International Journal of Cooperative Studies

Vol. 1, No. 2, 2012, 55-64

The Role of Credit Co-Operatives in the Agricultural Development of Andhra

Pradesh, India

R. Uma Devi* and S. R. K. Govt

Department of Commerce, Pondicherry University, Yanam, India

Andhra Pradesh (A.P.) is basically an agrarian economy and is known as “Granary of the South” by
producing one-tenth of India’s total output of food grains. Initially the agriculturists depend more on non-
institutional sources for their credit requirements which used to squeeze the blood of the poor peasants by
charging high rates of interest. Hence adequate and timely credit to the farmers on liberal terms becomes Sine
qua non. Cooperatives are considered as the agencies for mobilization and development of rural resources in
a planned and cost effective manner besides providing inputs, services and marketing facilities to the rural
economy. In Andhra Pradesh, Credit Co-operatives are playing a significant role in serving the needy farmers
by fulfilling their credit requirements. On this backdrop, an attempt is made to analyze its role in the
agricultural development of the state. The main objective of the study is to evaluate the performance of Credit
Cooperatives by analyzing its deposits, credit and impact of credit on the beneficiaries. In the state, Co-
operatives are functioning in most efficient manner by providing adequate, cheap and timely credit to
agricultural sector. These are providing not only credit, but also non-credit services for all activities under
primary, secondary and tertiary sectors of rural economy. Through cooperative credit the farmers benefitted
to maximum extent by increasing their agricultural output which in turn increased their levels of employment
and income. Hence it can be concluded that cooperative credit has become a powerful tool in the agricultural
development of the state.

Keywords: Co-operatives, credit, irrigation, yield, term-loans, HYV, allied sector

Introduction The emphasis on agricultural credit continued to be

on progressive institutionalization for providing
“In the village itself no form of credit organization timely and adequate credit to farmers for increasing
will be suitable except the Co-operative society, agricultural output and productivity. It also aims at
Co-operation failed, but Co-operation must better access to institutional credit for small and
succeed”. -All India Rural Credit Survey. marginal farmers and other weaken sections to
Agriculture forms the backbone of the Indian enable them to adopt modern technology and
economy. It contributes 18.5 percent to the GDP improved agricultural practices. Agricultural credit
and provides employment to about 52 percent of has been distributed through a multi-staged
the total working population during the year 2006- network consisting of Commercial Banks, Regional
07. The advanced technological changes in the Rural Banks and Credit Co-operatives.
agricultural sector necessitated the requirement of Co-operative Movement in India was started
more working capital. Hence, the poor peasants in primarily for dealing with the problem of rural
India are in search of timely credit. Co-operative credit. Credit Co-operatives play an important role
banks were established on the principle of co- in the Indian financial system especially at the
operation and to serve the poor peasants. The main village level. These are one of the important
function of these banks is to relieve the poor components of multi-agency system which plays a
farmers from the clutches of the money lenders. vital role in the development of the nation. These
Credit is an important input which ensures are the oldest and the most numerous of the all
adequate working capital as well as infrastructural types of Co-operatives in India. The origin of
development. Adequate and timely credit provision Indian Co-operative Banking started with the
significantly increases agricultural output which enactment of Co-operative Societies Act, 1904. The
leads to an increase in the economic development objective of this Act was to establish Agricultural
of the cultivators and people attached to cultivation. Co-operative Credit Societies “to encourage, thrift,
Moreover, agricultural credit serves as an self-help and co-operation among agriculturists,
instrument for stimulating increase in output, artisans and persons of limited means”.
income and employment. The following are the objectives of credit co-
operatives: i) To ensure timely and increased flow
of credit to the farming sector ii) To reduce and
*
Corresponding author. Email: [email protected] gradually eliminate the money lenders iii) To
ISSN 2168-2631 Print/ ISSN 2168-264X Online
© 2012 World Scholars
56 R. Uma Devi and S. R. K. Govt

