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ROLE OF SHORT TERM CREDIT STRUCTURE & COOPERATIVES

SHORT TERM CREDIT STRUCTURE

Dr Balraj Vishnoi

States successfully provides its services to the rural farming community to provide short term agriculture loan for: a) Agricultural needs; b) Rural development purpose;   c)Non-agricultural loans based on various programmes ; d) Employment oriented schemes; and significantly e) Short term loans. For instance RSCB enhances Short term Co-operative Credit Structure with innovative banking and secure financial services with the objective to Serve Rural areas in particular.

State Cooperative Bank Ltd (SCB) is an Apex institution of the District Central Cooperative Banks (DCCBs) functioning in the state. The governance of Primary Agriculture Cooperative Societies (PACS) meant for villages, District Central Cooperative Banks(DCCBs) & RSCB is ensured by elected board.

Functional and Structural System

                                                                

In order to achieve the objectives of the Cooperatives, an extensive net-work is available to cater the needs of rural masses at their door-step with a three tier short-term cooperative credit delivery system.

At the Apex level, Rajasthan State Cooperative Bank (RSCB) with its 5 Regional and 8 local (Jaipur) Branches in the State. At the District level 29 DCCBs covering 33 Districts of the State having 409 Branches.

At the grass-root level 5389 PACS/LAMPS which covers 100% of the geographical area of the state, i.e., 42955 villages.

PACS are the backbone of Short-term Cooperative Credit Structure. Out of 5389 PACS/LAMPS in the state, 4117 PACS working as Mini Bank were collecting deposits from their members. Total deposits of these Mini Banks stood at Rs.805.69 crores as on 31.3.2011AND show variation by 2013 in terms of target and deposits not up to mark.

SHORT TERM COOPERATIVE STRUCTURE

RBI  NABARD

RSCB

DCCB

BRANCHES

FOCUS:

1 issue Kisan Credit Card to all eligible farmers.

2To increase the borrowing membership by the end of March, 2013.

3 To inculcate thrift habits in rural areas by mobilizing rural savings through PACS/MINI Banks and branches of DCCBs. GSS(PACS/LAMPS)

4 To implement Life Insurance/ Personal Accidental Insurance/ Crop Insurance Schemes/Group Health Insurance Scheme covering borrowers & customers of Cooperative Sector.

5 To release farmers from the clutches of money lenders by providing cheaper and timely institutional credit.

6 To increase investment credit to farmers to create/enhance capital formation in the state.

7 To support State Government's efforts to implement the revival package for Short-term Cooperative Credit Structure.

8 To promote farmers club & SHGs ensuring. Credit linkage of Maximum SHGs & special efforts for women SHGs.

9 To bring about technological changes in the Short-term Cooperative Credit Structure.

10 To enhance corporate image of cooperative banking in general and Apex Bank in particular.

11 To start branches of Mini banks in more than 4000 Bharat Nirman Rajeev Gandhi Seva Kendra’s constructed at Gram Panchayat Level.

12 To complete the Computerization of PACS under Vaidynathan Revised Package by Nabard so that Uniform Common Accounting System (CAS) and Management Information System (MIS) are successfully implanted.

KISAN CREDIT CARD

In the State of Rajasthan, the crop loans were disbursed in the cash credit form based on " Sri Ganganagar or Punjab Pattern" even prior to the introduction of Kisan Credit Card(KCC) Scheme. However, with the introduction of KCC scheme, loan disbursement procedure has been renamed accordingly. At present all crop loans are being disbursed under

KCC. The State Govt. has also taken keen interest to see that more and more KCC are issued to the eligible farmers of the state. Short term cooperative credit structure of the state has issued KCC not op up to expectation by 31st March,2013.

DIVERSIFICATION OF LOAN PORT-FOLIO

In last few years concerted efforts have been made to diversify loan portfolio so as to provide an opportunity to DCCBs to cross subsidize their losses in traditional crop loan business. Consequent to above deliberated efforts, DCCBs have been able to develop investment portfolio over a period of time.

In this endeavor NABARD has introduced lots of new schemes

viz; water harvesting structure, organic farming, agri-clinic /agri-business centers, aromatic and medicinal plantation, onion storage structure, horticulture, self help groups, house building, swarojgar credit card etc. for which DCCBs can avail refinance from NABARD and can further diversify their farm and non-farm investment portfolio. Apex Bank on its part has been pursuing DCCBs to finance for innovative activities, the sole purpose of which is to diversify the loan portfolio of these banks and to facilitate economic development through creation of assets in the rural areas of the state.

