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Dr.Bank Credit Utilisation by Agriculturists and MSMEs: An Empirical Study With Reference To Kerala
The paper examines the utilisation of bank credit by micro, small and medium enterprises (MSMEs) in the selected districts of Kerala. One of the cardinal principles behind sanctioning a loan is to use it for the purpose for which it was granted. However, diversions of credit for unspecified purposes...
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| Format: | Printed Book |
| Veröffentlicht: |
Commerce Spectrum
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| Schlagworte: | |
| Online Zugang: | http://10.26.1.76/ks/005895.pdf |
| Zusammenfassung: | The paper examines the utilisation of bank credit by micro, small and medium enterprises (MSMEs)
in the selected districts of Kerala. One of the cardinal principles behind sanctioning a loan is to
use it for the purpose for which it was granted. However, diversions of credit for unspecified
purposes are alleged to be diluting the objective of lending. Moreover, most of the bank officials
are pressured by target oriented lending and to fulfil their target, most of the time, they relax the
lending and utilisation norms. Eventually, it results in loan default and utilization gap. The
empirical results show that a large majority of the borrowers (63.8%) utilized credit for the
purpose for which it was sanctioned and the rest (36.2%) diverted the credit. Again, 38.2 per
cent of the borrowers diverted 10 to 20 per cent of their loan amount and 33.6 per cent diverted
30 to 40 per cent. Further, 53.9 per cent of the borrowers, who diverted the loan, used the
amount for unproductive purposes and none more than 7.4 per cent used it for productive
purposes. This paper insinuates banks to cautiously design an efficient and effective mechanism
to identify an eligible borrower and the point at which the borrower diverts the loan. Ensuring
proper scrutinizing of the borrowers along with adequate credit flow and efficient monitoring
machinery will definitely alleviate the chances of default, which rescue the borrower from the
claws of insolvency and the bank from the snatch of over dues syndrome. |
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| Beschreibung: | p.36-42 1(1), June 2013 |