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Abstract
This study examines the environment of the association between prescribed agricultural credit and agricultural GDP in India, specifically the role of the former in supporting agricultural growth, by adequate finance is a universal remedy, the presently under right of way sector, Govt. and RBI are guiding to commercial banks channelizing more and more funds to farmers at easy conditions. The study uses a mediation analysis support to plan the pathways through which institutional credit relates to agricultural GDP relying on a control function approach to undertake the problem of endogeneity. There is a sigh of relief for the rural poor from the dreaded clutches of money lenders. The Recent data reveals that 66% households in rural area are still away from getting banking services and facilities at cheaper cost. The Commercial banks are extending financial inclusion in rural areas directly beating poverty alleviation in India. Though financing of agriculture by commercial banks has proved its value in changing the economy of farmers by raising their returns so far the system is not free from some problems. This study is a challenge to find the problems faced by farmers and propose some framework changes about problems and sound financing system for the future.