New Delhi [India], January 5 : India's rural credit ecosystem is increasingly getting formalised and borrowers across the country are preferring formal sources due to a variety of reasons, including interest subventions and subsidised credit, National Bank for Agriculture and Rural Development (NABARD) Chairman Shaji KV told reporters on Sunday.
"The access of credit from informal sources is actually coming down very drastically. That means that a formalisation of rural credit is happening. (Formalisation of rural credit) in itself will leave a lot of margins at the hands of the rural people, because if you access an informal source, the rate of interest will be higher, thus margins before them will be lower," Shaji KV told a press conference at the ongoing six-day Grameen Bharat Mahotsav in Bharat Mandapam here.
Interest-subvented loans through Kisan Credit Cards, agri fund schemes, and a cap on the rate of interest on informal means put together helped formalisation of rural credit, he said.
Rural consumption in India is improving and the rate of growth in rural consumption is better than urban consumption, creating a lot of demand in the rural pockets.
Going ahead, with farmgate infrastructure being set up across the country, Shaji KV said there now is a need to shift people out of agricultural production to value-added processing through a value chain development.
He said agri credit growth is expected to be more than 13 per cent this fiscal 2024-25. Agri credit growth has been on an average at 13 per cent over the past ten years.
"This year we will be achieving around 27 to 28 lakh crore in agriculture credit," the NABARD chairman said.
The NABARD chairman was also asked to respond about the regional imbalance in agri credit, particularly in east and northeast India. He said the lack of digitised land records was an impediment.
"...for any credit to grow there needs to be a linking of the KYC with the activity which they are doing. So in the case of certain areas, there is still a problem of land records being made available. So that is what is preventing. To address this, the government is now going for this digitisation," he said.
A lack of data is creating that imbalance, he stressed. "So we are addressing that imbalance through making available the data and making it easier for banks to lend credit," he supplemented.
Asked whether only subsidization of fertilizer will help augment the agricultural sector, Shaji KV argued that subsidization of fertilizer will definitively help, and in the same breath added that irrigation, better roads, high-yielding crops, credit availability at subvented or subsidised rates were also key.
The ongoing six-day Grameen Bharat Mahotsav in the national capital is aimed at improving the visibility of rural Indian products to urban consumers. NABARD is India's apex development bank, established in 1982 under an Act of Parliament to promote sustainable and equitable agriculture and rural landscapes.
"We are showcasing their specialised products, especially the GI ta products, organic products, products of rural artisans, products of tribal people, products of women entrepreneurs, products of SHGs, FPOs, and such other things," the NABARD chairman said.
NABARD is also handholding rural artisans to market their produce on the internet, including the flagship digital public infrastructure ONDC.
Open Network for Digital Commerce (ONDC) is aimed at promoting open source networks for all to exchange goods and services on the internet, and most importantly it is independent of any specific platform.
"We are working in different states with different groups for improving their productions and improving their visibility," the NABARD chairman said.
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