III. The distribution pattern of RRB’s loans

This section attempts to examine the pattern of distribution of the TGB’s loans across different sections of rural households. The main purpose is to find out as to what extent the functioning of the TGB has benefited the rural poor. For this purpose, 197 sample households have been classified into different groups on the basis of their socio-economic characteristics like caste/religion, occupation, land ownership, value of assets owned, and family income. The objective of such grouping is to delineate the rural poor or the weaker sections based on each of the above characteristics. The distribution pattern of the RRB’s loans is analysed by looking into both the percentage share of each group under different socio-economic categories in the total loans disbursed as compared with the percentage share of each group in the total sample, and the average loan obtained by a household under each group.⁵

(i) Distribution Pattern by Social Groups

The sample households based on their caste or religion were classified into five broad social groups namely, forward caste, backward caste, Muslim (religion), artisans and service caste, and scheduled caste and scheduled tribe (SC & ST). The groupings were done in such a way as to represent the status of a household in the rural social hierarchy.⁶ The distribution pattern of TGB’s loans across these social groups is given is Table 3.

It may be seen from the table that only the forward caste group has received more than its proportionate share in the total loans borrowed by the sample households. The households in the forward caste group who constitute about 44 percent of the sample have received nearly 65 percent of the total loans. For all other groups the share in the total loan amount is less than their respective proportion in the total number of households. When one looks at the average amount of loan received, the forward castehouseholds have received a far higher average of Rs.13,156 as compared to the households in other groups. Across other social groups one cannot discern a clear pattern in the average amount of loans received, if one moves down the social hierarchy. The SC & ST households who are at the bottom of the social hierarchy have received a higher average loan (Rs.6761) than the backward caste (Rs.4770) and artisan/service caste households (Rs.4773).

Table 3. Share of Different Social Groups in the Loans Disbursed by TGB and Other details

Social Groups	Households share in loans (in Rs)	Percentage loan (in Rs) Schemes (%)	Average poverty alleviation to TGB(%)	Loans under households having regular access		Proportion of No. %
	1	2	3	4	5	6
Forward caste	86	43.7	64.9	13,156	5.8	76.7
Backward caste	45	22.8	12.3	4,770	37.4	60.0
Muslim	19	9.6	7.6	7,016	35.5	57.9
Artisan/service caste	26	13.2	7.1	4,733	56.5	57.7
SC & ST	21	10.7	8.1	6,761	86.3	23.8
Total	197	100.0	100.0	8,855	22.1	62.9
	(17.44)*

* The figure in the bracket is the total amount of loan in lakh rupees.

(ii) Distribution Pattern by Occupation Groups

Based on their main occupation⁷ the sample households were classified into four groups, namely, agricultural labour, rural artisan/service, trade and business, and cultivator.

It may be seen from Table 4 that it is only the households belonging to cultivator and trade and business group who have received either proportionate or more than proportionate share in the total loans of the TGB. While the cultivator households constituting about 74 percent have received about 83 percent of the total loans, the households having trade and business as their main occupation have received about 9.3 percent of loans with a proportion of about 9.6 percent in the sample. In the case of the other two occupation groups, agricultural labour and rural artisan/service, the share of loans received is less than half of their share in the total number of households. Even the average loan obtained shows that it is the households in the cultivator and trade and business groups who could get a higher average loan amount when compared to households in the lower occupation status groups like agricultural labour and rural artisan/service.

Table 4. Share of Different Occupation Groups in the Loans Disburse by TGB and Other Details

Groups	Occupation share in No. (in Rs)	Households loan %	Percentage poverty loans schemes (%)	Average households (in Rs) to TGB(%)	Loans under having alleviation	Proportion of regular access
	1	2	3	4	5	6
Agricultural labour	17	8.6	4.1	4,233	100.0	11.8
Rural Artisan/ service	16	8.1	3.5	3,777	62.9	37.5
Trade/business	19	9.6	9.3	8,564	18.1	84.2
Cultivator	145	73.6	83.1	9,995	16.9	69.0
Total	197	100.0	100.0	8,855	22.1	62.9
	(17.44)*

* The figure in the bracket is the total loan amount in lakh rupees.

(iii) Distribution Pattern by Land-Size Groups

Land is an important asset which determines the economic status of a rural household to a great extent. The sample households were classified into six land-size groups on the basis of the extent of their land ownership.

The distribution of loans of the TGB by land-size groups can be seen in Table 5. For the lower land-size groups (up to 5 acres) the share in the total loans obtained is far lower when compared to their share in the total number. As one moves up from lower to higher land-size groups, the proportion of loans received by different groups becomes more or less equal to or higher than their respective share in the total sample. The lower three land-size groups including the landless constituting about 50 percent of total households have all together received only about 28 percent of the total loan amount; while the other 50 per cent of households of higher land-size groups have received about 72 percent. The households in the highest land-size group alone constituting only about 14 percent have obtained nearly 40 per cent of the total loans of the TGB.

