Ability to Repay Loans to the Banks in Bankura District of West Bengal

This paper is to investigate the determinants of the borrower's ability to repay loans to the banks in the district of Bankura in West Bengal. For this purpose we have collected the primary data from 400 sample borrowers who have taken loans from Commercial Banks, Regional Rural Banks and Co-operative banks. We employed the logit models to identify the main determinants that influence ability to repay loans of the borrowers. The result of this study shows that the ability to repay loans of the borrowers is influenced by the growth rate of income, worker population ratio, productive use of loans, shortfall of desired investment, interest rate differential and education. We also find that the ability to repay loans to the banks varies directly with the level of income.