Role of Co-Operative Banks in Agriculture Credit: Organization, Growth and Challenges

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Role of Co-operative Banks in Agriculture Credit: Organization, Growth and Challenges Rajesh Kumar, Sanjay Malhan
In this study we have analysed the role of Co-operative banks in agriculture credit in India from 2001/2002 to 2006/2007 with the help of ACGR. The study reveals that the aggregate amount of agriculture credit has increased, while, the share in total institutional agriculture credit has been decreased from 37.91 in 2001/2002 to 18.51 in 2006/07 and further, found that the level of NPAs in Co-operative banks is very high as compare to other financial institutions in India. So, co-operatives banks should control their NPAs level for surviving in credit market of India in future. Key Words: Co-operatives, Agriculture credit, NPAs

Agriculture is the mainstay of the Indian economy. According to NSSO round 2001, 54.3 per cent workforce has been depends on agriculture, out of these, 50.3 percent depends on crop production and left 4 percent on livestock production for their livelihood. Agriculture and allied sectors contribute nearly 22 per cent in Gross Domestic Product (GDP) of India and further 9.93 per cent contribution in total export of India (Economic Survey of India: 2006). Agriculture sector plays a vital role in Indian economy through providing livelihood opportunity and export earnings. Agriculture is the most important sector of the Indian economy from the perspective of poverty alleviation, and employment generation. When any change in the agriculture sector-‘Positive or Negative’- has multiplier effect on the entire economy. At presently agriculture are facing much difficulties such as irrigation, HYVs, marketing of agriculture products, advanced technique of farming, fertilizer, credit and other capital equipment etc. Credit is the major factor all of them that affecting the agriculture development. The low productivity of land, heavy dependence on usurious money lender and high level of indebtedness were seem as the main causes of rural poverty and distress (Vidyanathan: 2010). There are two source of agriculture credit first is non-institutional i.e., Professional miner lenders, friends, relatives etc. and second is institutional source i.e., Co-operative banks, Regional Rural Banks and Commercial Banks. The institutional source of agriculture credit aim is providing high quality loans with low cost. But at present the aim of different institutions is not fulfils. The Economic survey (GoI), 2010, showed that out of 27 public sector banks, only 14 public sector banks achieved the agriculture credit target of 18 per cent agriculture credit, in case of private sector banks, only 8 achieved the target of 18 percent for lending to agriculture in 2009, further, National Sample Survey Organization (2003) in his “situation assessment survey” found that the ‘only 48.6 percent farmer households were indebted, of which only 57.7 percent were indebted to institutional agencies. In other words, only 28.04 percent of farmer households were indebted to institutional agencies. And further found that the ‘after nearly 37 years of nationalization and over 15 years of credit targeting for agriculture, in AP and Rajasthan the total debt of the farmer households from all institutional sources put together was less than that from the moneylenders. Further, in Punjab, Assam and Bihar, the total debt of the farmer households from institutional agencies was less than from non-institutional agencies. Thus, evolution of institutional credit to agriculture has assumed critical importance. In this study, we have examined the role of Co-operative banks in agriculture credit from 2000/2001 to 2006/07 in India. Thus, this study examined the organisation, trend and pattern of agriculture credit and challenges facing by Co-operative banking institution in India. Research methodology

The nature of present study is analytical. The study is based on secondary data. The necessary data were collected from...
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