What are the major-institutional sources of rural credit?

All the less developing countries are facing capital shortage problem. In Pakistan, our farmers conditions is also very poor and he is unable to use the modern technology. So credit is playing important role for the development of rural areas.

Sources of Rural Credit :-
Following are the main sources of agricultural credit :

1. Village Shopkeeper and Middleman :-
In our villages shopkeepers commission agents in the market provide loan to our farmers. They charge very high rate of interest. There terms and conditions are also very tied.

2. Landlords :-
In Pakistan there is a landlord system the tenants borrow the money from the lords and they receive heavy charges. They also misuse them during the selection of the Assembly members. So many problems take place in the way of democracy.

3. Friends Relatives :-
Friends and relatives also provide loan in the rainy days. It has been estimated that 25% of the total demand of the farmer is met by these above three sources.

4. Tactical Loans :-
These were provided by the government to purchase machinery, cattle's, seeds, rebuilding of houses destroyed by the floods. These were issued by the revenue department. These are playable within one to 8 years. But in fact the practice of these loans has been finished.

5. Commercial Banks :-
In the early years independent commercial banks ignored the agriculture sector. But after nationalization now proper attention is paid to the agriculture. Now the 45% of the total rural credit is issued by the commercial banks. Even commercial banks are providing interest free loans to the small farmers for the improvement of agricultural output.

6. State Bank :-
The state bank does not directly finance the agriculture. It provides loan at concessional rates for this sector to the cooperative banks and ADBP.

7. National Bank Role :-
In 1972 national bank of Pakistan started first time a surprised credit scheme for the farmers and later it was adopted by all the commercial banks. Now various other schemes have been introduced for the farmers.

8. National Credit Consultative Council :-
The government of Pakistan established the national credit consultative council in 1972 to review the overall credit in the economy. It makes recommendations to the government with regard to the credit expansion among various sections.

9. Agricultural Credit Advisory Committee :-
It was also set up 1972 its objective was to watch the credit provided to this sector. It had also improved the credit availability for the agriculture sector.

10. Cooperative Banks :-
It is the oldest source of agriculture credit. The loan is supplied to the framers through the credit societies. These societies provide credit to the small farmers for the purchase of agricultural inputs such as seeds and fertilizers. The federal cooperative was also established in 1976 with the provincial cooperative banks. This source provided 15% of the total rural credit which is issued in Pakistan.

11. Agricultural Development Bank of Pakistan :-
The ADBP provides short term, medium term and long term loans to the agriculture sector. loans are granted in cash and in kind. It provides loan for the purchase of inputs, machinery, and for cottage industry in the rural areas. It is specialized institution for the rural credit.