On Reorganisation of Co-Operative Credit Societies

Present Position:

1.The agricultural credit system in India to day is in a bad shape.

2. The commercial banks, which accounted for the larger part of the term loans to agriculture, have reduced their advances, despite the stipulation about priority sector lending. Bad debts and high cost of administering relatively small amount of loans to large numbers located in dispersed villages are the major reasons for this. They are able to meet the stipulation about priority sector lending through deposits with NABARD, which is a convenient, trouble-free and profitable venue. That the state governments misuse a large part of this money is not a matter of concern to the commercial banks.