Agricultural development rural credit and problems of its recovery

The objective of the present study is to explore the nature and character of credit in the agricultural sector and major implications of defaulter and overdues.

Introduction of seed-fertilizer technology involving intensive application of modern inputs has given rise to increasing demand for credit. Credit is to be considered as viable, versatile and easily accessible. The credit requirements have been rising very fast to meet the short and long term needs of farming community, replacing money lender. The distribution of institutional credit is not only uneven among different size groups of cultivators and regions of the country but also results in a high degree of default and overdues. It has serious implications in regard to flow of funds, liquidity, risk that confronts the lenders and borrowers in the two segments of the Indian money market. The incidence of defaulting is higher in the case of large farmers compared to small. Overdue outstanding of Guntur District Central Cooperative Bank Ltd., have been steadily rising over three decades. Its recovery performances have been improving by the rehabilitation pro grammes initiated from above. The empirical study proves that the incidence of defaulters is more among growers of food crops than non-food crops. Agrarian reforms and crop and market insurance, if properly conceived and enforced can promote the incomes of the rural weak and enable them to repay loans.