Credit: The Critical Input in Farming – The Delivery Mechanism and Farmer Preferences

This paper has analysed the farmers’ behaviour with respect to credit intake and its repayment in a relatively backward area in the state of Kerala, viz. Wayanad, which is basically an agrarian economy. The study is based on the primary data collected from 135 sample respondents selected from nine panchayats. The study has revealed that about 60 per cent of the total respondent farmers had taken loan from various sources. Contrary to earlier reports, it was observed that most of the indebted farmers were depending on institutional sources and only about six per cent were depending on the non-institutional credit sources. Most of the farmers were availing credit for farming. Institution-wise commercial banks had supplied a major share of total credit flow, though Regional Rural Banks (RRB) had a better reach. About 40 per cent of farmers were depending on RRBs, followed by commercial banks (36%) and co-operatives (18%). The total borrowed capital by the respondents amounted to 130 lakh. Of this 45 per cent was credited by the commercial banks and 37 per cent by RRBs and the rest by Cooperatives (~ 18%). The average credit was around 1.55 lakh per respondent and 42908 per hectare of cropped area.