Table 5. Share of Different Land-Size Groups in the Loans Disbursed by TGB and Other Details

(in acres)	Land-Size groups No. (in Rs)	Households share in % schemes (%)	Percentage loan loans to TGB (%)	Average poverty (in Rs)	Loans under households alleviation	Proportion of having regular access
	1	2	3	4	5	6
Landless	39	19.8	11.6	5,176	53.2	30.8
0 - 2.5	21	10.7	6.6	5,474	67.9	47.6
2.5 - 5	39	19.8	10.0	4,461	34.5	74.4
5 - 10	44	22.3	20.2	8,010	28.7	61.4
10 - 20	27	13.7	12.5	8,094	13.4	77.8
>20	27	13.7	39.1	25,281	1.3	92.6
Total	197	100.0	100.0	8,855	22.1	62.9
	(17.44)*

* The figure in the bracket is the total loan amount in lakh rupees.

The average loan obtained by a household in different land-size groups increases with the increase in the size of land ownership. While for the landless category the average loan obtained is Rs. 5,176, for the highest land-size group it is Rs. 25,281 - a difference of nearly five times. In other words the pattern is: higher the ownership of land, higher the loan amount obtained from the TGB.

(iv) Distribution Pattern by Asset Groups

Besides land there are also other assets like buildings, livestock, gold, financial assets, etc., which determine a household’s economic status and capacity to borrow. The sample households were classified into asset groups on the basis of the value of various assets they own.⁸ The distribution pattern of the TGB’s loans across different assets groups is given in Table 6.

Table 6. Share of Different Asset Groups in the Loans Disbursed by TGB and other details

Asset groups (Rs 000s)	Households share in No. (in Rs)	Percentage loan % schemes (%)	Average poverty loans to TGB (%)	Loans households (in Rs)	Under having alleviation	Proportion of regular access
	1	2	3	4	5	6
< 1	13	6.6	2.7	3,588	91.4	7.7
1 - 5	9	4.6	2.0	3,822	79.4	11.1
5 - 10	10	5.1	2.5	4,301	67.2	30.0
10 - 20	20	10.2	6.5	5,685	81.0	50.0
20 - 50	37	18.8	12.4	5,829	56.9	62.2
50 - 100	37	18.8	13.2	6,241	24.3	64.9
100 - 250	50	25.4	23.9	8,341	3.6	82.0
> 250	21	10.7	36.9	30,617	0.0	100.0
Total	197	100.0	100.0	8,855	22.1	62.9
	(17.44)*

* The figure in the bracket is the total loan amount in lakh rupees.

The major share of the total loan amount has gone to the top two asset groups. These two asset groups constituting about 36 percent of the total households have received nearly 61 percent of the total loans of TGB. The highest asset group alone, with only 10.7 percent share in the sample has received nearly 37 percent of the total loans. The four lower asset groups accounting for 26.4 percent of total households, put together have obtained only 13.6 percent of total loans. The average loan received by a household in different asset groups shows a very clear increase along with the increase in the asset worth. While the households in the lowest asset group on an average have received a loan of Rs.3,588; it is Rs.30,617 in the case of households in the highest asset group. A direct association is noticeable between the asset ownership and the loan received.

(v) Distribution Pattern by Income Groups

In addition to the classifications based on caste, occupation, land and value of assets owned, the sample households were also classified into 8 groups on the basis of their annual income. For this purpose, the net annual income derived by a household from all activities has been considered.⁹ Household income helps in making a distinction between the poor and the non-poor. During the Seventh Five Year Plan (1985-90) all rural households having annual income up to Rs.6400 were considered as poor.¹⁰

The distribution of loans of the TGB across different income groups reveals that it is the households in the higher income groups who have received the major share of the loans (Table 7). The households in the top three income groups constituting about 39 percent of the total number have received about 58 percent of the total loans.

The households having more than Rs 50,000 of annual income though represents only 7 percent of households but account for 29 percent of the total loan amount. At the other extreme, the households having annual income of less than Rs 6,400 representing about one-third of the total sample households have received only about one-fourth of the TGB’s loans.

