CHAPTER – IV

AGRICULTURAL CREDIT CO-OPERATIVE SOCIETY

These societies, constituting the bulk of the Co-operative credit

societies, supply short term and intermediate term, not exceeding five years

finance to agriculturists. Each society has usually only a single village as its

area of operation, but in some cases hamlets and smaller villages in the

neighbourhood for which it is not possible to organise separate societies are

also included in its jurisdiction. Membership is open to all residents of that area

who satisfy certain conditions laid down in the bye-laws.

It has its own aim and objectives. The main aim of the Primary

Agricultural Co-operative Bank is to grant loan for agricultural and animal

husbandry, cottage industries, handicrafts, medical treatments and for funeral

ceremonies. In addition to this, it gives credit to the purpose, which is agreed

by the financial aid banks and Registrar353.

The objectives of the society are: To get credit deposits from the

members and others to enforce the central objective of the Bank, To Undertake

lending services, Accordingly, it owns agricultural devices, electrical

instrument and animal of its own to lend then to the members for hire, To

1. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor, p.2.

125
Enlighten the people about new techniques concerned with agriculture and

handicrafts and encourage the members to adopt them354.

To arrange social welfare entertainment activities for the sake of the

members and getting necessary funds from the common people as donation or

from the government as subsidy for conducting these programes, To get

financial aid from the government by way of subsidy and others through

donation for the banking activities, To develop the sense of co-operation

among the people in matters like economy, self help and mutual help among

the members and to spread the co-operative principles and enforcing them. 355

It collected money through share among the members. Bank’s “Share

Capital” shall be as Rs. 50,00,000 it shall have be 5,00,000 share valued for 10

Rupees. The share should be paid when they are distributed. Bank should pay

back to government, for which they give document to government. 356

The Primary Agricultural Co-operative Banks finance is drawn from

different sources. They are Share Capital, Thrift deposit paid by the members,

Credit received from the government, Deposit, Entrance fees and other fees,

Donations Miscellaneous income ect.357

2. Ibid., pp.2-3.
3. Ibid., p.3.
4. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Malayady., pp.3-4.
5. Ibid., p.4.

126
 To Register New Branch, it has its own system. If anyone wanted to

start a new Primary Agricultural Co-operative Bank branch, they should follow

demand which is mentioned by the Registrar. If the Primary Agricultural

Co-operative Bank wanted to start a branch, then the bye-law of the Primary

Agricultural Co-operative Bank related to the starting of the branch should be

amended and the amendment should be passed by the General Body of the

Bank, It should not appoint any person to run the new branch. It should be run

by the present working staff358.

The branch should function in the safe building located near the

populated area, Safety locker facilities are necessary to run the branch, The

monthly rent of the branch building should not exceed Rs.200, otherwise it is

necessary to get the permission as per rules, The branch should collect Rs.10

lakhs deposit within one year359.

It should insure all the furniture, cash on hand, jewel stock, manure

stock existing in the branch of the bank. Further it should insure completely the

cash in transit to the head office and central Co-operative Bank from the

branch. The necessary power should be given to the Secretary to maintain

register for the staff working in the branch to examine the activities of the

branch, Notice board should be kept for indicating the working days of the

branch and it is necessary to send the proposals to get the permission for the

6. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor, p.3.

7. Ibid., p.4.

127
expenditure pertaining to the starting of the branch.360 After fulfilling these ten

conditions by the Primary Agricultural Co-operative Bank, started two

branches with government permission361.

In the Welfare State, one of the Primary duties of the State is to provide

food security to its people. Distribution of essential commodities on family

cards has been in vogue in Tamil Nadu since 1964. The Public Distribution

System has been the lifeline for a section of people in our country especially

for those living below poverty line. The distribution system envisages sale of

essential commodities such as Rice, Sugar, Wheat and Kerosene etc. at

subsidised rate through fair price shops both in the urban and rural areas. In

Tamilnadu the Public Distribution System is being implemented by the Tamil

Nadu Civil Supplies Corporation and the co-operative department. Out of the

total number of fair price shops 95% of the fair price shops are run by the

co-operative department through various Co-operative Institutions such as

District Consumers” Co-operative Wholesale Stores, Co-operative Marketing

Societies, Primary Agricultural Co-operative Banks, Primary Co-operative

8. Circular of State Registrar, No.10675/97, Kurumathoor Primary Agricultural

Co-operative Bank, Kurumathooor, 1997.
9. Annual Report of Kurumathoor Primary Agricultural Co-operative Bank,
Kurumathoor, 1995-1996, p.4.

128
Stores, LAMPS etc. Thus co-operatives play a predominant role in the

distribution of essential commodities under Public Distribution System362.

The policies regarding Public Distribution System are being taken by the

Civil Supplies and Consumer Protection Department, procurement, processing,

storage and transportation of essential commodities upto Taluk godown level

are governed by the Tamil Nadu Civil Supplies Corporation Ltd. Distribution

of essential commodities from Taluk level godowns of Tamil Nadu Civil

Supplies Corporation to Fair price shops are being done by both Tamil Nadu

Civil Supplies Corporation and co-operatives. Items of Essential Commodities

are Rice, Sugar, Wheat and Kerosene363.

In order to control the rise in Price in the Open Market, Government

have ordered for distribution of Toor Dhall, Urid Dhall Rava, Maida and RBD

Palmolein Oil in pouch to the card holders through Fair Price Shops under

Special Public Distribution System. Initially this Scheme was introduced in

Chennai with effect from 14th April 2007 and extended to all other districts

with effect from 1st May 2007364.

Apart from routine distribution of essential commodities to general

Public, the following special schemes are being implemented in Public

10. Right to Information Act, 2005 Manual, General Information about Co-operative
Department, Under the Control of Registrar of Co-operative Societies, Chennai,
2005, p.38.
11. Ibid., p.40.
12. G.O.(M.S) No.106, Co-operation, Food and Consumer Protection (D1)
Department, Dated 04-04-2007.

129
Distribution System. Old Age Pensioners scheme was introduced 1.11.80 and

withdrawn on 1.5.81. It was again revived on 15th September 1991. Under this

scheme, rice is being supplied at free of cost to the old aged helpless persons as

per the scale indicated below, Free supply of 1 Kg of rice per week per head for

those who are not taking meals in the Nutrition Meal Programme. Free supply

of ½ Kg of rice per week per head for those who take meals in the Nutrition

Meal Programme365.

Annapurna scheme is implemented since January 2002, by the state to

ensure food security to indigent senior citizens. Under this scheme 10 Kg, of

rice per month is given at free of cost to the Old Aged Pensioners. Antyodaya

Anna Yojana scheme, 35 Kg. of rice is given to the Antyodaya families poorest

of the poor per month at a concessional rate of Rs.2/- per Kg366.

Under Sampoorna Gramin Rozgar Yojana scheme, 5 Kg. of rice per

Monday is being supplied to the beneficiaries as a part of their wages, at

Rs.5.65 per Kg. Block Development Officers will issue coupons to the workers

who will in turn draw rice from Fair price shops concerned by surrendering the

coupons. The Government have issued orders to implement food for work

programme under Special Component of SGRY through various departments

in order to provide wage employment to the affected people and to ensure food

13. Right to Information Act, 2005 Manual, General Information about Co-operative
Department, Under the Control of Registrar of Co-operative Societies, Chennai,
2005, p.41.
14. Ibid., p.42.

130
security in all affected areas. Under this scheme, each worker is being supplied

7 Kg. Of rice per Manday as a part of their wages at a concessional rate of

Rs.5.65 per Kg. The affected area will be identified by the Government from

time to time367.

Free Rice to the Pregnant, Lactating Women and Adolescent Girls

scheme is introduced in Tiruvannamalai and Ramanathapuram districts from

25th November 2002 as a pilot scheme. Under this scheme 6 Kg. of Rice (per

month) is provided at free of cost to the pregnant and Lactating women with

body weight less than 40 Kg. and adolescent girls with body weight less than

35 Kg. With a view to serve the family card holders with better quality at

reasonable rate, selling of non-controlled commodities like provisions,

cosmetics, etc., in fair price shops was allowed. Apart from provisions and

cosmetics, the following special items are sold in fair price shops as per the

Government orders368.

