Accessibility of marginal and small farmers to institutional credit in south western Punjab

Punjab agriculture has become capital intensive since the inception of ‘Green Revolution ’. Following technological change and greater need for credit to facilitate the adoption of technology, the question of small farmers ’effective access to institutional finance is of crucial significance. Empirical evidence has indicated higher dependence of marginal and small farm categories on exploitative informal sources of credit, thus making them more vulnerable. It was found that factors like farm size, total annual income, location of the financial institutional agency and purpose of loan were affecting the availability of credit from formal sources of credit in case of sampled farmers. Then, low rate of interest, charged by institutional sources of finance and credit limits formed of borrowers by these agencies emerged as the primary reasons for preferring institutional sources of credit. While lesser formalities, timeliness and easy access were the factors weighing heavily in favour of non-institutional sources of finance.