Towards a Perspective on Flow of Credit to Small and Marginal Farmers in India (CMA Publication No.240)

Against the backdrop of consistent and continuous failure of the formal rural financial system to fulfill the goals and aspirations of government policy and poor masses on the one hand and the resilience of the traditional rural informal credit system on the other this study has applied the tools of institutional economics—especially those pertaining to information asymmetry and transaction costs to develop a conceptual framework to capture the broad features of the current rural credit scenario in India. Using a fairly large size data from 700 borrower households and 94 lending organizations across the country and over a period of three years supplemented by case studies of several new generation credit organizations it has evolved both demand and supply side perspective and action points to resolve the observed problems of rural credit—especially those pertaining to small farmers and other vulnerable (mostly landless) groups