Strategies to Resurrect Rural Credit Delivery System in India

Deepak Shah

MPRA Paper from University Library of Munich, Germany

Abstract: The RFIs operating in Maharashtra have not only shown slower growth in their loan advances and other operational indicators during the period between 1991 and 2000 but also poor performance thereafter. The credit cooperatives in particular have shown significantly high NPAs in Maharashtra. In Maharashtra, Vidarbha region not only shows very low magnitudes of credit flow through cooperatives but also decline in share of loan for cotton crop vis-à-vis other field crops. One of the adverse effects of slowing down in loan advances for cotton crop is seen on the farming community of this region where a significant number of cotton growers have committed suicide either due to lack of loan advances to them or because of pressure created by various financial institutions in terms of recovery of loan despite crop failure. With a view to revive the agricultural credit delivery system, there is need to tackle twin problems facing the system, viz., growing NPAs with falling CD ratios and poor recovery performance of RFIs, aside from adopting innovative approaches like linking of SHGs and NGOs with mainstream financial institutions. In brief, the focus of rural credit delivery system should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.

Keywords: Rural; Credit; Delivery; India (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2007-07-09
New Economics Papers: this item is included in nep-cwa and nep-mfd
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