INTRODUCTION
India is a nation of villages. Almost 742 million people constituting 72.2 % of
India‟s population (2001 Census) live in the countryside. The rural segment; apart from
the demographic density represents true India, which is comprised of the people
predominantly depending on the agriculture for their livelihood.
Naturally, this sector evokes great interest and concern of the planners under the
successive governments regardless of their political affiliation. Agricultural growth and
upliftment of the rural community have remained in focus of planning in India since the
first five-year plan attracting prioritized attention, involving policy initiatives and
undertaking rural development programmes.
Rapid pace of industrialization, urbanization and globalization in the WAKE of new
world order under WTO changed the complexion of the very concept of rural
development, for the rural canvas has become still more complex as REFLECTED by change
in demography, consumption pattern, types and the species of the crops grown.
Suddenly, the focus of farming has shifted from its traditional role of being a
labour oriented agrarian society to a segment in need of higher capital INVESTMENT for
pushing through the and improved technology machinery, equipment and tools in
agricultural. Transition of agricultural from a labour intensive segment to a capital
intensive one increased the need for credit to the farming sector. Credit has become the
soul of rural development as REDDY C.R. put it: “Among the several inputs of farm sector
the one input that can make the FARMERS use other inputs is the „Capital‟ namely
„Credit‟.” (Reddy C.R., 1993)
Inadequacy of financial resources to defray such expenses the Indian farming
community, had to explore the loans or credit facilities from the sources, which were
easily available and accessible. Way back in 1931, the Central Banking “Enquiry
Committee” estimated Rs. 300-400 crores as the lower limit of the farmers‟ need for
short term and intermediate credit in the whole of the British India, and expressed the