reduce regional disparities throughout the country  Refinement in Kisan Credit Cards (KCC) and
iv) To provide longer credit support to various rural fixation of scale of finance.
development programmes v) To provide cheap The farm credit package announced in June 2004
credit with or without any security. targeted doubling the flow of institutional credit for
Co-operative Banks are organized and agriculture in the next three years. The farm credit
managed on the principle of co-operation, self-help package includes the following components:
and mutual- help and function with the rule of “one Kisan Credit Cards (KCC): To provide adequate
member, one vote”, function on “no profit, no loss” and timely support to the farmers, Kisan Credit
basis. Co-operation as principle does not pursue the Card (KCC) scheme was introduced in August
goal of profit maximization. 1988 for short and medium term purposes. About
705.55 lakh Kisan Credit Cards have beenissued up
Strategy of co-operative banks to November 2007. It covers short term and
medium term credit and a reasonable component of
Co-operative banks mainly focus on increase in consumption credit within the overall limit
viability and outreach of rural finance, to strengthen sanctioned to the borrowers.
implementation capital at all levels for more Rate of interest on farm loans: From Kharif
effective rural finance inventions, to improve MFI 2006-07, the rate of interest on crop loans should
monitoring and reporting and impact assessment of be 7 percent up to Rs. 3,00,000. The GOI would
rural finance investment. The cooperative credit provide necessary interest subvention to NABARD
policy has always been oriented to meeting the needs and other banks for this purpose and also made a
of the weaker sections of the rural population like provision of Rs. 1,677 crores in the Union budget
small and marginal farmers. The targeted loans as 2007-08.
per Ninth Five Year Plan are 67 percent of the total
short-term, 95 percent of the medium-term and 40 to Table 1. Prevailing interest rates.
60 percent of the long-term loans. In the case of NABARD to APCOB : 8.00 %
SC/ST, it is 14 to 15 percent and 10 to 20 percent of APCOB to DCCBs : 8.50%
ST/Mt loans and LT loans respectively. DCCBs to PACS : 10.50%
Cooperatives will have to focus their attention PACS to ultimate borrowers : 12.50%
to cost reduction and diversification of their
activities. The primary level cooperative credit Agricultural insurance: The National Agricultural
institutions at village level should made healthy for Insurance Scheme (NAIS) for crops has been
effective delivery of credit. The cooperatives will implemented from Rabi 1999-2000 seasons with
have to keep the parameters of output and the objective of providing insurance coverage in
employment growth in sanctioning loans for the event of crop failure due to natural calamities,
various economic activities and programmes. The pests and diseases. The scheme is available to all
cooperative banks which are engaged in financing the farmers irrespective of their size of holdings
Self-Help Groups, revamped micro credit women and operates on the basis of “Area approach.”
doing small business in urban areas, loans to Andhra Pradesh is predominantly agricultural in
women entrepreneurs and loans to working women character producing more than one - tenth of India’s
will aim at increasing food production, generation total output of food grains every year. It has a widely
of employment, creation of income opportunities diversifies farming base with a rich variety of cash
and greater application of appropriate technologies. crops. It has surplus in food grains, produces 10
million tons of rice and can rightly claim to be the
Credit policy of co-operatives “Granary of the South”. Agricultural sector accounts
for around 50 percent of the state’s income and
 Credit flow to farm sector to be increased at the provides livelihood for nearly 70 percent of the
rate of 30 percent per year. population during 2007-08. It occupies fourth
 Debt restructuring in respect of farmers in place in the production of food crops in the
distress and farmers in arrears providing for country. In Andhra Pradesh 16.02 million tons of
rescheduling of outstanding loans over a period of food grains were produced in 7.65 million hectors
5 years including moratorium of 2 years, thereby of land in 2000-01. It occupies seventh place in the
making all farmers eligible for fresh credit. production of pulses, fifth place in the production
 Special one-time settlement scheme for old and of sugar-cane and second place in the production of
chronic loan accounts of small and marginal oil seeds. Various crops are grown here in about 41
farmers. percent of the geographical area. In Andhra
 Banks allowed extending financial assistance for Pradesh 11.27 million hectors of land is under
redeeming the loans taken by farmers from private agriculture. As per 2000-01 censuses, the small and
money lenders. marginal holdings come to 82.73 percent, medium
 New investments in agriculture and allied activities 16.69 and large holdings 0.58 percent of total
at the rate of two or three projects per branch. holdings. The percentage of cultivators and
International Journal of Cooperative Studies 57

