2 and 3 Tier Structure of Co-operative Credit (CC) in India: Current Status, Issues and Challenges

Abstract

Co-operative banks in India have come a long way since the enactment of the Agricultural Credit Co-operative Societies Act in 1904. The century old co-operative banking structure is viewed as an important instrument of ba62nking access to the rural masses and thus a vehicle for democratization of the Indian financial system. Co-operative Banking is an agency which, in the words of Henry Wolff , “is in a position to deal with small man on its terms, accepting his security he has and without drawing on the protection of the rich, that the agency must not be channel for pouring charity or subsidizing the small man out of the public funds, instead, the material help must be backed by moral improvement and strengthening of the fiber”. Today, short term co-operative credit structure has 32 state co-operative banks and 371 district central co-operative banks operating through 14907 branches. There were 92,996 Primary Agricultural Credit Societies (PACS) as on March 31, 2014 at the grass root level catering to the credit requirements of the members but also providing several non-financial services like input supply, storage and marketing of produce, supply of consumer goods, etc. The journey has not been smooth for the co-operative banking structure. This analysis has been made based on the various data given by Reserve Bank of India (RBI) to trace out the current trend of the co-operative credit institutions also includes the issues and challenges of the two and three tier credit structure of co-operative credit.