Misuse of agriculture credit

RBI report provides damning evidence

The lingering suspicion that a sizeable part of the institutional loans extended to the farm sector is being misused and misdirected has virtually been confirmed by a recent review of agricultural credit by an internal working group of the Reserve Bank of India (RBI). It has found that several states are getting more institutional agricultural finance than their annual farm sector gross domestic product (agri-GDP). In some states, the amount of such finance has been observed to be much higher than the estimated total farm input requirement by their farmers. In Andhra Pradesh, for instance, the crop loans given between