Mumbai, June 15: The credit flow of commercial banks to agriculture sector has increased by 21 per cent at Rs 41,033 crore for the fiscal 2002-03 over Rs 33,587 crore extended in previous fiscal, even as rural banking witnessed a decline in coverage of borrowers. Short term lending of commercial banks also recorded a 21 per cent increase at Rs 21,873 crore in FY-03 (Rs 17,904 crore in last year) while medium/long term credit swelled to Rs 19,160 crore (Rs 15,683 crore in last year), according to the data available with National Bank for Agriculture and Rural Development (NABARD) here.
After the introduction of financial sector reforms, public sector banks were shying away from operating in rural areas dealing with numerous small loan accounts, it said.

"With increased emphasis on profitability these banks are reducing their presence in rural areas, which is reflected in the reduction of rural branches and declining share of net bank credit", it said.
The commercial banks have emphasised on efficiency and viability through rationalisation of their operations and consolidation of their branch network and this has resulted in relocation and even closure of rural branches, it said. Bureau Report