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The institutional credit has been devised to play a crucial role in the rural development of India. The public policy on rural credit in India has been focused on institutionalization as a means of providing cheaper credit to farmers. However, the persistence of moneylenders in the rural credit market is still a major concern. This paper is based on a primary field survey and deal with the nature and extent of peasant class differentiation and the nature of access of rural households to rural finance alternatives in West Bengal. Accessibility and distribution of credit will be our major concerns of investigation. We shall try to also explore the role of institutional credit in the process of differentiation. This helps us to understand whether there exists any biased socio-economic framework to access rural finance facilities. In an attempt to study and analyse the ground situation, this study undertook a detailed analysis of all relevant variables to examine the structure of investment and production taking place in West Bengal. The other objective of this paper is to enquire whether there exists any contradiction in objective and principle, the practice of Microfinance run by Government or private or panchayat or cooperative leading to creation of obstacles in the realization of rural development goals. The sample households collected from relatively advanced and backward areas are distributed according to economic classes defined by Patnaik (1976) side by side with the standard acreage groupings. Subsequently, we explored the degree of association between the two criteria and found that the two criteria of households are associated with each other but they are not identical. The analysis in this paper would help us to know first of all, to highlight the agrarian relation and peasant class differentiation in West Bengal on a sample of diversely developed regions. Second, to what extent households are dependent on private sources of credit vis-à-vis the institutional sources, Third, whether credit absorption has something to do with the intensity of class differentiation. [ABSTRACT FROM AUTHOR]

Institutional banking system in India is strengthened through nationalization of banks and many innovative initiatives such as Self Help Group (SHG) - Bank Linkage Programme, Kisan Credit Card (KCC) Scheme and Financial Inclusion. However, many studies conducted in Tamil Nadu, have pointed out several issues such as inadequacy of crop loan amount owing to lower scale of finance and minimum focus on long term agricultural advances that are hampering the banking services directed towards agricultural development. In order to address these issues, an attempt was made in the present study to assess the causes for and consequences of credit gap in the disbursement of short term / crop loan to the sample farm households; Results of the study indicated that the credit gap I (Credit requirement - Scale of finance) and Credit Gap-II (Credit Requirement - Credit Sanctioned) per ha of paddy were lesser in ST borrower farms, which indicted that though the scale of finance for paddy has been fixed at higher level, i.e., well above the credit requirement, the actual credit disbursement was far lesser than the credit requirement. The working capital, in general, enhances the productivity of the crop and the external financial assistance could help farmers in purchasing the necessary farm inputs in adequate quantities and thereby the farm productivity could be improved. But the scale finance itself was far lesser than the working capital required for cultivating paddy in all categories of farms and this resulted in the wider credit gaps in the different farm categories. [ABSTRACT FROM AUTHOR]

Agriculture sector plays a strategic role in the process of economic development. Agriculture is the backbone of the Indian economy because agriculture is the largest and oldest economic activity in the world which provides the basic intergradient to mankind and raw material for industrialization. For the development of agriculture, modernization of agriculture is very important. In the modernization of agriculture credit play an important role. As the World Bank describes, "Credit is often a key element in the modernization of agriculture". In India, agriculture loans are mostly provided by co-operative banks, commercial banks, regional rural banks etc. Among these co-operative banks play an important role in the rural credit. So an attempt has been made in this paper to study the role and financial position of district central co-operative banks in Haryana. [ABSTRACT FROM AUTHOR]

This article examines the question, what makes a rural household a preferred choice for formal lenders? A sample selected ordered probit model is developed to address this question. While the selection equation models the determinants of access to credit, an ordered probit model is used to determine the factors affecting the choice of credit sources in hierarchical order. Using household data from six Indian states, this study finds corroborative evidence that relatively resource-rich households, even while staying at distant locations, enjoy greater access to formal creditors. It also identifies a new factor, i.e., interlinked credit, as a significant variable influencing access to formal credit. [ABSTRACT FROM AUTHOR]

Wealth in rural India is growing, which was not the case 7-10 years back. Financially remunerative farming and the real estate boom of the past decade has put many farmers in the league of at least rupee millionaires making them an attractive proposition for bankers. Rural banking in India plays a vital role in development of rural economy. The commercial banks, Regional Rural Banks are found in rural pockets of our country to help the rural people for their all round development. Rural banking is rightly called as an engine of rural growth. Therefore, there is need to develop a profitable model of rural banking. The overall position of Rural Banking in India is not quite encouraging. The banker offers almost everything from a plain savings product, to loans for businesses and wealth management advice to the rural population and creating new strategies to woo rural customers with deeper pockets for whom a State Bank of India was almost synonymous to banking as Life Insurance Corporation of India was for insurance. But do the villagers trust private banks? How does one break the strong affinity towards public sector banks? Since the rural banking is supposed to be a bank for poor people, it's presence in all the states of country especially in underdeveloped States can make things better. The government seems to be instrumental in spreading the branches of regional and rural banks at grass root level to provide such banking service to the really needy rural people. In this context, the purpose of this paper is to assess the level of banking penetration in rural areas and villages in the different states focusing on present position, emerging trends, and the challenges ahead in rural banking. The present paper is a qualitative analysis and secondary data was collected from various sources including journals, magzines, books and the internet. [ABSTRACT FROM AUTHOR]

