Agriculture and Allied Sectors
3.5 COOPERATIVES INCLUDING AGRICULTURAL CREDIT
Table 3.5.1: Performance of
Introduction
Cooperative Credit Institutions
Cooperatives act as an effective
(` crore)
organization intended for the welfare
and economic upliftment of the people, Loan Achieve Achieve
Target
particularly living in rural areas. The Type ment ment(%)
cooperatives implement several socio- Short term 10369.00 10495.00 102.00
economic programmes such as disbursement loans
of agricultural credit, non-agricultural credit,
supply and distribution of agricultural Medium 968.00 635.00 66.00
inputs like seeds, fertilizers, facilitating the term loans
marketing of agricultural produce, sale of
essential commodities at reasonable prices to Long term 310.00 36.16 12.00
protect consumers’ interest etc., and public loans
distribution system.
Source: Dept. of Cooperation, Food and
In the State, to cater to the credit
Consumer Protection, GoTN
needs of agriculture and rural development,
a State Apex Cooperative Bank (TNSACB), Similarly under long term loans, the
a State Cooperative Agriculture and target fixed for the Eleventh Five Year Plan
Rural Development Bank (TNSCARDB), period was `310 crore, the achievement was
23 District Central Cooperative Banks `36.16 crore only. The target with respect
(DCCB), 4534 Primary Agriculture to long term loans could not be achieved
Cooperative Credit Societies (PACCS) and mainly due to the absence of refinance
180 Primary Cooperative Agriculture and from the National Bank for Agricultural
Rural Development Banks (PCARDB) are and Rural Development (NABARD) and this
effectively functioning. Besides, to meet the lending segment has also reached a point
credit needs of urban people, 120 Urban of saturation. There was low offtake on
Cooperative Banks (UCB) and One Tamil investment credit due to fragmentation of
Nadu Cooperative Urban Bank Federation lands.
(TNCUBF) are functioning in the State.
Besides loans for agricultural
Review of the Eleventh Five Year
production and for undertaking activities
Plan
allied to the agriculture, the cooperatives
Performance of Cooperative Credit
are providing jewel loans to meet the urgent
Institutions
needs of the public throughout the State
The primary level cooperative credit through the branches of TNSC Bank, DCCBs,
institutions at village level are functioning PACCS, UCBs, Cooperative Marketing
for effective delivery of credit. As against Societies and PCARDBs. Against a target of
the Eleventh Five Year Plan target of `10369 `64451.50 crore, an amount of `62397.17
crore in the short term agricultural loans, an crore was disbursed as jewel loans by
amount of `10495 crore was disbursed as DCCBs and PACCS. Urban Cooperatives
shown in Table 3.5.1. disbursed `15268.65 crore against a target of
`18066.29 crore.
119
Twelfth Five Year Plan Tamil Nadu
Non-Farm Loans restricted area of operation of the PACCS,
high transaction costs as well as the
Non-farm loans are disbursed for
traditional policy of undiversified lending.
investment and productive purposes. In the
On the management side, there is a need
non-farm loans, DCCBs disbursed `151.44
for rationalization of staff and introduction
crore, PACCS disbursed `125.66 crore and
of modern management techniques. To
UCBs disbursed `663.56 crore and all were
address the above issues, the borrowers have
well less than the target of `479.60 crore,
to be sensitized in such a way that loans
`398.25 crore and `837.90 crore respectively.
given by cooperatives have to be repaid on
Housing Loans time and necessary infrastructure including
consumer/farmer-friendly technologies in
The cooperative banks provide loans
cooperative institutions have to be adopted. In
for house construction and extend house
agriculture, more importance has to be given
mortgage loans in rural and urban areas.
to the emerging agricultural extension and
As against the target of `594.22 crore, only
diversification activity such as horticultural
`490.10 crore was disbursed during the
development and godown construction.
Eleventh Five Year Plan period through
Lending has to be extended to horticultural,
cooperative institutions for housing purpose.
herbal crops, wasteland development
Pledge Loan programmes and micro irrigation schemes.
