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A
loan in time saves nine contd
 SHG
programme
This
programme combines the strength of the formal banking system with
the reach and flexibility of informal self-help groups to make credit
accessible to the rural poor. The SHGs mobilise their own savings,
convert them into loans to members and plough their earnings from
interest income back into equity. The low bank and client transaction
cost and low risk coupled with the absence of interest rate restrictions
and repayment rates of more than 99 per cent, SHG banking is highly
profitable. Banks are now beginning to find the system very attractive.
Over 43 commercial banks, 177 regional rural banks (RRB) and 94
cooperative banks from 27 states now participate in the programme.
The number of SHGs availing micro credit grew 82 per cent from 81,780
in 1999-00 to 149,050 in 2000-01.
Kisan
Credit Card Scheme
The
scheme aims to simplify the credit mechanism and make timely credit
available to farmers. Under the scheme, banks have issued over 1.80
crore KCCs, worth an aggregate Rs 42,469 crore, up to August 31,
2001. Some of the features of this scheme are:
- Revolving
cash credit facility, allowing any number of withdrawals and repayments
within the limits.
- The
entire production credit need for a full year, plus ancillary
activities related to crop production to be considered while fixing
the limit.
- Conversion
or rescheduling of loans in case damage to crops due to natural
calamities.
- Personal
accident insurance coverage of Rs 50,000 on death or permanent
disability and Rs 25,000 on partial disability.
The
Government of India constituted in 1999 a Task Force to ‘study the
functions of cooperative credit system and to suggest measures for
its strengthening’ under the chairmanship of Jagdish Capoor, Deputy
Governor, Reserve Bank of India. The major recommendations of the
committee are:
- Strengthening
the resource base of cooperative banks, reducing government control
over cooperatives, giving them maximum autonomy and making them
‘member driven.’
- Adoption
of Model Cooperative Societies Act. Cooperative Banks to work
like professional organizations on sound managerial systems.
-
Cooperative Banks to initiate necessary steps for ensuring viability,
to initiate measures for the rehabilitation of potentially viable
cooperative banks.
- Setting
up of a Cooperative Rehabilitation and Development Fund at Nabard
and Mutual Assistance Fund at the State level,
- Government
support to cooperative banks in their recovery efforts,
- Branch
licensing of District Cooperative Central Bank (DCCBs) to be brought
under the provisions of BR Act 1949,
- Bringing
Transparency and Disclosure norms in respect of cooperative banks.
 Nabard
appointed an Expert Committee headed by Professor VS Vyas in August
2000 to review the emerging scenario in rural credit and preparation
of workable comprehensive plan of action for a more effective rural
credit. The committee submitted its report on July 23, 2001.
The
major recommendations of the Committee
are as follows:
- Strengthening
the cooperatives.
- Model
Cooperative Act may be adopted in all states and BR Act be made
applicable to cooperatives.
- Restore
health of Pacs by scrapping cadre system.
- Audit
of Pacs by professional CAs.
- Selective
de-layering of ST cooperative credit structure.
-
Integration of long and short term structures.
- Provide
guarantee free refinance with relaxed norms for disadvantaged,
under developed areas or states.
- Central
banks need to offer value added services through rural branches
to improve viability of these branches.
- Service
Area Monitoring and Information System returns to be made statutory,
shortfall in lending to weaker sections be called in to RIDF and
restrictions on interest rates on small loans be removed.
- Credit
for short term and long term for both agriculture and non farm
activities be progressively under KCC.
- In
case of patently non-viable RRBs the option of liquidation be
considered.
-
RRBs without accumulated losses should be recognised as Local
Area Banks (LAB).
-
Human resources requirement study to be conducted for cooperatives
and excess staff be redeployed or offered voluntary retirement
scheme.
- Need
to motivate and train the employees manning Pacs, rural branches
of CBs and RRBs, and computerised back and front office operations.
-
State Government may support the efforts in improving recoveries
of credit institutions and by improving and updating land records,
waive stamp duty and registration fees on loan documents.
- Nabard
to play a more active role, form a venture capital subsidiary,
allow preferential interest rates on its refinance to thrust sectors,
make cooperative development funds more pro-active, sharpen development
action plan, open more DDM offices, incorporate greater disclosure
in balance sheet of cooperative banks and RRBs and publish Trend
and Progress in Cooperative Banks and RRBs from March 2002.
- State
Governments to take greater interest in RRBs and cooperatives,
devise internal system to make the best use of District Credit
Planning, promote private sector participation in rural development
by creating better facilities.
- Panchayati
Raj and civil society institutions can be made effective partners
and helpmates to credit bodies in various pursuits, such as deposit
mobilisation, awareness creation and recovery.
- Government
to support revitalisation of cooperatives and RRBs, carefully
select nominees to RRB Board, legislate enabling measures, defer
incidence of corporate income tax on Nabard by five years.
- State
Governments to take greater interest in RRBs and cooperatives,
devise internal system to make the best use of District Credit
Planning, promote private sector participation in rural development
by creating better facilities.
- RBI
should announce rural credit policy and review achievements, advocate
revitalisation of cooperatives and extension of BR Act to cooperatives,
ensure greater involvement of central banks in rural credit, monitor
lead bank performance, extend greater support to Nabard with an
increase of 10 per cent to 15 per cent annually in its general
line of credit to Nabard and allow access to National Industrial
Credit.
A
free-flowing, transparent and ameliorating synergy between the various
institutions and farmers is crucial.
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