What are the major challenges faced by small and marginal farmers in accessing credit and financial services?
Rohit Kumar
Small and marginal farmers encounter several challenges when trying to access credit and financial services. Firstly, their lack of collateral often makes it difficult for them to qualify for traditional loans, as financial institutions typically require tangible assets as security. Moreover, the complex and lengthy loan application processes can be daunting for farmers who may have limited literacy or understanding of financial systems. Additionally, the high interest rates charged by many lenders make loans unaffordable for small-scale farmers, who often operate on slim profit margins. Geographic isolation and inadequate infrastructure further exacerbate these challenges, making it harder for farmers in remote areas to access banking services. Finally, the seasonal and unpredictable nature of agriculture can make it difficult for farmers to meet repayment schedules, leading to a reluctance among lenders to extend credit. Addressing these barriers requires targeted efforts to improve financial literacy, expand collateral-free lending options, lower interest rates, and enhance rural infrastructure to facilitate easier access to financial services for small and marginal farmers.
Bhawna Vijay
Yes mam you said very true that small and marginal farmers face several problems when trying to get loans and financial services. They often can't provide collateral, which is usually needed for traditional loans. The loan application process is also complicated and hard to understand. High interest rates make loans too expensive, and remote locations with poor infrastructure limit access to banking services. Additionally, farming's unpredictable nature makes it hard to repay loans on time, causing lenders to hesitate. To help, there should be efforts to improve financial literacy, offer loans without collateral, reduce interest rates, and improve rural infrastructure.
A major challenge small and marginal farmers face is poor financial management. Many of these small and marginal farmers keep improper records, while others fail to keep records. Proper record-keeping, which is a vital aspect of financial management, will assist these farmers in measuring their performance, managing their risk, increasing efficiency, etc.
Credit agencies need to assess the risk and ability of these farmers to pay back the credit and financial facility advanced to them.
Tamunokonbia Promise Ogan
I'm fond of your insights sir ji...
Than you very much.