Question

what do we mean by :

using credit for non productive purposes?

Answer 1

It implies taking credit for consumption purposes and not using the credit for the production ventures. Since the loan is not used for production, recovery of loan also becomes difficult as it is spent on non essential consumption purposes. For instance recently under Kisan credit scheme which aimed at giving credits to farmers for the purchase of seeds, fertilizers and pesticides, besides production needs,it has been found that farmers are using those loans to meet personal needs.