CASE 10

Rural Financing Strategy

The demand for rural credit is estimated at Rs. 143,000 crore. For banks, the challenge is not in disbursement but in loan recoveries. Some of the reasons for poor loan recoveries are:

  • Farmers are risk averse and do not shift from established farming practices.
  • The agri services provided by government and private agencies are intermittent and less intensive.
  • The agri input sellers are only sales oriented. The dealers are prone to give incorrect information that sometimes ruins the crop.
  • At mandi, the farmer is exploited. He is not able to realise the profitable price. Unfair practices, shabby treatment and inconvenience adversely affect the psychology of a farmer.
  • Farmers are unable to invest in capital assets. ...

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