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Estimation of Agricultural Loan Default in a Private Sector Bank

Savitha, B (2015) Estimation of Agricultural Loan Default in a Private Sector Bank. In: Emerging Issues and Challenges in Banking. Emerging Issues and Challenges in Banking . McGraw Hill Education, New Delhi, New Delhi. ISBN 978-93-392-2428-8

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Abstract

Agricultural credit poses certain risks that complicate the credit appraisal and decision making process to minimize non-performing assets. Assessing the agriculture loans for possible default is required primarily due to increasing number of loan defaults. This study aims to explicate the factors that determine the risk of default and non-performing loans (NPL) in agricultural sector using the data obtained from a large private sector bank in Karnataka. The data of 638 farmers was analyzed using logistic regression method. The model predicts size of land holding, value of land, type of loan, credit to asset ratio and crop grown as important factors in determining the credit worthiness of the borrowers. NPLs are determined by type of loan, debt-to-income ratio and tenure of the loan. The factors predicted by the model can be incorporated by the bank to assess credit risk of borrowers. This would help the lending officers to recognize key risk factors and manage the loan portfolio better to decrease credit losses and mitigate risk in agricultural lending.

Item Type: Book Section
Uncontrolled Keywords: Agriculture, credit, risk, determinants, default
Subjects: Management > MIM Manipal
Depositing User: MIM User
Date Deposited: 31 Mar 2016 12:57
Last Modified: 18 Apr 2016 15:21
URI: http://eprints.manipal.edu/id/eprint/145715

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