In order to alleviate the sufferings of the small tea growers in the

Nilgiris district. The Government have introduced a scheme on 28th August

2001 to sell tea (processed by INDCOSERVE) through fair price shops. The

total price of Ooty tea is very competitive i.e. Rs.10/- per 100 gm. Packet. With

a view to minimise the health hazards caused due to deficiency of Iodine, and

to promote the sale of salt produced by Tamil Nadu Salt Corporation, the

15. Ibid., p.43.

16. G.O.Ms.No.294, Agriculture (Agri.1) Department, dated 27.07.2001.

131
Government have permitted the sale of Iodised Salt through fair price shops in

all districts. The selling price of 1 Kg. Crystal Iodised Salt is Rs.2.50369.

In pursuant to the announcement on the floor of Assembly by the

Hon’ble Ministers for Co-operation, Food and Consumer Protection

Department and Hon’ble Minister for Handlooms, Textiles and Khadi, the

scheme for sale of Khadi products produced by the Khadi and Village

Industries Board through fair price shops was launched on 8th July 2002. In

order to prevent/ control HIV/AIDS and to create awareness among the Public,

Condoms are sold in fair price shops370.

Ration Shops are necessary to the Primary Agricultural Co-operative

Banks to sell important commodities to the people who are living within the

area of operation of the bank. 371 It distributes rice, sugar, wheat, kerosene, oil,

soap, tea and salt among the people who belong to the area of operation of the

bank.372It is supplying rice for Rs.1 per kilogram, by the order of our

Honourable Chief Minister373. Toor dhall and Urad dhall shall be supplied at

17. Ibid.,
18. Right to Information Act, 2005 Manual, General Information about Co-operative
Department, Under the Control of Registrar of Co-operative Societies, Chennai,
2005, p.42.
19. R.Balakrishnan., Co-operative Credit, Trinelveli, 1992, p.64.
20. Report of Kurumathoor Primary Agricultural Co-operative Bank, Kurumathoor,
1998 – 1999, p.12.
21. R.Nallathambi,(Editor)., Tamilnadu Journal of Co-operation, June, 2006, p.3.

132
the rate of Rs.1, per 1 kg, per month per family374. The prices at which these

commodities will be supplied to the public will be decided later depending on

the procurement prices and the open market prices prevailing at the time of

distribution375. In Kanyakumari District there are 425 full time Shops out of

378 in rural and 47 in Urban excluding 66 partime shops. Next 26 women

shops and 2 kerosene bunks also function in Kanyakumari District. Altogether

there are 4,24,224 Cards out of 3,74,580 are in rural areas and 49,644 cards in

urban areas376.

At the state level the Principal Secretary to Government, Co-operation,

Food and Consumer Protection Department reviews Public Distribution

System. Besides monthly meetings, review meeting are conducted as and when

need arises. The District Collectors are also reviewing the Public Distribution

System on weekly basis. Registrar of Co-operative Societies reviews the Public

Distribution System with regional Joint Registrars on bi-monthly basis. The

functions / performance of Public Distribution System in Chennai City and Belt

areas are reviewed by the Additional Registrar on fort night by basis. At the

District level Regional Joint Registrar / Deputy Registrar concerned reviews

Public Distribution System with their subordinates engaged in Public

22. G.O.(M.S) No.106, Co-operation, Food and Consumer Protection (D1)

Department, Dated 04-04-2007.
23. From the Chairman and Managing Director, Tamil Nadu Civil Supplies
Corporation D.O. Letter No.COM/16458/2007 dated 26.2.2007 and 23.3.2007.
24. Right to Information Act, 2005 Manual, General Information about Co-operative
Department, Under the Control of Registrar of Co-operative Societies, Chennai,
2005, p.43.

133
Distribution System on weekly basis. Apart from this, a monthly co-ordination

meeting is being convened at the head office of the Tamil Nadu Civil Supplies

Corporation, by its Managing Director, the representative of the Registrar of

Co-operative Societies Joint, the Special Officers of Co-operative Wholesale

Stores in Chennai city discuss the various problems in Public Distribution

System and remedial measure being taken377.

The Regional Joint Registrars and Joint Registrar I and II, Chennai,

organise Special Flying Squads for surprise inspection of fair price shops every

month mobilising the staff of the department. They also organise Flying Squads

for inspecting the movement of stocks from the godowns of Tamil Nadu Civil

Supplies Corporation and kerosene suppliers to fair price shops to check

irregularities. During the course of inspection the following items of works are

attended, Verification of stock, Verification of cash balance and remittance of

sale proceeds, Availability of commodities, Distribution of commodities

according to the scale of supply and rates prescribed by the Government,

Verification of accounts and Registers, Verification of family cards,

Correctness of weights/ measures, Cleanliness of fair price shops and

Ascertaining Public opinion about the functioning of the fair price shops378.

As per the, A fair price shop should display the following information in

front of the fair price shops. Working hours of the fair price shops, Scale of

supply of essential commodities, Allotment for the month, liftment details

25. Ibid., p.47.

26. Ibid., p.48.

134
commodity wise, Stock on hand of the commodities with price, Samples of

essential commodities which are distributed and Office address and telephone

number of the District Supply Officer, Taluk Supply Officer, Regional Joint

Registrar, Deputy Registrar Public Distribution System to whom complaints

regarding fair price shops and Public Distribution System to be made379.

Verification of modern weighting machines and measurements to see

whether they are in good condition or not, is an important duty of the Secretary

of the bank. Accordingly the Government sanctions a sum of Rs. 11.50 crores

towards financial assistance in the form of subsidy to Co-operative fair price

shops for purchase of 23,600 modern weighing machines380. If they are not in

good condition, then they are to be removed from the shop. The Secretary visits

the shops twice in a month to examine the selling commodities and about their

measures. This helps the people to get the commodities without corruption.381

Up to 1934 the trend was towards unlimited liability. But it was found

later that the enforcement of unlimited liability after liquidation created some

restrictions against Co-operative Societies in villages. The Co-operative

Planning Committee of 1946 recommended the introduction of limited liability

27. G.O.Ms.No.162 Co-operation, Food and Consumer Protection Department,

dated 12.6.1997.
28. From the Registrar of Co-operative Societies, Letter RC.No.168115/08/PB1, dated
19.12.2006 and 10.01.2007.
29. G.O. (2D) No: 58, Co-operation, Food and Consumer protection Department,
dated 29.05.2007.

135
for rural credit bank. The All India Rural Credit Survey Committee conceived

of large scale Co-operative Credit Bank with limited liability. 382

In the Primary Agricultural Co-operative Bank, the liability of members

is ten times greater than that of this share capital paid by them. But the liability

of the following members is the amount equal to the share capital paid by them.

They are: The members those who did not attain the correct age fixed by the

Bank, Government and mentally disordered members383.

Short Term and Medium Term Credits

Modern agriculture, as distinguished from traditional cultivation,

involves substantial investment of recurring nature for using high yielding

varieties of seeds, fertilisers, insecticides and costly agricultural implements. In

such a situation, arrangements for credit should go much beyond the simple

provision of credit and must be linked operationally with productivity and other

services. Production and productivity, marketing and raising the level of

surplus and savings must, therefore, be the major functions of credit. The

benefit of modern technology, the advantages of institutional credit,

infrastructural arrangements etc., should accrue to all classes of farmers.

Besides, on the supply side, there must be an arrangement for assessing the

requirements of funds on the basis of actual cost and raising the resources

therefore. It was in this context, the crop loan system or the production oriented

30. J.Banerjee., Co-operative Movement in India, Calcutta, 1961, p.95.

31. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Malayady, p.3.

136
system of lending was evolved and conceived as the most appropriate

mechanism for mass disbursement of production credit.

The Short Term and Medium Term Co-operative Credit Structure

operates in three tiers viz. Tamil Nadu State Apex Co-operative Bank at the

State Level, Central Co-operative Banks at the District Level (excluding

Chennai Central Co-operative Bank which does not undertake agricultural

finance) and Primary Agricultural Co-operative Banks at the Village level384.

The Tamil Nadu State Apex Co-operative Bank, which is the Federation

of the Central Co-operative Banks, has been disbursing credit through its

affiliates for both agricultural and non-agricultural purposes since 1905. It

channelises the funds provided by NABARD towards short term loans and

medium term loans etc. for agricultural purposes and provides cash credit from

its own resources to the District Central Co-operative Banks to enable them to

finance their affiliates385.

