Pastoral Views

AR Patel explains the need for a National Comission on rural banking where financial institutions would play a critical role in ameliorating the condition of the rural populace

It was indeed in the right direction that after independence, the Government of India, in consultation with the Reserve Bank, initiated several policy measures to strengthen co-operative credit structure for providing production as well as investment credit to farmers to support farm sector development. It was in this context that the All India Rural Credit Survey Committee was appointed in 1952 and acceptance of its recommendations laid the foundation for formulating policies and programmes such that two wings of the co-operative credit structure can progressively meet the credit needs of the farm sector. Subsequently, Agricultural Refinance Corporation was established in 1963 to make longterm credit available to farmers for investment purpose by way of refinance through long-term wing of the co-operative credit structure. In order to achieve the objectives of modernisation, growth and self-sufficiency in the area of agriculture farmers’ were demanding for credit to switch over to High Yielding Varieties Programme which then existing co-operative credit institutions were unable to meet. Accordingly, 14 commercial banks were nationalised in the year 1969 and six more in 1980 to meet this increasing demand for farm credit. Besides, Regional Rural Banks were established from the year 1975 for improving a large number of small and marginal farmers’ access to agricultural credit and achieving the social and equity objectives. Thus, as agriculture is the vital sector of the Indian economy, several programmes, schemes and projects have been initiated by the Government and banks from time to time which led to disbursement of significant amount of credit [Table No.1] to make agricultural sector a vibrant, dynamic and a sustainable one. While disbursement of farm credit of very significant amount since 1970’s has indeed facilitated the country to substantially increase food grain output, it is sad that even today a large number of rural poor, in view of their lack of purchasing power, cannot afford to purchase food grains, even if it is available. There is now a greater and more urgent need than before to pay undivided attention to accelerate the process and pace of rural development through rural banking with which agriculture is interlinked. It is in this context an attempt is made here in brief to highlight the efforts so far made to develop farm and the rural sector. 1. Objectives and concept of rural development
2. Aspects of planning to accelerate the rural development process and
3. Need for establishing a National Commission on Rural Banking for Rural Development to review...

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