Agricultural Credit in India – Innovations in Design and Delivery of Products and Services
The concept of bringing farmers together in a voluntary group was initiated in 1982 through the Farmers’ Club Programme. This institutional innovation has received a renewed focus from 2007–08 onwards. Nevertheless, access to farm credit sector has not been easy and adequate. In this paper, innovative approaches to improve agricultural credit flow have been captured from the secondary sources and analysed using compound annual growth rate and descriptive analytical tools. The share of private moneylenders has decreased with the institutional agencies making inroads into the rural scene. The structure of the sources of credit has witnessed a clear shift wherein the scheduled commercial banks and RRBs have emerged as the major sources of direct and indirect institutional credit to agriculture in recent years. The SHG-bank linkage programme, Kisan Credit Card, Farmers Clubs, Joint Liability Groups and Interest Subvention Scheme have been promoted to supplement rural credit delivery effectively and have also shown a significantly increasing growth rates over the years. In addition, there are a number of other small innovations that have taken place across the spectrum of agricultural credit markets. All these would eventually contribute to making sustainable access to agricultural finance leading towards a path for prosperity of farming community, especially the small and vulnerable farm households.
Institutional Credit to Agriculture Sector in India: Status, Performance and Determinants
The institutional credit has been conceived to play a pivotal role in the agricultural development of India. A large number of institutional agencies are involved in the disbursement of credit to agriculture. However, the persistence of money lenders in the rural credit market is still a major concern. In this backdrop, the present study has examined the performance of agricultural credit flow and has identified the determinants of increased use of institutional credit at the farm household level in India. The study based on the secondary data compiled from several sources, has revealed that the institutional credit to agriculture in real terms has increased tremendously during the past four decades. The structure of credit outlets has witnessed a significant change and commercial banks have emerged as the major source of institutional credit in recent years. But, the declining share of investment credit in the total credit may constrain the sustainable agricultural growth. The quantum of institutional credit availed by the farming households is affected by a number of socio-demographic factors which include education, farm size, family size, caste, gender, occupation of household, etc. The study has suggested simplification of the procedure for a better access to agricultural credit of smallholders and less-educated/illiterate farmers.
Regulation of Informal Financial Institutions: A Study of Money Lenders in Kerala
* The author was Assistant Adviser in the Department of Economic Analysis and Policy, Reserve Bank of India, Regional Office, Kochi at the time of the preparation of this paper. Unfortunately, Dr. Jeromi passed away in April 2007. He had wished to express his indebtedness to Dr. K. A. Menon for his valuable suggestions and comments on an earlier draft of the paper and gratefulness to Dr. S. S. S. Satchidananda for his initial involvement in the study. He also wished to acknowledge prompt assistance received from Abraham David and K. Premavathy. P. D. Jeromi*