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Agricultural credit in India is on track to hit a fresh high in FY26
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Tuesday, 02 December, 2025, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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India’s agricultural credit ecosystem is entering a phase of accelerated expansion, with fresh indicators showing stronger institutional lending, deeper rural penetration, and a steady decline in dependence on informal sources. As the country heads into FY26, farm credit is poised to scale a new high, driven by policy push, rising demand for working capital, and greater confidence among commercial banks and regional rural banks in financing the agri–rural economy.
The surge is driven largely by commercial banks and regional rural banks, buoyed by growing demand and a greater push toward formalising rural lending. In the first half of the fiscal year alone, banks disbursed around Rs 14.51 lakh crore in farm loans.
In FY25, agricultural credit across commercial, cooperative and regional rural banks had already crossed Rs 28.69 lakh crore with roughly 60% of it going toward short-term crop loans, and the remainder for investment credit in agriculture and allied activities.
Still, distribution of credit remains uneven across the country. Southern states, for instance, accounted for nearly 48% of total disbursements in FY25 despite representing only about 17% of India’s gross cropped area.
To reduce such regional imbalances, NABARD is doubling down on district-level Potential Linked Credit Plans (PLPs), as well as leveraging schemes like self-help groups, farmer–producer organisations and micro-enterprise development programmes.
As credit grows, the share of informal lending (moneylenders, non-institutional sources) is steadily falling signalling a shift toward more transparent, accessible, and regulated financing for farmers.
With this expansion in formal agricultural credit, rural India could see a boost in productivity, allied-sector investments (like dairy, poultry, fisheries), and broader agri-infrastructure — paving the way for more inclusive growth.
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