While such practices increased revenues for lenders, it is less clear how they benefited cardholders. Also, paymentallocation rules tended to treat consumers unfavorably and made it difficult for them to benefit fully from promotions such as balance-transfer programs. Even as credit products were growing in variety and complexity, consumer debt was expanding dramatically over recent years.
These are: (i) insistence on collateral, (ii) complicated loan administration procedures, (iii) distances from the villages to the branches, (iv) higher monitoring and follow up costs, (v) culture gap between bank officials and farmers, (vi) political interference, (vii) inflexible lending policies and procedures including cumbersome documentation, (viii) difficulties in recoveries of overdue loans, (ix) lack of provision for consumption credit, (x) absence of effective systems for screening credit risks and, finally (xi) a misplaced belief that the borrowers in the agricultural sector, particularly, small and marginal farmers with low per capita incomes are risky and hence non-bankable.