News: Rural India still banks on money lenders
(TNN 08/05/2006) New Delhi - Rural folk continue to remain more dependent on non-institutional agencies, not only when it comes to taking loans, but also when it comes to repayment of debt.
In a recent report of the National Sample Survey (NSS), it has been found that outstanding debt to non-institutional agencies like local money lenders, friends and relatives is almost half of the total outstanding debt of rural people compared with that of institutional agencies.
The trend continues despite the efforts of the government to provide rural credit at interest rates as low as 7%, as against the average of a 22% interest charged by money lenders.
The fact that villagers and small-towners still rely more on moneylenders is corroborated by the figures in the report which show that the outstanding debt per household to non-institutional agencies is Rs 3234 for rural areas as against Rs 2931 for urban areas. Also, while outstanding debt to the local money lender in urban areas is 14.1% of total outstanding debt it is 29.6% for rural households.
As far as non-institutional agencies are concerned, 10% of the unpaid debt belongs to the agricultural money lender and 19.6% to the professional moneylender. These figures are much lower as compared to those of the two major sources of institutional rural credit — co-operative societies and banks.
The percentage of total outstanding debt to the former is 27.3% and 24.5% for the latter. The two alone contribute to 51.8% of all unpaid debt in rural areas. At the same time, these figures also indicate that commercial banks, regional rural banks (RRBs) and co-operative societies have managed to make inroads into rural areas, encouraging folk to use institutional agencies for the credit needs.
While the unpaid debt outstanding to institutional money lenders like banks is as high as 75% the reason for such high non-payment is not the same. In urban areas the total outstanding debt per household to institutional agencies is as high as Rs 8,840, while that for non-institutional agencies it is only Rs 2,931 per household.
However, in case of rural areas the difference between outstanding debt per household from institutional and non-institutional agencies is not as huge. The outstanding debt per household to institutional agencies is Rs 4305 as against that for non-institutional agencies is Rs 3,234.
The survey points out that unpaid debt to non-institutional areas stands at 42.9% as against 57.1% of institutional agencies like banks. In urban areas, unpaid debt to non-institutional areas is about 25% of the total outstanding debt.
In a recent report of the National Sample Survey (NSS), it has been found that outstanding debt to non-institutional agencies like local money lenders, friends and relatives is almost half of the total outstanding debt of rural people compared with that of institutional agencies.
The trend continues despite the efforts of the government to provide rural credit at interest rates as low as 7%, as against the average of a 22% interest charged by money lenders.
The fact that villagers and small-towners still rely more on moneylenders is corroborated by the figures in the report which show that the outstanding debt per household to non-institutional agencies is Rs 3234 for rural areas as against Rs 2931 for urban areas. Also, while outstanding debt to the local money lender in urban areas is 14.1% of total outstanding debt it is 29.6% for rural households.
As far as non-institutional agencies are concerned, 10% of the unpaid debt belongs to the agricultural money lender and 19.6% to the professional moneylender. These figures are much lower as compared to those of the two major sources of institutional rural credit — co-operative societies and banks.
The percentage of total outstanding debt to the former is 27.3% and 24.5% for the latter. The two alone contribute to 51.8% of all unpaid debt in rural areas. At the same time, these figures also indicate that commercial banks, regional rural banks (RRBs) and co-operative societies have managed to make inroads into rural areas, encouraging folk to use institutional agencies for the credit needs.
While the unpaid debt outstanding to institutional money lenders like banks is as high as 75% the reason for such high non-payment is not the same. In urban areas the total outstanding debt per household to institutional agencies is as high as Rs 8,840, while that for non-institutional agencies it is only Rs 2,931 per household.
However, in case of rural areas the difference between outstanding debt per household from institutional and non-institutional agencies is not as huge. The outstanding debt per household to institutional agencies is Rs 4305 as against that for non-institutional agencies is Rs 3,234.
The survey points out that unpaid debt to non-institutional areas stands at 42.9% as against 57.1% of institutional agencies like banks. In urban areas, unpaid debt to non-institutional areas is about 25% of the total outstanding debt.
posted by InCar Group Press Room at 00:08
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