The outreach and access to total bank credit has undoubtedly been improved by bank nationalisation. However, the delivery of agricultural credit remains wrought with weaknesses, negating equitable and efficient distribution, thereby affecting the viability and sustainability of formal institutions. Scarcity of credit, higher transaction costs, shortage of staff and dominance of noninstitutional credit markets have necessitated follow-up services for enhancing the productive utilisation of credit and repayment performance through group-lending schemes. Microfinance delivery models striving for the participation of voluntary agencies, women activists, thrift and credit societies, Self-Help Groups (SHG) and SHG Federations in backward regions, have come into the limelight as the panacea of these problems. Besides reviewing the trend, status and issues of agricultural credit in India, this paper appraises the implementation and issues of sustainability of the government-run micro-finance model towards increasing universal access, ensuring procedural efficiency and cost effectiveness in financing credit to the rural poor.