Mention briefly the problems related to agricultural finance in India.

Question

Accepted Answer

Rural banking has expanded a great deal in India. But there are certain deficiencies which have led to the problems related to agricultural finance. These are:

1. Credit has been linked with collateral, because of which small and marginal farmers have not been the major beneficiaries of it.

2. The government has often been very lenient on the recovery of loans from the farmers, because of which there has been a large number of overdue instalments.

3. Most financial institutions have failed to develop a culture of thrift among the farming families.

4. Mobilisation of deposits has never been encouraged.