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. Agricultural credit clearly started to grow after bank nationalization, and it has been growing continuously since then. With all the concerns and skepticism expressed, the difficult and continuous changes in institutional credit have indeed borne fruit. Over the years there has been a significant increase in the access of rural cultivators to institutional credit and, simultaneously, the role of informal agencies, including money lenders, as source of credit has declined. The age old problem of rural credit has been the excessive reliance of borrowers on money lenders and other informal sources that have entailed usurious interest rates and exploitation. It was the nationalization of banks in 1969 and subsequent spread of rural bank in 1969 and subsequent spread of rural bank branches that has really made a difference in reducing, finally the share of money lenders in agricultural credit. Due to regional imbalances in India, Northeastern states are suffering from proper mechanism of credit to agriculture and allied activities. With this backdrop the present paper attempts to analyse the trend and pattern and the issues related to the direct institutional credit to agriculture and allied activities in the North eastern states.