Rural credit system in India: Institutional financing

Abstract

A significant amount of qualitative, quantitative, and structural changes has taken place in the institutional framework for the distribution of rural loans since the country gained its independence. The purpose of this article is to investigate the present rural credit system in India in order to determine the extent to which it has been able to satisfy the ever-increasing credit requirements of various rural borrowers. The policy of the government for rural credit has been one of the progressive institutionalizations that has been working toward the goal of providing rural borrowers with credit that is both prompt and appropriate. The conclusion of this article, which is based on data obtained from secondary sources, is that the primary area of concern in rural financial institutions in India is the accumulation of non-performing assets and delayed payments. The authors highly propose that remedial steps be implemented, such as focusing on monitoring and supervision of the end use of credit by the borrowers, rather than just disbursing credit. This is one of the recommendations that the writers make. There are a number of suggestions that have been presented in order to transform the rural financial institutions that are losing money into profitable organizations.