landless labourers is 25.47 and 33.83 respectively Literature Review

of the total working population of the state.
Co-operative Movement in Andhra Pradesh As agriculture forms the backbone of the Indian
has been playing an important and vital role in the economy, The Government of India recognized the
economic development of the state. The importance of free flow of credit to agriculture and
agriculturists in particular derived considerable allied sectors. Sharma (1967) stated that for
benefits through the Co-operative movement. Co- agricultural development, credit is an important
operatives as an instrument of change started a input which ensures adequate working capital as
century ago to finance agriculturists and to relieve well as infrastructural development. Deccan Ryots
them from the clutches of money lenders and had Commission (1875) and Famine Commission
enlarged its activities to different spheres of (1880) concluded in their reports that majority of
activity. Co-operative credit is the supervised credit land holdings were deeply and inextricably in debt.
subject to the financial and monetary discipline, The Central Banking Enquiry Committee (1929)
which are the essentials of sound banking and vital observed that institutional credit provided to the
to the health of the economy of the country as a agriculturists covered only a smaller portion. Black
whole. The Co-operative credit institutions occupy (1955) has emphasized the importance of credit and
a place of pride in the overall credit delivery observed that credit provision was the first and
system for their role in agricultural and rural foremost input to be increased, which enabled the
development. Initially they were concerned with farmers to buy more labour saving equipment,
the short-term loans only and later extended their better seeds and fertilizers etc. Ford Foundation
services to investment loans also. (1959) had recommended adequate supply of farm
credit in order to increase the farm productivity.
Functions Mishra (1982) has observed that modernization of
agriculture necessitated huge capital investment.
 The Andhra Pradesh Co-operative Bank (APCOB) Hence, farm credit becomes sine qua non of
through the District Central Co-operative Banks and agricultural development in the country. Reports of
Primary Agricultural Co-operative Societies Frederic Nicholson and Edward Law Committee on
provides refinance support for agricultural Co-operative legislation confirmed and reiterated
production credit for seasonal agricultural operations the need for the state to actively promote co-
(crop loans), investment credit for investment in operatives. A decade later, a Maclagan Committee
agriculture for Minor Irrigation, Farm Mechanization, (1915) advocated that “there should be one Co-
Land Development, Horticulture, Diary and other operative for every village and every village should
diversified investments and allied activities. be covered by a Co-operative”. In 1928, Royal
 In times of natural calamities, the bank provides commission observed that “if co-operation fails,
credit stabilization arrangements by way of there will fail the best hope of rural India”.
conversion, rephasement, postponement and The observations of Chaudhuri (2001) were
reschedulement of agricultural loans. strongly supported by Shetty (2004) and suggested
 The bank extends its helping hand to ameliorate that in order to increase the productivity of
the sufferings of the weaker sections of the society agriculture, better institutional credit delivery
and to bring them above the poverty line. mechanisms were to be conceptualized, planned
 The bank is advancing more than 60 percent of and executed urgently. Kanthimatinathan (2004)
the total term loans to the small farmers. added to the above arguments and opined that
 Loans to Employee Credit Societies are also without cheap credit it is not possible for small and
extended to provide timely financial support to marginal farmers to carry out their activities.
employees of various organizations through the Sivaloganathan (2004) observed that adequate
District Central Co-operative Banks. credit facilities were highly essential for
 The bank finances Industrial Co-operatives and agricultural growth because there was a vast gap in
Agro- processing industries. the vital sectors of the economy. The multi-agency
 To promote rural development, it provides approach has to be initiated as it facilitates access
assistance for programmes under SwarnaJayanti to resources and service. More over credit for
Gram SwarojgarYojana, non-farm sector finance agriculture serves as an important instrument for
for self-employment, micro credit through Self stimulating increase in output, income and
Help Groups (SHGs) etc. employment. Subrahmanyam (2005) in his study
 The APCOB is also implementing Intensive observed that the government of India examined
Credit Development Programme (ICDP) schemes the flow of agricultural credit and related issues in
in all districts with a view to achieve sustainable consultation with RBI, NABARD and announced
development of Co-operative institutions from the farm credit package to ensure doubling the flow
grass root level. of agricultural credit in the next three years He also
 It offers all types of banking services like any viewed that Cooperative rural credit delivery
other Nationalized Bank. system has been farmer-friendly and has out
58 R. Uma Devi and S. R. K. Govt

