The co-operative movement was started in India largely with a view to providing agriculturists funds for agricultural operations at low rates of interest and protect them from the clutches of money lenders.
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They meet all types of credit viz., short term, medium term and long term credit requirements.
Co-operative Agricultural Credit Structure:
ADVERTISEMENTS:
Short term and Medium term credit (three tiers):
1. State Co-operative Bank (SCB).
2. District Central Co-operative Bank (DCCB).
ADVERTISEMENTS:
3. Primary Agricultural Credit Societies (PACS).
Primary Agricultural Co-operative Societies (PACS):
Functions:
i. To provide short term and medium term credit.
ii. To supply agricultural inputs like fertilizers and seeds.
ADVERTISEMENTS:
iii. To provide marketing facilities for the sale of agricultural produce.
iv. To associate itself with economic and social welfare programmes of the village.
Sources of Funds:
Share capital, deposits, reserve funds and loans borrowed from higher institutions or govt.
District Central co-operative Banks:
Functions:
i. To maintain close and continuous contact with PACS and provide leadership and guidance to them.
ii. To undertake non credit activities.
iii. To meet the credit requirement of member societies.
Sources of Funds:
Share capital, deposit from public, borrowing from state cooperative banks, Govt. RBI, SBI and commercial banks.
State Co-operative Banks (SCB):
Functions:
i. Act as banker’s bank to the district central co-operative banks.
ii. Uniform credit policies for the cooperative movement are formulated and executed by them.
iii. It also perform banking functions such as issuing drafts, cheques, collecting and discounting bills etc.
Sources of Funds:
Share capital, reserve funds, deposit from members and non members, borrowings from NABARD, SBI and State Govt.
Long Term Rural Credit:
The long term requirements of the farmers were traditionally met by the money lenders but later by land mortage banks. These banks were later called land development banks. In recent years, they have been renamed as cooperative agricultural and rural development banks (CARDBs).
Functions:
i. To grant loans on the security of agricultural properties.
ii. They lend at fairly low rates of interest and enable the needy farmer to secure funds for long periods.
It provide credit for a variety of purposes such as redemption of old debts, improvement of land, purchase of costly agricultural equipment, construction of wells and erection of pumps.
Sources of Funds:
Share capital, deposits and issue of bonds. They are subscribed by commercial banks, SBI and RBI.