Financial Exclusion Prominent in Rural Areas

Abstract

India’s rural households continued to remain financially excluded prominently compared to urban households particularly with respect to their access to institutional credit. Nearly half (44%) of the credit requirements of rural households is still met through non-institutional sources of finance as indicated by the latest report on Incidence of Indebtedness (NSSO 2016) released in December 2016. The results suggested that exclusion of rural households from access to institutional credit is leading to their dependence on non-institutional sources of credit at significantly high interest rates particularly for the lower asset holding classes of cultivator households.

Keywords: Farmers Indebtedness, Rural Indebtedness, AIDIS, Institutional Credit, Rural Credit, Agricultural Credit

JEL Classification: A1, E5, E51, H81, O13, O17, O18, G2