NEED /TYPES

ON basis of TIME • Short term (< 15 months) • Medium term (15 months to 5 years) • Long term (> 5 years)

NEED /TYPES
ON basis of PURPOSE

• Productive. • Consumption needs. • Unproductive.

• Cheap , Adequate and Timely supply. • Small Farmers and Landless Labourers. • Uncertainty shrouding credit requirements. • Seasonality of many agricultural activities • High information and transaction

Constraints To Financial Services

SOURCES OF AGRI-FINANCE
1.NON-INSITUTIONAL SOURCES.
• • • • Money Lenders. Traders. Commission agents. Landlords.

7.INSITUTIONAL SOURCES.

INSITUTIONAL SOURCES
• CO-OPERATIVE CREDIT SOCIETIES. • COMMERCIAL BANKS. • REGIONAL RURAL BANKS. • NATIONAL BANK FOR

SHARE OF SOURCES

Total Credit to Agriculture

In Crore

05-06 06-07

CO-OPERATIVE CREDIT SOCIETY

SCARDBs: State Co-operative Agriculture and Rural Development Banks. PCARDBs: Primary Co-operative Agriculture and Rural Development Banks.

Evaluation of co-operatives
• • • • • Heavy dependence on outside funds Problem of high level of Overdues High level of NPAs Substantial losses PACS are too small in size to economical & viable. • Greater benefits to Larger landowner • Regional disparities in distribution of credit

“Co-operation has failed but Co-operation must succeed”
• In 2005-06 Co-operatives provided Rs. 39,404 crore of rural credit

REFORMS
• Revival and restructure of CCS. • Financial restructuring & assistance. • To make co-operatives truly democratic & member driven. • Regulatory control of the RBI • NABARD-as implementing & Pass through agency.

COMMERCIAL BANKS
• Less Concentration on Primary Sector. • Nationalization of banks. During 2005-06 Commercial banks provided rural credit of Rs. 1,25,859 crore. 69.7 % of total 1,80,486 crore institutional credit.

REVIEW
• Rapid Expansion and Diversification. • Large no. of small advances. • Reduction of margin available. • Bad recovery position. • Multi-alternative credit system. • Decline in credit deposit ratio. • Reduction of loan to small

REGIONAL RURAL BANKS
• Local feel + Business organization. • Low cost low profile credit institution. • Staff from the neighboring area. • 2006-07, RRBs provided 27,964 crore as credit to Agriculture sector. • 8.5% of total institutional credit to

PROBLEMS OF RRBs
• Organizational Problem. • Problems of recovery • Mounting losses leading to Non-Viability. • Management Problems.

REFORMS

Relative Share
Per cent

2004-052005-06

• Apex bank for rural credit. • Provides credit to SCBs & RRBs. • Assistance to state government. • Inspecting Co-operatives, RRBs. • Maintains a R&D funds.

• Rural Infrastructure Development Fund (RIDF) • Microfinance Innovation. • Kisan Credit card scheme.

• Credit monitoring arrangement. • Refinance under SGSY. • Co-operative development fund (CDF) • Supervision

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