Several district central cooperative (DCC) banks in the State have not been performing the role for which they were constituted and are lending more than 50 per cent of their portfolio for non-agricultural purposes.
A committee of the Reserve Bank of India (RBI) has recommended that DCC banks should strive to provide at least 70 per cent of their loan portfolio for agriculture. But in Karnataka, only seven of the 21 DCC banks had granted more than 70 per cent have stuck to this recommendation in the financial year 2011-12.
There are 4,500 Primary Agriculture Cooperative Societies (PACS) and 21 DCC banks with 516 branches in the State affiliated to the Karnataka State Cooperate Apex Bank. A decision has been taken to liquidate 122 PACS in the State owing to financial distress.
The panel headed by Prakash Bakshi, Chairman, National Bank for Agriculture and Rural Development (NABARD), which submitted a report on cooperative credit structure to the RBI last month, said that the share of many PACS and CCBs in farm credit has been less than 30 per cent in their operational area.
According to data provided to The Hindu by NABARD, six DCC banks — Belgaum (47 per cent), Bidar (48), Uttara Kananda (43), Mandya (41), Shimoga (29) and Tumkur (48) — have granted loans less than 50 per cent of their portfolio to the agricultural sector in 2011-12.
The panel recommended that a CCB or State cooperative bank should be declared and treated as an urban cooperative bank if it consistently underperforms and provides less than 15 per cent share of agricultural credit in the operational area.
The Shimoga DCC bank granted Rs 108.18 crore to the farming sector and Rs. 260.49 crore for non-agricultural purposes in 2011-12, while Bagalkot DCC bank granted Rs. 590.34 crore to the farming sector and Rs. 199 crore to the non-agricultural purposes.
Seven complaint banks
Only seven DCC banks had granted more than 70 per cent of the total lending to the farm sector. They are Bagalkot (74 per cent), Chikmagalur (73), Davangere (77.40), Kodagu (72), Kolar and Chickballapur (72), Mysore and Dharwad (71) and Chamarajangar (72).
“Necessary amendments in the State Co-operative Societies Act, rules and bylaws of these banks may have to be carried out for this purpose,” the panel said. . Cooperative banks in Delhi, Goa and Chandigarh provide insignificant credit to agriculture and are catering to only the urban population
