SUCCESSFUL COOPERATIVE SYSTEMS IN GUJARAT, MAHARASHTRA, PUNJAB
Co-operative credit System in Maharashtra
Maharashtra has all along been a leader in cooperative movement. Cooperative has
become a way of life for people in the State. Almost 50% of the State’s population is connected
to 1.78 lakh cooperative societies, covering different aspects of people’s day to day life. We
have about 20,000 primary agriculture credit cooperative societies and 31 district central
cooperative banks. As against six villages covered by the society in the country, we in
Maharashtra have one society for two villages. More than 10 million farmers are members of the
primary societies. The cooperative credit system in the State accounts for 65% of the credit
disbursements for agriculture as compared to 35% at national level. That is why, the State
needs to ensure that the cooperative credit institutions remain vibrant and work in a professional
and competitive environment.
The cooperative credit institutions in districts, having good access to irrigation have done
extremely well due to greater degree of crop diversification. The dams and the societies in
consistently drought prone and rain-fed districts, have not been able to stand the impact of
continued default and thus, over a period of time, become extremely weak. Revitilisation of
these institutions is a must to ensure greater flow of capital to agriculture in these districts.
The cooperative movement has contributed a great deal in the development of rural
economy in the State. While we lead the country in terms of financial institutes in the
cooperative sector, there are many other success stories like sugar industry, textiles, poultry,
milk, agro-processing and marketing etc. What else can be the best way to show it, than to
stand up to the challenge of competition?
Over the time, there has been some slackness in the working of some of these societies,
but I must say that these societies have contributed immensely in the growth of rural areas in
the State. The slackness in the working of many of these societies can be attributed to many
factors, but lack of appropriate incentive system is one of the key reasons for it. The
recommendations of Task Force will help in creating environment for such incentive system to
operate. The cooperative credit structure in Maharashtra will grow at much faster rate once
faced with competitive forces and will help serve our population better.
, The suggestions made by the Task Force relating to financial, administrative, legal and
technical aspects seem to be well through out. When we talk of competition, the independence
of the concerned institution also needs to be re-visited and they are required to be given
environment for operating freely and in democratic manner, as demanded by the competitive
atmosphere. Recommendation to provide wider choice on borrowings and investing to
cooperatives and in turn to borrowers is going to galvanise the rural credit system. Small
borrowers will now operate in buyers’ market, thus providing them with more bargaining power.
Agricultural Credit
The co-operative agricultural credit structure in Maharashtra is a three tier structure.
Short & Medium Term Credit Long Term Credit
Central Co-op Banks at district level
Primary Agricultural Credit Societies at Village Level
Long term credit Mascard Bank
Branches at district level
Sub Branches at Taluka level
(MASCARD Bank is Maharashtra State Co-operative Agriculture and Rural Development Bank )
Thus the agricultural credit reached the farmers right upto their doorstep through the
Primary Agricultural Credit Societies (PACS). The Short Term loan is made available for a
period of 12 to 15 months for meeting the cost of expenditure during the agricultural season.
Medium Term loan is given for a period of upto five years for the purchase of bullocks, carts,
repairs to old wells etc..The Long Term Loans are granted for period exceeding five years
mainly for sinking of wells, permanent fencing, purchase of land, purchase of heavy agricultural
machinery like tractors etc as well as for lift irrigation schemes.
The life of the farmer is full of problems- small holdings, indebtedness, lack of irrigation
facilities leading to low productivity. He is traditionally used to dealing with one single agency for
satisfaction of all his credit requirements. Thus the local trader/money lender not only lends him
money for his seeds, fertilisers, insecticides etc. but at times also provides these necessities to
him. The trader/moneylender also provides him credit for his household needs. And when the
crops are harvested the trader also markets the crops.
