Priority sector lending (PSL) was formalized in 1972, and RBI advised PSL targets to banks in 1974, which ensures that the lenders compulsorily lend 40% of their total credit to specific sectors The Reserve Bank of India (RBI) has defined different categories under priority sector and agriculture is one of that category which falls under priority sector lending Domestic scheduled commercial banks...
Agri financing plays an essential role in farm sector development, as India being an agrarian economy is a major contributor to the global food basket As on March 31, 2020, NBFCs had total assets of Rs 5147 trillion, almost 25% of India’s GDP Therefore, a healthy NBFC sector from a systemic point of view is crucial for India’s economic revival The recent RBI bulletin released in May 2021...
The Indian agriculture market is estimated to be worth INR 18,367 billion (2019) Currently, India ranks within the world’s five largest producers of over 80% of agricultural items, including many cash crops Easy availability of credit is a major driver of the Indian agriculture industry Many farmers and agribusinesses do not have access to timely and suitable credit leading to lower production...
The agriculture sector contributes significantly to the Indian economy in terms of revenue and employment It makes for around 16% of the Indian GDP and 4149 percent of the workforce employment But farming and related commercial activities are tough It requires labour, supplies, land, and equipment It also faces risks like vagaries of weather, shrinking farm sizes and pest infestation Limited...