A Study on Institutional Credit Utilization Pattern Among Borrower Farmers of Regional Rural Bank

Abstract

RRBis engaged in providing credit facilities to the farmers for productive purposes. Study was found that about 74.5 per cent of farmers fully utilized the credit and only 25.5 per cent of farmers partially utilized the credit, utilization of credit for a scheduled productive purpose has a direct bearing on the repayment behavior of the borrowers and it is expected that the farmer will make judicious use of the credit. The crucial factor to judge the utilization pattern of the loan advanced is the transaction habit of the borrower. The credit is of course important, but more importance is its proper utilization. Utilization of credit is normally examined in the context of the purpose for which the credit has been advanced and the purpose for which it is actually used. In other words, the difference between these two indicates the extent of miss utilization or diversion of credit. It is quite difficult to collect information on the amount actually utilized. The present study has been attempted to study, the institutional credit utilization pattern among the borrower farmers of Regional Rural Bank in balaghat district of Madhya Pradesh. Present study focused on reference period from 2006-07 to 2009-10, with selected branches of RRB from the 10 block of study area, total 400 farmers were selected randomly from each block, former were selected on the basis of their proportion in the blocks of the district. The result revealed that more farmers were fully utilized the credit and some of them partially utilized the credit, behind this, main reasons associated with the misuse of credit are socia ceremonies, sub lending, other business, salting old debt and building of house.