Access to cooperative loan to small farmers

**Executive Summary** This document outlines initiatives by the Ministry of Cooperation to strengthen the cooperative movement and enhance access to cooperative loans for small farmers. Key actions include expanding loan coverage, introducing an e-KCC scheme for faster loan application, and implementing fair debt recovery practices. The information was presented in a written reply in Rajya Sabha. **Key Points / Main Content** * **Strengthening Cooperative Movement:** * The Ministry of Cooperation has implemented over 140 initiatives to bolster the cooperative movement and extend its reach to grassroots levels, focusing on the upliftment of small and marginal farmers and traders. * **Regulatory Oversight:** * Cooperative Banks are regularly monitored by the Reserve Bank of India and NABARD to ensure timely and fair access to credit for farmers and small traders. * Periodic inspections, audits, and reviews are conducted to uphold prudential norms, transparency in lending, and proper complaint handling. * **Inclusive Cooperative Lending:** * Loan coverage has been expanded to include small/marginal farmers, women Self-Help Groups (SHGs), and rural artisans. * An e-KCC scheme allows farmers to apply for crop loans through Common Service Centres (CSCs), enabling loan disbursement within two days. * Awareness camps are conducted in villages to educate members about cooperative credit schemes through Financial Literacy Camps (FLCs). * **Fair Recovery Practices:** * As per RBI Master Direction on Responsible Business Conduct, Cooperative Banks must ensure that neither they nor their agents engage in intimidation or harassment during debt recovery. This includes prohibiting public humiliation, invasion of privacy, inappropriate messages, threatening calls, or persistent contact with borrowers. * A grievance redressal mechanism is established at the society level for recovery-related complaints. * Cooperative Banks are included in the RBI's Cooperative Ombudsman Scheme for accountable and transparent services. * **Doorstep Cooperative Banking Services:** * Field officers equipped with handheld devices are deployed for services such as account opening, loan disbursement, and recovery at members' residences. * Monthly mobile cooperative banking camps are organized in remote villages. * **Interest Subvention and Loan Recovery:** * The Government of India provides an interest subvention of 3% for prompt repayment of crop loans directly to farmers. * Awareness initiatives have contributed to a consistent loan recovery rate of around 99%. **Impact Analysis** **Small and Marginal Farmers** * **Impact:** Increased access to credit through expanded loan coverage and the e-KCC scheme, potentially leading to faster loan acquisition. They also benefit from interest subvention for timely loan repayment and protection against harassment during debt recovery. * **Action Required:** Apply for crop loans through nearest Common Service Centres (CSCs) or PACS, attend awareness camps for credit scheme information, and ensure prompt repayment of loans to avail interest subvention. **Women SHGs and Rural Artisans** * **Impact:** Expanded eligibility for cooperative loans, offering new avenues for financial support and economic development. * **Action Required:** Inquire about and apply for eligible cooperative loan schemes through PACS or designated channels. **Cooperative Banks** * **Impact:** Mandated to adhere to stricter fair recovery practices as per RBI guidelines, requiring an overhaul of collection strategies to avoid intimidation and harassment. They also need to ensure efficient functioning of doorstep banking services. * **Action Required:** Implement RBI Master Directions on Responsible Business Conduct for debt recovery. Deploy field officers for doorstep services and organize monthly mobile banking camps. Ensure compliance with grievance redressal mechanisms and the Cooperative Ombudsman Scheme. **Primary Agricultural Cooperative Societies (PACS)** * **Impact:** Will play a role in implementing the expanded loan coverage, e-KCC scheme, and awareness programs. They are also responsible for facilitating the grievance redressal mechanism. * **Action Required:** Facilitate loan applications through the e-KCC scheme, conduct awareness camps, and establish a society-level grievance redressal mechanism for recovery-related complaints. **Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD)** * **Impact:** Continue their regulatory and supervisory roles over Cooperative Banks. NABARD's Financial Literacy Camps (FLCs) are utilized for farmer education. * **Action Required:** Maintain ongoing regulatory oversight and supervisory mechanisms. **Ministry of Cooperation** * **Impact:** Continues to implement initiatives to strengthen the cooperative sector and facilitate farmer access to credit. * **Action Required:** Continue to promote and monitor the implementation of cooperative strengthening and farmer credit access initiatives.

Key Entities Referenced