What are the problems of rural credit in Pakistan and suggest measures?

Following are the problems of rural credit in Pakistan :

1. Complicated Procedure :-
Our farmer is uneducated and he can not complete the formalities to obtain the loan. Complicated procedure is the main obstacle in the way of borrowing.

2. High Rate of Interest :-
Our farmer is poor and rate of interest is very high so it discourages the farmer to get the credit.

3. Lack of Planning :-
In Pakistan there is a lack of credit planning. In order to meet the credit requirements of agriculture sector there is a heed of preplanned expansion programme for the agriculture sector.

4. Small Farmers Ignored :-
In Pakistan commercial banks always ignored the small farmers keeping in view the repayment problem. Because everybody hesitates to lend the money to poor person.

5. Lack of Information :-
In the villages people are uneducated and banks are also not available. So they do not know the information about credit and the procedure of borrowing.

6. Lack of Contact :-
The credit officers have no contact with the farmers. So due to this reason our farmer can not get the loan.

7. Uncertain Weather :-
Our farmer fears to borrow that if crops damages due to floods or untimely rains then how he will repay.

8. Low Yield :-
In our country the production per acre is very low and rate of profits are also low. So it reduces the loans repayment ability of the framers.

9. Problem of Security :-
Our small farmers can not get the credit because they are unable to offer security to the credit institutions. Even they are unable to provide guarantee of two persons.

10. Credit Timings :-
Farmer gets the loan to purchase the seeds fertilizers and other inputs. Sometimes the credit is not provided in time to the framer and he fails to use these inputs.

11. Unproductive Use :-
A large share of credit which is provided to the farmers is misused. Our farmer uses the credit on death birth occasions lavishly.


MEASURES TO REMOVE THESE PROBLEMS :-
Our government has taken various measures to remove the problems of the rural credit. These are following :

1. Establishment of Agricultural Finance Institutions :-
The government established ADFC in 1952 and ABP in 1957 to finance agriculture. In 1961, they were merged into ADBP which is main source of agriculture finance.

2. Federal Bank for Cooperative :-
It was set up in 1976 to provide finance to this sector and it has played very effective role in providing rural credit.

3. Reorganization of Cooperative Societies :-
The cooperative societies have been reorganized. The provincial cooperative banks and societies are playing effective role to finance the agricultural sector.

4. Agricultural Credit Advisory Committee :-
It was set up in 1976 by the government solve the problems of rural credit.

5. Special Scheme :-
In 1977 the commercial banks introduced a s[special scheme to extend larger amount of credit to agriculture sector.

6. Interest Free Loans :-
The commercial banks are providing finance to small farmers without interest and some times on low rate of interest.

7. Recovery of Loans :-
A provision has been made in law for recovery of agricultural loans as arrears to lend revenue. Recovery is also made at the time of harvesting.

8. Pass Book System :-
The pass book system has been introduced to simplify the procedure of borrowing.

9. Mandatory Credit Target Scheme :-
This scheme was introduced in 1972. According to this scheme commercial banks are given mandatory targets for credit agriculture sector by the state bank.

10. Credit in Kind :-
To ensure the proper use of credit the bank have been advised to give supervised finance in kind.

11. Bank Branch in Rural Areas :-
Banks are being encouraged to set up the branches in rural areas. They will also keep close contact with the farmers and increase the credit facilities.

12. planned Credit Expansion :-
Present government has given proper attention to the planning and development of the country. For agriculture sector NCCC was set up in 1972. Every year it reviews the credit plans.

13. Transfer of Technology :-
The banks are appointing the credit officer who have acknowledge of advance technology. They will transfer it to the farmers and it will be very useful for the agriculture sector.

14. Security :-
In the past people were rigid minded and they disliked to mortgage their property. But now our farmer is ready to provide security. The credit officers are also authorized to advance credit without keeping security.

Due to measures production is increasing day by day and we are self sufficient in food in-spite of 3% rate of population per annum.