Consider the following statements:
- In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
- One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Explanation
Statement 1 is incorrect
- As per the RBI, Scheduled Commercial banks provided the majority of credit for agriculture and related industries. A significant share of agricultural credit also comes from cooperative institutions, with State Cooperative Banks (StCBs), District Central Cooperative Banks (DCCBs), and Primary Agricultural Credit Societies (PACSs) collectively accounting for 12% of the total credit provided by cooperative banks and institutions.
Image Source: RBI
Statement 2 is correct
- The Primary Agriculture Credit Societies (PACS) form the vital third tier in the three-tier structure of the Short-Term Cooperative Credit Structure (STCCS). The other two tiers are comprised of District Central Cooperative Bank (DCCBs) (2nd tier) and State Cooperative Bank (StCBs) (1st tier). PACS are owned by farmers, rural artisans etc. and aim at promoting thrift and mutual help among the members; cater to their credit requirements and provide credit-linked services like input supply, storage and marketing of agricultural produce etc.
- DCCBs provide direct linkages to the PACS through direct financing. The StCBs are primarily responsible for the control and coordination of the finances of DCCBs. NABARD refinances PACS through District Central Cooperative Banks (DCCBs) and State Cooperative Banks (SCBs).
