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(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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