Cooperative credit for farm production in Mysore State, India

One channel that has received attention are the cooperative credit societies. But despite help from state and national financial institutions, many local agricultural credit cooperatives in India have had problems of getting farmers to repay loans and, in turn, retaining their own viability. Societies with more than half of their loans in arrears have not been uncommon. This study examined the relationship repayment of crop production credit and various characteristics of a sample of farms and cooperative societies in selected areas of Mysore State, India. Lending policies and administrative procedures of the district cooperative central banks were also examined. Specific objectives were: (1) to depict the organizational efficiency of these agricultural credit cooperatives, (2) to identify their lending practices and operational problems, and (3) to ascertain sources of difficulty encountered by farmer-borrowers in repaying crop production loans. Information from 35 local cooperatives in three districts in Mysore State was obtained in 1972. A sample of 136 of their farmer-borrowers was interviewed. The cooperative societies were compared according to 1970-71 short-term loan repayment experience. Tabular analysis was used also to compare farmers who had and had not defaulted on their crop production loans, grouped according to farm size. In addition, regression analysis was applied to this farm level information to examine the relationship between amount of crop production credit overdue and several socioeconomic variables.