Structure and Problems of Land Development Banks

abhishreshthaa

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The Structure of LDBs:- The long term credit structure consists of the central land development banks (generally one for each State) and primary land development banks. In some States, there are no primary land developments banks but in their place, there are branches of central land development banks.



 Problems of LDBs:-


Land development banking is yet to take strong roots in India barring few States. However, LDBs have contributed in large measure to agricultural development by lending specially for minor irrigation. All their loans are for productive purposes benefiting mostly the small farm holders. Though land development banking has made considerable progress in recent years, it has not really contributed much to the improvement of the financial position of the farmers. A large number of factors are responsible for the relative ineffectiveness of LDBs.



 Overdues Problems:-

mounting overdues in most of the LDBs have crippled the structure badly, in recent years. Overdues at the level of primary land development banks have been put between 42 to 44 percent. Overdues have caused innumerable financial problems besides limiting the capacity of LDBs to lend and operate as viable units.


The financial discipline imposed on the banks in the matter of eligibility to undertake fresh lending based on recovery performance has been the main limiting factor quantitative growth of credit operations.


To some extent, the banks themselves are to be blamed for this predicament due to faulty loaning policies, inadequate supervision, over-utilisation of loans, ineffective measures for recovery etc. Which have contributed to the deterioration in recovering the loans.
 
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