The PACCS provide pledge loans Diversified lending for profitable avenues has
to farmers in order to help them to avoid to be encouraged. Common Service Centres
distress sales during the peak harvest (CSCs), Agri-clinics and Agro Service Centres
seasons. During the Eleventh Five Year Plan, are also being established in PACCS to
out of the target of `347.50 crore, an amount diversify their activities.
of `280.32 crore was disbursed under pledge Financial Health of Cooperatives-
loan. Short term cooperative credit
structure
Equitable Access to Credit: The programme
for sanction and disbursement of loans to TNSAC bank is the oldest among
the members belonging to the scheduled the cooperative credit institutions in the
castes/scheduled tribes during the Eleventh State. The bank presently has 46 branches
Five Year Plan was 15 percent as short term including head office at Chennai. The net
profit of the bank was `15.12 crore during
and 30 percent as medium term loans.
2007-08 and it increased to `40.69 crore in
Gender orientation: Cooperative credit 2010-11. Credit-Deposit Ratio (CDR) rose
structure has been fulfilling the credit needs from 83.54 to 125.07 during the above period.
of the Self Help Groups (SHGs) and the flow The DCCBs registered a sharp increase in
of credit to SHGs is on the increase. For deposits and it rose from `8844.66 crore
SHGs `1414.35 crore was disbursed as loans (2007-08) to `13274.66 crore (2010-11).
against a target of `2040.02 crore. Now all the DCCBs have become profit
making banks. Number of profit making
Problems and Constraints faced by banks has increased from 11 to 23. Due to
Cooperatives the initiatives taken by the department, all
The problems and constraints the 23 DCCBs have received banking license
faced by the cooperative sector are: poor from the RBI. Similarly, the PACCS registered
recovery of loans due to persuasive policy, a sharp increase in deposit and it rose from
differential rates of interest when compared `3055.81 crore in 2008-09 to `4245.00 crore
to commercial and private banks and also in 2010-11. The borrowings of PACCS also
customer friendly technological solutions increased from `5113.11 crore to `7544.80
provided by nationalized and private banks, crore during the same period.
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Agriculture and Allied Sectors
Table 3.5.2: Key Financial Parameters of TNCSARDB
(` crore)
S. No. Parameters 2007-08 2008-09 2009-10 2010-11 (P)
1 Share capital 40.29 40.35 40.37 40.37
2 Reserves 432.42 591.17 587.41 612.64
3 Deposits O/S 40.00 38.74 37.96 46.28
4 Borrowings O/S 449.46 263.71 153.56 183.76
5 Loans & Adv O/S 931.92 1107.77 1182.37 1343. 24
6 Investment O/S 239.26 254.46 173.25 95.44
7 Accumulated loss - 43.62 -44.96 Nil Nil
8 Profit/Loss +41.02 +1.97 +49.56 +4.94
Source: Dept. of Cooperation, Food and Consumer Protection, GoTN
Long term Structures- Measures taken to strengthen the
Tamil Nadu Cooperative State cooperatives
Agriculture and Rural Development
Bank (TNCSARDB) Revival of Short Term Cooperative
The long term cooperative credit
Credit Structures-
structure in Tamil Nadu is federal in character Based on the recommendations of Prof.
with the TNCSARDB at the State level and Vaidyanathan Committee, the Government
180 Primary Cooperative Agriculture and of India has initiated a scheme of ‘Revival
Rural Development Banks (PCARDBs) at package for Short Term Cooperative Credit
block / taluk level. (Table 3.5.2) Structure (STCCS)’. Government of India,
In the absence of refinance from the Government of Tamil Nadu and NABARD
NABARD, the performance of TNCSARDB has signed MoU on 3.1.2008 to implement
during the last four years as reflected above the scheme. The Government of Tamil Nadu
was not satisfactory and its operations have fulfilled its obligations by taking necessary
been restricted to disbursement of jewel loans actions and carrying out amendment to
only. The TNCSARDB has started funding Tamil Nadu Cooperative Societies Act, 1983
the PCARDBs from out of its own resources, with reference to STCCS. As per the MoU,
enabling them to lend for minor irrigation Government has formed State Level and
and other agriculture related activities. The District Level Implementing and Monitoring
TNCSARDB is making all efforts to improve Committees to monitor the revival scheme.
