Explain in brief the cooperative credit structure as it obtains in India.
Today, Co-operative credit societies play an important supporting role in the agricultural credit in India. Under the system, the individual savings of different farmers are pooled together to meet the financial requirements of the needy members of the credit society. This enables the economically poor individual to gain strength as a part of the group by gaining mutual financial support. These societies provide loans for various productive purposes (such as for seeds, fertilisers, irrigation purposes, etc).
In India, the rural co-operative credit societies are governed by the rules and regulations of NABARD (National Bank for Agriculture and rural Development). NABARD forms the apex bank for rural credit and finance in India. Based on the period for which the credit is extended, the co-operative credit structure has been organised into short-term structure and long- term structure.
Under the short-term structure, a three-tier structure is followed.
- Primary Agricultural Credit Societies (PACs)- PACs are formed at the village level by ten or more than ten persons and loans are provided by PACs for various productive purposes.
- At the second level are the District Central Co-operative Banks (CCBs). CCBs are further divided into two types- Co-operative banking union (in which only the co-operative societies can become members while membership is not open to individuals) and Mixed central Co-operative banks (in which both the individuals as well as co-operative societies can become a member).
- At the highest level are the State Co-operative Banks which act as a support system to CCBs to enhance their capacity to provide loans and credit at the village level.
The long-term structure comprises of Land Development Banks. They provide credit for long-term requirements such as purchase or agricultural equipments, irrigation purposes, repayment of old debts, etc.