In any economic or productive activity, finance is an essential component. Agriculture is a productive activity, wherein the requirement of finance plays an important and significant role. In India, agriculture has been the predominant sector for production, employment and economic prosperity. Performance of agriculture in India is crucial to its overall growth as bulk of the Indian population is dependent on it in terms of self employment and food security. Introduction of technology in recent years has transformed the nature of agriculture in India. However, throughout the transition, finance has played a vital role in shaping agricultural activities reach its present status. The flow of credit in agriculture has played a significant role since its traditional days. Credit during the traditional agriculture phase was obtained by farmers for maintenance. As agriculture activities in India were mostly for subsistence, credit was obtained mainly for cultivation and for meeting expenses during crop failure. However, as subsistence farmers were unable to generate any surplus and with their level of income not permitting any savings, credit, burden led to indebtedness and poverty.

Institutional credit is a part of all credit which has been providing by financial inst financial institutions, like-Banks, MFIs, Governments, Corporation etc. ments, Corporation etc. Rural lnstitutional Credit is important in any effort to eliminate rural poverty in India and to provide employment opportunities. The development of opportunities. The development of the secondary and tertiary sectors which are an inescapable need for India 1s possible to a large extent through the availabilities of instítutional credit facilities. Therefore, the provision of credit must have a high priority in any scheme of rural agricultural development in India. Banking is one of the major sector of rural institutional credit in agriculture development in Indian econonmy. Institutional agencies, have made efforts to accelerate the process of capital formation in agricultural sector in particular, and other development processes in rural areas, in general. The Commercial bankS along with cooperative societies have been playing a pivotal role to increase their share of lending to the rural institutional credit in agricultural sector of the economy. The objective of institutional credit is to provide assistance to the target groups such as scheduled tribes, agriculture labourers, landless labourers, rural artisans an down trodden people, marginal and small lan farmers, etc. to enable them to improve their income. This is done by providing ncome. This is done by providing producti ctive assets to the identified families. Institutional credit is to identity the poorest st of the poor families in the rural agricultural areas and help them to rise above the ve the poverty line. It is also useful to acquire productive assets tnchnological skill by way of providing them help through various schemes technological Ip through various schemes arted by thhe Central and State Government, nationalized banks, cooperative started by the ernment, nationalized banks, cooperative hanks and voluntary agencies.
It may be stated that institutional credit is an important effort to eliminate rural poverty in India and to provide employment opportunities. The development of the secondary and tertiary sectors which are an inescapable need for rural institutional credit in agricultural development in India is possible to a large extent through the availabilities of institutional credit facilities. Therefore, the provisions of institutional credit have been accorded a high priority in any scheme of rural agricultural development in India.