The Bank has been providing term finance to spinning mills/sugar mills

and direct financial assistance to other Apex Co-operative Institutions in the

State. A Fund called, ‘The Primary Co-operative Development Fund’, is

32. Record Book of Kanyakumari District Central Co-operative Bank, Nagercoil,

1992, p. 5.
33. Record Book of Kanyakumari District Central Co-operative Bank, Nagercoil,
April, 1999, p. 9.

137
maintained by the Apex Bank to strengthen the primaries in the State. As on

31st January 2002, a sum of Rs.228.53 lakhs is available under this fund386.

As on 31st January 2002, the Tamil Nadu State Apex Co-operative Bank

has a share capital of Rs.31.44 Crores (including Government share capital of

Rs.0.26 crores), reserves of Rs.193.23 crores and deposits of Rs.2612.57

crores. During the year 2001-2002, upto 31st January 2002, this Bank has

disbursed loans to the tune of Rs.1,969.43 crores. The bank earned a net profit

of Rs.40.22 Crores during 2000-2001387.

There are 23 District Central Co-operative Banks functioning in the

state, with branches mostly in rural areas to serve the affiliates and the rural

public. The District Central Co-operative Banks are financing the Primary

Agricultural Co-operative Banks from their own reserves and also by availing

credit from the NABARD for agricultural purposes. They are also financing

Primary Handloom Weavers Co-operative Societies by availing credit from the

NABARD388.

These banks also sanction loans for non-agricultural purposes like

purchase of lorries and buses, bulldozers, earth movers, construction,

34. Circular of State Registrar No.10675/97, Kurumathoor Primary Agricultural

Co-operative Bank, Kurumathoor, 1997.
35. Mannual on Deposits, the Tamilnadu State Apex Co-operative Bank Limited,
Chennai, 2000.
36. Record Book of Kanyakumari District Central Co-operative Bank, Nagercoil,
1992, p, 12.

138
establishment of clinics/service centres by doctors/engineers and for pursuing

professional courses by wards of members etc389.

As on 31st January 2002, the share capital of the District Central

Co-operative Banks was Rs.347.70 crores, which includes Government share

capital of Rs.63.81 crores, reserves of Rs.537.93 crores and deposits of

Rs.6,573.00 crores. Their working capital stood at Rs.9,962.52 crores390.

As on date 4595 Primary Agricultural Co-operative Banks are

functioning in the State which provide short term loan to the farmers repayable

within 15 months towards cultivation purposes and medium term loans

repayable within 3 to 5 years for undertaking subsidiary occupations such as

dairying, sheep rearing, poultry farming etc391. The cultivation loans are

provided on personal surety basis as per the scales of finance upto 10 acres for

registered sugarcane crop and other crops, while loans upto Rs.50,000/- are

provided for other crops like paddy, cotton, groundnut, turmeric, flowers and

fruits. For loans over and above 10 acres, loans are issued with reference to the

scales of finance on mortgage of property in respect of registered sugar cane

37. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,

1995 – 1996, p.36.
38. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2001 – 2002, p.86.
39. R.NallaThambi., (Editor) - Tamilnadu Journal of Co-operation, Chennai, June,
2006, p.8.

139
crop. For raising other crops, loans upto Rs.70,000/- are issued on mortgage

of property392.

There are 144 Primary Agricultural Co-operative branches in

Kanyakumari District. They are located in Azhagiapandipuram, Kadukkarai,

Arumanalloor, Chiramadam, Thittuvilai, Veeravanallore, Putheri,

Aralvoimozhi, Thazhakudi, Vellamadam, Sarakkalvilai,

Kalasamirakkikudyruppu, Muhilanvilai, Maravankudiyiruppu, Parakkai,

Thengamputhur, Puthalam, Melakrishnanputhur, Ethamozhi, Munchiravilai,

Suchindrum, Teroor, Oottuvalmadam, Perumselvavilai, Karavilai, Peruvalam,

Kottaram, Kanyakumari Panchyat, South Thamaraikulam, North

Thamaraikulam, Mylaudy, Azhagappapuram, Kumarapuram Thoppur,

Eraviputhoor, Melaperuvilai, Manavalakurichi, Mavilai, Reethapuram,

Palapallam, Manavilai, Parappattu, Saral, Kuruthencode, Thalakulam Eranial,

Azhaganparai, Neyoor, Lekshimipuram, Kandanvilai393, Karankadu,

Kattimancode, Veeranarayanacheri, Mekkamandapam, Brammapuram,

Kattathurai, Paracode, Vellicode, Muttakadu Jawahar, Madathattuvilai,

Manakkavilai, Kannanoor, Thiruvattar, Aruvikkari, Andoor, Attoor, Charoor,

Kulasekaram, Ettakaveli, Thirunanthikarai, Thirupparappu, Ponmani, Kolvel,

Venddlicode, Pechipparai, Eraviputhoorkadai, Palliyadi, Thickanamcode,

Vattavilai, Unnamalaikadai, Changai, Thazhakkanvilai, Nanthankadu,

40. Report of Kurumathoor Primary Agricultural Co-operative Bank, Kurumathoor,

1998, p.18.
41. Y-11, The Kanyakumari District Central Co-operative Bank Ltd., Nagercoil, Final
Audit Memorandum – 2007-2008, p.468.

140
Keezhkulam, Keezhkulam Ananvilai, Periarilai, Karangal FSCS, Irenipuram,

Keezhmidalam, Vizhunthayambalam, Nelveli, Painkulam, Kunnathoor,

Vencode, Vilathurai, Chennithottam, Parthirapuram Munchirai, Vilavancode,

Nattalam, Karavilai, Kollencode, Venkanchi, Kirathoor, Vayakkaloor 394,

Malayadi, Methukummal, Charapalanthi Athencode, Kurumathoor, Arumanai,

Palugal, Pulliyoorsalai, Edaicode, Elanchirai, Ramavarmanchirai, Pacode and

Anducode395.

As on 31st December 2001 the Primary Agricultural Co-operative Banks

had mobilised a deposit of Rs.3,373.61 crores396. The amounts of deposit from

31st March 1998 are 1645.85 crores and growth rate was 39%, 31st March 1999

are 2045.47 crores and growth rate was 24%, 31st March 2000 are 2,764.46

crores and growth rate was 35%, 31st March 2001 are 3,196.99 crores and

growth rate was 16%, 31st March 2001 are 3,373.61 crores and growth rate was

5%.

These banks issue loans for other agricultural purposes like purchase of

agricultural lands, tractors, power tillers and other agricultural implements.

These banks have also been permitted to utilise their deposit funds for issue of

loans for purchase of consumer durables, two wheelers, tempos, trucks,

42. Y-11, The Kanyakumari District Central Co-operative Bank Ltd., Nagercoil, Final
Audit Memorandum – 2007-2008, p.469.
43. Y-11, The Kanyakumari District Central Co-operative Bank Ltd., Nagercoil, Final
Audit Memorandum – 2007-2008, p.470.
44. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2001 – 2002, p.87.

141
tractors, power tillers, buses, cars, jeeps, construction and repair of houses and

for starting of service centres by engineers and doctors397.

The NABARD has sanctioned a sum of Rs.45.12 lakhs to 106 Primary

Agricultural Co-operative Banks as loan for contributing towards their share

capital during 2001-2002398.

The quantum of short term and medium term loans issued during the 9th

Five Year Plan are given below: In the year 1997-1998 was 697.99 crores short

term cultivation loan and 100.74 crores medium term agricultural loans for

subsidiary occupations, next 1998-1999 was 732.12 crores short term

cultivation loan and 117.13 crores medium term agricultural loans for

subsidiary occupations.

In the year 1999-2000 was 879.04 crores short term cultivation loans

and 111.73 crores medium term agricultural loans for subsidiary occupations,

next 2000-2001 was 1049.26 crores short term cultivation loans and 69.06

crores medium term agricultural loans for subsidiary occupations, at last 2001-

2002 was 878.26 crores short term cultivation loans and 34.95 medium term

agricultural loans for subsidiary occupations for upto January 2002. It is

45. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,

2001 – 2002, p.87.
46. Mannual on Deposits, The Tamilnadu State Apex Co-operative Bank Limited,
Chennai, 2002, p.68.

