14th May 2025: India is poised to reach a significant milestone in agricultural finance, with farm credit expected to exceed ₹31.5 lakh crore in the financial year 2025-26, according to the National Bank for Agriculture and Rural Development (NABARD). This marks a steady rise in formal credit for farmers and reflects ongoing efforts to strengthen rural credit systems across the country.
In the previous fiscal year (2024-25), over ₹28.98 lakh crore was disbursed in agricultural loans, with nearly 60% going toward short-term crop loans and the rest directed toward long-term investments in agriculture and allied sectors such as dairy, fisheries, and horticulture.
Ajay K. Sood, NABARD’s Deputy Managing Director, noted that the consistent rise in credit flow demonstrates increasing institutional outreach to farmers. He emphasized that NABARD is working closely with banks to reduce regional imbalances in credit distribution—particularly in underbanked regions like the Northeast—through focused credit planning, awareness programs, and mechanisms like crop insurance and social guarantees.
To further boost credit access, banks are preparing district-specific loan plans that prioritize both immediate and long-term financing needs in farming communities. Meanwhile, the government has announced an increase in the Kisan Credit Card (KCC) loan ceiling—from ₹3 lakh to ₹5 lakh—to better meet farmers’ rising input costs and working capital requirements. Under the Modified Interest Subvention Scheme, farmers repaying loans on time can benefit from an effective interest rate of just 4%.
Currently, India has over 77 million active KCC holders, including those engaged in livestock and fish farming. For loans not directly linked to crop production, the limit remains at ₹2 lakh.
NABARD is also exploring concessional refinancing options for ‘aspirational districts’—regions that often lag in development—with an aim to offer lower interest rates and tailored financial solutions for small and marginal farmers.
Experts have pointed out that aligning credit distribution with actual agricultural output is essential to ensure that affordable credit serves its intended purpose. There’s growing concern that crop loans should not be diverted for non-agricultural use or become concentrated in a few states.
Overall, the anticipated growth in agricultural credit reflects a more inclusive and resilient approach to rural development—one that recognizes the evolving needs of farmers and s their efforts to build a sustainable future.
