Study on credit utilization pattern and repayment behaviour of agriculture loan borrowers of lead bank

Abstract

Credit is a valuable financial resource enabling individuals to acquire necessary goods and services with the commitment to repay the borrowed amount within an agreed-upon timeframe. In the realm of agriculture, where many farmers lack sufficient capital to invest in their operations, credit plays a vital role. Farmers often require short-term loans to fund crop cultivation and address immediate consumption needs, as well as medium-term loans for asset replacement and maintenance. The utilization of credit varies among borrowers depending on their specific circumstances. In designated districts, Lead Banks are expected to play a pivotal role in fostering banking and credit development. A significant portion (55.00 percent) of respondents exhibit a high level of credit utilization, with medium and low levels accounting for 22.50 percent each. The majority of loan recipients (84.17 percent) are categorized as Regulars, while 15.83 percent are labeled as Defaulters. The primary expenditures for loan funds among respondents include seed procurement (ranked first), followed by fertilizer purchases (second), and spending on herbicides, pesticides, and other chemicals (third). This indicates a preference for utilizing loan funds towards essential agricultural inputs. Among the identified patterns of credit utilization, the highest-ranked activities include frequent procurement of seeds (1st rank), followed by fertilizer purchases (2nd rank), and spending on herbicides, pesticides, and other chemicals (3rd rank).