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Agricultural Finance

28-AUG-2014 13:22

    Agricultural finance is termed as a division of rural finance devoted to financing agricultural related activities such as production, input supply, wholesale, distribution, processing & marketing.

    Credit needs of the farmers can be determined:

    • On the basis of time
    • On the basis of purpose

    On the basis of time: On the basis of time the credit needs of the farmers can be classified as:

    • Short-term
    • Medium-term
    • Long-term 

    Short-term loans: They are required for the procurement of fertilizers, seeds, feeds, pesticides and fodder of livestock, payment of wages of hired labour, marketing of agricultural produce, litigation & a range of consumption & unproductive purposes. The period for these loans is less than 15 months.

    On the basis of purpose the agricultural credit needs of farmers can be classified as:

    • Productive needs
    • Consumption needs
    • Unproductive needs

    Productive needs – In Productive needs we can take in all credit requirements which unswervingly affect agricultural productivity. Farmers habitually necessitate loans for consumption too. Between the instant of marketing of agricultural produce & harvesting of subsequent crop there is a long gap of time & most of the farmers do not have adequate income to prolong them through this period. As a result, they have to take loans for meeting their consumption needs.

    Sources of Agricultural Finance

    • Non-institutional sources
    • Institutional sources

    The non-institutional sources are:

    • Moneylenders
    • Relatives
    • Traders
    • Commission agents
    • Landlords

    The institutional sources:

    • Cooperatives
    • Scheduled Commercial Banks
    • Regional Rural Banks

     

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