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.
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).
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