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National Bank for Agriculture and Rural Development (NABARD) Chairman Shaji KV has said that 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. He said ‘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.’

He said 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. 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, he 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. He said ‘this year we will be achieving around 27 to 28 lakh crore in agriculture credit.’