Credit Planning as a Rural Finance Initiative in India: An Overview

Abstract

Banking system acts as a conduit for transfer of financial resources from net savers to net borrowers and plays a key role in mobilization and allocation of domestic savings. In a resource-scarce country like India, balanced development of the economy necessitates speedier and heftier transfer of financial resources to the sectors relatively more starved of the same. Hence the need to align the rural financial system to the developmental goals of the country through an effective process of credit planning. The paper traces the evolution of credit planning as a rural finance initiative in India, discusses various inadequacies still affecting the process and offers suggestions for addressing the issues related to these inadequacies. It concludes that efficacy of the system hinges critically on effective co-ordination among all stakeholders in the development process including notably the lending institutions, the government and the civil society.