Commercial Bank Credit to Agriculture in India

The present study relates to all the Scheduled Commercial Banks operating in India using the post nationalization period time series data from the year 1970-71 onwards.The results suggested that in respect of agricultural and non-agricultural credit Scheduled Commercial Banks have reverse trend with each other.Further,the result indicates that inter-state disparities in flow of bank credit to agriculture reduced in pre-liberalization period and the disparities increased in post-liberalization period.Correlation results showed that higher loan recovery performance is associated with higher flow of credit per hectare which support the hypothesis that poor loan recovery inhibits credit widening and deepening.Commercial banks have been experiencing high volume of non-performing assets (NPAs). The policy suggested to give up the conventional security oriented approach, dispense of routine procedure of obtaining third party guarantee,introducing deposit schemes that suit the farmers. Further,there is a dire need for raising investment credit along with production credit such that term loan should be in the range of two-third to three-fourth of the total agricultural loan.