Question

Classify rural credit in different categories on the basis of time period.

Answer 1

Rural credit may be classified as

(i) Long-term Credit - These loans are for a period of 5 to 20 years. These loans are required to acquire permanent assets like tractors, land, costly equipment, tubewells, etc.

(ii) Medium-term Credit - Such loans generally stretch over a period of 12 months to 5 years. These loans are required for purchasing machinery, constructing fences and digging wells.

(iii) Short-term Credit - These loans are for a period of 6 to 12 months. These loans are required for buying seeds, tools, manure, fertilisers, etc. These loans are given to the needy borrowers by cooperatives, moneylenders and banks.