Agricultural Credit: Regulatory Concerns

In a Rut Growth of credit in agriculture, despite its priority sector lending status, has remained a persistent problem in the economy. According to the RBI, domestic banks must allocate 18 per cent of their advances to the agricultural sector (including direct and indirect finance). However, in 2002-03, public sector banks lent only 15.5 per cent and private banks 10.8 per cent of their credit to the farm sector. The interim budget has announced some high-profile measures but what has been offered, in effect, is a rehash of the old fare, inadequate as it was in the first place.