142
significant to note that the issue of agricultural loans during the above years has

been steadily increasing399.

The quantum of loans issued to the non-farm activities/small scale

industries during the 9th Five Year Plan is given below400. In the year 1997-

1998 was 20.60 crores by district Central Co-operative Banks and 6.60 crores

by Primary Agricultural Co-operative Banks. Next 1998-1999 was 25.48 crores

by District Central Co-operative Banks and 33.49 crores by Primary

Agricultural Co-operative Banks.

In the year 1999-2000 was 48.17 crores by District Central Co-operative

Banks and 67.88 crores by Primary Agricultural Co-operative Banks. Next

2000-2001 was 84.74 crores by District Central Co-operative Banks and 57.02

crores by Primary Agricultural Co-operative Banks; at last 2001-2002 was

32.48 crores by District Central Co-operative Banks and 38.02 crores by

Primary Agricultural Co-operative Banks upto January 2002. The amount was

increased upto Rs.36,549 crores during the eleventh five year plan all over

India401.

The Primary Agricultural Co-operative Banks are paying due attention

to meet the credit needs of weaker sections in the state. As per the guidelines

of NABARD, not less than 20% of short term lending by the Co-operatives

47. Appraisal of 9th Five Year Plan (1997-2002) and Annual Plan 2001-2002, p. 132.
48. Appraisal of 9th Five Year Plan (1997-2002) and Annual Plan 2001-2002, p. 133.
49. Eleventh five year plan 2007-20012, Planning commission, government of India,
Vol – I, p.79.

143
shall go to the small farmers, those owning or cultivating 5 acres or less of wet

or dry lands. However, it has been programmed to issue 60% of short term

loans and 75% of the medium term loans to weaker sections402.

The quantum of Short term loans issued to the weaker sections during

the last five years is given below: In 1997-1998 was 429.47 crores, 1998-1999

was 461.13 crores, 1999-2000 was 554.14 crores, 2000-2001 was 652.01 crores

and 2001-2002 496.77 crores up to December 2001.

The quantum of Medium term loans issued to the weaker sections during the

last five years is given below: In 1997-1998 was 89.97 crores, 1998-1999 was

99.52 crores, 1999-2000 was 90.48 crores, 2000-2001 was 54.37 crores and

2001-2002 was 24.80 crores up to December 2001.

The programme for issue of loans to the members belonging to the

Scheduled Castes/ Scheduled Tribes for 2001-2002 is 14% under short term

and 30 % under medium term loans, against which the achievement upto

December, 2001 is 9.05% and 21.28 % respectively. It has been proposed to

issue 14 % of the short-term loans and 30 % of medium term loans to the

SC/ST members during the year 2002-2003 also403.

The Kisan Credit Card Scheme formulated by the NABARD is

implemented through District Central Co-operative Banks and Primary

50. Guidelines for 58th All India Co-operative Week Celebrations, New Delhi,
2011, p.23.
51. Guidelines for 58th All India Co-operative Week Celebrations, New Delhi,
2011, p.22.

144
Agricultural Co-operative Banks404. As on 31.1.2002 the Kisan Credit Cards

have been issued to 946919 farmer members and credit limit to the extent of

Rs.2,07,486.87 lakhs has been sanctioned against the above said Credit

Cards405.

The Government has been implementing a scheme since 1981-82 to

enroll atleast one member from each family belonging to the scheduled caste to

the membership of Primary Agricultural Co-operative Banks to enable them to

avail short term and medium term loans to improve their economic condition.

A subsidy of Rs.100 is provided to each member towards the share capital to be

paid by them to the society. 1,10,000 persons were enrolled as members with

government subsidy of Rs.110.00 lakhs under this scheme. This scheme of

assistance was taken over by the Government of India in 1988-89 and till 1998-

1999 the Government of India have sanctioned a subsidy of Rs.125.092 lakhs

to enroll 1,25,092 persons. So far 2,35,092 Scheduled Caste members have

been assisted under State/Central Scheme. From the year 2000-2001, this

scheme is implemented under the scheme shared between State and Centre, and

a sum of Rs.22.20 lakhs was sanctioned to 11,100 persons at Rs.200/- each in

2000-2001. During the year 2001-2002, a sum of Rs.10.00 lakhs has been

sanctioned to 5000 persons406.

52. Circular RPCD. PLFS.BC.No.38/05.05.2009/2004-2005, dated 04-10-2004.

53. RBI / 2011-2012 / 553, RPCD. FSD. BC.No.77 / 05.05.2009 / 2011-2012
dated 11.05.2012.
54. Amended Bye-laws of 1957, Agricultural Co-operative Bank, Pechiparai., pp.14.

145
 Special Scheme implemented with assistance from Government. A sum

of Rs.250/- is provided as interest-free share capital loan to each of the

identified scheduled caste member of the Primary Agricultural Co-operative

Banks so as to increase their borrowing power. The loan amount is recoverable

in five equal annual installments407. Under this scheme, 80,000 scheduled caste

members of Primary Agricultural Co-operative Banks were assisted to the

extent of Rs.2.00 Crores during the period from 1992-93 to 2000-2001.

Pursuant to the policy decision of the Government of India, that both the

short term and long term credit structures should be strengthened in order to

enable smooth flow of rural credit, the NABARD has issued guidelines for

implementation of a time bound action programme. Based on these guidelines,

Development Action Plans were prepared by the co-operative banks from

1994-95 to 1998-99 in respect of short term credit structure and from 1994-95

to 1997-98 in respect of long term credit structure408.

With a view to ensure satisfactory compliance with all the Action Plans

in their entirety and for continued financial and other support from NABARD,

the State Government along with the Tamil Nadu State Apex Co-operative

Bank and Tamil Nadu Co-operative State Agriculture and Rural Development

Bank have entered into a Memorandum of Understanding with the National

Bank for Agriculture and Rural Development for the years from 2000-2001 to

55. Amended Bye-laws of 1957, Agricultural Co-operative Bank, Pechiparai., pp.15.

56. K.Kannan., Centenary of the Co-operative Movement in Tamilnadu, Chennai,
2004-2005, p. 127.

146
2002-2003. In the State Level Monitoring and Review Committee meetings,

the implementation of action points in the Memorandum of Understanding is

being reviewed409. The objective under the Memorandum of Understanding is

to make all the District Central Co-operative Banks and Primary Agricultural

Co-operative Banks viable.

Since the Commencement of Development Action Plan in 1994-95, the

Government have contributed to the share capital of the District Central

Co-operative Banks, Primary Agricultural Co-operative Banks and Primary

Agriculture and Rural Development Banks by availing loan assistance from

National Rural Credit (Long Term Operation) Fund of NABARD as detailed

below: From the year 1994 to 2001 was 27.11 crores sanctioned by Central

Co-operative Bank. From the year 1994 to 2001 was 31.07 crores sanctioned

by Primary agricultural Co-operative Banks. From the year 1994 to 2001 was

13.12 crores sanctioned by Primary Agriculture and Rural Development Banks.

The Co-operatives are providing Jewel Loans to meet the urgent needs

of the weaker sections, particularly in rural areas with a view to prevent them

from falling into the hands of unscrupulous private money lenders 410. During

the year 2001-2002, as against a target of Rs.5,000 Crores, the Credit

co-operatives have issued Jewel Loans to the tune of Rs.3,386.26 crores upto

57. Ibid., p.128.

58. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor, p.22.

147
31st January 2002411. The Primary Agricultural Co-operative Banks also issue

jewel loans.412The jewel loan is granted to the market value of gold. The

maximum amount provided to the member is fixed by the Registrar. The

maximum amount of jewel loan is 3 lakhs. Generally the stones affixed on the

jewels, have no value. Service charge is collected from 5 to 50 rupees for each

and every jewel loan. The amount should be remitted completely within 12

months including the interest. These jewels are kept in the safety locker. After

the validity period, a notice is being sent by registered post to the member, after

10 days of issuing the notice the jewels are put in public action.413 The

Tamilnadu Government provided 6,000 crores for jewel loan during the year

2006.414

Construction of Gobar Gas stove is a notable feature of this sector.

There are two types of Gober gas stove, KVIC model and Deena bandu model.

