Agricultural Credit Availed and its Utilization on Large Sampled Households in Punjab

The present study has been devised to have an in-depth knowledge about credit utilization of large farmers in Punjab. For this study, data was collected from large farm households having operational holding more than 10 hectares (25 acres) as per the standard classification of operational holding. Sampled farmers were found to be availing large amount of institutional credit in terms of short-term credit due to their high credit limit, which was diverted for other purposes like purchase of lan and tractors, construction of houses and marriage ceremonies. Source-wise, about 93.45 and 6.55 percent of the total loan availed was borrowed from institutional and non-institutional sources, respectively. The regression coefficients for the factors like farm investment, expenditure on dwelling house and expenditure on social ceremonies were found to be having positive and significant effect on diversion of credit in south-western Punjab. So, it was suggested that, basis of credit limit formulation needs to be modified to check the diversion of short-term credit, as diversion of it was found to be high on the sampled farms.