Determinants of repayment and overdues in agricultural sector

The Agricultural Credit Review Committee (1989) headed by Khusro identified several weaknesses in the rural credit delivery system which included poor loan recovery and overdues. In this context, the economic survey (1992-1993) had noted that 'despite phenomenal increase in overall agricultural credit, there is a serious problem of overdues'. In this backdrop, the current study attempted to analyse the determinants of repayment and overdues. In the current study, Bayesian analysis and the discriminant analysis were used to assess the probability contribution of the selected socio-economic factors to the amount of recovery and discriminating the borrowers/defaulters into defaulters and non-defaulters/wilful and non-wilful defaulters. The non-farm income and consumption expenditure were the dominant factors in classifying the defaulters into wilful and non-wilful defaulters. The wilful defaulting was mainly due to the expectation of the borrowers to write-off the loans and inefficient bank management.