Co-ops lag in rural credit: Kumar

Nabard chief says voluntary organisations need support in rural areas

Commercial and regional rural banks (RRBs) of the country have performed well in rural credit, but co-operative banks have not done too well in this front and there is a need for a greater level of professionalism in the management of co-operative banks.

According to Ranjana Kumar, chairperson of National Bank for Agriculture and Rural Development (Nabard), despite Nabard having earmarked Rs 3,500 crore as additional refinance, very few co-operative banks have come forward to use the amount to finance rural schemes.

Kumar was in Ahmedabad on Wednesday to launch Rudi bazaar, a rural distribution network of members of SEWA, a voluntary organisation working among poor women.

While commercial banks account for 58 per cent of the rural credit, 10 per cent of this comes through regional rural banks and 33 per cent through co-operative banks.

"This 33 per cent is, however, still inadequate given the fact that co-operative banks have 69 per cent of the networks of banks and some are 100-year old institutions," Kumar said.

She said at a recently held Nabard meeting with co-operative banks in Maharashtra, it was told that these bank boards were not allowing additional rural credit and although co-operative banks have done marginally better in rural credit than last year, they still lag behind other banks in a big way.

On the need to set up more self help groups (SHGs), which can receive finance, Kumar said 1.85 lakh new SHGs need to be created this fiscal, of which 90,000 have already been formed.

Kumar also stated that there is a need to assist voluntary organisations which are doing commandable work in rural areas.

"Nabard has drawn up a list of 1,500 NGOs which are doing good work. Micro credit must ultimately result in micro enterprise, but that is unfortunately not happening," she said. Kumar also stressed on the need for many more farmers' clubs. There are about 9,000 farmers' clubs in India today, but according to Kumar, that is "just the tip of the iceberg".

"I believe that until all our farmers do not become literate, the 'farmers' club' concept is the only way to provide them a fair deal," Kumar said.

Nabard Gujarat chief general manager Bhawar Puri said there are over 700 farmers' clubs in Gujarat and 300 more are being formed.