RAS question
Agricultural credit in India is primarily provided by:
Correct answer: (D) Commercial banks, cooperative banks, and RRBs.
Agricultural credit in India is primarily provided through commercial banks, cooperative banks and regional rural banks, with NABARD functioning as the apex refinance and development institution rather than the main direct lender.
Explanation
India’s agricultural credit system is not built around a single institution. It operates through a multi-agency framework in which commercial banks account for the largest share, followed by regional rural banks and cooperative banks, while NABARD acts as the refinancing agency and apex development bank for agriculture. The Press Information Bureau explainer on the Kisan Credit Card says KCC credit is implemented through commercial, regional rural and cooperative banks, and notes that the KCC platform has onboarded banks from all three categories. This is why option D is the best answer. It captures the actual delivery channel for farm credit, instead of treating RBI, NABARD or informal moneylenders as the sole provider.
Why the other options are wrong
- (A) RBI is the monetary authority and does not directly provide agricultural credit to farmers through the KCC delivery network described by PIB.
- (B) NABARD is important as the refinancing agency and apex development bank, but the actual lending channel runs through banks, not NABARD alone.
- (C) Moneylenders may exist in informal rural credit, but the institutional framework is built around commercial, regional rural and cooperative banks.
Concept
This tests institutional agricultural finance in the Indian economy, especially the difference between direct lending channels and refinance or regulatory institutions. It recurs in RAS because farm credit links banking structure, rural development and government schemes such as Kisan Credit Card.