Non-Recovery of Loans and Consequent Problem of Overdues of Agricultural Credit Provided by the Regional Rural Banks- a Comparative Study in Two Districts (Bhadrak and Keonjhar) in Odisha, India

Abstract

The institutional credit plays a very useful role in enhancing productivity, production and income in the farm sector.  For a predominantly rural and agrarian state like Odisha characterized by the presence of high incidence of poverty, unemployment, low productivity of agriculture,  low capital formation, inadequate irrigation facilities and uneconomic size of land  holdings, provision of  credit  in right quantity and in right time to the small, marginal and tenant farmers and  share croppers  in the state is of utmost importance for stimulating agricultural production, expanding employment, enhancing income and  poverty reduction. Several studies made earlier found that institutional credit made available to the farmers has produced significant positive impact on productivity, production, employment and income in agriculture sector. It is therefore expected that the borrowers will pay the loans along with interest within stipulated time period from the increased income without difficulty. However, such expectation of the policy makers and the lending institutions has not become fully true. Unless the growing delinquency in repayment of agricultural credit is corrected, the ability of financial institutions to recycle their funds would be highly restricted and ultimately it would severely restrict the growth of agricultural production. In view of this, it is worthwhile to study the problem of overdues in the two sample blocks of the two sample districts chosen for the study.

Here an attempt is made to measure the extent of overdues of agricultural credit granted by the regional rural banks to the farmers category wise and to identify the causes of such overdues in the study area and also to suggest the measures to overcome the problem of overdues.