In a bid to help ailing District Central Cooperative Banks (DCCBs) in the state, Maharashtra State Cooperative (MSC) Bank, which is at the three-tired cooperative credit structure, plans to directly finance Primary Agriculture Credit Societies (PACs).
MSC Bank is an apex body for 31 DCCBs which have about 3,746 branches, with a third tier of around 2.21 lakh PACS which directly lend to farmers and the rural population. Normally, this bank refinances the DCCBs and also extends working capital to sugar mills, after the latter pledge their sugar stock and the DCCBs, in turn, finance the PACs.
However, in some of the districts of Maharashtra, DCCBs have reported high NPAs and therefore, are unable to lend to PACs. Farmers have thus been deprived of credit and have been unable to get crop loans. Vidyadhar Anaskar, chairman, administrative board, MSC Bank, said the bank will directly start lending to farmers in PACs. This, however, will be monitored through the DCCBs, he said. “At present, lending to PACs in some parts of the state is completely stopped since the DCCBs have high NPAs.. MSC Bank has, therefore, decided to establish a separate account for PACs and the old accumulated dues of PACs will not be taken into consideration here. Instead, farmers will be given finance and DCCBs, in turn, will get a margin of 1% and a 0.5% on recovery of the loans,” Anaskar explained. This will not only strengthen DCCBs financially but will also help them to adjust the margins earned in this manner to the clear the dues of the old accumulated debt, he said.
According to Anaskar, there are more than 11 DCCBs in Maharashtra that are ailing and three major DCCBs — Wardha, Buldhana and Nagpur — would be the first where MSC Bank intends to run this pilot. Anaskar said he wishes to strengthen the cooperative sector in the state and for this purpose, he wishes to make ailing DCCBs work as the business correspondents (BCs) of the MSCB.
“These BCs would give details of eligible borrowers ( Primary Agriculture Credit Societies ( PACS) to us; we would give them fund which they can disburse as loans to the needy borrowers”, Anaskar explained, adding that in return MSC Bank would give 1% commission to DCCBs for providing the details of borrowers.