public and private sector banks are being encouraged to enhance credit - delivery while strengthening disincentives for shortfall in priority sector lending. fifth, the banks are urged to price the credit to farmers based on actual assessment of individual risk rather than on a flat rate depending on category of borrower or end - use while ensuring that interest - rates charged are justifiable as well as reasonable. in brief, the thrust is on enhancing credit - delivery in a regime of reasonable credit - prices within the existing legal and institutional constraints and to this limited extent there has been “ a major change in the mindset ”, that professor rao desired. in this background, the agenda for future consists of five parts. first, there is a need for legal and institutional changes relating to governance, regulation and functioning of rural cooperative structure and regional rural banks who have to be critical instruments for rural credit in future. in this regard, it is useful to note the nature of competition and accountability to shareholders governing the functioning of commercial banks which would make their foray into rural credit predominantly subject to commercial considerations. the changes warranted in cooperatives as well as rrbs involve deep commitment of state - governments and have significant bearing on political economy. thus, the current thrust to improve credit - delivery may soon face limits unless the legal and institutional changes are agreed upon and acted upon in good faith in a timely fashion. it is the fervent hope of rbi that a consensus will develop soon on these fundamental changes that are essential for achieving the broad policy objectives. second, there are overhang problems of non - performing loans and erosion of deposits in both cooperatives and rrbs. there is some assessment of magnitudes of losses and capital needs in rrbs while in the case of cooperatives the data are not yet firm. it may not be appropriate to continue to permit institutions that are not solvent to seek and accept public deposits and hence rbi favours early restructuring and recapitalisation. there is an inevitable fiscal impact of any scheme of recapitalisation which has to be transparent and has to bear all the costs of overhang issues as well as capital adequacy to assure continued solvency and safety of public deposits in future. such a one - time fiscal support is justifiable, urgent and essential for several reasons, including that “ there is no alternative ” and delayed response could end up being more expensive. the current acceleration in credit - delivery can be sustained in the medium term, if such fiscal support from

##uwalia as a telugu or an andhraite since he lived in hyderabad and had his schooling - perhaps the secret of the solid foundation for scholarship. there are several concerns in relation to rural credit which are generally expressed in terms of inadequacy, constraints on timely availability, high cost, neglect of small and marginal farmers, low credit - deposit ratios in several states and continued presence of informal markets. it is held that while the commercial banks are more focused in improving efficiency and profitability, they have tended to give comparatively less priority to rural credit. regional rural banks ( rrbs ) and co - operatives appear to face serious problems of governance as well as operational efficiency. it is argued that most part of the co - operative credit structure is multi - layered, under capitalized, over - staffed and under - skilled, often with mounting non - performing assets while in a few cases resulting in erosion of public deposits as well. many of the rrbs also appear to share most of these problems, though there are some vibrant and viable institutions in this category. these problems relating to rural credit have been well documented and several policy - approaches were made to remedy the situation. however, there is some element of dissatisfaction that overall situation in regard to rural credit is not improving to the desired level inspite of such a series of actions. it is a matter of concern that cognizable success is eluding the policy - makers, at a time when increasing commercialization warrants a big thrust in institutional credit to agriculture. there is thus a discernible widespread intellectual recognition that while immediate measures are undertaken to increase the flow of credit to agriculture, there is a need to review the policy of rural credit in a comprehensive and thorough manner. the current strategy adopted by rbi to increase the flow of credit may be summarized as follows. first, the coverage of rural credit is extended to include facilities such as storage as well as credit through nbfcs. second, procedural and transactional bottlenecks are sought to be removed, including elimination of service area approach, reducing margins, redefining overdues to coincide with crop - cycles, new debt restructuring policies, one - time settlement and relief measures for farmers indebted to non - institutional lenders. third, kisan card scheme is being improved and widened in its coverage while some banks are popularizing general credit cards ( gccs ) which is in the nature of clean overdraft for multipurpose use, including consumption. fourth,