The World Bank on Wednesday approved one of its largest support packages to India with a $600 million loan and credit designed to transform access to financial services for Indian farmers.
The Strengthening Rural Credit Cooperatives Project supports the Government of India's programme to reform and revitalise the country's rural Credit Cooperative Banks (CCBs).
These include some 31 state cooperative banks, 367 district central cooperative banks and over 100,000 primary agricultural credit societies.
The goal is to transform them into efficient and commercially viable institutions responsive to the financial service needs of India's poorer farmers, including small and marginal farmers, the Bank said in a statement.
"Since the early 1990s, India has introduced impressive financial sector reforms that have resulted in increased competition, diversification, openness and depth.
"Yet, India's rural population still has limited access to finance from formal sources, relying instead on extortionate money lenders. The problem is particularly severe for small and marginal farmers, who are among the poorest of India's rural dwellers farming, respectively, less than one acre and between one and four acres of land." the Bank said.
The estimates suggest that some 87 per cent of marginal farmers and 70 per cent of small farmers have no access to credit from a formal financial institution.
"Better access to finance for India's rural poor is absolutely critical for higher rural growth, for reducing inequality, and ultimately, alleviating poverty," said Isabel Guerrero, World Bank Country Director for India.