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The Role of Commercial Banks in Providing Agricultural Credit (Factors Responsible for Overdue Position)-A Study with Reference to Tamil Naduin India

Selvaraj N and Palajikumar P

Agricultural sector occupies a key position in the Indian economy. It provides employment to about 65 per cent of the working population of India. Around one-quarter of India’s National income originates from the agricultural sector. It is imperative that the problems of farmers are addressed with a sense of urgency. Agriculture being a State subject, the bulk of public investment in agriculture takes place at the level of States and the Central Government supports the States as a catalyst. On the basis of difference in the socio-economic characteristics of the borrowers, linear discriminant analysis was used to classify the borrowers into defaulters and non-defaulters and again the defaulters were classified into willful defaulters and non-willful defaulters. The exact amount of non-performing assets and over dues percentage wise as well as absolute amount-wise are going on increasing. The bad and doubtful debts, funds blocked in suit-filed accounts and decreased debt and funds in the hands of willful defaulters are showing an upward trend. Most of the borrowers are non-willful borrowers in selected areas. Thus it could be concluded that the marginal farmers had performed well not only in the prudent investment they had made on the financial and physical assets, but also in the better and more efficient utilization of factors and inputs in the study area. Agricultural credit, particularly commercial bank credit, promoted agricultural inputs to meet their various day-to-day agricultural expenses. Besides it had also motivated them to adopt intensive methods of cultivation. It could also be inferred that the recovery performance, which was found to be better in the study area, had in its turn induced the effective functioning of the Lead Bank in the study area.