Determinants of Financial Inclusion among Farmers in Coimbatore District

The share of total agricultural credit supplied through rural branches had declined from 55.5 per cent in 1990 to 38.5 per cent in 2010. The contribution of urban and metropolitan branches to agricultural credit had increased from 14.9 per cent to 33.7 per cent during this period, indicating that credit disbursement was mainly through non-rural branches. The available data raised questions about the segments to which the credit was actually flowing and whether it was reaching the intended beneficiaries. The above evidences showed the financial market imperfections in agricultural sector. The financial market imperfections were likely to affect the decision making agents particularly the small farmers and economic development.  The financial market imperfections would lead to income inequality or poverty traps.  Financial market imperfections such as information asymmetries and transactions costs were likely to be binding on the talented poor and the micro  and small enterprises that lacked collateral, credit histories and connections, thus limiting their opportunities and leading to persistent inequality and slower growth. In this backdrop, an attempt was made to assess the determinants of financial inclusion among farmers in Coimbatore district.