Table 7. Share of Different Income Groups in the Loans Disbursed by TGB and other details

Income groups (Rs 000s)	Households share in No (in Rs)	Percentage loan % schemes (%)	Average poverty loans to TGB (%)	Loans house (in Rs)	under hold alleviation	Proportion of shaving regular access
	1	2	3	4	5	6
<2	12	6.1	5.8	8,484	90.8	41.7
2 - 4	31	15.7	11.9	6,703	57.3	32.3
4 - 6.4	23	11.7	6.6	4,974	55.6	39.1
6.4 - 10	33	16.8	8.3	4,395	32.7	69.7
10 - 15	27	13.7	9.9	6,379	19.5	73.4
15 - 25	30	15.2	14.7	8,526	10.0	70.0
25 - 50	27	13.7	13.8	8,940	1.2	88.9
> 50	14	7.1	29.0	36,138	0.0	92.9
Total	197	100.0	100.0	8,855	22.1	62.9
	(17.44)*

* The figure in the bracket is the total loan amount in lakh rupees.

As regards the average loan, though households in the two bottom income groups have received a higher average amount than those in the middle income groups, overall it is the households in the higher income groups (>Rs 15000) who have received higher amount of loan, on an average, than all other households. The households from the highest income group have borrowed on an average Rs 36,138 which is almost four times the average loan received by a household (Rs. 8,940) even in the second highest income group.

Thus,from the above analysis it is possible to make out that though the RRB was intended basically to provide credit to the weaker sections, it has been serving households belonging to almost all segments of the rural society. At the same time the pattern of its loan distribution is also found to be inequitablenaturewith the major share of the loans having gone to the households in the upper strata of various socio-economic categories.

The reasons for the above pattern of loan distribution is to be found clearly in the type of lending policy being pursued by the RRB. As discussed in section II, the RRB has followed mainly collateral-based lending. When the lending is predominantly collateral-based, it is bound to benefit different categories of households more or less according to the pattern of ownership of assets. In the case of the sample households, 77.4 percent of the total loan amount obtained by them is based on the direct or indirect security¹¹ of land or gold or deposits (Table 8). Now, given the type of lending procedure or practice followed by the bank, this major chunk of the loans has got distributed across households in accordance with their capacity to provide/offer different types of collateral.

Table 8. Distribution of Loans Obtained by Sample Households from TGB by Type of Security

Type of Loan		Percentage
1. Security Based		77.41
	(i) Land based	49.80
	(ii) Gold loans	14.45
	(iii) Indirect security	13.16
2. Hypothecation and		22.59
Personal Security (unsecured)
Total (1 + 2)		100.00
(Rs in lakhs)		(17.44)

An understanding of the actual lending procedure or practice followed by the bank would explain as to how the inequitable distribution of loans has occurred. The bank is expected to identify its target groups like small and marginal farmers, agricultural labourers, rural artisans and other persons of meagre means on the basis of the household’s income or land. However, in actual practice, the bank was considering an individual and not an household as the borrowing unit. The actual asset disclosed or offered by an individual was being considered for determining the eligibility of the borrower. As a result, even members belonging to richer sections were able to borrow from the RRB in the name of the rural poor by showing only a part of land or income which makes them eligible to get a loan. Also, since the bank had fixed the maximum limit for individual loans, in order to maximise the total borrowings, households which could offer more than one collateral at a time had borrowed more than one loans in the name of either the same or a different member of the family. It may be seen from Table 9 that the average number of borrowal account per sample household is more than one and it increases along with the increase in the value of the asset owned. This multiple borrowing has in fact enabled many a household, particularly, the richer ones to obtain from the bank almost as much loan as they needed.

Table 9. Average Number of Borrowal Accounts by Asset Groups

Asset-Groups (in Rs.000s)	No. of Borrowal per household
< 1	1.0
1-5	1.0
5-10	1.2
10-20	1.3
20-50	1.3
50-100	1.5
100-250	1.8
>250	3.4
Total	1.6

Thus, security based lending coupled with individual rather than household based lending procedure has resulted in different type of households to obtain loan from the RRB more or less according to their asset ownership.

At the same time, as discussed in the previous section, a significant proportion of TGB’s loans are lent without any primary collateral. These are the loans which are provided mainly under various credit based poverty alleviation schemes to households selected by the government agencies. In the present study the loan amount borrowed from the TGB under various poverty alleviation schemes like IRDP, Antyodaya, Special Component Plan, etc. accounts for 22 percent of the total amount borrowed by sample households and for households in the lower strata of various socio-economic categories (column 5 in Tables 3 to 7), the major share of their loans has come mainly from these schemes. Out of the 197 sample households, 66 have borrowed under these schemes. Most of them have entered the institutional credit network for the first time by virtue of being selected under the poverty alleviation schemes. The inclusion of these households by the TGB has been possible mainly because of the insistence of the government to bring such households under the institutional credit network. The bank, as could be made out from the observations of its officials, has been a rather reluctant lender to households under this category. The credit for bringing these households under the institutional credit network therefore to a great extent, goes to these programmes.¹⁴