Small agri debts on rise, personal loans fall

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In a clear indication of expansion of agriculture credit, the number of small loan accounts held with nationalised and cooperatives banks have significantly risen during last few years. According to latest monthly bulletin published by Reserve Bank of India, the share of number of small loan accounts in the agriculture credit sector increased from 35.5% in 2004 out of the total small accounts to 41.8% in 2006, an increase of more than 17%.

However during the same period, the share of small personal loan accounts went down from 41.8% to 35.5%. But the share of small borrowers in the banking sector continues to go down with their share of accounts dropping down from 96.4% in March 2001 to 90.3% in March 2006 and their share of the total loan volumes shrinking from 19.7% to 16.4% during the period.

The Survey of Small Borrowal Accounts, conducted by RBI recently, had covered 33.8% of the 7.71 crore small borrower accounts with credit limits of Rs 2 lakh. The survey also said that though the share of small borrowers continues to decline, the share of agriculture loans in the total small loans went up substantially from 33.4% to 41.2% an increase of 8.8 percentage points just over in two years. The share of the amount outstanding against agriculture loans however only went up from 29.1% to 31.1% during the period.

According to the survey, there was considerable disparity in the share of small borrowers across the states. The states with the highest share of small borrowers accounts were the poor and middle income states like Andhra Pradesh (94.2%), Bihar (95.9%), Jharkand (93.8%) and Tamil Nadu (94.5%) while that with the least share included rich states like Delhi (76.7%), Maharashtra (78.9%) Punjab (80.2%) and Haryana (82.7%). Similarly the share of small borrowers in total borrowings was the highest in least developed states like Bihar (56.9%), Assam (42.1%) and Orissa (41.9%) whereas it was the least in the developed states like Delhi (3.8%), Maharashtra (5.8%), and Gujarat (15%).

The worst impact was on industry where the share of small borrower lending declined marginally both in terms of number of accounts and amount outstanding to 3.7% and 4% respectively, the RBI bulletin has said. Amongst individual loans, the bias against women continues to increase.