It gets subsidy for 4 cubic meters. The loan to buy Gobar Gas stove is given in

three installments.415

59. Y-11, The Kanyakumari District Central Co-operative Bank Ltd., Nagercoil, Final
Audit Memorandum – 2001-2002, p.320.
60. R.Nallathambi (Editor)., Tamilnadu Journal of Co-operation, June, 2006, p.11.
61. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor,
pp, 68-70.
62. R.Nallathambi (Editor)., Tamilnadu Journal of Co-operation, September,
2006, p.12.
63. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor,
pp.60-61.

148
 Purchase of Milk Cows is a new innovation of the Co-operative Bank.

The loan is given to buy two or five or twenty cows. The loan is advanced to

the members selected by the bank and milk producers’ society. The

co-operative secretary should supervise milk cows, milk accounts and the

amount of loan paid. Half an acre of land is necessary for fodder for 5 cows.

The member is eligible to get the loan for buying another cow of the first loan

is promptly paid.416

Establishment of Poultry Farms is another feature of the co-operative

sector. This scheme is granted only for getting egg laying hens. For

constructing a grower shed and 3 layers shed, 90% of the amount is provided

by the bank. The rest of the expenses should be met by the concerned person.

The loan is issued in 3 installments. 417

This Medium Term Small Irrigation Facility Loan is provided for

installing pipe-line up to 300 meters and purchase of electric motor and oil

engine, but the members should get the permission of the concerned

department.418

In the villages and in the rural areas, the distribution of consumer goods

is being undertaken by the Primary Agricultural Co-operative Bank’s. 419This

loan is issued for purchasing of consumer goods. Consumer goods mean radio,

64. Ibid., p.61-62.

65. Ibid., p.62.
66. Ibid., p.63.
67. R.Nallathambi (Editor)., Tamilnadu Journal of Co-operation, January, 2007, p.38.

149
television, bi-cycle, motor vehicle, bike, moppet, electric fan, refrigerator,

grinder, sound system, gas-stove etc. A maximum amount of Rs. 35,000 is

given under this scheme. 420 This loan is highly benefited to the people of the

rural areas.

The basic idea behind the agricultural co-operative bank is to develop its

own resources and to depend on finance that is locally available. The Bank

should tap deposits from both members and non-members and carry on its

business with such deposits which represent saving and thrift of members. In

fact, some banks have been able to do that, but except in few cases deposits

from members and non member constitute a small portion of the working

capital of agricultural credit bank. The members may think that, this is as good

as the savings with money lenders. The system of home saving boxes is rather

better expedients.421

A permanent deposit is a deposit meant for particular amount for

particular period. The amount of deposit should be Rs.10 and multiple of 10.

Any amount in between that would be accepted. It is returned back with

interest after the particular period.422

68. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor,

pp.70-73.
69. J.Baneerjee., Co-operative Movement in India, Calcutta, 1961, p.100.
70. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor,
pp.74-75.

150
 The rate of interest from 30 to 45 days is 4.50%, 46 to 90 days is 7.00

%, 91 to 180 days is 7.50%, 181 to 364 days is 8.50%, 1 year to 2 years is

9.00% and 2 years and above is 8.50%. Senior citizen (above 60 years) from 6

month to 1 year is extra 0.75% and above 1 year is extra 1.00%423.

In addition to the above loans, the members are also given deposit loan

from the deposit. 85% of the deposit is give as loan and it should be repaid

within the given person.424 Co-operative Bank distributes Marriage Loans to

the purpose of marriages also. The person should be a member of the co-

operative bank. One lakh of Rupees is given for their son’s or daughter’s

marriage.425

Housing Loan and House Maintenance Loan are given to the members

values 50,000 Rupees for house maintenance, and Rupees 1 lakh to construct

new houses426, also provides Loan for the handicapped persons to start small

business.427 Education loans where given to the children of the members of the

71. Circular No.5900/17-05-2007, Kanyakumari District Central Co-operative Bank.

72. Personal Interview with Santhi., Secretary of Kaliyakkavilai Co-operative Bank,
aged 42, residing at Kaliyakkavilai, dated 30-05-2010..
73. Personal Interview with John., Accountant of Kurumathoor Primary Agricultural
Co-operative Bank, aged 40, residing at kuzhithurai, dated 27-04-2010.
74. Personal Interview with Rajjaian., Secretary of Kurumathoor Primary Agricultural
Co-operative Bank, aged 52, residing at Kakotuvilai, dated 27-04-2010.
75. Personal Interview with Santhi., Secretary of Kaliyakkavilai Co-operative Bank,
aged 42, residing at Kaliyakkavilai, dated 30-05-2010.

151
co-operative Bank. Professional course students are receiving upto Rs.50,000

credits from the Bank428.

Salary loan is advanced to the government servants, who are the

members of co-operative bank. They should give salary certificate as bond.

This loan is given to women employees also. The maximum amount of the loan

is 50,000 rupees429. Shopping Complex Loan is issued to construct shopping

complex. The member should submit the needed Documents and also submit

the bond to the Co-operative Bank430. Loans are also issued to Construction of

Auditorium. This loan could be obtained by submitting the eligible certificate

to the co-operative bank431. Land Loan can be received from the Co-operative

Bank for the purchase of land. The member must submit the details of land like

total length, area etc.432

76. Personal Interview with Geetha., Accountant of Kaliyakkavilai Co-operative

Bank, aged 45, residing at Padanthalumoodu, dated 30-05-2010.
77. Personal Interview with John., Accountant of Kurumathoor Primary Agricultural
Co-operative Bank, aged 40, residing at kuzhithurai, dated 27-04-2010.
78. Personal Interview with Rajjaian., Secretary of Kurumathoor Primary Agricultural
Co-operative Bank, aged 52, residing at Kakotuvilai, dated 27-04-2010.
79. Personal Interview with Geetha., Accountant of Kaliyakkavilai Co-operative
Bank, aged 45, residing at Padanthalumoodu, dated 30-05-2010.
80. Personal Interview with Kumar., Cashier of Kurumathoor Primary Agricultural
Co-operative Bank, aged 47, residing at Thiruthuvapuram, dated 27-04-2010.

152
 Rain water Harvesting Loan is also given to make Rainwater harvesting

tanks. A maximum of Rs.2,600 is given for this purpose433. Weekly Micro

Credit Loan is also given to both poor men and women who are the members

of Co-operative Bank doing small profession. Mostly Rs.2,000 is given as

credit. It should be repaid in 7 installments and should be paid within 147 days.

It is given to flower venders, vegetable venders, small merchants and cottage

industries434.

Accident Insurance is created among the members. If a person dies by

accident, that person’s heir can claim insurance. But that person should pay

Rs.60 to the Bank, when they purchase loan. The heir should submit the death

certificate, postmortem certificate and also submit concerned authority

certificate. One lakh of rupees is given as Insurance amount. 435

Nowadays, Primary Agricultural Co-operative Bank is giving more

importance to self help groups. Most of the Bank loans are released to self help

group. Separate rules are kept in the Bank for giving loans. In self help groups

people of similar economic position join and working together to improve their

81. Personal Interview with Santhi., Secretary of Kaliyakkavilai Co-operative Bank,

aged 42, residing at Kaliyakkavilai, dated 30-05-2010.
82. Personal Interview with Geetha., Accountant of Kaliyakkavilai Co-operative
Bank, aged 45, residing at Padanthalumoodu, dated 30-05-2010.
83. Personal Interview with Rajjaian., Secretary of Kurumathoor Primary Agricultural
Co-operative Bank, aged 52, residing at Kakotuvilai, dated 27-04-2010. [It is
noted that when one member named Thasian, a farmer met with accident and
died, his family members claimed for Insurance and got Rs.1 lakh as Accident
Insurance.]

153
economic life. The groups are having fund for giving loans to their members,

which is the purpose of self help group436.

The Primary Agricultural Co-operative Bank grand loans to the

members of the self help group. To become a member of the Primary

Agricultural Co-operative Bank, it has to apply in Form 16, sub law of 27 of

1988. Tamil Nadu Co-operative Societies Act. The Self Help Group could have

their saving account in Primary Agricultural Co-operative Bank. To have a

permanent account there should be minimum hundred rupees in saving

account.437

The Self Help Group should be in existence for at least for 6 months. It

should have 12 to 20 members and should not have more than 20 members in

the group. It should conduct meetings which should have been attended by

75% of the members, 50% of the members should be taking loan from the

group finance. All the group members should save for the group finance and

the group should clearly check the account books. 438

Eligibility Rules for Self Help Group is above 2 Years of existence. The

Group getting 70% of marks could apply for loan of four times of its savings.

