Performance of Financial Institutions in Supply of Farm Credit in Nayagarh District of Odisha

Farm credit is the vital financial support for the economic sustenance and social stabilization in the field of agriculture. The present study immensely facilitates to have a thorough understanding about sources of credit delivery mechanism for farm business. So far as agricultural credit is concerned in Odisha, the extent of crop loan has been maximum in case of paddy with a lion share by the cooperatives (~66 per cent). Issue of term loan has been a challenge for the bankers as the majority of the farmers are marginal farmers and they lack security. An attempt is herein made to study performance of financial institutions in supply of agricultural credit which was designed through a random sample survey of hundred credit availed farmers in the diverse agriculture terrains of Nayagarh district and analyzed by descriptive statistics. In the study area, it is seen that forty four per cent of respondents met their credit needs from cooperatives followed by thirty nine per cent from commercial banks and rest of the respondents from the RRBs. None of the sample respondents relied on informal sources, not even for their consumptive needs. It is felt that although the financial institutions have increased the quantum of their lending still the supply of farm credit does not match with the credit demand. The average amount of credit borrowed by a respondent from commercial banks was Rs 46693 while Rs 43939 from Cooperatives and only Rs 21910 from RRBs. To enhance the agricultural productivity, there should be composite credit system that would include both cash credit and term loans that would result in institutional support for capital formation in agriculture. Besides, there is a need to assess the performance of RRBs in credit lending.