the financial parameters of its own and that
of PCARDBs. As per the revival package, the
accumulated losses as on 31.3.2004
Primary Cooperative Agriculture amounting to `2129.50 crore (4540
and Rural Development Banks PACCS) shall be recapitalized. Further, the
(PCARDBs): Government has taken the following action
There are 180 PCARDBs in the as per the MoU:-
State established at block/taluk levels. The
• Necessary amendments had been carried
functioning of PCARDBs is not impressive
out to the Tamil Nadu Cooperative
during the recent past. Absence of fresh
Societies Act, 1983 and as well as Rules
lending, declining recovery levels and raising
and bylaws of societies and the same had
costs are the matters of serious concern.
121
Twelfth Five Year Plan Tamil Nadu
been published in the Government Gazette establishment of CSCs, commencement of
on 02.12.2008. Agro Service Centres, formation of Joint
Liability Groups (JLGs)and Interest subsidy
• Based on the Special Audit Report of the
and subvention for the crop loans. The
DCCBs and PACCS, the Government has
JLGs have been formed with a view to help
provided assistance to 4540 PACCS to
marginal and small farmers and tenant
wipe out the accumulated losses as on
farmers who are in normal circumstances
31.3.2004 as recapitalization assistance.
unable to obtain institutional credit facilities.
• The GoTN and GoI have released a sum Under this scheme, each JLG is provided with
of `230.82 crore and `1080.12 crore a revolving fund of `10,000. The scheme
respectively to 4296 PACCS. also paved way for the adoption of technology
Transforming PACCS into and mechanization through joint agricultural
multifunctional organizations operations including post harvest technology
adoption.
The accounting systems have been
improved and made transparent so as to Augmentation of Storage Capacity
give greater confidence to all the members of in Cooperatives
cooperatives. At present, the total storage capacity
Extension Services to the Members of the PACCS and Agricultural Producers
and Public Cooperative Marketing Societies is eight lakh
metric tonnes (L.MT.) and part of it is used
Cooperatives has taken steps to provide
for storing PDS items and inputs like seeds
a variety of services like extension services to
and fertilizers. As a result, space available
the farmers through formationof Agri clinics,
for storing the agricultural produce is only
40 percent of the installed capacity. It is
Box 3.5.1: Farm Machinery for proposed to construct 1141 godowns at a
PACCS cost of `97.20 crore with Infrastructure
Development Fund. In the year 2011-12,
The Government has perceived it was programmed to create additional
the difficulties that the farmers confront storage capacity of 1.55 L.MT. in PACCS and
in day to day agriculture and steep Agricultural Producers Cooperative Marketing
escalation of input prices, especially, Societies by constructing 1166 godowns at a
wages for farm labourers. Moreover, cost of `107.26 crore by availing financial
due to rapid urbanization in the State, assistance under the Rural Infrastructure
availability of labour has become a cause Development Fund (RIDF) of the NABARD.
of concern. In order to solve the above
twin problems, the Government has Major components required for
taken a prudent step to extend subsidy to strengthening of credit cooperatives:
the tune of `80 crore @ `20 lakh/PACCS
for 400 PACCS towards procurement of • As of now, NABARD is providing refinance
farm machinery. Government has given upto 45 percent. This needs patronage of
guidelines that these machinery will be the Government/Quasi Government by
custom hired for lesser cost than the way of deposits
prevailing market charges. This would • Recruitment of adequate and competent
pave way for efficient utilization of farm personnel. Professionalism of the
machinery that could assist in increasing Cooperative Credit Institutions and HRD
the food production and thereby assuring policies.
food security.
• Increase in volume of transactions.
Source: Dept. of Cooperation, Food and
Consumer Protection, GoTN.
122
Agriculture and Allied Sectors
• Since cooperatives are member driven hi-tech agriculture to be given more
institutions, periodical member education importance viz., establishment of banana
and development of Human Resources ripening chambers, procurement of black
through IEC & CB activities is essential. gram at remunerative prices.