Access to finance by the poor is a prerequisite for poverty reduction and sustainable economic development. Importance of financial inclusion arises from the problem of financial exclusion of nearly 3 billion people from the formal financial services across the world. The study has critically analyzed the issues and challenges involved in financial inclusion for inclusive growth and has also successfully attempted to highlight the factors that can aid in achieving financial inclusion for inclusive growth in India, particularly in the context of the feared global slowdown and negative impact of high inflation on the Indian economy. The paper has also suggested some policy choices for successful implementation of the policy of financial inclusion for sustainable growth of Indian economy. The paper is a significant attempt to understand and emphasize the importance of the topic. [ABSTRACT FROM AUTHOR]

The issue of the implication of interlinkage of factor markets on the allocative efficiency level of the farm households deserves a special attention in the light of the controversy among two distinct schools of thought: the Neoclassical and the Marxist. An attempt has been made in the paper to measure allocative and cost efficiencies of the interlinked holding vis-à-vis a comparable group of non-interlinked holding in the framework of Data Envelopment Analysis. Empirical evidence establishes the Neo-classical proposition that interlinked factor markets can be considered as one of the "efficiency improving institutional change" in rural agrarian economy. [ABSTRACT FROM AUTHOR]

The rural credit markets in poor economies have presented many puzzling features. Traditionally, indigenous credit institutions relied primarily on the private moneylenders resulting in evolution of various indigenous credit systems. However, over past hundred and fifty years and more, rural lenders and corresponding credit institutions have been viewed suspiciously. Hence [benevolent] government intervention was considered particularly desirable for the benefit of the poor and disadvantaged. However, the few studies that did look at the question of cost of private rural credit did discover the disturbing and rather paradoxical phenomenon of rise in cost of private credit with increasing presence of institutional finance. This paper takes a close look at the rupture of indigenous institutions, often through benevolent government intervention, and its consequences for the economy and society in general and for the poor and disadvantaged in particular, through study of the particular case of rural credit. It draws upon the author's in-depth study of credit market in a village in India. The credit market is highly fragmented and "regressive" in nature. Some of traditional credit systems continue to exist with practically no change. There are implicit subjective costs as well as subjective benefits to the lending business; and mostly subjective costs arising out of act of borrowing (in addition to explicit objective costs). There is substantial perceived increase in the risk of default on private (source) loans, after great surge in institutional rural finance. There is also a political economy dimension to this phenomenon. Introduction of institutional finance, benefiting mostly the better-off and powerful sections of the village society, itself is governed by local political economy. The higher cost of institutional credit faced by the poor is not a matter simply of corruption, but also of alliances between the local elite and the functionaries of financial institutions. This nexus is not incidental. In addition, the same phenomenon further accentuates power relation between the same powerful (usually) lenders, and now residual, mostly poor borrowers. The study calls for a fresh look at the role of village lenders in the rural economy. First, it facilitates a more open approach to understanding the functioning of village lending systems in history afresh with an unprejudiced eye which can help in devising and developing better functioning rural credit institutions today; second, it calls for giving due recognition to the inherent strengths of the village lenders; third, it implies consideration of a much greater role for village lenders in the rural economy. Formal institutions and village lenders can be complementary rather than competitors as perceived till now. It is important to realize that there are substantial transactions costs involved in lending by formal institutions. Leaving actual lending mostly to the village lenders, and confining the public institutions to basically a refinance function will help in all round cost reductions. [ABSTRACT FROM AUTHOR]

The long-term neglect of agriculture as reflected in the falling real investment, rising input costs and inadequately remunerative prices lead to fall in agricultural production vis-à-vis requirements. Despite spectacular expansion of bank branch network since 1969, a substantial proportion of rural households still remain outside the coverage of the formal banking system. Cumulatively, the sharply declining farm income is leading to suicides by farmers. Amidst the crisis, what remained as eternal is farming community's desperate search for fresh credit for the ensuing season. The current agrarian crisis thus, calls for radical policy alternatives. Against this backdrop, this article examines the need for effective delivery of credit at an affordable cost to the vast sections of disadvantaged and low-income groups who tend to be excluded from the formal banking channel and argues for constituting a new pan India bank for rural credit by transferring the existing rural branches of Public Sector Banks (PSBs) and Regional Rural Banks (RRBs) to it to serve the needs of rural population with a totally new culture. For, such State intervention in the form of 'capitalist guided market economy' alone can ensure 'inclusive growth'. [ABSTRACT FROM AUTHOR]