reached to serve agriculture. Agricultural credit and Hyderabad and The Directorate of Economics and
agricultural development goes by hand in hand, Statistics etc.
hence the farmer should be provided adequate and The study has its own limitation as it is based on
cheap credit (Dutta & Sundaram, 2005). Calvert the secondary data. The present study is confined to
(1996) aptly argued that Cooperative credit is the 1998-99 to 2009-10. The cooperative credit was
practical alternative to usury. Subbaiah and analyzed on the angle of State Cooperative Banks,
Selvakumar (2005) observed that the institutional District Central Cooperative Banks and Primary
finance to agriculture which has contributed 22.1 Agricultural Cooperative Societies.
percent of GDP in 2002-03. He also found that the
Government has estimated the credit flow from all
Analysis
lending institutions for the year 20003-04 at Rs.
80000 crores and has planned to enhance the level
The Green Revolution results in remarkable
of flow to Rs. 105000 crores for the year 2004-05
changes in agricultural sector. The Revolution
which represents an increase of 30 percent over the
initiated through the changes in the approach of the
previous year. Vilasrao Deshmukh (2005) said that
Fourth Five Year Plan envisaged that modernizing
the Cooperatives in India account for more than
agriculture is more or less a technology of inputs
half of industrial finance advanced to agriculture
and its judicious management on scientific basis.
and one-fifth of private capital formation. Sharma
This new situation calls for greater financial
(1970) observed that an Advisory Committee on
investment on the part of farmers for purchasing of
Rural credit was constituted by the RBI to
the inputs. Consequently the provision of credit to
accelerate the flow of credit to the agricultural
farmers on liberal terms and conditions become
sector. It had been proposed that co-operatives
sine qua non of agricultural development in the
might waive security requirements for agricultural
country. The development of Cooperative credit in
loans from Rs. 10,000 to Rs. 50,000.
the form of catalyst has accelerated the pace of
agricultural development.
Methodology Co-operatives have beenpromoted and
organized for the achievement of social and
In India Co-operative Credit Institutions are economic betterment of the people in a democratic
playing significant role in extending credit to the structural framework in pursuance of the National
farm sector besides providing inputs, marketing and State objectives, such as: i) Provision of
and extension services. The objective of present adequate agricultural credit to farmers to enhance
study is to analyze the role of Credit Cooperatives agricultural output. ii) Provision of gainful
in the agricultural development of Andhra Pradesh. employment and alleviation of poverty and
Agricultural development in the present work has destitution especially in rural areas. iii)
been assessed through the flow of cooperative Decentralization of economic development, effort
credit to farm sector.In order to study the role of and iv) Development through mutual-help and Co-
cooperative banks, the credit supplied by the operative effort.
cooperative banks to the agricultural sector has In Andhra Pradesh, co-operative credit was
been analyzed. The credit supplied by the divided into short-term, medium-term and long-
cooperative banks to different sectors such as short- term credit having a multi-tier structure. The short
term credit, long-term credit and credit to allied and medium Co-operatives, known as Rural credit
sector has also been analyzed. Consistent with the co-operative structure has a three-tier structure with
objectives of the study, different techniques had Andhra Pradesh State Co-operative Bank
used for the analysis of the data. The data (APSCOB) at the Apex Level, District Central Co-
pertaining to the study was analyzed and presented operative Banks (DCCB) at the district level and
in tabular forms to make the findings meaningful Primary Agricultural Co-operative Societies
and easily understandable with simple statistical (PACS) at the village level. The Primary
tools of analysis like ratios, compound annual Agricultural Co-operative Societies are the basic
growth rate (CARG) etc. On the above backdrop, foundation for the whole edifice of co-operative
the structure of the credit cooperatives, their growth credit. Under the long-term credit structure (two-
and development and their trend of credit tier) State Co-operative Agricultural and Rural
disbursements etc. have to be taken into Development Banks (SCARDB) are at the state
consideration for the analysis of the objective.The level and affiliated Primary Agriculture and Rural
data used for the analysis is of secondary in nature. Development Banks (PARDB) at the district or
The secondary data relating to the growth and taluk levels. Table 2 shows the profile of Co-
development of Credit Cooperatives in Andhra operative societies in the state. It shows the growth
Pradesh etc. are collected from the various of co-operatives during the period of 1990-91
publications and websites of The APCOB, Co- to2009-10.
operative Union, Hyderabad, Co-operative College,
International Journal of Cooperative Studies 59

Table 2. Profile of co-operative societies in Andhra Pradesh.

Year No. of Societies Membership Paid-up Working capital Loans Loans Outstanding
(in 000) (in 000) capital advanced
1990-91 20205 15157 4180180 47044806 23557038 40119870
1991-92 20411 15787 3989373 54679031 21758305 44371539
1992-93 20257 16657 4401668 64472601 31867219 53386518
1993-94 20489 16812 4662758 75564550 34878348 58465752
1994-95 20582 17182 4813190 96207167 50443475 75121257
1995-96 22426 19022 6303876 102071454 57167641 82248613
1996-97 23155 20050 6635722 107199887 60026944 86361043
1997-98 25265 21052 9767508 112559881 63028291 90679095
1998-99 28675 22104 7315883 118187875 66179705 95213049
1999-00 29663 22767 7535359 121733511 68165096 98069440
2000-01 30267 22956 765411 122241632 70224016 99215875
2001-02 31252 23011 771256 123687541 71365485 100562153
2002-03 32566 23542 775968 124587213 72564831 101553624
2003-04 33247 24351 778632 125436874 73698215 103524867
2004-05 34266 25499 783659 128463522 74165328 105721695
2006-07 34963 26532 795231 129935482 74582316 107596354
2007-08 35698 26873 806399 13624985 75832542 108935467
2008-09 35918 27216 807734 13784532 75912657 109621843
2009-10 36011 27993 815269 13902563 75986532 110826531
Sources: Commissioner & Registrar of Co-operative Societies, Government of Andhra Pradesh, Hyderabad.

