Hand in Hand
Dr
Subrahmanyam in conversation with Latika Sakhuja, stresses that co-operative
banks are the first and sole arm for disbursing agriculture finance
and should be granted due credit
Co-operative banks have been committed to the agriculture sector
since their inception in 1904.
They have the largest network covering states and villages alike,
across the country. These institutions have numerous strengths and
possess the ability to spread credit to farmers even in the remotest
areas. In spite of this, the co-operative banks structure, in India
does not have the kind of support and backing that is required to
exploit its potential. Dr Subrahmanyam, Managing Director, National
Federation of State Cooperative Banks, gives us an insight.
What
is the role of co-operative banks in rural and agricultural development?
Co-operative banks have the largest network in India, and the
potential to provide 100 per cent credit coverage to agriculturists
across the country.
They aim at providing credit to each and every farmer across the country
with their network spreading across the nation, from the state level
to the village level. These banks have been committed to farmers since
the past 100 years and are memberdriven organisations. In fact, 65
per cent of the Kisan Credit Cards are issued by co-operative banks.
Also, short-term agriculture credit was a monopoly of co-operative
banks till 1969.
The role and importance of co-operative banks has been re-emphasised
time and again in serving the needs of the rural economy through ensuring
smooth and enhanced flow of credit.
Co-operative
banks have been termed as the third arm for delivering farm credit
in the Budget for 2004-05.What
are your comments on this and on the steps initiated in the Budget?
The undoubted intention to double the flow of agricultural
credit in three years may not be easy to achieve if the resources
are diverted solely to state governments instead of farmers through
cooperative banks. It becomes all the more necessary to provide proper
support to co-operative banks, as the responsibility to ensure the
doubling of credit has also been entrusted to them, without assessing
their actual capabilities.
The statement that the co-operative banking system is the third arm
for delivering farm credit is far from reality. In fact, it should
be viewed as the first and sole arm for disbursing agricultural credit,
as contribution from other players is insignificant.
The Budget proposals have made it amply clear that the Government
of India, irrespective of the party in power, has never demonstrated
its sincerity towards strengthening the 100-year old rural co-operative
banks credit delivery institutions. In fact, the Government of India,
in addition to the State Governments, has always utilised the potential
and strength of the co-operative banks in implementing their programmes
without any concern towards their financial viability. Illconceived
decisions to lower the rates of interest, measures to vitiate recovery
environment, and measures to affect their image have contributed to
weaken co-operative banks.
The Union Budget, 2004-05, proposal did not reflect the objective
of the Common Minimum Programme on the rural co-operative bank credit
delivery system, especially the assurance to nurse the system back
to health. The realisation of the fact that “Unless co-operative
banks are healthy and creditworthy, it would not be possible to provide
credit to every farmer in need...” has not reflected in the Budget.
What is the constitution and role
of the task force for co-operative banks that was set up as per the
suggestions in the Budget?
Rural co-operative credit institutions play an important
role as financial intermediaries, particularly for the agriculture
sector and for rural development. These institutions, according to
the...
contd...
TO
READ FURTHER... SUBSCRIBE TO
YOUR COPY TODAY!!!