The group with 50 – 69% of marks is got eligible for loans and the Group

84. Primary Agricultural Co-operative Bank’s Suya Udavi Kuzhukkalukku Sirukadan

Vazhanguvathatkkana Mathiri Ozungumurai Vithikal, [Tamil], Tamilnadu
Co -operative Organisation, Chennai, 1999, p.1.
85. Registrar Office Letter No.128899/99, dated 21-03-2000, p.2.
86. Ibid., pp.2-3.

154
below 50% marks should not apply for credit now 439. The term of Loans for

Self Help Group is 6 months to 2 years

The Groups with 55% marks could apply for credit, 4 times of their

saving account. The Groups having 35 to 54 marks are not eligible to apply for

credit. The Group having below 35 marks should not apply for credit help. The

group should take decision whether to reject or accept the credit eligibilities.

Group members should express views about their prospectors. 440 The Amount

of credit depends on the savings of the groups. The Ratio of Credit will be 1:1

to 1:4441

The rate of interest for the loan advanced for Self Help Group is 12.0%

for one year. For providing credit to a member of Self Help Group, The

decision of the Self Help Group is essential442. The Self Help Group does not

provide any security apart from saving of their group. But the bank can take

decision regarding securities when advancing loan.443

87. Primary Agricultural Co-operative Bank’s Suya Udavi Kuzhukkalukku Sirukadan

Vazhanguvathatkkana Mathiri Ozungumurai Vithikal, [Tamil], Tamilnadu
Co-operative Organization, Chennai, 1999, p.5.
88. Ibid., p.6.
89. Registrar Office Letter No.128899/99, dated 21-03-2000, p.2.
90. Primary Agricultural Co-operative Bank’s Suya Udavi Kuzhukkalukku Sirukadan
Vazhanguvathatkkana Mathiri Ozungumurai Vithikal, [Tamil], Tamilnadu
Co-operative Organization, Chennai, 1999, p.7.
91. Ibid.,

155
 The Self Help Group should pay back the credit to the Primary

Agricultural Co-operative Bank in monthly installments. Within 3 years of time

the Self Help Group should repay the loan444. One of the Administrative

members from the Primary Agricultural Co-operative Bank could participate in

the meeting of the Self Help Group Association.445

Nowadays there is Self Help Group for men also. It follows the same

rules like the Self Help Group of women446. The Bank provides loans to the

weaker sections of the society. It offers business loans to women under the Self

Help Group programme and Kissan Credit Loan to small farmers.447

The Primary Agricultural Co-operative Bank provides subsidy to loans.

As per the Government order issued by the Honourable Chief Minister of

Tamil Nadu M.Karunanithi dated 5th May, 2006, the entire Co-operative loans

amounting Rs.6,866 crores of the farmers taken upto 31st March, 2006, are

write off. As a result of this many farmers are benefited448. In the Kurumathoor

92. Register Office Letter No.128899/99, dated 21-03-2000, p.2.

93. Primary Agricultural Co-operative Bank’s Suya Udavi Kuzhukkalukku Sirukadan
Vazhanguvathatkkana Mathiri Ozungumurai Vithikal, [Tamil], Tamilnadu
Co-operative Organization, Chennai, 1999, p.8.
94. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Kurumathoor, p.5.
95. R.Nallathambi (Editor)., Tamilnadu Journal of Co-operation, November,
2006, p.27.
96. G.O.No.70, Co-operative, Food and Consumer Protection Department,
dated 13.05.2006.

156
Primary Agricultural Co-operative Bank nearly thousand members are freed

from paying the total amount of one crores thirty lakhs. 449

The primary responsibility of any co-operative credit institution is to

recover the loans on the due dates. Their financial stability has a direct bearing

to the extent of collection of loans before they become overdue. While

reasonable levels of overdues are inevitable in credit dispensation schemes, no

credit institution can afford to have a persistently high level of overdues. If the

overdues are not kept under control, they will have a crippling effect of

curtailing the ability of the co-operatives to recycle the funds and expand their

business. This calls for a radical change in the attitude of the borrowers of the

co-operative banks to repay the loans on due dates so that they can avail of

further credit for continuing their seasonal agricultural operations. Therefore

the District Central Co-operative Banks are taking efforts to intensify their

collection drive and bring down the level of overdues to enable them to avail

refinance to the full extent from NABARD450.

The details of overdues in respect of Primary Agricultural Co-operative

Banks during the last five years are as follows:

30th June 1997 was 2236.74 crores outstanding and 653.69 crores

overdues, 30th June 1998 was 2982.01 crores outstanding and 835.83 crores

overdues, 30th June 1999 was 3382.94 crores outstanding and 905.77 crores

97. Registrar Office Letter No.65624/2006, dated 16.06.2006.

98. Amended Bye-laws of 1959, Agricultural Co-operative Bank, Malayady, p.24.

157
overdues, 30th June 2000 was 3985.15 crores outstanding and 974.99 crores

overdues and 30th June 2001 was 4443.05 crores outstanding and 1157.70

crores overdues.

Relief to farmers on interest and Penal interest scheme, 2001 was

properly implemented. During the year 1992, when this Government took over,

the Honourable Chief Minister announced a bonus scheme for the benefit of the

farmers451. Based on the scheme prevailed during 1992, after assuming charge

of the present Government, Honourable Chief Minister has announced the

scheme of waiver of interest and penal interest scheme, 2001. According to this

scheme, Government has announced the following benefit to the farmers452.

Borrowers who availed Short Term, Medium Term, Medium Term

Conversion loans in co-operative banks for agriculture and allied activities will

be given a concession of waiver of interest and penal interest, provided the

borrowers repay before 30th September 2001, the over due principal as on 30th

June 2000 either in full or in monthly installments in July, August and

September, 2001 before 30th September 2001 and also the amounts which

become due for payment during the period from 1st July 2000 to 31st August

2001. The period of the implementation of the scheme was extended upto

30.th November 2001453.

99. From the CMP&DD Letter No. 38801/86-D4, dated 03.07.1991.

100. From the CMP&DD Letter No. 38801/86-D4, dated 03.07.1991.
101. G.O.Ms.No.294, Agriculture (Agri.1) Department, dated 27.07.2001.

158
 Under this scheme 6,11,193 farmers have so far been extended interest

and penal interest relief of Rs.226.56 Crores. A sum of Rs.80 Crores has been

sanctioned by Government in 2001-2002. An allocation of Rs.146 Crores has

been made in the Budget for 2002-2003 towards reimbursement of the balance

of the dues towards waiver of interest and penal interest from the Government

to the Co-operative Banks. A scheme like this has not been implemented in any

other State in the country so far. It is pertinent to point out that this is a special

scheme launched by the Honorable Chief Minister454.

The Government has received several representations that some relief

should be provided to the farmers and other borrowers who were not covered

by the above scheme. The Government has introduced a one time settlement

scheme to provide relief to the borrowers from the co-operative sector, both

urban and rural, and to facilitate the recovery of long pending overdues. Under

this scheme, waiver of penal interest and freezing of the outstanding balance in

the account inclusive of interest as on 31st March, 1998, will form the basis of

the settlement. The amount of settlement arrived at would preferably be

recovered in one lumpsum or within a maximum period of 3 months. It is

hoped that about 4.5 lakh borrowers would be benefitted under this scheme and

the relief would be to the tune of Rs.110 crores. The co-operative banks have

102. G.O.Ms.No.294, Agriculture (Agri.1) Department, dated 27.07.2001.

159
agreed to bear this burden. The scheme will come into operation immediately

and will be in force till 30th June 2002455.

The Co-operative Banks and other Commercial Banks in our state are

providing loans for agriculture and allied activities and for small industries.

However, the credit facilities extended by the banks have not fully reached the

poor and down-trodden engaged in small business in the urban and rural areas.

A scheme called "Savings Linked Micro Credit Scheme" was implemented

from 1st January 1999 for women engaged in small business to improve their

economic status and inculcate the habit of savings456.