Modernisation of Cooperative
Banking
Computerization of banking
transactions in Credit Cooperative Institutions
will improve the operational efficiency and
enhance their customer service. With this in
view, steps have been taken to computerise
the Credit Cooperative Institutions in the
State.
Price Stabilisation Fund
The Government has constituted
a Price Stabilisation Fund with a corpus
of `50.00 crore which enabled market
intervention by the cooperatives to control
the price of essential commodities. During
the year 2011-12, 52980 kgs of tamarind and
Fig. 3.5.1: Storage Godown 22804 kgs of chillies for `53.18 lakh were
purchased and sold through the wholesale
• Strengthening of supervisory mechanism stores. These measures control the price rise
for project appraisal, timely disbursement and will be continued during the Twelfth Five
of credit and other inputs, etc. Year Plan.
• Strengthening the infrastructure Integrated Cooperative
in extension centres, PACCS and Development Project (ICDP)
diversification of business activities
The ICDP aims at integrated
Twelfth Five Year Plan
development of cooperative societies across
Objectives
various sectors within a district. This project
• Cooperative institutions are engaged in is implemented throughout India with the
financing the economically downtrodden financial assistance of National Cooperative
people in improving their standard of Development Corporation (NCDC) and
living. State Government. The scheme is being
• Financing the SHGs by various cooperative implemented in Salem, Erode, Madurai,
institutions. Pudukkottai, Tirunelveli, Sivagangai,
Dindugul, Karur, Nagapattinam and Vellore
• Providing micro credit to men and women districts. The financial assistance is provided
for undertaking petty trade economic to cooperative societies through the State
activity to earn livelihood. Government in the form of loan, share capital
• Making the small farmers and marginal and subsidy under the refinance scheme
farmers to avail cooperative credit easily of the NCDC. The NCDC has approved the
and if necessary under the JLGs concept implementation of ICDP in The Nilgiris,
to ensure timely repayment due to peer Thiruvallur, Namakkal and Kanyakumari
pressure. districts. This project will be continued
during the Twelfth Five Year Plan.
• Horticulture, floriculture, commercial
123
Twelfth Five Year Plan Tamil Nadu
Interest Subsidy and Subvention e-governance
for Crop Loans To serve the public in an effective
Cooperatives continue to be the manner, it is proposed to introduce 'Core
principal institutional agency in rural areas. Banking Solutions' in 23 DCCBs. In view
With a view to keep the cost of agricultural of the rapid urbanisation and to facilitate
credit at minimum and to encourage farmers the better service to public, it is proposed to
to take up production, an interest subvention upgrade the 10 PACCS into Urban Cooperative
of 2 percent is being given on the total crop Credit Societies.
loan disbursed by the cooperatives from their Marketing Cooperatives
own resources. Similarly, the entire interest
loss accruing out of the interest free crop loan The Cooperative Marketing Societies
scheme is being given by the Government (CMS) have been established with the
to the cooperatives on actual basis. (Table objectives of facilitating its members with
3.5.3) the marketing of agricultural produce at
Table 3.5.3: Interest Subsidy and a remunerative price, distribution of farm
Subvention for Crop Loans inputs to farmers, provision of produce pledge
loans, processing and value addition to the
(` crore) agricultural produce wherever possible.
Interest Interest
Crop Box 3.5.2: Pledge loans – Panacea
Year subvention incentive Total
loans to avoid distress sales
@ 2%* @ 7% **
2012-13 3400 35 200 235 In agriculture, price reduction due
to post-harvest glut is not uncommon.