The Government of Andhra Pradesh has appointed approval from the Central Government, the
a High Power Committee in 1982 headed by Sri Government of Andhra Pradesh has introduced the
Mohankanda to suggest on reorganization of Credit system with effect from 1st April 1987 to make the
Co-operatives in the state. This committee has existing primary Agricultural Co-operative
recommended the introduction of Single Window Societies more viable.
Credit Delivery System. After obtaining the

Table 3. Working of primary agricultural credit and multipurpose co-operative societies (Rs. in Crores).
Year No. of Membersh Share Deposit Borrow- W.C. Loans C-D
Societies ip (000) capital s Ings Advances Recovered O/S Over Ratio
dues
1962-63 15328 1599 4.67 0.94 22.43 29.52 29.72 19.20 34.32 6.05 31.62
1972-73 14950 2283 11.28 4.20 41.53 75.27 31.61 26.11 48.58 27.23 7.53
1982-83 7001 7159 36.82 9.93 191.89 324.83 186.70 150.53 222.70 111.27 18.80
1992-93 4638 11924 136.91 72.80 860.85 1122.28 737.60 461.66 1482.02 416.87 10.13
2002-03 4678 16026 589.01 309.88 3251.40 6169.47 3368.24 1273.61 4434.38 485.23 10.87
Sources: Various issues of Andhra Pradesh Statistical Handbook.

The above table depicts the decadal performance of number of societies during the period. This
Primary Agricultural Co-operative Societies. It is significant decline in the number of Primary
evident from the above table that there is a Agricultural Co-operative Societies has been
significant growth in the membership of the attributed to the consolidation and amalgamation of
Primary Agricultural Co-operative Societies after Primary Agricultural Co-operative Societies on the
the introduction of Single Window Credit Delivery basis of viability criteria under the Single Window
System. But there is considerable decline in the Credit Delivery System.

Table.4. Total credit disbursements of primary agricultural cooperative societies (Rs. In lakhs).
Year Short-term loans Medium-term loans Total loans
Amount Increase/ Amount Increase/ Amount Increase/
(Rs.) Decrease in % (Rs.) Decrease in % (Rs.) Decrease in %
2002-03 169230.56 0 41505.97 0 210736.53 0
2003-04 167460 -1770.56 32281.29 -9224.68 199741.29 -10995.2
2004-05 186271.6 18811.6 38297.79 6016.5 224569.39 24828.1
2005-06 200065 13793.4 40304.42 2006.63 240369.42 15800.03
2006-07 203788.67 3723.67 35614.12 -4690.3 239402.79 -966.63
2007-08 236023.36 32234.69 34514.22 -1099.9 270537.58 31134.79
2008-09 223571.62 -12451.7 33947.79 -566.43 257519.41 -13018.2
2009-10 300695.00 77103.38 33225.78 -722.01 333900.78 76381.37
Source: National Federation of State Cooperatives Banks LTD
60 R. Uma Devi and S. R. K. Govt

From Table 4, it is evident that the total loans Operations (SAO), Oil Seed Production
including both ST and LT loans showing increasing Programme (OPP) and Development of Tribal
trend. In the year 2002-03 the ST loans are Production (DTP).The DCCBs are disbursing a
Rs.169230.56 lakhs and it is increased to 300695 credit of Rs. 2037.23 lakhs for Seasonal
lakhs in 2009-10. Similarly the MT loans are Agricultural Operations (SAO), Rs.246.14 lakhs to
Rs.41504.97 lakhs in the year 2002-03 and Development of Tribal Production (DTP) during
decreased to Rs.33225.78 lakhs in 2009-10. The 2008-09. It is clear that the DCCBs are providing
total loans amounted to Rs.333900.78 lakhs for the major share to SAO. It is also clear that the DCCBs
year 2009-10 where as it is only Rs.210736.53 are concentrating more on crop loans than
lakhs for the year 2002-03. The CARG of total investment credit. Even though NABARD is
loans is 0.7 percent, whereas the CARG of ST financing for LT loans, the DCCBs are
loans are 6.64 percent and CARG of MT loans is - concentrating on crop loans only. The viability of
28.4 percent. The DCCBs are providing both crop any credit structure depends upon its recovery of
loans (Kharif and Rabi) and investment credit. It is loans. The DCCBs are in a safe position in the
providing credit under Seasonal Agricultural recovery of loans.

Table 5. Working of District Central Cooperative Banks (Rs. In lakhs).

Year No. of Share Reserves Borrowings Deposits Loans C-D
DCCBs capital(Rs.) (Rs.) (Rs.) (Rs.) Issued(Rs.) ratio(%)
2001-02 25 47356 50846 388510 245797 181005 73.64
2002-03 23 49265 65596 398083 256216 192863 75.27
2003-04 22 50200 75509 421738 254796 188485 73.97
2004-05 22 61290 88356 426135 247699 232645 93.92
2005-06 22 64642 108436 449716 251417 296956 118.11
2006-07 23 73299 126633 504902 260849 297693 114.12
2007-08 23 74664 128261 494547 273213 262652 96.13
2008-09 23 77278 121142 408041 335604 229549 68.40
2009-10 23 85101 250423 387918 380000 386206 101.63
Source: National Federation of State Cooperatives Banks LTD.

