An Economic Evaluation of Agricultural Financial Institutions in Maharashtra

This study attempts to evaluate the functioning of various rural financial institutions operating in the State of Maharashtra with major focus on the working of Credit Co-operalives. Commercial BankS. Regional Rural Banks (RRBs), Land Development Banks (WBs) and Self-Help Groups (SHGs) extending finances to rural poor. The study shows slower growth in institutional finance through RFls in Maharashtra during the decade of 1991- 2000. The reason for slower growth in institutional finance is assigned 10 adverse environment created by the financial sector reforms. Mounting NPAs, high transaction cost and poor repoyment performance are cited as the ischolar_main causes of moribund state of rural credit delivery system in Maharashtra. Further, the study shows deterioration in financial health of credit co-operatives in the forward region and gross inefficiency in their functioning in the backward region of Maharashtra, which in turn is due to mounting NPAs of these financial institutions during the decade of 1990s. With a view to rejuvenate the entire rural credit delivery system of Maharashtra, the study categorically emphasizes upon the need to tackle the problems facing system, viz., mounting NPAs, high transaction cost and poor repayment performance, with emphasis on recovery of loans from large category of willful defaults. The study comes out with several strategies to overcome the moribund state of rural credit delivery system of Maharashtra, which not only encompass issues relating to sustainability and viability, operational efficiency, recovery performance and small farmer coverage but also balanced sectoral development.