Under this scheme, women doing small business like selling flowers,

vegetables, fruits, running petty shops etc457. can avail loan in the range of

Rs.100/-, Rs.200/-, Rs.500/- Rs.1,500/- upto a maximum of Rs.5,000/-

according to their business requirements. Loans will be given daily either in

the morning or in the evening according to the requirement of the beneficiaries.

The beneficiaries need to pay Re.1/- only for a loan of Rs.100/- per day. Out of

this one rupee paid by them every day, eighty five paise will be credited to their

savings account. Out of the remaining 15 paise, 10 paise will be credited to the

banks towards service charges and 5 paise towards interest. Collection of

103. From the Registrar of Co-operative Societies, Letter No.168504/2002 (1) ACS4
dated 25.7.2003.
104. Amended Bye-laws of 1959, Primary Agricultural Co-operative Bank,
Arumanai, p.21.
105. Personal Interview with Santhi., Secretary of Kaliyakkavilai Co-operative Bank,
aged 42, residing at Kaliyakkavilai, dated 30-05-2010.

160
service charge of 10 paise is now left to the discretion of the banks

implementing the scheme. If the bank decides not to collect service charges,

then the service charge of 10 paise will also be credited to the savings bank

account of the beneficiaries. After six months, the beneficiaries are free to

withdraw their savings with interest458.

The beneficiaries under this scheme availing of loan facilities may stand

surety for each other and take the responsibility to repay the loan. The

beneficiaries, according to their convenience, themselves, may choose to repay

the loan due directly at the bank or make payments to the bank official in their

business area.

Upto 28th February 2002, a sum of Rs.358.34 lakhs has been issued to

15,191 beneficiaries under the revamped Micro Credit Scheme in the

Corporations, Municipalities and Town Panchayat areas in Tamil Nadu. The

Micro Credit scheme for Self-Help Groups is being extended to rural areas in

coordination with Tamil Nadu Corporation for Women Development by

getting refinance from NABARD. Government has permitted to admit the Self-

Help Groups as members in the Primary Agricultural Co-operative Banks. So

106. Amended Bye-laws of 1961, Agricultural Co-operative Bank,

Kaliakkavilai, p.21.

161
far these Banks have admitted 23,932 Self Help Groups as members and issued

loans to the extent of Rs.1518.20 lakhs to 4375 Self-Help Groups459.

In September 2001, this scheme has been revamped in order to give a

new thrust so as to cover larger number of women throughout the state to

benefit from the scheme. Accordingly the Government has revised the existing

norms of the Savings Linked Micro Credit Scheme for Women with the

following changes:

Collection of service charges should be dispensed with Rate of interest is

reduced from the existing 18% to 15%. Instead of crediting remittances in the

Savings Account of the beneficiary, it should be credited direct to her loan

account, Reducing balance method should be followed for calculating interest,

Instead of daily repayment, and weekly repayment may be made, Repayment

period may be extended from 118 days to 147 days. There is net savings of

Rs.146.80 for the beneficiary for a loan of Rs.1000/- over the existing

scheme460.

Women Development Cell has been formed in each of the District

Central Co-operative Banks to help the women in economic upliftment461.

Under the Women Entrepreneur Loan Scheme the District Central

107. Primary Agricultural Co-operative Bank’s, Suya Udavi Kuzhukkalukku

Sirukadan Vazhagavatharkkana Mathiri Ozungumurai Vithikal, [Tamil],
Tamilnadu Co-operative Organization, Chennai, 1999.
108. G.S.R.105 (E), dated 22nd September,2001
109. Personal Interview with A.Sanmukam Pillai, Co-operative Sub Registrar,
Personal Officer, aged 50, residing at Nagercoil, dated 03.07.2012.

162
Co-operative Banks and Urban Co-operative Banks are providing loan upto

Rs.5/- lakhs repayable in 60 monthly instalments at 15% interest to women

entrepreneurs to start small industries and service centres. This new loan

scheme has been implemented with effect from 19th October 2001. Upto 28th

February 2002, a sum of Rs.40.55 lakhs has been disbursed to 67 women

entrepreneurs under this loan scheme462.

Under the Working Women Loan Scheme, the District Central

Co-operative Banks and Urban Co-operative Banks are granting loans upto

Rs.20,000/- to women receiving monthly income. The borrower has to open

recurring deposit account for three years in the bank. The loan is repayable in

36 monthly instalments. The rate of interest charged to this loan is 15% per

annum. As many as 267 women beneficiaries availed loan to the extent of

Rs.40.32 lakhs upto 28.2.2002 under this loan scheme463.

The Government of India introduced a new scheme called “National

Agricultural Insurance Scheme (NAIS)” for Crop Insurance from Rabi 1999-

2000464. However, in Tamil Nadu the scheme was implemented only from

Khariff 2000. Under the scheme, food crops like paddy, ragi, cholam, oil-seed

crops like groundnut, gingelly and commercial crops like cotton and potato are

110. From the Registrar of Co-operative Societies, Letter No.168504 / 2002 / 2 ACS4
dated 25.7.2003.
111. Y-11, The Kanyakumari District Central Co-operative Bank Ltd., Nagercoil,
Final Audit Memorandum – 2001-2002, p.320.
112. Government of India, Ministry of Agriculture Lr.No.13011/15/99- Credit II
dated 07.07.1999.

163
covered. The sum insured will be upto 100% value of the threshold yield on

normal coverage and upto 150% on additional coverage. Moreover, apart from

the loanee farmers, non-loanee farmers are also covered under this scheme465.

The crops and the Blocks where the schemes to be implemented for

every year is decided by the State Level Co-ordination Committee. Under this

scheme, Government have so far sanctioned State Government share of

premium subsidy to an extent of Rs.38.79 lakhs. The small and marginal

farmers insuring their crop are given 50% of premium as subsidy under this

scheme, which is shared by the Government of India and the State Government

on 1:1 basis. Premium subsidy will be phased out on sun set basis over a

period of five years466.

The Long Term Co-operative Credit Structure consists of the Tamil

Nadu Co-operative State Agriculture and Rural Development Bank at the State

level and 181 Co-operative Primary Agriculture and Rural Development Banks

at the Taluk/Block level. These credit institutions are providing credit to the

members for agricultural and allied activities like minor irrigation, cultivation

of horticulture and plantation crops, poultry, dairying, sheep breeding, tyre

carts, sericulture etc. on schematic basis. They are also providing long term

credit under normal lending programme for repairs to wells, laying of

113. G.O.Ms.No.294, Agriculture (AP.1) Department, Dated 27.07.1997.

114. Government D.O.Lr.No.28213/AP.I/99-17, Agriculture dated: 25.11.1999

164
pipelines, purchase of tractors, power tillers, construction of cattle sheds, farm

house, etc. The period of repayment of such loans ranges from 5 to 15 years467.

The Tamil Nadu Co-operative State Agriculture and Rural Development

Bank raise the needed funds for its loaning operations through floatation of

Ordinary and Special Development Debentures. The Ordinary debentures are

subscribed by State and Central Governments, Life Insurance Corporation of

India, State Bank of India and its groups, commercial banks, Tamil Nadu State

Apex Co-operative Bank and other State Agriculture and Rural Development

banks. The Special Development Debentures are subscribed by NABARD,

State and Central Governments.

Automatic refinance facility available from 1995-1996 upto Rs.10.00

lakhs has been increased to Rs.15.00 lakhs by NABARD. Hence, NABARD’s

prior sanction is necessary only when NABARD’s refinance exceeds Rs.15.00

lakhs and in respect of innovative schemes only468. Details of schemes

formulated by Tamil Nadu Co-operative State Agriculture and Rural

Development Bank and sanctioned by NABARD from the year 1997 to 2002 is

127.71 crores upto 31st January 2002.

A sum of Rs.2.00 Crores and Rs.205.05 Crores are repayable as on 31st

January 2002 under ordinary and special development debentures respectively.

The internal resource of the bank was Rs.253.12 crores as on 31st January

115. A.Vaidvanathan., Introductory Note, Draft Report of the Task force on Revival of
Rural Co-operative Credit Institutions (Long Term), August 2004, p.54.
116. Investment in Agricultural Financial Institutions, Chennai, 2004, p.218.

165
2002469. The bank is maintaining a Debenture Redemption Fund for effecting

redemption of ordinary debentures on the maturity period of each series and the

sum outstanding under this Fund as on 31st January 2002 stood at Rs.27.43

crores470.

