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This report gives a description of the financial life of residents with a limited basis for cash-crop and off-farm opportunities, hence restricting them to size of landholding as a critical indicator of wealth and status and influences access to cheap bank finance.The authors demonstrates that the use of informal mechanisms like reciprocal gifts, interest-free lending and borrowing and taking credit in kind from shopkeepers, is widespread and does not decrease with increasing wealth. As one goes up the wealth scale, it was found that respondents regularly accessed an increasing number and range of devices, including those used by poorer respondents. As such, within this region, greater access to the formal sector does not preclude use of informal mechanisms. The report also revealed the following:Use of bank credit is open only to a minority whose landholdings are generally above 5-7 acres.In order to become a force for change, banks will need to increase their outreach even within the agricultural sector and to develop policies and products which promote innovation and higher value cropping. These might include financing the development of market and storage infrastructure for cash crops, tie-ups with seed and buy-back companies and schemes to facilitate the purchase and lease of land.For the poorest among the Farmer-Labourers, access to any institutional finance will depend on their capacity to build up an asset base which allows them to manage shocks and contemplate higher wage (but more risky) income options.[Adapted from Author]