Table 5 depicts the several parameters of DCCBs then it is showing an increasing trend of 101.63
for the period 2001-02 to 2009-10.During the percent. In the year 2001-02 the deposits are Rs.
period the no. of DCCBs are decreased due to the 245797 lakhs whereas the deposits for 2009-10 are
reorganization of the total co-operative credit Rs.380000 lakhs. The loans for 2001-02 are
structure at the time of introduction of SWCDS. Rs.181005 lakhs where as it is Rs.386206 lakhs for
The share capital, reserves, deposits and loans are the year 2009-10.
increased. The C-D ratio shows fluctuations; even

Table 6. Total Credit Disbursements of District Central Cooperative Banks (Rs. In lakhs).
Year Short-term loans Medium-term loans Total loans
Amount Increase/ Amount Increase/ Amount Increase/
(Rs.) Decrease in % (Rs.) Decrease in % (Rs.) Decrease in %
2001-02 174787 0 6218 0 181005 0
2002-03 186548 11761 6315 97 192863 11858
2003-04 182234 -4314 6251 -64 188485 -4378
2004-05 221350 39116 11295 5044 232645 44160
2005-06 276418 55068 20538 9243 296956 64311
2006-07 286377 9959 11316 -9222 297693 737
2007-08 254453 -31924 8199 -3117 262652 -35041
2008-09 215512 -38941 14037 5838 229549 -33103
2009-10 375392 159880 10814 -3223 386206 156657
Source: National Federation of State Cooperatives Banks LTD.

From Table 6 it is evident that the total loans Rs.108148 lakhs in 2009-10. The total loans
including both St and LT loans showing increasing amounted to Rs.386206 lakhs for the year 2009-10
trend. In the year 2001-02 the ST loans are where as it was only Rs.181005 lakhs for the year
Rs.174787 lakhs and it is increased to Rs.375392 2001-02. The CARG of total loans is 31.5 percent,
lakhs in 2009-10. Similarly the MT loans are whereas the CARG of ST loans are 31.9 percent
Rs.6218 lakhs in the year 2001-02 and increased to and CARG of MT loans is 18.7 percent.
International Journal of Cooperative Studies 61

Table 7. Working of district central cooperative banks for the last five decades (Rs. in Crores).
Year No. Share Reserves Deposits Borrow Working Loans C-D
of Capital (Rs.) (Rs.) ings Capital Advances Recover O/S Over ratio
banks (Rs.) (Rs.) (Rs.) (Rs.) ed (Rs.) (Rs.) due(Rs.) (%)
1962 -63 25 4.93 2.22 6.83 20.65 34.64 35.42 35.35 28.02 5.08 5.19
1972 -73 25 10.86 6.33 22.68 23.22 66.4 39.78 43.94 49.71 20.95 1.75
1982 -83 27 38.44 11.87 128.64 191.78 426.98 278.68 180.03 336.53 114.87 2.17
1992 -93 22 149.28 28.51 625.17 1514.77 2096.07 1115.72 596.65 1637.13 564.31 1.78
2002 –03 22 705.45 41.79 2647.95 4022.86 7456.28 2086.2 1893.82 8124.82 2000.9 0.79
Sources: Various issues of Andhra Pradesh Statistical Handbook.

Table 8 shows the decadal growth of DCCBs from However the deposits and advances were increased
1962-63 to 2002-03. The number of banks is to a considerable extent. But the C-D ratio is
decreased due to SWCDS from 25 to 22.It also decreased from 5.19 to 0.79 percent during the
make clear that the recovery performance of the period.
bank which doesn’t shows any positive progress.

Table 8. Progress of DCCBS during 1995– 06 to 2008 – 09 (Rs. In Crores).

Year Share Capital(Rs.) Reserves (Rs.) Profit / Loss(Rs.)
1995 - 96 1812.33 1544.93 - 815.04
1996 - 97 2553.71 1466.1 - 135.44
1997 - 98 3083.14 2168.69 + 122.83
1998 - 99 3830.99 3337.54 - 420.94
1999 - 00 4068.29 4703.2 + 21.58
2000 - 01 4302.6 5416.6 + 502.79
2001 - 02 4299.59 7919.04 - 993.30
2002 - 03 4382.47 6815.03 - 1908.86
2003 - 04 4371.41 8820.15 - 867.19
2004 - 05 4348.1 111439 + 132.28
2005-06 4412.21 1258.33 +149.86
2006-07 4538.11 2542.62 +327.8
2007-08 4678.26 3169.82 +526.33
2008-09 4787.61 3366.28 +714.29
Sources: Directorate of Economics and Statistics, Andhra Pradesh

