(GIST OF YOJANA) Empowering Agriculture Cooperatives through Digitisation


(GIST OF YOJANA) Empowering Agriculture Cooperatives through Digitisation

(July-2023)

Empowering Agriculture Cooperatives through Digitisation

Introduction: 

Cooperative credit institutions have long been instrumental in promoting social and economic development in India. These institutions play a crucial role in mobilizing credit for agricultural production, particularly in rural areas.

About Cooperative Credit Institutions 

  • The short-term rural cooperative credit structure (STCCS) is a 3 tier structure which comprises State Cooperative Banks (StBs), District Central Cooperative Banks (DCCBs) and Primary Agriculture Credit Societies (PACs) at the village level. 
  • They are regulated by the Reserve Bank of India (RBI) and supervised by the National Bank for Agriculture and Rural Development (NABARD).
  • They provide essential credit mobilization in agriculture production but also serve as catalysts for self-help, grassroots community participation, and social control over resource allocation and mobilization.

Challenges Confronting Cooperative Credit Institutions

  • Face stiff competition from commercial banks and microfinance institutions inthe rural credit sphere.
  • Inability to adopt cutting-edge technologies.
  • Reliance on conventional services (short-term loans) rather than tapping into services such as financial advisory and marketing. 
  • Lack of innovation.

Way Forward:

  • Centralized Online Real-time Exchange (CORE) based Banking Solutions (CBS) have automated State Cooperative Banks (StBs) and District Central Cooperative Banks (DCCBs), improving regulatory mechanisms and enabling anytime, anywhere banking. 
  • Efficiency and governance across cooperative banks can be improved by adopting standardized technology-driven office management systems. 
  • While DCCBs require the digitization of business processes, PACS need to be computerized as a fundamental step towards efficiency. 
  • The computerization of PACS aims to enhance service delivery, digitize operations, and integrate them with DCCBs and StBs. 
  • However, challenges such as inadequate rural infrastructure, power supply, internet connectivity, and computer skills must be addressed.
  • Need to adopt technologies such as mobile banking, internet banking, drones for field monitoring, and blockchain for cybersecurity and transparency. 
  • Need for collaborative partnerships with fintech firms to facilitate customer acquisition, credit profiling, advisory services, financial products, and development of user-friendly digital interfaces

Conclusion: 

Digitization has enormous potential to strengthen cooperative credit institutions and boost rural development. Digitization enables seamless integration, better service delivery and financial inclusion. With the right policy support and a targeted approach, cooperative lending institutions can use digitalization to effectively address the changing needs of Indian agriculture, thereby contributing to the prosperity of rural communities.

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Courtesy: Yojana