Institutional credit plays a crucial role in enhancing agricultural productivity in developing economies such as India, where a large proportion of farmers operate under financial constraints. Access to timely and affordable credit enables farmers to invest in quality inputs, adopt improved technologies, and manage production risks more effectively. This study provides a detailed theoretical analysis supported by secondary data trends to examine the impact of institutional credit on agricultural productivity. The analysis indicates a positive association between increased credit flow and improvements in productivity indicators such as yield, fertilizer consumption, and irrigation coverage (Reddy et al., 2017; FAO, 2021; NABARD, 2022; Government of India, 2023). Despite this progress, challenges such as unequal access, regional disparities, and procedural inefficiencies continue to limit the effectiveness of institutional credit. The study concludes that strengthening rural financial institutions and improving credit delivery systems are essential for sustainable agricultural development.