For a long time, the major source of rural credit was private moneylenders who exploited poor farmers in a number of ways. This system was highly inadequate, expensive and exploitative in nature.Since independence, multi-agency system consisting of cooperatives, commercial banks and regional rural banks, has been adopted to provide cheaper and adequate credit to farmers.
The major policy of this system of credit is progressive institutionalisation of rural credit to weaker sections and less developed regions.