Direct Institutional Credit to Agriculture and Allied Activities-Changing Scenario

L Krishna Veni and Ash Narayan Sah

The IUP Journal of Agricultural Economics, 2005, vol. II, issue 3, 63-71

Abstract: The Cooperative Banks, Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) are the important institutional sources to provide direct credit to agriculture and allied activities under short- and long-term credits. This study exposes that the growth rate of Cooperative Banks are relatively lower than the SCBs and RRBs in terms of short-term, long-term and total credits. The RRBs have recorded the highest growth rates in terms of credit-both at aggregate and disaggregate level since their inception in 1975-76 till 2001-02. It is also evident from the study that the SCBs have maintained the second position in terms of short-term, long-term credits and aggregate credits during the study period. Further, the Absolute Member Centrality (AMC) with respect to agricultural credit and the Relative Member Centrality (RMC) with respect to the Short-term Credit reveal a gradual decline in the share of Cooperative Banks' credit when SCBs and RRBs are taken as rivals during the study period. However, the declining trend in the share of Cooperative banks' credit is more visible since 1995-96 in terms of AMC and RMC. But the Relative Member Centrality (RMC*) with respect to the long-term credit indicates the fluctuating trend. This study emphasizes that the credit to agriculture and allied activities has been slowly moving from Cooperatives to SCBs and RRBs during the period of study. This study suggests that there is an immense need to improve the institutional credit especially the share of Cooperative Banks to save the farmers from financial difficulties. Above all, integration between the institutions and the state governments is required to attend the financial needs of the rural sector.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjag:v:02:y:2005:i:3:p:63-71

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