Write down the problems relating to agricultural finance.

Problems relating to agricultural finance:

1. Inadequate agricultural credits : The sources of institutional finance are inadequate to meet the requirements of agricultural credit. Farmers still depend on moneylenders for their credit needs.

2. Regional inequalities : There exists regional inequalities in the distribution of institutional credit.

3. High rate of interest charged by Mahajans etc. : Due to insufficient credit provided by the formal financial institutions, the farmers have to depend on non-formal financial institutions such as mahajans, moneylenders for meeting their financial needs. The non-formal financial institutions charge very high interest on the loan provided by them.

4. Marginal and small farmers do not become beneficiary : Small and marginal farmers receive only a very small portion of the institutional credit. A lot portion of institutional credit is taken away by the rich farmers. In this way, marginal and small farmers do not become a good beneficiary.

5. Problem of over-dues and default rate : Rural banking is suffering from the problems of large amount of over-dues and default rate. Recovery of agricultural loans has become a serious problem in the functioning of rural banking. About 50% of defaulters are wilful defaulters. This constitutes a threat to the existence of rural banking. It is an alarming situation.

6. Failure to encouraging saving : With the possible exception of the commercial banks, other formal institutions have failed to develop a culture of deposite mobilisation.