An Analysis of Agricultural Credit Utilization and Repayment Patterns among Farmers in Kanchipuram District

Abstract

Purpose: The objective of this study is to identify the awareness of farmers toward various government-offered loans and to evaluate the impact of these loans on their socio-economic conditions, including income levels, employment opportunities, and saving habits in the Kanchipuram district. The research specifically aims to analyze the various sources of financial assistance, the range of loan amounts applied for versus received, and the repayment capacity of farmers availing credit from financial institutions. Furthermore, the study seeks to understand the family conditions of farmers and provide actionable suggestions to improve the overall effectiveness of agricultural lending. Methodology: The study adopted a descriptive research design and utilized primary data collected via a structured questionnaire method. A convenience sampling method was employed to select a total of 500 respondents from five Administrative blocks within the Kanchipuram district which are Kanchipuram, Walajabad, Sriperumbudur, Uthiramerur, and Kundrathur each 100 samples taken from each blocks. Data analysis was performed using SPSS 17.0, utilizing statistical tools such as percentage analysis, chi-square tests, t-tests, and ANOVA to test various hypotheses regarding landholding size, cropping patterns, and credit utilization. The instrument’s reliability was confirmed with a Cronbach’s Alpha value of 0.96. Results: The findings indicate that demographic and agricultural factors significantly influence the purpose and utilization of agricultural credit borrowed from banks. While the banking system has made progress in disbursement, many farmers still face challenges due to small landholdings, leading some to depend on moneylenders at higher interest rates. The study reveals that access to institutional credit is vital for productivity; however, repayment behavior is influenced by factors such as the purpose of the loan, crop outcomes, and the socio-economic characteristics of the borrowers. Results also suggest a need for higher awareness among farmers regarding specific banking schemes. Conclusion: The study concludes that while institutional agencies have significantly expanded credit delivery, the success of the agricultural credit system depends heavily on proper utilization and timely repayment. Factors such as crop failure and high production costs remain primary obstacles to repayment. It is suggested that financial institutions, government agencies, and NGOs collaborate to educate farmers on productive loan use and simplify lending terms. Ultimately, enhancing the repayment culture and aligning loan amounts with actual agricultural needs are essential for the sustainable growth of the farming community and the national GDP. Future Research: The study results show that demographic, agriculture and agriculture related factors influence the purpose of utilization of agricultural credit borrowed from banks by the farmers in Kanchipuram district. In addition, financial institutions have to join hands with the government agencies, NGO’s, Rural Development Organizations (RDO’s) to enable the farming community.