ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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PM-KISAN and the Adoption of Modern Agricultural Technologies

The Pradhan Mantri Kisan Samman Nidhi scheme aims to provide income support to farmers for easing their liquidity needs to facilitate timely access to inputs. This study, based on 1,406 farmers of Uttar Pradesh, uses a binary choice model to examine the targeting accuracy and correlates of the spending pattern of farmers. Triple difference with matching estimators is used to identify the differential impact of the scheme on the Krishi Vigyan Kendra beneficiaries. Results show that the scheme reached one-third farmers in the first three months of its implementation, and has significantly helped those who are relatively more dependent on agriculture and have poor access to credit. Moreover, the scheme has significantly stimulated the Krishi Vigyan Kendra's impact on the adoption of modern cultivars.

Are Gold Loans Glittering for Agriculture?

Credit is essential for small and marginal farmers in India, whose low incomes limit savings, making them more vulnerable to several risks. Priority sector lending norms have channelled more formal credit to this sector. The interest subvention scheme for short-term crop loans makes formal credit more economical for farmers. However, there are issues of accessibility, most notably arising out of difficulties in presenting documentation, giving rise to a prevalence in the use of gold/jewellery as collateral. Loan data from three districts in Karnataka has highlighted some important lessons. The use of gold tends to exclude poorer farmers from availing all the benefits of the scheme, and poses issues of accessibility to formal credit. Digitisation of land records and farmer information, coupled with reduced recognition of gold loans in priority sector lending can be valuable to the Indian agriculture sector.

Did This Straw Break the Finance Sector’s Back?

The world’s financial markets are hurtling towards a new phase of crises ranging from currency, to balance of payments, to sovereign debt, to banking crises. The monetary tightening policies of the United States Federal Reserve and the European Central Bank will only precipitate crises in emerging markets as well as peripheral eurozone economies, which will have global repercussions.

Lucrative Defaults by Hungry Corporates

The implementation of the Insolvency and Bankruptcy Code, 2016 has led to aggressive competition to acquire firms that have been subjected to the resolution process. This suggests that the default that required the creditors to bring these firms to the National Company Law Tribunal was not due to poor fundamentals. Moreover, the decision of the original promoters to try and enter the fray as bidders for defaulting firms indicates that they too do not see the firms and the activities they are engaged in as unviable. Yet, there is much pressure on the government to favour those who seek to game the system.

Distortions in Land Markets and Their Implications for Credit Generation in India

Data shows that land is collateral in a large proportion of loans in India. Yet, the several structural, regulatory, and information-driven distortions that afflict Indian land markets force lenders to adopt conservative policies ex ante, affecting both the availability of credit and the collateralisation of land. The paper examines some of these distortions and highlights their significance to the current debate on reforming bankruptcy framework in India. The first part of the paper discusses structural, regulatory, and informational gaps that limit lenders’ ability to lend against land as well as recovery after default. In the second part, some opportunistic and structural reforms in the land markets that could effectively monetise land in credit markets have been proposed.

How Efficient Are India’s Cooperative Banks?

In spite of their distinct organisational structure and banking philosophy based on mutuality, there is scant evidence on efficiency of cooperative banks. The efficiency of district central cooperative banks in India is investigated by constructing a panel of 297 cooperative banks over the period 2002–14. Using parametric and non-parametric frontier analysis, it is found that efficiency estimates vary depending upon whether advances or investments of DCCBs are used as output. The efficiency of cooperative banking is mapped, and shows considerable variation in efficiency of DCCBs across states. The findings suggest the need for innovative strategies to improve cooperative banking efficiency in the country.

Converting Urban Cooperative Banks into Commercial Banks

The debate around the conversion of Scheduled Urban Cooperative Banks into commercial banks warrants an investigation into their performance. The larger objective is to examine whether SUCBs are able to compete with their peer group and remain viable when subjected to stringent regulatory requirements, in the event of their conversion. The performance of SUCBs as a group is comparable with that of their peer group, that is, old private sector banks, with the exception of non-performing assets. Performance rankings reveal that the smaller SUCBs are better performers than larger ones, calling for a relook at the threshold for conversion. In the event of conversion of SUCBs into commercial banks, some of the converted entities will be as good as some of the existing OPSBs, or may even be a shade better.

Public Sector Banks Are Adrift

With credit and deposit growth slowing in key sectors and only retail credit growing, low capital adequacy ratios of banks, senior management changes in the offi ng, and bank mergers, the National Democratic Alliance government needs to ask itself what it envisages for public sector banks, and indeed for the Indian economy.

Delinking Housing Cycles, Banking Crises, and Recession

The nexus of housing boom-busts, banking crises, and economic cycles is not unique to the last crisis and has been increasingly present in each of the major banking crises since the break-up of Bretton Woods in the early 1970s. Housing is a politically charged issue. A safer housing market, via planned fiscal intervention to steady supply, would do more to make the financial system safer than all of the other recent initiatives put together. Cheaper finance without cheaper homes only deepens housing inequality.

Financial Reforms in an Endogenous Money Economy

An examination of the Reserve Bank of India's monetary policy leaves little doubt that India can be suitably characterised as an endogenous money economy. In an endogenous money environment, financial reforms will prove ineffective in stimulating credit supply to large commercial borrowers. They may, however, prove counterproductive by sharpening the credit constraints faced by agricultural and other petty producers in the economy.

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