Funds like Rural Infrastructure Development Fund (RIDF) have been created out of priority sector lending shortfall of banks and established with NABARD with the underlying philosophy of lending to state governments to facilitate creation of enabling rural infrastructure to deepen the credit absorption capacity in rural areas. 11.
An analysis of sanctions from RIDF indicates that states with higher credit flow made higher demands for resources under the fund. On the contrary, states with lower credit flow were lagging in borrowing funds from RIDF. Thus, the least developed states which are already credit starved are getting lower share of funds from the RIDF.