Q. Which of the following grants/grant direct credit assistance to rural households? - Regional Rural Banks
- National Bank for Agriculture and Rural Development
- Land Development Banks
Select the correct answer using the codes given below. (UPSC Prelims 2013)
Answer:
1 and 3 only
Notes: The correct answer is
[C] 1 and 3 only. In the Indian agricultural credit system, it is crucial to distinguish between institutions that provide "direct" credit to individuals and those that act as "refinancing" agencies.
- Regional Rural Banks (Statement 1 is Correct): Established under the RRB Act of 1976, these banks are specifically designed to provide direct credit to small and marginal farmers, agricultural laborers, and rural artisans. They operate at the local level and interact directly with rural households for crop loans and other credit needs.
- National Bank for Agriculture and Rural Development (Statement 2 is Incorrect): NABARD is the apex regulatory body for agriculture and rural development in India. However, it does not provide direct credit to individual rural households or farmers. Instead, it is a refinancing institution. It provides funds to Commercial Banks, RRBs, and Cooperative Banks, which then lend that money to the end-users. NABARD’s role is to coordinate and monitor the rural credit system.
- Land Development Banks (Statement 3 is Correct): Now often referred to as State Cooperative Agriculture and Rural Development Banks (SCARDBs), these banks provide direct long-term credit to farmers for purposes like land improvement, digging of wells, and purchasing expensive agricultural machinery like tractors. They deal directly with the rural borrowers.