COMMERCIAL LOAN SCHEMES

Ever reducing margin on agricultural lending made diversification need of the time. Consequent to this concept several loan schemes were launched from time to time keeping in view the requirement of general public of the state. Most of the schemes have been adopted by DCCBs, some of them are as under: -

1 Personal Loans.

2 Vehicle Loans.

3 Working capital finance to the existing & new indutrial units.

4 Cash Credit limits.

5 Krishak Mitra Yojana

6 Aawas and Vyavasayik parisar loan Scheme.

7Swarojgar Credit Card Scheme.

8 Gyan Sagar ( Education) loan scheme.

9 Financing against N.S.Cs & Securities.

10 Avika Sahkari Credit Card Scheme for Sheep rearing.

11 Viswas Yojna for handicapped persons (FAILURE IN RAJASTHAN ).

12 Loan against property

CREATING INNOVATIVE FINANCIAL PRODUCT FOR THE POOREST OF THE POOR (SELF HELP GROUPS):

Under the micro-credit system promoted by Short Term Cooperative Credit Structure in the State, the DCCBs/PACS have been playing the role of facilitators to organize Self Help Groups of specially the women clientele to address their common socio-economic needs by pooling their resources to make available small interest bearing loans to their members.

The process helps them in inculcating saving habits and imbibes the essentials of financial intermediation including prioritization of needs, setting terms & conditions, accounts keeping & building financial discipline by handling resources of a size beyond their individual capacities. These groups are graduated to be linked with DCCBs/PACS. Since beginning of the SHG-Pilot project new SHGs have been formed and most SHGs were benefited by providing cumulative credit.

WEATHER BASED CROP INSURANCE SCHEME:-

State Govt. has launched Crop. Insurance scheme from Kharif Crop under  which prescribed Crops in the notified area are being insured. During Kharif 2013 cropsrural farmers was insured at minimum premium; remitted to insurance companies.

*RBI Report:

Micro Credit     

                                                                                                               

Loans provided by banks directly and through SHG/JLG mechanism will be eligible to be classified as priority sector advances subject to the conditions given below:

       i.            Income limit of the individual beneficiary is ` 60,000 p.a. in rural areas and ` 120,000 p.a. in non-rural areas.

     ii.            Loan does not exceed ` 50,000 per beneficiary.

  iii.            Loan is without collateral.

*Loans Individual/SHGs

The banks should obtain from MFI, at the end of each quarter, a Chartered Accountant’s Certificate stating, inter-alia, that (i) 85 percent of total assets of the MFI are in the nature of ‘qualifying assets’, (ii) the aggregate amount of loan, extended for income generation activity, is not less than 75 percent of the total loans given by the MFIs, and (iii) pricing guidelines are followed.

Cooperatives as an important financial player in rural economy

Cooperative system was created as an important institutional framework for ensuring necessary credit flow to agriculture. Rural cooperative credit institutions have played a large role in providing institutional credit to the agricultural and rural sectors in the past. However, contribution of cooperative sector in the upliftment of rural economy has drastically reduced over the years. Out of the total direct institution credit for agriculture and allied activities, loans issued by cooperatives was 23.9 per cent in 2008-09, down from 46.2 per cent a decade ago. This ratio, however, improved in case of SCBs from 44.8 per cent in 1998-99 to 65.3 per cent in 2008-09.

There is, therefore, a need to revitalize the cooperative sector by ensuring speedy implementation of the Vaidyanathan Committee recommendations. The key recommendations of the Committee were related to encouraging such institutions for product restructuring, institutional restructuring and allowing them to borrow from any financial institution. So far, 25 State Governments have signed the MoU with Government of India and NABARD, comprising more than 96 per cent of the rural cooperatives operating in the country.

Target groups under Agriculture and allied activities

In order to have focused approach for meeting the credit needs of different groups under agriculture sector, target groups are classified as under:

a. ‘Small & Marginal farmers including SHGs, JLGs and other aggregators exclusively of SFMF;

b. Other individuals, aggregators and proprietorship firms;

c. Others such as corporates, partnership firms & institutions.

Sub-target for small and marginal farmers

The definition of Small and Marginal farmer is given below:

Small Farmer: A farmer with a landholding of more than 1 hectare but less than 2 hectares

Marginal Farmer: A farmer with a landholding of up to 1 hectare.