It is evident from Table 8 that the share capital of Population (DTP) iv) National Pulses Development
the DCCBs is increased nearly two and half times Programme (NPDP)
during the ten years period i.e., from 1995-96 to It has introduced a Cooperative Kisan Credit
2008-09. It is observed that there are some Card cum Pass book (CKCC) for ease of operations
fluctuations in the profits, may be due to its by the farmers in respect of their production credit
recovery of loans, less deposits, non-performing needs under the above schemes from the year 1999-
assets and lack of management skills etc. 2000. Focus is given to financing of small and
In Andhra Pradesh, APSCOB is a scheduled marginal farmers and other weaker sections of the
State Cooperative Bank. It has 22 affiliated DCCBs farming community in providing production credit
which in turn have 557 branches and 2746 PACS for agriculture. APSCOB through its affiliate
through which development of agricultural credit is DCCBs and PACS is the single largest provider of
provide, to serve a sizeable chunk of the total investment credit in A.P. The bank supports credit
membership of the PACS of around 1.5 crores. stabilization by converting, reposing and
The objective of APSCOB is to set a faster pace for postponing agricultural loans issued earlier, into
agricultural and rural development in the state term loans repayable in a longer span, while at the
through the medium of cooperatives. It has same time providing fresh finance to undertake
formulated and is implementing various schemes of production activity subsequent to the advent of
refinance to various critical sectors in the state’s natural calamity.
economy. The APSCOB and affiliate credit structure in
The bank provides refinance for crop loan A.P. show case a unique experiment of Single
issued for undertaking SAO by the farmers through Window Credit Delivery System (SWCDS), as a
the DCCBs and PACS under the following first of its kind in the country under which, both
programmes: i) Seasonal Agricultural Operations investment and production credit for agriculture is
(Normal crop loans) ii) Oil Seeds Production provided at the grass root level through a single
Programme (OPP) iii) Development of Tribunal agency.
62 R. Uma Devi and S. R. K. Govt

Table 9. Prior and after SWCDS - working of state cooperative banks in A.P. (Rs. in Crores).
Year No. of Share Reserve Deposits Borrowings W.C. Loans
Banks Capital Advances Recovered O/S Over C-D
due ratio
1962-63 2 2.13 0.85 3.04 18.85 24.87 39.92 39.99 21.87 1.33 13.13
1972-73 1 2.39 3.31 16.71 9.67 32.84 40.95 55.86 25.96 2.26 2.45
1982-83 1 12.94 4.5 117.76 124.88 291.35 289.89 187.44 231.82 15.32 2.46
1992-93 1 36.46 82.13 422.25 703.86 1244.7 1024.34 912.51 880.44 84.19 2.43
2002-03 1 189.1 623.75 1359.63 3359.37 5284.77 2385.83 2870.99 4532.37 850.4 1.75
Source: Various issues of Directorate of Economics & Statistics, Govt. of Andhra Pradesh.

It is clear from table 9 that there are two apex 04.08.1963.All the parameters shows increasing
banks at the State level up to 1962-63 one for trend. But the C-D ratio shows decreasing trend
Andhra area and another for Telangana area and due to increase in over dues, out standings and bad
they were merged to form the APSCOB since and doubtful debts.

Table 10. Working of Andhra Pradesh State Cooperative Bank (Rs. in lakhs).
Year Share Reserve Deposits Borrowi W.C. Loans
Capital ngs Advances Recovered O/S Over due
1996 – 97 10,437 23,346 57,043 2,55,189 3,46,016 201,241 1,61,966 3,01,949 42,510
1997 – 98 10,932 26,204 81,295 2,83,409 3,94,595 2,34,359 1,99,556 3,29,806 54,590
1998 – 99 16,084 34,984 1,05,233 3,64,693 5,52,846 2,72,583 2,12,838 3,83,277 69,655
1999 – 00 16,923 45,609 1,45,290 3,54,143 5,61,966 2,84,803 2,23,133 4,09,453 45,224
2000 – 01 17,949 8,268 1,62,055 3,47,848 5,76,469 3,07,041 2,89,686 4,35,990 59,630
2001 – 02 18,599 53,566 1,53,412 3,35,231 5,61,708 3,06,668 2,80,903 4,61,753 84,297
2002 – 03 18,910 62,375 1,35,963 3,35,937 5,28,477 2,38,583 2,87,099 4,53,237 85,040
2003 – 04 19,014 64,271 1,67,794 3,21,937 5,73,016 3,38,583 3,33,547 4,47,782 74,998
2004 – 05 19,190 1,12,400 1,86,764 3,12,352 6,30,706 9,11,807 8,43,942 5,15,847 59,325
2005- 06 19,193 1,19,555 1,69,715 4,07,473 4,63,095 9,43,602 8,95,466 5,64,068 63,809
2006-07 19,198 1,24,415 1,77,844 4,19,146 7,40,604 10,92,359 10,49,973 6,06,454 87,849
2007-08 19,289 1,28,169 2,17,275 3,68,871 7,33,604 11,61,360 11,70,478 5,97,338 1,05,203
2008-09 19,275 1,03,543 3,17,600 2,75,208 1,48,481 4,71,831 4,40,326 31,504 31,504
2009-10 19,678 1,61,078 3,56,618 2,75,208 1,42,991 14,00,518 10,12,891 3,87,627 26,248
Source: Directorate of Economics & Statistics, Govt. of A.P.

