New Delhi: The stressing of lending money in rural areas throughout the country may subside.
A recent survey showed that cash debt from non-institutional credit institutions declined sharply to 34% in 2018 from 44% in 2012 and almost all countries showed this trend, showing an increase in economic formalization.
The recently released analysis of all debt & investment surveys (Aidis) by SBI shows that non-institutional credit share has declined significantly at Bihar, West Bengal, Rajasthan, Haryana and Gujarat.
It was said even in Haryana and Rajasthan who witnessed the loan neglect scheme, non-institutional credit shares declined contrary to popular perceptions.
“This can be explained with a significant increase in the penetration of the Kisan Credit Card (KCC) in both states.
Our estimates show the number of KCC cards has surged five times over a seven-year period of 2020.
For records, Haryana and Rajasthan did witness the average increase 9%, “Soumya Kanti Ghosh, economic adviser the head of the group in SBI said in his report.
He said recent reforms on agriculture could help in economic formalization.
“However, there are still fundamental reforms that are delayed in the Rabi Ruman.
This makes credit-credit loans equivalent to other segments,” he said.
The report said in accordance with the asset classification norms for agricultural progress, in the case of a farmer’s cash credit account, a farmer had to pay the whole extraordinary (principal along with interest) to find fresh loans from other banks from the cash credit business.
Where if the borrower has cleared interest payments, it will be eligible for an increase / update.
This will be the interest of farmers, if farmers are given updates / improvements, especially when banks are satisfied with farmers in terms of holding / payment capacity etc., the report is added.
Aidis Report for 2018 shows an increase in the average amount of debt among rural households and urban areas, with an average number of debt increases of 84% and amounted to 42% for rural and urban households for the 6-year period ending 2018.
Countries – The authorist trend shows that the average rural household debt is more than double in 18 states for the 6-year period ending 2018, while 7 countries witness the same for urban households.
Important, 5 countries, including Maharashtra, Rajasthan and Assam witnessed simultaneously in debt on average throughout the urban and rural households during this period, SBI report said.