MANAGEMENT INFORMATION SYSTEM (significance)

Robust Management Information System (MIS) is a sine qua non for effective monitoring of performance, understanding the gaps and formulating right policy responses. With adoption of technology by banks, the scope for better MIS exists. Technology has changed the face of banking in India and it can as well enhance quality and timeliness of data. Processing of data into useful information for MIS and decision support systems in individual banks as well as at aggregate level is important. For this, a uniform data reporting standards need to be put in place which will reduce reporting requirements and improve overall efficiency. Keeping this in view, there is a need to review the existing MIS prevalent in banks, and suggest ways to streamline the same in terms of frequency of compliance, data consistency and data integrity.

Towards credit cooperative reform

Since the 1990s India has taken steps to liberalize its financial sector. These reforms were first mainstreamed in the government-owned commercial banks and subsequently among the regional rural banks (RRBs), but not in the rural CCS. A comprehensive reform program to transform India’s CCS has been prepared in recent years (Vaidyanathan 2004) and is now being implemented.  Announced in January 2006, the reform package was “designed to transform the potentially viable CCBs into democratically governed, efficiently managed, financially sustainable, self-reliant entities that can provide a wider range of financial services to the rural poor”. Legal reforms are to be geared at full independence and autonomy of cooperative institutions; regulatory reforms at effective enforcement of RBI’s prudential regulations and corporate governance standards; operational reforms at uniform financial reporting and internal control systems, improved credit appraisal and risk management, and new staffing policies; and restructuring at cleaning the balance sheet.

Since 2006 Nabard has been implementing the reform package on behalf of the Government of India. Total cost of the short-term CCS at the all-India level was estimated at Rs136bn (US$3bn): 92% for cleaning up accumulated losses and 8% for audit, human resource development, and technological support. The costs are to be shared by the central government (68%), state governments (28%) and the CCS (4%). The central government (GOI) is to provide its share as grants, while the states are to meet their share from their budget or through open market borrowing. In support of the revival package, ADB sanctioned a loan of US$1 billion, the World Bank US$600 million and KfW €130m to GOI. GIZ, the German Agency for International Cooperation, in cooperation with DGRV, the German Cooperative and Raiffeisen Association, is among the agencies providing technical assistance, with a focus on an improved audit system and the development of a competence-based training certification system. In 2007 one of Nabard’s first acts of implementing the Revival Package for the Short-Term Credit Cooperative System aimed at internal control and financial transparency of the PACS, by preparing an obligatory Common Accounting System (CAS) and Management Information System (MIS) together with handbooks, followed by similar initiatives for the DCCBs and SCBs, with inputs by GIZ and DGRV. Implementation of the CAS/MIS, including capacity building and consolidation of reporting up to state and national levels, is a still ongoing, a challenging process. 

By March 2012, 25 states (out of 28) participated. The number of PACS has been declining due to mergers and closures. Special audits had been completed of 80,837 PACS in 25 states, and of 319 Credit Cooperative Banks (CCBs) in 15 states. Recapitalization assistance had been released to 54,715 PACS, amounting to US$2.28 billion, with a share of 79.1% from Union Government, 7.5% from state governments and 13.4% from the CCS/PACS. The CCS question the likely outcome insofar as the main focus, next to internal control of CAS and MIS on recapitalization.

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Footnotes:

RBI annual report

STCR of GOI

KVIC and UNDP assistance, Dr.Balraj Vishnoi / Cooperative Department, Rajasthan.

RSCB ltd Rajasthan/Apex bank progress and profile

Nabard circulars 71/DCRR-04/2007 (18.5.07), 157/DCRR-15/2007 (23.8.07), 123 /DCRR-09/2007-08 (19.7.07).

MOU beween GOI and NABARD /CAS/MIS

Innovation in Training of Personnel in an Organization

  Innovation in Training of Personnel in an Organization

  Dr. Balraj Vishnoi

 

1         The trainer who is enthusiastic, energetic and genuinely interested in both the subject and getting his or her message across will evoke the greatest response from the trainees.

2         Well prepared modules for training system and to provide guidance to trainers in the skills of conveying their message successfully and transferring related information.

3         For well prepared training situation there is mutual respect and trust between trainer and trainees and the responsibility of the trainer to ensure that even the weakest trainee performs to his/her best and the trainees develop a feeling of desire to achieve.

4         Trainer is the motivator and the trainees are the motivated in a training institute therefore training module to be schedule according to organizational behaviour.