Table 10 shows the growth of APSCOB from period. It makes clear that the recovery
1996-97 to 2009-10. It shows the different key performance of the bank was good enough and the
financial indicators of APSCOB by which it is clear deposits, advances and borrowings etc. were
that it shows a progressive growth during the increased to a considerable extent.

Table11. Ratio of Credit -Deposits of APSCOB (Rs. in lakhs).

Year Total Advances Total Deposits C/D ratio (in %)
1996 - 97 2,01,241 57,043 352.78
1997 - 98 2,34,359 81,295 288.28
1998 - 99 2,72,584 1,05,233 259.03
1999 - 00 2,84,803 1,45,290 196.02
2000 - 01 3,07,041 1,62,055 189.47
2001 - 02 3,06,668 1,53,412 199.9
2002 - 03 2,38,583 1,35,963 175.48
2003 - 04 3,28,670 1,67,794 195.88
2004 - 05 9,11,807 1,86,764 488.21
2005 - 06 9,43,602 1,69,715 555.9
2006-07 10,92,359 1,77,844 614.22
2007-08 11,61,360 2,17,275 534.51
2008-09 4,71,831 3,17,600 148.56
2009-10 14,00,518 3,56,618 392.72
Source: Directorate of Economics & Statistics, Govt. of A.P

Table 11 reveals the total deposits and advances of deposit mobilization. The total deposits increased
APSCOB for the period 1996-97 and 2009-10. By from Rs. 57,043 lakhs to Rs. 3, 56,618 lakhs
observing the above table it is clear that the credit- registering a growth rate of 250 percent. The total
deposit ratio of APSCOB shows a fluctuating trend. advances have been significantly increased, but
The bank has shown a satisfactory growth in there are fluctuations over the period.
International Journal of Cooperative Studies 63

Conclusion productive purposes. Besides the credit the banks

also providing agricultural inputs, fertilizers,
By the beginning of 20th century, the GOI pesticides etc. at subsidized prices. With the help of
recognized the root causes of the indebtedness and co-operatives the farmers benefitted to maximum
poverty of the Indian farmers and started Credit extent by increasing their agricultural output which
Co-operatives.Co-operative banks were established in turn increased the levels of employment and
on the principle of co-operation.The main function income. Hence it can be concluded that co-
of these banks is to relieve the poor farmers from operative credit has become vital not only for
the clutches of the money lenders and to provide agricultural development but also for the overall
adequate and timely credit at lower rates of interest. development of the people.
Sri Rajnath Singh (2006) called upon the The institutional credit increases the
Government to take necessary steps so that farmers purchasing power of the farmers and perhaps due to
may not have to pay more than 6 percent interest on this reason there is an increase in the use of modern
the agricultural loans. inputs in their farming procedures. It acts as a
Andhra Pradesh is the first state which moral boost to farmers in increasing the
implemented the Single Window Credit Delivery productivity which ultimately improves their
System in order to simplify the credit disbursement overall economic growth. Hence it can be said that
procedure.The Single Window Credit Delivery agricultural credit and agricultural development
System is the first of its kind in the Nation itself. It goes by hand in hand. The present study clearly
is an innovative programme in farm credit. Under enunciated the advantages enjoyed through
this system Primary Agricultural Co-operative improved technology with the efforts of the bank
Societies are expected to provide multi farm credit for the beneficiaries in terms of high production,
and multi-functional services at a single contact increased net returns and subsidiary incomes. The
point. In the state, the short-term and long-term results further emphasized the need to enlighten the
credit structures have been integrated under this farmers about the superiority and profitability of
System. This enables easy process of credit improved technology through the extensive credit
disbursement and also lessens the period of credit services. By and large the role of Credit
disbursal. Cooperatives is highly impressive and clearly
APSCOB is acting as Project Implementing exhibited in the socio-economic development
agency (PIA) and is implementing Investment gained by the beneficiaries. Thus it is evident from
Credit Development (ICDP) in the districts of East the above study that Credit Co-operatives are
Godavari, Nizamabad, Chittoor, Krishna, Nalgonda playing a key role in the progress of Andhra
and Kurnool. APSCOB as a leader of the Credit Pradesh in particular and the nation as a whole.
institutions in co-operatives undertakes annual
inspections of DCCBs by deputing its officers and
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