Prof Vijay Shankar Vyas, under whose chairmanship an advisory committee on flow of credit to agriculture had submitted its report to the Reserve Bank of India (RBI) few years ago, feels that the rural agricultural credit needs improvements in certain areas. Currently, Vyas is the chairman of the agricultural advisory committee of the Bank of Baroda.
Speaking to FE, he said that though the rural credit was doing well quantitatively, it was yet to be improved in the terms of quality.
Elaborating it, Vyas says that rural credit has already crossed the mark of 30% growth within a time period of two years, which is a year ahead of the target as projected by the government.
However, there was no progress on the front of providing loans to the small and marginal farmers despite the issuance of guidelines by the union ministry of finance and the RBI.
Vyas has advised that the transaction costs of the banks must be kept lower.
Referring to the existing schemes like banking facilitator and business correspondent, Vyas said that these schemes can be asked to do most of the preliminary works for the banks while lending to the farmers.
All the remaining jobs can be easily handled by the branches of the banks located in those areas, he said.
On the farmers suicides taking place in states like Andhra Pradesh and Maharashtra, Vyas said that a medium term programme has already been announced by the Prime Minister and if it was implemented, the initial problems relating to the issue can easily be solved.
Vyas is concerned over the fact that in spite of RBI?s saying no to the need of collaterals for small loans, it was not happening in practice.Some of the innovative loans, advised by the RBI and which include consumer loan, was not happening.