Large chunk of farmers'profit got wiped
2013-14 3900 45 225 270
out and pledge loans serve as an effective
tool to mitigate the related monetary
2014-15 4500 50 260 310
loss. The Government has enhanced the
produce pledge loan limit from `2.00 lakh
2015-16 4200 60 300 360 to `3.00 lakh for facilitating the farmers to
pledge their agricultural produce with the
2016-17 6000 65 345 410 Cooperative Societies. In the Twlefth Five
Year Plan, the marketing cooperatives will
Total 23000 255 1330 1585 augment their storage capacity by another
62,200 MT. to improve their pledge loan
Source: Dept. of Cooperation, Food and Consumer operations by disbursing `100.00 crore
Protection, GoTN annually to avoid the distress sale by
* interest subvention @ 2% for the farmers.
involvement of owned funds of the coops to
the extent of 55 % Source: Registrar of Cooperative Societies,
** Interest incentive at 7% for timely GoTN.
repayment at 95% recovery rate for the loans
disbursed during the previous years. The structure of cooperative marketing
in Tamil Nadu is a two-tier structure with the
Equity & Gender Welfare Measures Tamil Nadu Cooperative Marketing Federation
To increase the credit drawal facility of at the apex level and 110 Primary Agricultural
Producers Cooperative Marketing Societies
women, differently abled, SC and ST members
at taluk levels. The programme under CMS
of cooperatives, it is proposed to increase the
is given in Table 3.5.4. Under agricultural
Share Capital Assistance to `2500 from `250
cooperative marketing, following strategies
per member.
are proposed.
124
Agriculture and Allied Sectors
• The auction yards would be strengthened percent annually.
and modernized to offer better services to
• Dissemination of market information
its members.
through cooperatives would be
• Distribution of fertilizers would be institutionalized and strengthened.
increased by 2 percent and seeds by 15
Table 3.5.4: Programme of Cooperative Marketing Societies - Twelfth Plan
(` crore)
Marketing of Distribution of
Year Fertilizers Pesticides Seeds Total
agrl. produce pledge loans
2012-13 930.00 57.00 645.00 4.50 29.00 1665.50
2013-14 1120.00 58.00 660.00 5.00 33.00 1876.00
2014-15 1340.00 59.00 675.00 5.50 38.00 2117.50
2015-16 1610.00 60.00 690.00 6.00 44.00 2410.00
2016-17 1930.00 61.00 700.00 6.60 50.00 2747.60
Total 6930.00 295.00 3370.00 27.60 194.00 10816.60
Source: Dept. of Cooperation, Food and Consumer Protection, GoTN
Twelfth Five Year Plan Outlay
The outlay for cooperative sector in the Twelfth Five Year Plan is provided in the Table
3.5.5.
Table 3.5.5: Twelfth Plan Outlay – Cooperative Sector
(` crore)
S.No. Schemes outlay
Ongoing Schemes
State Schemes
1 Price Stabilisation Fund 150.00
2 Grant for Implementation of Integrated Cooperative Development Project 169.45
3 Loans to Co-operative Institutions and Banks - controlled by the 1585.00
Registrar of Co-operative Societies and Share Capital Assistance to
women, differently abled ,SC and ST members as subsidy to increase
their borrowing power
4 Interest subsidy and subvention to Co-operative institutions towards 1000.00
reduced interest for crop loans to the farmers
5 Assistance to Co-operative Institution in Tribal areas 4.50
6 Interest Free Loans to Scheduled Castes members of Cooperative 25.00
Societies and Institutions - controlled by Registrar of Cooperative
Societies
7 NABARD -Construction of godowns 129.00
8 Assistance to setting up modern retail outlets 2.00
9 Assistance for organisation of cooperative wholesale stores for newly 1.50
formed districts
Total Ongoing 3066.45
New Schemes ---
Grand Total 3066.45
125
Twelfth Five Year Plan Tamil Nadu
The monitorable targets in the cooperative sector is provided in the Table 3.5.6.
Table 3.5.6: Cooperative Loans Projections for Twelfth Plan
(` crore)
Monitorable
S.No. Loan type
targets
1 Crop Loan 23000
2 Investment Credit 1875
3 Jewel Loan 185165
4 Loans for SHGs and JLGs 1350
5 Non-Farm Sector Loan 1840
6 Housing Loan 1840
7 Loans to differently abled persons 90
Source: Dept. of Cooperation, Food and Consumer Protection, GoTN
126
