The decision of the National Bank for Agriculture and Rural Development (Nabard) against steadfast implementation of the Prakash Bakshi report for streamlining the short-term cooperative credit structure has come as a major relief to thousands of primary agricultural credit societies (PACS) in the State.

A major recommendation of the report was that PACS should work only as business correspondents on behalf of the Central Cooperative Bank. This was to ensure safety of deposits and efficient credit delivery to farmers.

Agricultural societies opposed the move of Nabard by stating that such a step would be detrimental to the growth and development of the prevailing credit structure of the State. Minister for Cooperation C.N. Balakrishnan had taken up the issue with Union Minister for Finance P. Chidambaram and urged him to exempt the State from the recommendations.

Nabard had asked all State cooperatives societies to take an independent decision on the Bakshi report. It would be difficult to implement the system in States such as Kerala where primary cooperative societies were strong, Josekutty Joseph, Deputy Registrar of Cooperative Societies, said.

State share

The report had pointed out that primary agriculture credit societies in 25 States had mobilised Rs.37,238 crore as on March 2011 and that 80 per cent of the deposits originated from Kerala, Karnataka, and Tamil Nadu. The share of Kerala was estimated to be Rs.21,140 crore.

“We welcome the decision of Nabard. Earlier, the proposal had created some anxieties,” said C.N. Vijayakrishnan, chairman, Calicut City Service Cooperative Bank.

K. Gopalakrishna Bhat, Registrar of Cooperatives, had written to Nabard stating that the deposits made in the credit societies, such as primary agricultural credit cooperative societies, non-agricultural credit societies, and employees’ credit cooperative societies were secure under the Deposit Guarantee Scheme of the Kerala Cooperative Societies Act.


A provision had also been included in the Act under which societies which failed to enrol in the deposit guarantee scheme would have no right to accept deposits and that the Registrar of Cooperatives shall be competent to issue the order, he said.

A three-tier credit structure was in place in the State. It comprised the Kerala State Cooperative Bank, the apex bank with 20 branches; 14 district cooperative banks with 668 branches; and 1,600 primary agricultural credit societies with 3,000 branches. Besides, there were 60 urban cooperative banks having RBI licences and 350 branches. There were 1,065 employees credit societies.

The total deposit of primary agricultural credit societies was Rs.47,374 crore as on March 31, 2013. The primary agricultural credit societies were also engaged in the supply of agriculture inputs, managing educational institutions, and agricultural and marketing activities, Mr. Bhat said.

The Kerala State Cooperative Bank and three Central Cooperative Banks at Thrissur, Ernakulam,and Alappuzha were working on Core Banking Solution (CBS). By the end of 2013, all Central Cooperative Banks would get CBS, he added.

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