In their initial days the rural credit societies could not satisfy the needs of the
farmers. They did not have enough funds or facilities to offer to the farmers. Thus the farmers
continued to rely on the money lenders and suffer. Thus came the advent of multipurpose co-
operatives. However since the societies at the village level were small in size, they could not
Co-operative credit System in Maharashtra
Maharashtra has all along been a leader in cooperative movement. Cooperative has
become a way of life for people in the State. Almost 50% of the State’s population is connected
to 1.78 lakh cooperative societies, covering different aspects of people’s day to day life. We
have about 20,000 primary agriculture credit cooperative societies and 31 district central
cooperative banks. As against six villages covered by the society in the country, we in
Maharashtra have one society for two villages. More than 10 million farmers are members of the
primary societies. The cooperative credit system in the State accounts for 65% of the credit
disbursements for agriculture as compared to 35% at national level. That is why, the State
needs to ensure that the cooperative credit institutions remain vibrant and work in a professional
and competitive environment.
The cooperative credit institutions in districts, having good access to irrigation have done
extremely well due to greater degree of crop diversification. The dams and the societies in
consistently drought prone and rain-fed districts, have not been able to stand the impact of
continued default and thus, over a period of time, become extremely weak. Revitilisation of
these institutions is a must to ensure greater flow of capital to agriculture in these districts.
The cooperative movement has contributed a great deal in the development of rural
economy in the State. While we lead the country in terms of financial institutes in the
cooperative sector, there are many other success stories like sugar industry, textiles, poultry,
milk, agro-processing and marketing etc. What else can be the best way to show it, than to
stand up to the challenge of competition?
Over the time, there has been some slackness in the working of some of these societies,
but I must say that these societies have contributed immensely in the growth of rural areas in
the State. The slackness in the working of many of these societies can be attributed to many
factors, but lack of appropriate incentive system is one of the key reasons for it. The
recommendations of Task Force will help in creating environment for such incentive system to
operate. The cooperative credit structure in Maharashtra will grow at much faster rate once
faced with competitive forces and will help serve our population better.
, The suggestions made by the Task Force relating to financial, administrative, legal and
technical aspects seem to be well through out. When we talk of competition, the independence
of the concerned institution also needs to be re-visited and they are required to be given
environment for operating freely and in democratic manner, as demanded by the competitive
atmosphere. Recommendation to provide wider choice on borrowings and investing to
cooperatives and in turn to borrowers is going to galvanise the rural credit system. Small
borrowers will now operate in buyers’ market, thus providing them with more bargaining power.
Agricultural Credit
The co-operative agricultural credit structure in Maharashtra is a three tier structure.
Short & Medium Term Credit Long Term Credit
Central Co-op Banks at district level
Primary Agricultural Credit Societies at Village Level
Long term credit Mascard Bank
Branches at district level
Sub Branches at Taluka level
(MASCARD Bank is Maharashtra State Co-operative Agriculture and Rural Development Bank )
Thus the agricultural credit reached the farmers right upto their doorstep through the
Primary Agricultural Credit Societies (PACS). The Short Term loan is made available for a
period of 12 to 15 months for meeting the cost of expenditure during the agricultural season.
Medium Term loan is given for a period of upto five years for the purchase of bullocks, carts,
repairs to old wells etc..The Long Term Loans are granted for period exceeding five years
mainly for sinking of wells, permanent fencing, purchase of land, purchase of heavy agricultural
machinery like tractors etc as well as for lift irrigation schemes.
The life of the farmer is full of problems- small holdings, indebtedness, lack of irrigation
facilities leading to low productivity. He is traditionally used to dealing with one single agency for
satisfaction of all his credit requirements. Thus the local trader/money lender not only lends him
money for his seeds, fertilisers, insecticides etc. but at times also provides these necessities to
him. The trader/moneylender also provides him credit for his household needs. And when the
crops are harvested the trader also markets the crops.
In their initial days the rural credit societies could not satisfy the needs of the
farmers. They did not have enough funds or facilities to offer to the farmers. Thus the farmers
continued to rely on the money lenders and suffer. Thus came the advent of multipurpose co-
operatives. However since the societies at the village level were small in size, they could not
