Following are the institutional sources of agricultural credit excepta)Regional banksb)Money lendersc)Commercial banksd)NABARDCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

Institutional sources of agricultural credit:
- Regional banks: Regional banks, such as Regional Rural Banks (RRBs) and State Cooperative Banks, play a significant role in providing agricultural credit. They are specifically designed to cater to the credit needs of the rural and agricultural sector.
- Commercial banks: Commercial banks, including public sector banks and private sector banks, also provide agricultural credit. They offer various loan products, such as crop loans, term loans, and agricultural gold loans, to meet the financial requirements of farmers and agricultural activities.
- NABARD: The National Bank for Agriculture and Rural Development (NABARD) is a specialized financial institution that provides credit and other support to agriculture and rural development. NABARD refinances commercial banks, regional rural banks, and cooperative banks for agricultural lending.
Excluded source:
- Money lenders: Money lenders are not considered institutional sources of agricultural credit. Money lenders are individuals or small entities that lend money to farmers or rural borrowers at high-interest rates, often exploiting their vulnerabilities.
Therefore, the institutional sources of agricultural credit except money lenders are regional banks, commercial banks, and NABARD.

Answer

Institutional Sources of Agricultural Credit

Regional banks
Regional banks are one of the main sources of agricultural credit, as they are specifically designed to cater to the financial needs of farmers in a particular region. These banks provide loans at lower interest rates compared to other financial institutions.

Commercial banks
Commercial banks also play a significant role in providing agricultural credit. They offer loans to farmers for various agricultural purposes like purchasing seeds, fertilizers, machinery, etc. Commercial banks have a wide network and can reach a large number of farmers.

NABARD
The National Bank for Agriculture and Rural Development (NABARD) is an apex financial institution in India that provides credit to agriculture and other rural sectors. NABARD refinances the credit extended by financial institutions like regional rural banks and cooperative banks to farmers.

Money lenders
Money lenders are not considered institutional sources of agricultural credit. They are informal sources of credit and often charge exorbitant interest rates, leading to a debt trap for farmers. It is recommended for farmers to avoid borrowing from money lenders and opt for formal sources of credit like banks and NABARD.

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