Introduction:

Agricultural finance refers to the provision and management of financial services and products that are specifically designed to support agricultural activities. It includes a wide range of financial tools such as loans, credit, insurance, savings, and investment aimed at farmers, agribusinesses, and other entities involved in agricultural production and distribution. The sources of agricultural finance in India comes from many ways.

Agricultural finance can come from various sources, including both formal and informal channels. These sources provide the necessary funding for farmers, agribusinesses, and other stakeholders to invest in agricultural activities. The main sources of agricultural finance include:

Sources of agriculture finance:

Sources of agriculture credit can be divided into two categories non institutional sources and institutional sources.

 Non institutional sources:

 The non institutional sources of the following are;

• Money lenders: There are two types of money lenders in rural area they are farmers who do money lending as a side business and the village shopkeepers. Besides these two there is professional money lender. the cultivators depend upon the money lenders for the requirement of cash according to the rural credit survey undertaken for the year 1951-52 money lender accounted for nearly 70% of all rural credit. But according to another survey of 1980-81 they accounted for only 16% of rural credits and according to another 1990-91 of rural indebtedness the share of money lenders in 2002 was 19.6% .however they still continue to be a great force in our village.
• Traders and commission agents: They assist farmers by extending loans to them against their crops. they charge high rates of interest and generally forced the farmers to sell the produced to them at low price. they also detect heavy commissions for themselves. this source of finances becoming less important it was 5.5% of total rural credit in 1951-52 and decrease to 3.2% in 1980-81 and 3.1% in 1990-91 as per NSS 59^th  round survey of rural indebtedness the share of trader and commission agents in 2002 was 10.0%.
• Relatives: Agriculturist able to borrow from relatives often in the form of grains, seeds etc. such loan are generally informal and may not carry any interest at all. the repayment may also be easy but this source of loan in highly undependable and is becoming less important as per NSS 59^th  round survey of rural indebtedness the share of relatives in 2002 was 7.1%.
• Landlords: Small and marginal farmers generally borrow from landlords and others, both for production and consumption the rate of interest is quite heavy and beside there is every possibility of the small and national farmers losing the land to the landlords and becoming bounded labour  un -fortunately the magnitude of this source has increased from 3.3% in 1951- 52 to 8.8% in 1980-81 and 8.1% in 1990-91.

Institutional sources:                                      

• Government: The state government has been a source of rural credit both for short and long period government sanction loans to farmers an these loans are known as Tacavvi loans.  These loans generally given in time of emergency or distress such as floods. since independence the government has started extending crop loans under the scheme of ‘grow more food’ and community development programmed
• Commercial bank: Before nationalization commercial banks were a negligible source of rural credit but through nationalization of government banks in 1969 and 1980, the government sought to assign to commercial banks a bigger soon after their nationalization. The bank started lending extensively to the farmers. They give term loans to buy agriculture machinery and implement such as tractors, pump set etc.
• Cooperative societies: It is an old source of credit in India as they were established in 1904 it provides only a 3.1% of total rural credit in 195- 52 however ,progress after independence quiet rapid it was 29.9% of the total credit in 1981-82, 21.6% in 1990-91 and 27.1% in 2002.
• NABARD National bank for agriculture and rural development: The most important development in the field of rural credit is the setting up of the NABARD in July 1982. NABARD is now the apex for rural credits. The agriculture refinance and development corporation which was set up in 1963 to meet a long term credit needs of the rural areas has also been merge with NABARD the authorized share capital of NABARD is rupees 500 crores and paid up capital is rupees 100 crores.

also read: explain the Irrigation development in India.