Finance is the crucial instrument to boost the income earning capacity of subsistence farmers. The aim of the present research was to ascertain the impact of institutional credit on the agricultural income of the sample farmers. The study was based on the primary data collected from 150 farmers through purposive random sampling. Regression analysis was done to obtain the results. Ordinary Least Square (OLS) method was applied to generate the results. Results of this study revealed that there exists a positive and statistically significant relationship between institutional credit and agricultural income of the farmers. The other variables such as source of credit, ownership of farming machinery, access to market and family labour also have a positive and statistically significant relationship with the dependent variable except the age of the farmer. Therefore it is recommended that there is a strong need to enhance easy and timely accessibility of institutional credit for all growers so that they could increase their agricultural productivity that will further lead to increase their agricultural income. It is neccessary that government should practice the credit policy to protect the interest of small and medium farmers by providing them loans on easy terms and to facilitate them against any natural hazards and disaster.