Why are small farmers not able to get credit facilities from banks?

The other reason why banks avoid lending to small farmers is that they are unable to price the loan as per the profile of the farmer or the commodity, observed Arindom Datta, Asia Head, Sustainability Banking, Rabobank Group.

Why banks are not willing to provide loans to poor farmers?

Banks are not ready to provide to loans to small scale farmers because the banks tend to give loans on very high interest rates and this usually causes the farmers to land up in a debt trap. Also because of no education these farmers are not able to provide proper documentation and security (collateral) to the banks.

Why should farmers be allowed to take bank loans?

To encourage our farmers, banks in India offer loans to farmers to help them cultivate their land so they may earn a living out of it. They can also use these farming loans to purchase land and agricultural tools for the cultivation and harvesting of crops.

What are the problems of agricultural credit in India?

1. It is highly exploitative in character because of the inherent profit motive. 2. Since such credit is provided largely for unproductive purposes the rate of interest charged is very high.

Who regulate India’s farm credit?

Agriculture Credit to farmers in India – NABARD.

What are the reason why the banks might not be willing?

The banks might not be willing to lend certain borrowers due to the following reasons: (a) Banks require proper documents and collateral as security against loans. Some persons fail to meet these requirements. (b) The borrowers who have not repaid previous loans, the banks might not be willing to lend them further.

What are the problems of agricultural finance?

covariance of production, market, and price risks. absence of adequate instruments to manage risks. low levels of demand due to fragmentation and incipient development of value chains. lack of expertise of financial institutions in managing agricultural loan portfolios.

Why do small farmers need to take loans?

1. Only small farmers have to borrow money in order to carry on agriculture. 2. Large farmers have sufficient money to carry on agriculture.