(a) whether approximately 40 per cent of the credit in the country comes from the
cooperative sector;
(b) if so, the details thereof;
(c) the percentage of the said credit provided to the farmers on soft loans; and
(d) the steps being taken by the Government in this sector?
MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE (SHRI KANTI LAL BHURIA)
(a)&(b): The share of cooperative credit institutions in the total ground level credit flow to
agriculture sector was 39 percent in the year 2000-01 which has declined to 31 percent in
2003-04.
(c): In the deregulated interest regime, cooperative banking institutions in the country are free
to determine rate of interest on loans. However, in most of the States interest rates charged by the
cooperative banks ranges between 9 to 16.5%.
(d): Details are annexed.
Annexure
A. Pursuant to the announcement made by the Finance Minister on 18th June, 2004
containing measures for improving agricultural credit flow and providing credit related
relief to farmers, the co-operative banks have been advised as under:
1. To achieve a 30 per cent increase over the flow of credit in the previous year.
2. To enhance coverage of institutional credit, including through KCCs, in line
with the higher goal for agricultural credit in 2004-05.
3. In order to provide credit to tenant farmers and oral lessees, facilitate
formation and financing of self-help groups of tenant farmers and oral
lessees during the current year.
4. Reviewing scales of finance to meet the realistic credit needs of farmers,
especially capital intensive agricultural operations.
5. Debt restructuring under the following heads in accordance with the new
guidelines issued by NABARD:
? Farmers in distress – Rescheduled/restructured debts of farmers as on 31st March,
2004 in districts declared as calamity-affected by the State Government.
Rescheduled loan shall be repayable over a period of five years, at current interest
rates, including an initial moratorium of two years.
? Farmers in arrears – Loans in default of farmers who have become ineligible for fresh
credit as their earlier debts have been categorized as sub-standard or doubtful will
be rescheduled as per the guidelines issued by NABARD so that such farmers
become eligible for fresh credit.
? OTS for small and marginal farmers –Guidelines for increasing the flexibility of
cooperatives to grant a one-time settlement (OTS) for small and marginal farmers
who have been declared as defaulters and have become ineligible for fresh credit
from lending institutions have been issued by NABARD. Cooperatives banks have
been advised to review cases where credit has been denied on the sole ground that a
loan account was settled through compromise or write offs.
? In some parts of the country, farmers face acute distress because of the heavy burden of
debt from non-institutional lenders (e.g., moneylenders). Banks have been permitted to
advance loans to such farmers to provide them relief from indebtedness against
appropriate collateral or group security.
B. Recommendations of the Task Force constituted by the Government under the
Chairmanship of Prof. A. Vaidyanathan for revival of rural co-operative banking institutions
have been accepted in principle for implementation.