Revive Cooperative Banks To Extend More Long-Term Loans To Farmers: Amit Shah

Cooperation Minister Amit Shah on Saturday urged Agricultural and Rural Development Banks (ARDBs) to extend more long-term loans to the agriculture sector, including for irrigation and other infrastructure.

The government is building a database on cooperatives for expansion of this sector, which is important for boosting farm growth and doubling farmers' income, he added.

Farmers' income cannot be raised without improving the farm sector, especially irrigation, he pointed out, and asked cooperative banks to focus on providing loans for increasing irrigated land in the country.

The minister further said India, which has 49.4 crore acres of arable land, highest after the US, has potential to feed the whole world if the entire arable land is irrigated.

Currently, about 50 per cent of the arable land in the country is monsoon dependent.

Addressing a national conference here, Shah said Agricultural and Rural Development Banks have been functioning in the country under different names in the last nine decades. Most of them operated as land mortgage banks and were first to grant long-term finance to farmers way back in 1924.

With the conversion of these banks into ARDBs, farmers' dependence on monsoon got reduced. Slowly, long-term financing evolved, he said.

"If we look back and see the last 90 years' journey of long-term financing through cooperatives and how it has percolated down, if you see the data, it has not grown," Shah observed.

"Especially in agriculture financing, be it long or short term, it is paralysed in many parts of the country. In many places, activities are done well but in some states it is not. We need to revive them," he said.

Shah, however, stated that there are many hurdles in providing long-term financing to the agriculture sector. Time has come to overcome those hurdles with cooperative spirit and achieve agriculture growth, he asserted.

The minister further said ARDBs have financed more than 3 lakh tractors so far, but the target should be 8 crore tractors. Similarly, about 5.2 lakh farmers have been provided with medium and long-term finance through cooperatives, but the target should be reaching more farmers.

ARDBs should undertake reforms to facilitate farmers seeking long-term finance, Shah said, and cautioned cooperative banks not to focus only on "bank specific reforms" but the entire sector.

He also said long-term financing to the farm sector should be more than the short-term loans and asked NABARD to set up an extension wing to facilitate the same.

Not just financing, the minister said, ARDBs should focus on other cooperative activities like setting up of agri infrastructure such as irrigation, horticulture, poultry, fishery, lift irrigation and other areas.

"We should not run banks alone, but work towards objectives for which cooperative banks were set up," he said, and asked ARDBs to adopt the Amul model to scale up services towards the farming community.

To overcome the challenges of small farm holdings, the minister asked cooperative banks to think how to operate such small farm fields with a cooperative spirit.

For expansion of the cooperative sector, the minister said the government is building a database of cooperatives which will help frame policies and programmes.

"We don't have a database of cooperatives at present. We don't know how many cooperatives are working in the field of fishery and we don't know which areas are deprived of primary agriculture cooperative societies (PACs). We have started working on the data and will benefit in a big way," he said.

The expansion cannot be undertaken if one does not know where it is to be done, he added.

The minister also outlined recent measures taken in the cooperative sector, including digitalisation of PACs, procurement by cooperatives through the Government e-Marketplace (GeM), and a draft proposal sent to states for amendment of bylaws of PACs.

The cooperative sector can strengthen itself and for that it needs to revive with a cooperative spirit. Only then can it contribute towards achieving a USD 5 trillion economy, he added.

Shah also gave away outstanding performance awards to four State Cooperative Agricultural and Rural Development Banks (SCARDBs) located in Kerala, Karnataka, Gujarat and West Bengal. Four oldest ARDBs were also felicitated for their ceaseless service to the rural sector for 90 years.

Moinul Hassan, chairman of West Bengal Agricultural Cooperative and Rural Development -- one of the four oldest ARDBs -- said the problem of human resources, lack of computerisation and old mindset are some of the hurdles faced by cooperative banks in long-term financing.

Besides, NABARD does not perform its role adequately to facilitate long-term financing, he claimed.

Union Minister of State for Cooperation B L Verma, Cooperation Secretary Gyanesh Kumar, National Cooperative Agriculture and Rural Development Banks Federation Chairman Dollarrai V Kotecha, and National Cooperative Union of India and IFFCO President Dileep Sanghani were also present at the event.