MANAGING DEFAULT RISK IN KISAN CREDIT CARD

In the field of agriculture finance, default is the most common occurrence. Default involves a great deal of learning for it. Each default tells its own story. There are numerous factors that influence defaults. Many factors have reasons that are primarily driven by lenders. The default may be genuine or intentional, but understanding its full composition is fascinating. From the lenders perspective, its critical to understand some of the factors that have a dual impact on timely recovery. The success of agriculture finance is largely attributed to the underwriters knowledge of the sector and its practical implications. Unlike other advances, where income and repayment are controlled factors in the borrowers hands, agro-climatic factors and other local influences drive repayment culture in agriculture advances.The lenders overall dealings with the farmer while on boarding him as a borrower have a significant impact on default. Credit risk management is complicated by lenders lack of sectoral knowledge; as a result, rural bankers who are involved in this industry will find this article useful. Lets delve deeply into a few of the aspects that I believe may be beneficial to the rural banking community in KCC while managing defaults.