REASEARCH PROPOSAL

“study of agriculture loan lending system in cooperative banks”

INTRODUCTION :
India is agricultural based country and its 70% population stay in rural area. The
cooperatives which are the life blood of the Indian economy and the mechanism for
any developmental programs. Especially in an agriculture dominated rural sector,
cooperative banks play a pivotal role in bolstering the common individual and financing his
business and personal needs. The cooperative credit structure is serving the Indian society
since 1904 and since then it has seen several ups and downs. Despite of several
limitations such as restriction of area of operations, limited clients, small volume of
business, political interference, this movement is standing since last 108 years and
serving the societies. Economy of the Chhattisgarh is mainly dependent on agriculture as
more than 80% of the total population is engaged in this sector. The Chhattisgarh
Government has implemented from 2008-2009 the scheme of providing agricultural loans at
the rate of 3%. Chhattisgarh is basically known as “Rice Bowl” The State has witnessed
tremendous growth in the cooperative sector. Empirical analysis results show that the
increase in the level of agricultural loans granted by the cooperative banks positively
influence development of agriculture in india.
Agriculture is a pivotal sector in many economies, particularly in developing countries.
Cooperative banks play a crucial role in supporting this sector by providing necessary
financial services. This study aims to investigate the agriculture loan lending system in
cooperative banks, focusing on the processes, challenges, and impacts on farmers'
livelihoods.
Agriculture remains the backbone of many economies, particularly in developing countries
where a significant portion of the population depends on farming for their livelihoods.
Despite its importance, the agricultural sector often faces challenges related to financing.
Access to credit is essential for farmers to invest in inputs such as seeds, fertilizers, and
equipment, which in turn can enhance productivity and sustainability.
RESEARCH OBJECTIVES :
To examine the structure and functioning of the agriculture loan lending system in
cooperative banks.
To analyze the criteria and processes involved in loan disbursement.
To identify the challenges faced by cooperative banks and farmers in the loan lending
process.
To evaluate the impact of agricultural loans on farmers' productivity and income.
To suggest improvements to enhance the efficiency and effectiveness of the loan lending
system.
REVIEW OF LITERATURE 1 :
According to Sharma and Sharma (2019), cooperative banks play a pivotal role in promoting
agricultural development by providing credit facilities to farmers at affordable interest rates.
They act as a bridge between financial institutions and rural communities, facilitating
financial inclusion and empowerment. Unlike commercial banks, which often have
standardized loan products, cooperative banks can offer customized financial products
tailored to the specific needs of agricultural borrowers. This flexibility allows them to cater to

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the diverse requirements of farmers, whether they need short-term crop loans, medium-term
agricultural machinery loans, or long-term investment loans for farm infrastructure
development. Cooperative banks typically offer credit at lower interest rates compared to
commercial banks, making it more affordable for farmers to access finance for their
agricultural activities. This aspect is critical, especially for small and marginal farmers who
may not qualify for loans from mainstream financial institutions or may find their interest
rates prohibitive. Cooperative banks operate on a democratic principle, with members
actively participating in decision-making processes. This participatory approach enhances
trust and accountability within the institution, fostering a sense of ownership among
members. Farmers feel more empowered when they have a say in how their financial
institution is run, leading to stronger community bonds and a greater commitment to the
cooperative's success.
REVIEW OF LITERATURE 2 :
Research by Kumar et al. (2020) highlights various challenges faced by cooperative banks in
agriculture lending, including lack of creditworthiness among farmers, inadequate
infrastructure, and bureaucratic hurdles. These challenges often result in delayed loan
disbursements and hamper the efficiency of the lending process.
 Lack of Creditworthiness Among Farmers: One of the primary challenges faced by
cooperative banks is the perceived lack of creditworthiness among farmers, especially small
and marginal farmers. Traditional credit assessment metrics may not accurately capture the
creditworthiness of agricultural borrowers, leading to reluctance among banks to extend
credit. This issue is compounded by the informal nature of many agricultural transactions,
which makes it difficult to assess borrowers' repayment capacity accurately.
 Inadequate Infrastructure: Cooperative banks often operate in rural and remote areas
with limited infrastructure, including physical banking infrastructure and connectivity. The
lack of proper banking facilities, such as ATMs and bank branches, hampers the accessibility
of financial services for rural farmers. Additionally, poor connectivity and unreliable internet
access impede the adoption of digital banking solutions, further exacerbating the problem.