The significance and efficiency of agricultural credit in Karnataka's agricultural economy was analyzed by using secondary data for 1984-85 to 1998-99. The incremental capital-output ratio had shown positive trend of efficiency of agricultural credit. The analysis of the Marginal Value Product of credit along with other factors using the principal component regression showed that the credit significantly contributed to the agricultural State Domestic Product. Even though the efficiency of agricultural credit in the state from the point of its contribution to the agricultural State Domestic Product was found to be promising, its allocation had not reached the optimum level. Financing institutions should increase their agricultural lending without significant increment in the cost of credit but curbing down the transaction costs and raising the level of banking efficiency. [ABSTRACT FROM AUTHOR]

This study, based on a primary field survey in rural West Bengal, analyses the terms and conditions of the differentiated structure of rural credit with the advent of capitalist agriculture within the interventionist state. The sample households are classified according to the economic classes of Patnaik as well as the standard acreage criterion. The possibility of interlinkage between credit and all other structures is remote. The avenge rate of interest is inversely related to ascending class status. There is a systematic association between rate of interest and the value of collateral on the one hand, and marketability of collateral and interest rates on the other. [ABSTRACT FROM AUTHOR]

Analyzes the role of commercial banks, primary credit societies and primary cooperative agricultural and rural development banks in the rural development of Kerala, India. Background of the extent of credit requirements, credit disbursed and the prevailing credit gap; Insight into the challenges faced by borrowers in obtaining loans; Problems related to utilization of loan, repayment performance and the impact of credit on borrower's income, employment, asset positions and standard of living.

The literature on the rural credit market in India (and elsewhere) has generally assumed that peasant farm households are rationed in their access to subsidized formal credit. Because of a lack of infrastructure and poor access to institutional credit, such farmers are exploited by means of an interlocked market connecting informal credit to the sale of paddy. The resulting gap, between the sale by a borrower of paddy at a predetermined low price, and the price of this commodity the open market, constitutes the amount of what is termed a distress sale. The latter is itself influenced by the bargaining capacity (or lack thereof) of the peasant farmer who borrows on the informal market. Also of importance in determining whether or not a cultivator is compelled to resort to the informal credit market and thus into an interlocked arrangement-is the need for additional liquidity to meet production costs and/or household consumption, as well as the monopsony nature of the paddy market. Data from Kalahandi district in Orissa suggest that access to formal credit is limited in rural areas although there exists a high demand for it, that a high degree of credit rationing by the formal lender occurs, and that poor implementation by the state of minimum support price policy all contribute to the need for informal loans and its attendant interlinkage. [ABSTRACT FROM AUTHOR]

Financial liberalization is a key component of programmes of orthodox structural adjustment. Financial reforms include, among other things, the removal of controls on interest rates and the abolition of programmes of directed credit. Here the effect of financial sector reform on rural banking and rural credit transactions in India is examined, with particular reference to landless labour households. First, the trends in selected indicators of rural banking at the national level over the last 30 years are reviewed. Secondly, longitudinal data for a village in Tamil Nadu are used to examine changes in patterns of indebtedness and credit transactions among landless labour households. It is argued that the exploitation of landless labour households in the credit market has intensified with the introduction offinancial reforms. Lastly, the policy envisaged as an alternative to the formal credit sector in the countryside - the establishment of micro-credit projects - is examined critically. [ABSTRACT FROM AUTHOR]

An analysis of the ICRISAT data from three Indian villages raises concern about the extent of rationing mechanism inhibiting the spread of formal credit in rural India where a significant proportion of households do not have any outstanding loan or borrow from the informal sector only. A limited-dependent econometric analysis of the factors jointly determining household sectoral choice and effective demand for informal loan conditional on whether a formal loan is available suggests that compared to formal loan easy and adequate access and prompt recovery are significant determinants of the popularity and viability of informal rural credit among sample households; also some households substitute labour income to ease the extent of credit. Thus, rationing of the formal credit is not the only factor inhibiting the spread of formal credit in the study villages. [ABSTRACT FROM AUTHOR]

The article presents information on the Maharashtra Rural Credit Programme (MRCP), which was implemented to attain sustainable improvement in the delivery of credit services to the rural poor in India. The Government of Maharashtra, India, and the National Bank for Agriculture and Rural Development have been implementing the MRCP since 1994. It is stated that the ultimate goal of MRCP is to alleviate poverty by providing improved financial services to the rural poor. The project involves development of financial services to assist commercial banks for providing credit to the poor, and to create funds for lending through savings mobilization.

This study presents estimates of borrowing functions based on rural household data from India. It improves upon existing work in three key areas. First, it is shown that existing studies have used an inappropriate definition of the demand for funds, which when rectified produces quite different results. Second, the interaction between agricultural technical change and the rural finance market is examined and it is shown that farmers in a position to benefit from technical change tend both to borrow more and to face lower interest rates. Third, it is shown that farm-specific interest rates, when introduced endogenously, are quite sensitive to personal and locational characteristics and are significant determinants of borrowing. [ABSTRACT FROM AUTHOR]

Examines the nature of inter-state variations in the use and cost of rural credit in India. Economic activity in different states; Level of economic development; System of land tenure; Cooperative credit societies.