Banking Sector Reforms and Co-operative Credit Institutions in India

The credit cooperatives in Maharashtra have shown slower growth in their membership and institutional financing. On the other hand, a faster growth has been observed in outstanding against loan advances. A lackadaisical approach of Primary Agriculture Cooperative Credit Societies (PACS) has been observed towards SC/ST members, particularly in terms of their coverage, pattern of loan advances to them and recovery pattern. The study has identified several issues that need to be taken cognizance of to revitalize the rural credit delivery system through the cooperatives. One of these is wide variations in total and crop loan advances across various districts and regions of Maharashtra. A decline in the loan advances with rise in GCA in the Konkan region is another issue, but the most important one among all is the mounting overdues and non-performing assets (NPAs) of the cooperatives operating in both forward and backward regions of Maharashtra. The viability of two central level credit institutions, viz. Sangli District Central Cooperative Bank and Buldana District Central Cooperative Bank, has been estimated. In order to rejuvenate the rural credit delivery system through cooperatives, the major problems facing the system, viz. high transaction cost, poor repayment performance, mounting NPAs, distributional aspect of credit, low coverage of SC/ST members, etc. need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, particularly by the large farmers.