An Economic Analysis of Kisan Credit Cards – offering institutional finance in Karnataka
Dr. Jagannatha
Agriculture, Institutional Finance, Loans and Advances, Kisan Credit Cards
Availability of agricultural finance plays an important role in the agricultural development of the country and it is sure to act as a catalyst, which could modernize agriculture and spur agricultural growth. In Karnataka, a large number of institutional agencies are involved in the disbursement of credit to agriculture. Some of them are: Co-operative Banks including Primary Agriculture Credit Societies(PACS), District Central Co-operative Banks(DCCB), State Cooperative Banks and Agriculture and Rural Development Banks (ARDBs) – Previously known as Land Development Banks (LDBs), etc. these financial agencies lend money primarily for the purpose of meeting cultivation expenses, which are categorized as ‘Crop Loans’. The Rural Credit Survey (1991) by the Reserve Bank of India (RBI) had brought out that, despite a substantial growth in rural credit, a substantial portion of rural population is not covered by formal credit mechanism. Though banks have tried to extend agricultural credit and reduce the role of money lenders, the credit delivery system has been constrained by traditional systems and procedures and lengthy documentation. Poor collateral efficiency and lengthy legal systems have also played a crucial role in inhibiting agriculture credit. India adopted financial sector reforms in the early 1990s. The country witnessed the deregulation of the banking and financial sector and opening up of banking and financial industry, which has given freedom to banks to plan their business by themselves and price the loans as per market rates. Simultaneously, the changes that have been brought about in the regulatory norms have made the banks take a closer look at the asset quality. As a consequence, credit products for industrial and retail sectors have undergone rapid changes. Simultaneously, the rapid strides in the Information technology and adoption of some of the IT packages in the banking sector have ensured that the new products could be offered more efficiently by banks and accessed more easily by the urban and corporate customers. The IT has not much impacted the rural credit till recently. It is only after 2006, that rural branches of banks have been brought under core banking. The structure of cre
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Unique Paper ID: 151239

Publication Volume & Issue: Volume 7, Issue 5

Page(s): 217 - 222
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