A COMPREHENSIVE STUDY ON THE VARIOUS ISSUES PERTAINING TO REASONS FOR NON-REPAYMENT OF CREDIT UNDER KISAN CREDIT CARD OF SMALL AND MARGINAL FARMERS AND AGRICULTURAL PRODUCTIVITY IN CENTRAL INDIA

Abstract

Government of India introduced Kisan Credit Card Scheme in the year 1998-99 with a view to fulfil the production credit requirement of small and marginal farmers. This scheme was further stretched in the year 2004 to meet the investment credit requirement of farmers in farming and non-farming activities A Further revision in the year 2013 aimed at providing adequate and timely credit support and inclusion of small and marginal farmers in banking system under a single window which proved flexible and simplified financial procedures to the farmers for their farming and other needs. The Kisan Credit Card (KCC) scheme has played a pivotal role in ensuring timely and adequate credit access to small and marginal farmers in India. However, the issue of non-repayment of credit remains a significant challenge, particularly in Central India, where agricultural productivity and financial stability are closely intertwined. This study aims to explore the various factors contributing to credit defaults among KCC beneficiaries, examining both institutional challenges and farmer-specific constraints.Key factors influencing non-repayment include fluctuations in agricultural productivity, climate variability, price volatility, inadequate risk management mechanisms, and farmer indebtedness. Additionally, issues such as low financial literacy, improper fund utilization, structural inefficiencies in Cooperative Banks, and delays in government subsidies exacerbate the problem. The study also highlights the role of policy interventions and the need for reforms in agricultural credit distribution, loan restructuring policies, and financial inclusion strategies. By analyzing the correlation between non-repayment rates and agricultural productivity, this research provides insights into potential solutions, including digital financial services, credit monitoring mechanisms, crop insurance enhancements, and farmer training programs. The findings underscore the importance of holistic credit management policies to ensure both financial sustainability for lending institutions and long-term economic stability for farmers. This comprehensive study contributes to the broader discourse on agricultural finance and rural banking reforms, offering recommendations for policymakers, financial institutions, and stakeholders to mitigate credit risks and improve farmer resilience in Central India.