AN ASSESSMENT OF PRIORITY SECTOR LENDING IN JORHAT DISTRICT OF ASSAM
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Date
2018-01
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AAU, Jorhat
Abstract
In a developing economy some sectors of society need special and priority attention as they are starved for capital. The Reserve Bank of India has clearly specified the sectors that are termed the priority sectors. The lending that is done to them is referred to as Priority Sector Lending (PSL). The philosophy behind the adoption of priority sector lending is mainly intended to bridge the lacuna of credit influx which was hitherto not timely and adequately dispensed. The sectors may be agriculture and allied activities, micro and small enterprises, non conventional, other low income groups and weaker sections. This is essentially meant for an all round development of the economy as opposed to focusing only on the financial sector.
As regards credit, in most of the cases, it was not in adequate quantity as also not received in time when it was needed. Under these circumstances there is strong justification to study the status of Priority Sector Lending with the specific objectives viz., 1) Study the financial management practices of farmers and financial institutions under Priority Sector Lending, 2) Derive optimal solution of short term loan use to maximize net farm return in the existing financial environment and 3) Suggest alternative rural credit sources to different category of farmers for promoting financial inclusion under Priority Sector Lending.
The study was designed to carry out in the selected areas of Jorhat District. The study was based on both primary and secondary data. Primary source were the farmer borrowers and the bankers. The secondary sources were the District lead bank, Reserve Bank of India and NABARD (National Bank for Agriculture and Rural Development) publications and other relevant publications. The primary data were collected with the help of pre-tested schedule and questionnaire through personal interview.
The study found that the farmers adopted few strategies to manage their financial positions whereas financial institutions like banks focuses on credit risk management as a financial management practices and adopted numbers of strategies to mitigate those risks of return. The study also developed an optimal plan for short term loan use for the study area. Based on the problems cited by the farmers in accessing in rural credit and sources of credit, an alternative rural credit source was proposed in logical way.
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