The agriculture sector in India is one of the biggest employers of labour force. With such a large percentage of the population employed in agriculture or allied sectors, agriculture finance plays a significant role. Agricultural finance caters to funding activities associated to agricultural activities. This can include soil cultivation, production, storage, and selling of products.
The sources of agricultural finance in India are broadly classified as institutional and non-institutional sources. Institutional sources are related to institutions such as cooperatives, regional rural banks (RRBs) or scheduled commercial banks (SCBs). Non-institutional agricultural finance refers to financing support offered by traders, money lenders or other individuals like agents, landlords or even family members.
Among the sources of farm finance to banks and institutions in India is the National Bank for Agriculture and Rural Development (NABARD). NABARD offers refinance to regional rural banks, state co-operative banks, district central co-operative banks and state governments as well.