Agricultural sector occupies a key position in the Indian Economy. It provides employment to about 65 per cent of the working population in India. Nearly one-quarter of India’s national income originates from the agriculture sector, It is imperative that the problems of farmers are addressed with a sense of urgency. Agriculture being State subject, the bulk of public investment in agriculture takes place at the level of states and the central government supports the States as a catalyst. Indian agriculture is one of the strong hold of the India economy and it accounts for 18.5 percent of the gross domestic product (GDP). Capital requirement has increased manifold in agriculture due to increased use of purchased inputs like high yielding verities (HYVS) of seeds, fertilizers, irrigation, pesticides and machineries in agricultural production process. Moreover, agricultural production process is biological in nature and has larger transition period, resulting in a wide time gap between investment and income. In order to produce more, the farmers need to spend more on modern inputs which must be financial either out of saving or through borrowing. Hence an increased institutional credit flow is essential for faster agricultural growth but the rural financing market development is a complex process because agriculture is small, widely dispersed, weather dependent, partially commercialized and deprived of basic socio-economic and institutional infrastructure. Moreover agriculture has got a preferred status for financing through institutional sources in India, particularly during post bank nationalization era. With this background, the present study concentrates on the issues of direct institutional credit for agriculture and allied activities in this post liberalized era.