73
in respect of urban and metropolitan branches. As a result, the average share
of these latter branches in total agricultural credit had shot up from 21% in
March 2000 to a peak 37 or 38% in 2006 and 2007. But, thereafter, as in
the case of indirect credit, the share of urban and metropolitan branches has
slided and has come down to 33% by March 2011. Correspondingly, the rural
and semi-urban branches, which had accounted for about 85% of total farm
credit outstanding in the early 1990s and which had suffered an erosion and
experienced the lowest share of 62% in March 2007, began to increase their
share thereafter and have touched 67% in March 2011 (Table 4.9).
It must be noted here that the above three aspects of agricultural lendnigs,
which reveal a qualitative change in farm credit dispensation, began somewhat
before the policy of doubling of bank credit began to be implemented. With
rapid diversification in agriculture, the character of agriculture itself may have
undergone a change. And, once the banks began to expand their credit base
after a long period of lull and low profitability, they turned towards indirect
lendings, agricultural lendings on the periphery of urban and metropolitan
areas and relatively large account holders. The process of doubling of credit
vastly intensified these tendencies.
Phenomenal Increases in Large-Size Loans
A distinct feature noticed after the initiation of financial sector reforms
in the early 1990s and until the beginning of a movement for financial inclusion
in the early part of the current century, had been the stagnated or even absolute
declines in many years, in the aggregate loan accounts of scheduled commercial
banks. This was the period when there were sizeable increases in loans
outstanding against agriculture, there were large increases in average loans
per account and impliedly there were also large increases in big-size loans.
With the initiation of the policy of doubling of bank credit, the number
of farm loan accounts has increased but interestingly the phenomenon of a
rising proportion of big-size bank loans, has also persisted. We have presented
a special review of the loss of momentum in the distribution of bank credit
in favour of small borrowers and other vulnerable groups. The obverse of
this phenomenon is the shifting by banks of their attention in favour of big-
size borrowers. The size distribution of all agricultural loans of scheduled
commercial banks for about 16 years from March 1995 to March 2011 is
portrayed at length in Table 4.10. This set of detailed data provides many a
revelation concerning growing inequality in the distribution of farm loans.
