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ARTICLE
b. Variability in Incomes d. Attitudinal Conditions
The farmer may be unable to re- Farmers who do not want to repay loans even though they have the
pay his loan in a particular season repaying capacity falls in this category. They did not consider government
owing to crop failure due to natu- funds as loans, but often as grants. This is as a result of credit
ral calamities or the destruction of organisations defective policies such as little efforts to collect arrears
a crop by theft, fire or other haz- under earlier schemes and the lack of effective sanctions on defaulters.
ards. His inability to repay may 14.29 per cent defaulters felt under this category and their default
also be caused by a sudden fall in amount was 9.15 per cent in canal region. In the non-canal region the
prices or the unmarketability of his defaulters were 10 per cent and loan amount defaulted was 12 per cent,
produce. Farmers in this category which is comparatively high.
are normally able and willing to
repay. Defaulters in this category e. Misallocation
are 22.86 per cent and their de-
fault amount was 21.1 per cent. This category includes the farmers who use the loan for purpose other
In the non-canal region the de- than those stated in the application. These farmers invested to loan
faulters were 18.67 per cent and amount for other activities in which they had failed or even though
the loan amount defaulted was successful they face a problem of liquidity to repay in time. Other
31.2 per cent. misallocations include for repayment of other loans, ceremonial purpose
and illness or death. In canal region nearly 25 per cent of the loan amount
c. Defects in the Credit was unpaid because 24.28 per cent of the defaulters have used the money
Organisation for unauthorized purposes, which result in failure or liquidity problems.
For the same reason in non-canal region 20 per cent of the defaulters
The farmer in this category is accounted for 21.5 per cent of the loan amount defaulted.
able to repay and willing to do so,
but since the organization giving f. Miscellaneous
credit does not force him to re-
pay, he does not. The farmer may This includes other reasons not easily categorized. Political interference is
believe that he will neither suffer also included in this category. In the canal region 12.86 per cent of the
penal interest nor endanger his defaulters and 19.6 per cent of the loan amount defaulter belongs to this
subsequent borrowing by his de- category. For the same category 17.33 per cent of defaulters and 4.8 per
fault, loopholes which enable a cent of defaulted amount comes in non-canal region. They did not indicate
defaulter to borrow subsequently any specific reason for default in repayment of dues to credit
and abandoning attempts to col- organization. Some of these could be the cases of "willful" defaulters and
lect earlier defaults would sup- this is in fact a "Don't know" category.
port this belief. Sometimes the
staff of the credit agency itself ANOVA is calculated for the data available in Table 2 and the results are shown
might even encourage borrowers in Table 3.
not to repay. Deficiencies in
credit organisation accounted for Table - 3
11.43 per cent of defaulting bor- ANOVA RESULTS
rower, these default amount be-
ing 8.25 per cent in canal region. Source of Variation Sum of Degree of Mean of F F. Critical
In the non-canal region for the
same reason 8 per cent were de- squares freedom squares Value value
faulters and the loan amount de-
faulted was 8.25 per cent, which (SS) (d.f.) (MS)
is less than the canal region.
Category of amount 3.78 5 6.83 5.05 10.32*
defaulted
Region 5.35 1 9.07 6.61 8.71*
Error 2.08 5 4.12 - -
*Significant at 5 per cent level.
40 | 2016 | JANUARY | BANKING FINANCE
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