Extent of Credit Availed by Rural Households in Punjab: Purpose-wise and Source-wise Analysis

The present study has been undertaken in three agro-economic zones of Punjab to examine the extent of credit availed by rural households in Punjab. Multistage random sampling technique was used for the selection of 90 farmers. A typical feature of the Indian rural credit market has been the coexistence of institutional and non-institutional sources of finance. Accordingly farmers were found to be borrowing from both the sources for their short-term as well as long-term credit needs. It was found that sampled farmers were borrowing more from institutional sources and commercial banks were their main suppliers of credit. In long-term, farmers were borrowing for both productive as well as unproductive purposes. None of the institutional source was directly providing credit for unproductive purposes; it was the diversion of institutional credit for unproductive purposes. It was observed that for productive purposes higher amount of credit was borrowed from institutional sources, while for unproductive purposes borrowing from non-institutional sources was found to be higher.