RBI points out regional disparities in agricultural lending

RBI Deputy Governor Swaminathan J. highlighted ongoing regional disparities in agricultural lending, despite record institutional credit. Institutional credit to agriculture reached an all-time high of Rs25.10 lakh crore during 2023-24. At an international conference, he stressed the need to address these imbalances and ensure farmers have equal access to financial resources, tools, technology, and knowledge for sustainable agriculture.

Regional disparities in agricultural lending continue to be a concern, even as institutional credit to the sector reached a record Rs 25.10 lakh crore in 2023-24, according to Reserve Bank of India Deputy Governor Swaminathan J.

While addressing an international research conference organized by the College of Agricultural Banking, the central banker stated, “A concerted focus on addressing regional imbalances, enhancing credit access, and integrating value chain financing is crucial for a more sustainable and resilient future for Indian agriculture.”

In a speech published on the RBI’s website, he noted that institutional credit to agriculture soared to a record Rs 25.10 lakh crore in 2023-24, facilitated by approximately 7.4 crore active Kisan Credit Cards, which serve as essential tools for delivering short-term credit.

Swaminathan noted, “Going forward, two critical issues must be addressed: promoting sustainable agriculture and ensuring adequate funding for it.”

“Sustainable finance should not only promote environmentally friendly practices but also ensure that financial resources are available to the farmers who need them most, providing equitable access to tools, technology, and knowledge,” he added.

He remarked that traditional lending practices fall short in addressing the specific needs of the agricultural sector, which is seasonal by nature and often faces delayed or reduced returns. He further highlighted the potential of blended finance models, where public funds help attract private investments, to provide essential capital for sustainable transitions. This approach would not only bring together resources from diverse sources but also ensure a more balanced distribution of risks and returns.

He also pointed out that Indian agriculture is confronting a demographic challenge, as the average age of farmers has risen to 50.1 years, emphasizing the importance of drawing younger generations into the sector.