Future Planning

COOPERATIVE CREDIT POLICY 2001-2006

The Cooperative Credit Institutions are distinctively structured to provide for short-term and long-term credit needs of the farmers in the State. The Punjab State Cooperative Bank (PSCB) and its constituent 19 Central Cooperative Banks (CCBs) and 4000 Primary Agricultural Cooperative Service Societies (PACS) direct and deliver short-term production credit to the farmers. The Punjab State Cooperative Agricultural Development Bank (PSADB) and its constituent 84 Primary Cooperative Agricultural Development Banks (PADBs) cater to long term credit needs of the farmer. These institutions are committed to promote and sustain economic interests of their members and customers in keeping with the principals of self-help, self-responsibility and self-administration. They facilitate development of their members by providing easy, timely, cost-effective and quality services.

Short-term Cooperative Credit in the State has increased from Rs.7.60 crore in 1965 to Rs.2364.00 crore in 2000. Similarly, Long-term Cooperative Credit has increased from Rs.1.64 crore in 1965 to Rs.375.00 crore in 2000. Estimates indicate that nearly 70% of credit needs of the farmers are met by Cooperative Financing Institutions. They have been able to do so with a very high rate of recovery, which was 96.30% in case of PSCB, 90.7% in case of CCBs and 80% for PADBs in 1999-2000.

• Cooperatives are not unaffected by structural adjustments and globalisation of commodity market. As a result, Cooperative Banks are required to redesign their strategies for sustainability and growth. The economic reforms initiated by the government of India in 1991 have affected the Financial Institutions including the Cooperative Financial Institutions. These reforms aim at liberalisation and deregulation of Indian economy.

• The Cooperative Banks of Punjab have accepted the reforms in Indian economy, especially, the financial reforms in right spirit. Since these Banks have mainly been providing credit to agriculture sector, changes in agricultural economy affect them more closely. The Banks envisage following scenario as a result of liberalised agricultural policy :

1. Liberalisation of agricultural policy would result in greater capital intensity and borrowed capital requirements of agriculturists. In order to induce diversification and produce quality products for international market. For this purpose, Punjab farmers would need greater credit support for improved technology, seeds and agro-inputs.

2. Liberalised agricultural policy would reverse the process of fragmentation of land holdings and would result in exodus of employment opportunities from agricultural sector to other sectors of economy. Such as small business enterprises, services and industrial sector.

3. Liberalisation of agriculture would professionalise and modernise agriculture, thereby earning a status of industry attracting high skilled professionals in agriculture sector.

4. Liberalised agricultural economy would lead to a greater role of private research and development institutions in improving the productivity and quality of agricultural operations.

5. The liberalised agricultural policy would result in greater thrust on value addition in agriculture. Therefore, a great deal of thrust would be on agro-processing units.

6. The liberalised agricultural policy would lead to contract forming for ensuring marketing of agricultural produce at better prices.

7. The liberalised agricultural policy would bring greater thrust on export of raw and value added agro-products.

8. The liberalised agricultural economy would lead to sowing/planting of new crops. Leading to a great deal of crop diversification.

• With this perspective, the Cooperative Credit Policy, both for short-term and long term requirements of the farmers, needs to be restructured. Accordingly, the Cooperative Banks in the State resolve to pursue credit policy in keeping with the following.

COOPERATIVE CREDIT POLICY FOR 2001-2006

The Cooperative would continue to sustain agricultural production in changing scenario of agriculture in the State. They would endeavour to provide for short-term and long term requirements of the farmers, through specifically targeted schemes and projects, which do not encourage and increase indebtedness amongst the farmers.

The Cooperative Banks would act as catalyst to bring about and sustain diversification in agricultural sector in keeping with the liberalised economy. Credit provisioning and interest rates would be restructured induce diversification of agriculture. Greater thrust would be given on short-term loans for cultivation of sugarcane, sunflower, vegetables and fruits and long term loans for warehousing, commercial dairies, cattle breeding and marketing infrastructure. Cash Credit Scheme would be pursued for Primary Milk Producer’s Cooperative Societies to encourage quality milk production in the State.

The Cooperative Banks would continue to be farmer driven, ensuring to make agriculture a multi-functional occupation. They would finance and support agri-business, agro-processing and farm equipments industry to supplement and complement farmers sources of income.

1. The Cooperative Banks would give greater thrust on processes and initiatives aimed at improvement in quality of agricultural produce and products by giving liberal finance for technology introduction and up-gradation and for procuring high quality agro-inputs.

2. The Cooperative Banks would encourage creation of common assets like storage facilities, farm machinery like tractors and other agricultural implements at the level of Cooperative Marketing-cum-Processing Societies and PACS so as to reduce debt burden and input costs of the farmers.

3. The Cooperative Banks would pursue with renewed vigour lending in non-farm sector of economy, especially for those rendered surplus in rural and semi-urban areas due to liberalised agriculture policy Gainful self employment activities and small businesses would be promoted by providing cheap, easy and adequate credit. Special schemes and products would be launched for low income groups including small and marginal farmers.

4. The Cooperative Banks would forge inter-se linkages in financing the Projects, requiring long-term capital investment and short term working capital, PSADB/PADBs would provide for long-term capital finance which would be supplemented by short-term working capital finance by PSCB/CCBs.

5. The Cooperative Banks would provide medium and short-term finance for promotion of housing, particular for rural population in the State.

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