REVIEW OF LITERATURE 3 :
Government policies play a pivotal role in shaping the landscape of agriculture lending,
particularly in cooperative banks. Singh and Kumar (2018) delve into the influence of
government schemes and policies on agriculture lending practices, highlighting their impact
on farmers' access to credit and the functioning of cooperative banks. Here are some key
insights from their research:
1. Kisan Credit Card (KCC) Scheme: The Kisan Credit Card scheme, introduced by
the Government of India, aims to provide timely and adequate credit to farmers for
their agricultural and allied activities. Under this scheme, farmers are issued a credit
card that enables them to access short-term credit facilities for crop production, post-
harvest expenses, consumption needs, and other agricultural purposes. Singh and
Kumar's research evaluates the effectiveness of the KCC scheme in enhancing
farmers' access to credit and improving the efficiency of agriculture lending in
cooperative banks. They find that the KCC scheme has been instrumental in

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 simplifying the loan application process, reducing paperwork, and expediting loan
disbursements, thereby benefiting farmers and enhancing the financial viability of
cooperative banks.
2. Interest Subvention Scheme: The Interest Subvention Scheme, another government
initiative, aims to provide interest subsidy to farmers on short-term crop loans. Under
this scheme, farmers are eligible for an interest subsidy of a certain percentage (e.g.,
2% or 3%) on their crop loans, provided they repay the loan promptly. Singh and
Kumar's research assesses the impact of the Interest Subvention Scheme on
agriculture lending in cooperative banks, highlighting its role in reducing the cost of
credit for farmers and incentivizing timely repayment. By subsidizing the interest rate
on agricultural loans, the scheme aims to make credit more affordable and accessible
to farmers, thereby stimulating agricultural growth and rural development.
REVIEW OF LITERATURE 4 :
Jain and Agarwal (2021) investigate the transformative impact of technological innovations
on agriculture lending practices within cooperative banks. The adoption of digital solutions
has revolutionized traditional banking operations, offering new avenues to enhance
efficiency, accessibility, and transparency. Here are key insights from their research:
1. Mobile Banking: Mobile banking has emerged as a powerful tool for expanding
access to financial services in rural areas. Cooperative banks leverage mobile banking
platforms to offer a wide range of services, including account management, fund
transfers, bill payments, and loan applications, directly to farmers' smartphones. Jain
and Agarwal's research explores the role of mobile banking in agriculture lending,
highlighting its ability to overcome geographical barriers, reduce transaction costs,
and enhance convenience for farmers. By empowering farmers to access banking
services anytime, anywhere, mobile banking promotes financial inclusion and fosters
closer engagement between cooperative banks and their members.
2. Online Loan Applications: Traditional loan application processes often involve
cumbersome paperwork, lengthy approval times, and physical visits to bank branches.
Online loan application platforms streamline this process by enabling farmers to apply
for loans digitally, without the need for extensive documentation or in-person visits.
Jain and Agarwal's research evaluates the impact of online loan applications on
agriculture lending in cooperative banks, highlighting their role in expediting loan
processing, improving customer experience, and reducing administrative overheads.
By digitizing the loan application process, cooperative banks can enhance operational
efficiency and better serve the needs of farmers.

REVIEW OF LITERATURE 5 :
Gupta and Chauhan's (2017) study provides a comprehensive examination of the intricacies
of risk management in agriculture lending within cooperative banks. Agriculture lending is
inherently fraught with various risks, ranging from environmental factors to market
fluctuations, which necessitate robust risk management strategies. Here's an in-depth look
into the key insights from their research:
Risk Identification and Assessment: Effective risk management begins with the
identification and assessment of potential risks associated with agriculture lending. Gupta and
Chauhan stress the importance of conducting thorough risk assessments to identify both
internal and external risk factors. Internal risks may include credit risk, operational risk, and
liquidity risk, while external risks may encompass weather-related risks, market volatility,
policy changes, and socio-economic factors. By understanding the nature and magnitude of

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these risks, cooperative banks can develop proactive risk management strategies to mitigate
their impact.
Methodology :
Data Collection:
Primary Data: Surveys and structured interviews with cooperative bank officials and farmers.
Secondary Data: Review of bank records, reports, and existing literature.
Sample Selection:
Geographical Area: Select regions with significant agricultural activity.
Sample Size: A representative sample of cooperative banks and farmers.
Data Analysis:
Qualitative analysis of interview transcripts.Quantitative analysis using statistical tools to
evaluate survey data.
SIGNIFICANCE OF THE STUDY:
This study will provide insights into the effectiveness of the agricultural loan lending system in
cooperative banks. It will highlight the challenges and propose practical solutions to improve the
lending process, ultimately contributing to the betterment of the agricultural sector and farmers'
livelihoods.

CONCLUSION :
Cooperative banks are vital in providing agricultural loans, which are essential for the growth of the
agricultural sector and rural development. Despite facing significant challenges, these banks can
enhance their lending systems through innovations and improved risk management practices.
Continued support and policy interventions are necessary to strengthen the cooperative banking
system and ensure its effectiveness in meeting the needs of farmers.

REFERENCES :
Sharma, R.K. (2019). Role of Cooperative Banks in Agricultural Finance. Journal of Rural
Development.
Singh, P. (2020). Agricultural Loan Disbursement and its Impact on Rural Development. International
Journal of Agricultural Economics.
Kumar, A. (2021). Challenges in the Agricultural Loan Lending System of Cooperative Banks.
Banking and Finance Review.
Patel, M. (2018). The Impact of Cooperative Bank Loans on Small-Scale Farmers. Journal of
Agricultural Finance.
D'Souza, J. (2022). Innovative Approaches to Agricultural Lending in Cooperative Banks. Rural
Banking Journal.

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