needs of the marginal and small farmers. Hence, to cater the credit needs of the farmers other than agricultural purposes, to meet the consumption needs, to avoid misutilisation of credit, to have equitable distribution of credit and to achieve financial inclusion in the agricultural sector, Kisan Credit Card Scheme was introduced in 1998–1999. Since the main objective of Kisan Credit Card system is to improve the credit accessibility of the farmers and financial inclusion, an attempt was made to analyse the impact of Kisan Credit card scheme on agricultural financial inclusion in India. The findings of the study showed that, the loan outstanding in the direct agricultural credit was higher for the co-operatives than the scheduled commercial banks till the year 1983–84. At the end of the pre Kisan Credit Card period, the outstanding loan amount for the co-operatives was Rs. 213.90 crore whereas it was Rs. 284.45 crore for the scheduled commercial banks. In 1998–1999, the amount of loan issued by the co-operatives was Rs.150.99 crore, whereas the scheduled commercial banks disbursed only Rs. 146.63 crore. The dominance of the co-operatives in agricultural loan disbursement was retained till the year 2003–2004. In 2003–2004, the direct loan disbursement from the scheduled commercial banks was higher than the co-operative banks. The amount of direct agricultural advances from the scheduled commercial banks was Rs.400.49 crore in 20052006, whereas it was Rs. crore for co-operatives, the Regional Rural Banks provided Rs.12816 crore at the same year. All the institutional agencies had attained the highest growth in the direct agricultural credit disbursement in the post Kisan Credit Card period. It indicates that the Kisan Credit Card scheme had improved the credit accessibility of the farmers.