A recent survey showed that the share of fast cash loans debt of non-institutional lending organizations fell sharply to 34% in 2018 from 44% in 2012 and almost all states have shown this trend, indicating the increase in the formalization of the economy.
An analysis of the All India Debt & Investment Survey (AIDIS) recently released by SBI Research showed that the share of non-institutional credit has declined significantly in Bihar, West Bengal, Rajasthan, Haryana and Gujarat .
He said that even in Haryana and Rajasthan, which witnessed loan exemption programs, the share of non-institutional credit declined contrary to popular perception. “This could be explained by a significant increase in the penetration of Kisan credit cards (KCC) in these two states. Our estimates show that the number of KCC cards has jumped five times during the seven-year period ended in 2020. . For the record, Haryana and Rajasthan experienced an average increase of 9%, ”said Soumya Kanti Ghosh, chief economic adviser of the SBI group, in his report.
He said recent reforms in agriculture could further help formalize the economy. “However, there is still a fundamental reform pending which is in the domain of the RBI. It makes farm cash credit on par with other segments,” he said. The report states that according to the asset classification standards for agricultural advances, in the case of an agricultural cash credit account, a farmer must repay the entire outstanding amount (principal and interest) to apply for new loans. with banks, unlike other segments of the cash lending business. where if the borrower has offset the interest payments, he / she would be eligible for the upgrade / renewal. It would be in the farmer’s interest for the farmer to benefit from a renewal / improvement, especially when the bank is satisfied with the farmer in terms of land ownership / ability to pay etc., adds the report.
The AIDIS report for 2018 shows an increase in the average amount of debt among rural and urban households, with the average amount of debt increasing by 84% and 42% respectively for rural and urban households for the 6-year period ended in 2018. State The wise trend indicates that the average rural household debt more than doubled in 18 states for the 6-year period ended in 2018, while 7 states experienced the same for urban households. It is important to note that 5 states, including Maharashtra, Rajasthan and Assam, experienced a simultaneous doubling in the average debt of urban and rural households during this period, according to the fast cash loans