Sajjad Zohir |
September 1982|

Credit is an important component of the current rural development programmes that are being pursued in many under-developed countries. Such programmes can be effective only if objective considerations are made of the non-institutional market for credit. This market reflects the underlying social and economic structure. The present study attempts to understand rural society in Bangladesh from observations made of the credit market.
The study is based on a survey of three villages in Noakhali district, conducted during the months of

April to August in 1981. The of the study show that in most cases the net creditors in the market have their surplus originating from non-agricultural sectors of the economy and the direction and nature of credit flow indicate that few changes may be expected from the forces within the rural society.
Institutional lending is observed to be sustainable only if changes in the modes of agricultural production are brought in from outside. Otherwise, its initial impact tends to lose momentum. Finally, the high interest rates, prevailing in the non-institutional credit market, seem to strengthen the vicious circle of poverty.

The study also focuses on issues such as the influences of kinship on lending, factors influencing the determination of interest rates, and the nature of institutional lending through the cooperative societies. These are discussed to facilitate an understanding of the social dynamics.

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