abhishreshthaa
Abhijeet S
The credit needs of the agricultural sector in the next few years are estimated to rise to Rs.50,000 to Rs.60,000 crores. To meet the needs is an enormous task, and responsibility will have to be borne by co-operatives and commercial banks. As resources available to commercial banks in the agricultural sector will naturally be limited, it is important that every commercial bank attempts to make optimum use of its limited resources in this sector.
In the field of financing of agriculture, the problem is not merely quantitative but also of coverage vis-à-vis the organization and the personnel available to the nationalized banks. The majority of the rural population consists of small farmers. Further, there are 5,50,000 villages spread throughout the country.
To reach all of them with only about 47,000 banking offices is, no doubt, a stupendous task. Even with the completion of branch extension programmes of the commercial banks now in hand or those which may be undertaken during the next 5 to 10 years, commercial bank may not be in a position to cover many of the villages.
Moreover in recent years, the rural branches of commercial banks in general and branches of RRB in particular, have been under severe financial strain on account of higher transaction cost involved in handling of large number of small size loan accounts and somewhat lower interest income as a result of concessional rate of interest on small size loans.
The lower proportion of current deposits in total deposits of rural branches has also placed them at a disadvantage with regards to cost of resources. Finally, the presence of overdues, particularly after the implementation of Agricultural and Rural Credit Debt Relief Schemes, 1990 has further adversely affected the viability of rural branches of commercial banks.
Under these conditions, if the development of agriculture is not to suffer for want of credit and if there has to be some improvement in the lot of innumerable small farmers, new dimensions will have to be given to schemes of financing agriculture.
In the field of financing of agriculture, the problem is not merely quantitative but also of coverage vis-à-vis the organization and the personnel available to the nationalized banks. The majority of the rural population consists of small farmers. Further, there are 5,50,000 villages spread throughout the country.
To reach all of them with only about 47,000 banking offices is, no doubt, a stupendous task. Even with the completion of branch extension programmes of the commercial banks now in hand or those which may be undertaken during the next 5 to 10 years, commercial bank may not be in a position to cover many of the villages.
Moreover in recent years, the rural branches of commercial banks in general and branches of RRB in particular, have been under severe financial strain on account of higher transaction cost involved in handling of large number of small size loan accounts and somewhat lower interest income as a result of concessional rate of interest on small size loans.
The lower proportion of current deposits in total deposits of rural branches has also placed them at a disadvantage with regards to cost of resources. Finally, the presence of overdues, particularly after the implementation of Agricultural and Rural Credit Debt Relief Schemes, 1990 has further adversely affected the viability of rural branches of commercial banks.
Under these conditions, if the development of agriculture is not to suffer for want of credit and if there has to be some improvement in the lot of innumerable small farmers, new dimensions will have to be given to schemes of financing agriculture.