5         It is important that all members of a training institution /faculty should be familiar with the principles espoused in the training modules so that to ensure that every presentation in a training course for a scheduled period should embodies the principles according to prescribed module.

6         Needful in modern era that the trainees are not only told how to train, but see how it should be done successfully with interactive discussion in sessions with a FEEDBACK as necessary part of training .

7         The modules contents should be intended as memory joggers for those trained to train others thus depending on the nature of the subject, some material is presented in point form while other material is covered by full text. PPT presentation need to be more animated rather than just theory presentation in points in traditional style

8         The trainer must be specialized with scheduled program and having skilled in presentation of the training information and related methods. He or she must be at least familiar with many other aspects of training not covered by the modules such as motivation theory, the art of public speaking, conducting discussions, course planning, written communication, verbal methods and computer skill etc.

9    Faculty in training positions are expected to be highly competent to present ideas, giving directions and explaining procedures. In fact, this quality of being an effective communicator is generally considered to be an essential element of the effective trainer's skills in an organization.

 The way in which trainer interpret and transmit information of organization’s policies, goals, values and procedures has significant influence on the way trainees/employees/officers develop their perceptions and their commitments to the office procedure.

 The following guidelines will make the transmission of effective message:

a)Use simple language and avoid technical jargon.b) Keep explanation short and do not swamp them with unnecessary detail (which is called "overloading"). c) Choose reasoning that is natural and familiar to trainees related to trainer’s topic.d) Make explanations colorful by using examples to illustrate points. e)List all supporting points first; then return to each point and fill in the details. f) Use visual aids, where possible, to illustrate points for trainers.

Do not get defensive when a trainee asks a question or makes a statement that is or appears to be a criticism. As a trainer and communicator, must retain objectivity. To become defensive and subjective quickly signals to the listeners that you are not sure of yourself or your facts, and they may assume that what you are saying is unreliable. This can lead to loss of credibility as a trainers.

     Use of exercise : Ask participants to give a five- to seven-minute mini-lecture on a subject of their own choice that is related to food quality control. Instruct the participants to prepare a point outline on the subject of their lecture for use during their presentation.

      Use of Handouts with regular exercise related to served handouts it should be:-brief and    sharp/containing only essential details, Be accurate and complete, designed clearly and attractively, Include diagrams if appropriate, always have a title, planned, standard size, presented in a logical sequence and pitched at a level appropriate to the trainees. Handouts carry the stamp of authority, provide a record of important information, supply data to reflect the presentation, provide background documentation (longer and more comprehensive), can be studied at the reader's own pace AND convey with certainty the same data to a number of trainees.

    Emphasize on Common Accounting system, Computerization and field visit training to staff and management of government staff of cooperative societies , vyavasthapaks, secreateries  for PACs secretaries and managers KVSS etc.

    Training of financial knowledge on “monetary share process”  such as for government through NABARD based on a) Capacity building programs from NABARD  b) Training institutes master trainers to be send to luckhnow at BIRD for ‘ Trainers training’ programmes as compulsion.   

     New training program on “ Financial impairment of the Co-op Credit Structure(CCS)” due to impairment in governance and management based on suggestions by Vaidhyanathan committee.

As PACS are very weak and nearly half of them incurring losses thus need for training on reorganization through 5 days training programmes by modifying traditionally outdated BDP based on “Modern business development” model called MBD and professional practitioners to be called teaching rather than traditional calling routine lecturers with theoretical knowledge only as seen in RICEM. Further Faculty Members and training center’s tutor should have knowledge of using computer             related work also rather than dependency on operators everytime due to poor HR practices; non-professional trainer / faculty staff  without HR and professional staff.

Innovation needed to organize Training schedule such as “Issues of Cooperative Credit Structure” related to subtopics like High NPAs ; high risk premium in lending Loan appraisal systems, monitoring very poor; Poor internal checks and controls; Financial disclosures not transparent. Duality of control.Further needful to built Module based on “CCS – Governance, legal & regulatory issues” like non conduct of elections for long periods, Boards superseded in a number of SCBs/DCCBs, State Governments combine the role of Dominant Shareholder, Management, Supervisor and Auditor, Financial Disclosures not transparent, RBI’s ability to enforce its regulatory powers constrained and sub-topic on NABARD exercising supervisory powers on behalf of RBI.

 
Dr Balraj Bishnoi                                              ...... 1
jnvishnoi@gmail.com