135
5
Total Flow of Ground-Level Credit for Agriculture
from All Institutional Agencies
The study hitherto has concentrated only on bank advances extended by
scheduled commercial banks including regional rural banks (RRBs) because of
three self-evident reasons; increasing and now dominant involvement of these
banks in agricultural lendings; definitive policy focus on these banks in terms
of priority sector targets after bank nationalisation; and neater availability of
data for them through control and statutory returns. But, India has a long
history of rural finance from the cooperative sector too.
“Although the share of cooperative credit is now much lower than that
of commercial banks, the reach of cooperative credit societies is much
wider. With over 1.10 lakh primary credit societies and 127 million
members and 45 million borrowing membership, cooperative credit
societies have more than twice the number of rural outlets and four
times more accounts than those of scheduled commercial banks and
RRBs put together. Cooperative credit societies provide small loans to
small borrowers in rural areas. In March 2003, while the public sector
banks had 164 lakh accounts with an average loan size of
`
31,585,
the cooperative societies had 639 lakh account holders whose average
borrowing was only
`
6,637” (
Report of the Task Force on Revival
of Cooperative Credit Institutions
(Short-Term), February 2005,
Chairman: A. Vaidyanathan).
In fact, as we would presently show, loans issued by the cooperative institutions
for the agricultural sector until the second half of the 1990s had always been
higher than those issued by scheduled commercial banks and RRBs together
(Chart 10). In addition, there are sizeable amounts of indirect assistance
extended by cooperatives in the form of loans to institutions, state electricity
boards and commercial organisations engaged in the distribution of agricultural
inputs or in on-lending secondary assistance to weaker sections; in this respect
too, available data suggest that the involvement of cooperatives in lending to
weaker sections had been much more extensive than that of commercial banks.
The objective of this chapter is to present a review of the aggregate
flow of institutional finance for agriculture and allied activities including that
from cooperatives and how differing roles are played by cooperatives and
commercial banks in rendering crop loans and term loans for the farm sector
over years. In doing so, we stern clear of the data problems cited above and
