This paper analyses the factors governing loan recovery performance of the primary agricultural credit societies in 19 states of India during 1997β2005. The paper's main finding is that the government's contribution to equity capital of credit societies is detrimental to their recovery. Increase in member size and rising proportion of non-borrowing depositors also adversely affect their recovery. Comparative Economic Studies (2009) 51, 384β400. doi:10.1057/ces.2009.6; published online 14 May 2009