The Monitoring and Evaluation Cell in the Apex Bank studies the

problems in the implementation of various schemes and evaluates the benefits

that accrue to farmers. Out of the schemes 465 monitoring and evaluation

studies have been conducted upto 31st January 2002471. The needed funds for

the long term credit of Primary Agriculture and Rural Development Banks are

being channelised by the apex institution viz, The Tamil Nadu Co-operative

State Agriculture and Rural Development bank.

The details of long term loans issued by Primary Agriculture and Rural

Development Banks during 9th five year Plan (1997-2002) are 1298.86 crores

programme and 878.51crores achievement. In order to cope with the changing

trend in providing credit by other financial agencies, the Primary Agriculture

and Rural Development Banks have been permitted to undertake financing in

the following sectors also472.

117. Investment in Agricultural Financial Institutions, Chennai, 2004, p.219.

118. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2001 – 2002, p. 37.
119. Ibid. p. 38.
120. Ninth Five Year Plan (1997-2002), Planning Department Government of India,
September 2002, p.133.

166
 Since 1990-1991, the scheme of financing of rural artisans, craftsmen,

and small scale entrepreneurs etc. is implemented by the Primary Agriculture

and Rural Development Banks. Under such financing, rural people are

benefited to a great extent in augmenting their income through gainful

employment. The NABARD provides 100% refinance under this scheme

without reference to the lending eligibility criteria of the Primary Agriculture

and Rural Development Banks473. The maximum individual credit limit under

the scheme is fixed at Rs.2.00 lakhs under composite loan and Rs.15.00 lakhs

under integrated loan474.

The details of loans issued by the Primary Agriculture and Rural

Development Banks under Non-Farm Sector for the previous 4 years and upto

January 2002 in 2001-2002 are given below: In 1997-1998 is 75.54 crores,

1998-1999 is 83.07 crores, 1999-2000 is 75.57 crores, 2000-2001 is 61.09

crores and 2001-2002 is 14.10 up to 31st January 2002.

The Primary Agriculture and Rural Development Banks provide loans for

individuals and group of individuals including Co-operative enterprises in rural

areas for purchase of both goods carriers and passengers vehicles including

121. Co-operation, Food and consumer Protection Department, Rights to Information

Act, 2005, p. 30.
122. R.Nallathambi (Editor)., Tamilnadu Journal of Co-operation, January,
2007, p.36.

167
rickshaws whose gross vehicle weight does not exceed 16.2 tonnes. Under this

scheme, 85% of the cost of the vehicle will be given as loan475.

A loan to Weaker Sections in Society is a noble feature in the system of

Co-operative Bank. The details of loans issued in the 9th Plan period are as

follows: From the year 1997 to 2002 is 878.51 crores upto January 2002, and

187.82 crores loan issued to weaker sections up to January 2002.

Government sanctioned a sum of Rs.20 lakh as interest free loan to 8000

Scheduled Caste / Scheduled Tribe members of Primary Agricultural

Co-operative Credit Societies at the rate of Rs.250/- per member to contribute

the required share capital to the Primary Agricultural Co-operative Credit

Societies during the year 2010-2011476. The Registrar of Co-operative

Societies, in his letter second read above has sent proposal for the continuance

of the above scheme and has requested to sanction an amount of Rs.20/- lakh

for assistance to 8000 members belonging to Scheduled Caste / Scheduled

Tribes during the year 2011-2012 on the usual terms and conditions as they are

finding it difficult to contribute the required share to avail credit facility from

Primary Agricultural Co-operative Credit Societies. After careful examination,

Government have decided to continue the pattern of assistance implemented

during the previous years and sanction a sum of Rs.20/- lakh (Rupees twenty

123. Co-operation, Food and consumer Protection Department, Rights to Information

Act, 2005, p. 31.
124. From the Registrar of Co-operative Societies, letter Rc.No.83107/2011/ ACS1,
dated 7.9.2011.

168
lakh only) as interest free loan to 8000 Scheduled Caste / Scheduled Tribes

members of Primary Agricultural Co-operative Credit Societies at the rate of

Rs.250/- per member to contribute the required share capital to the Primary

Agricultural Co-operative Banks during the year 2011-2012. The financial

assistance sanctioned in para 3 above shall be subject to the following

conditions, the interest free loan shall be sanctioned only to the members of

Primary Agricultural Co-operative Credit Societies who belong to Scheduled

Caste / Scheduled Tribes and who have not availed interest free loan facility

earlier. The amount of interest free loan shall not exceed Rs.250/- per member.

The loan shall be repayable in five equal annual instalments commencing from

the year succeeding the year in which the loan is sanctioned477.

The Registrar of Co-operative Societies is permitted to allocate the

amount sanctioned in para 3 above to the District Central Co-operative Banks.

He shall ensure that the loans granted in the earlier years are repaid by the

beneficiaries regularly on the due date. The Regional Joint Registrar of

Co-operative Societies, concerned are authorized to sanction the financial

assistance to the identified Scheduled Caste / Scheduled Tribe members of

Primary Agricultural Co-operative Credit Societies. The Circle Deputy

Registrar of Co-operative Societies, are authorized to draw and disburse the

amount to the District Central Co-operative Banks so as to pass on the amount

to the Primary Agricultural Co-operative Credit Societies concerned which will

125. G.O. (Ms). No. 115, Co-operation, Food & Consumer Protection Department,
dated 25.8.2010.

169
credit the amount to the share capital account of the members concerned. They

are also responsible for watching the regular repayment of loan 478.

The lending eligibility of Primary Agriculture and Rural Development

Banks is linked to their recovery performance. Unless the Primary Agriculture

and Rural Development Banks collect a minimum of 65% of their demand as

on 30th June, there is no scope to attain unrestricted lending eligibility.

However, the NABARD has refixed cut-off recovery points by enhancing the

percentage of recovery to 70% for 2001-2002479.

The collection of overdues to the maximum level is also necessary to

attain profitability and ultimately sustainable viability of the Primary

Agriculture and Rural Development Banks. However, the occurrence of

natural calamities, such as drought, floods etc., and the lack of interest among

the borrowers for repaying loans in due time are the principal factors

responsible for the accumulation of overdues. Therefore, the Primary

Agriculture and Rural Development Banks have to collect their loan dues

through intensive persuasion and personal contacts480.

The details of recovery of overdues at Primary Agriculture and Rural

Development Banks level for the last five years are indicated below: In 30th

126. From the Registrar of Co-operative Societies, letter Rc.No.83107/2011/ ACS1,

dated 7.9.2011.
127. Government Lr.No.5557/02-1, P. &.A.R. (Per-A) Department, dated 25.1.2002.
128. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2001 – 2002, p.226.

170
June 1997 was 694.43 crores loan amount outstanding and 150.51 crores

amount of overdues, In 30th June 1998 was 786.05 crores loan amount

outstanding and 201.65 crores amount of overdues, in 30th June 1999 was

907.31 crores loan amount outstanding and 233.46 crores amount of overdues,

in 30th June 2000 was 998.34 crores loan amount outstanding and 278.63 cores

amount of overdues and 30th June 2001 was 1,057.14 crores loan amount

outstanding and 339.60 crores amount overdues.

Urban Co-operative Banks are providing loans to non-agriculturists and

weaker sections in urban and semi-urban areas. At present 128 Urban

Co-operative Banks are functioning in the state. Their loaning operations

include provision of credit facilities to small traders, artisans and persons

belonging to middle income group for purposes, such as extension/repairs of

their houses, establishment of small and cottage industries etc 481. The amount

of short term and medium term loans outstanding as on 31st January 2002 is

Rs.1,831.52 Crores. Total deposit of all Urban Co-operative Banks as on 31st

January 2002 is Rs.2,926.38 Crores482. As per the guidelines issued by the

Reserve Bank of India, the Urban Co-operative banks are required to issue not

less than 60% of their total lending to priority sector and atleast 25% of priority

129. Personal Interview with Rajjaian., Secretary of Kurumathoor Primary

Agricultural Co-operative Bank, aged 52, residing at Kakotuvilai, dated 27-04-
2010.
130. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2002 – 2003, p. 128.

171
sector advances should be issued for the benefit of the weaker sections of the

community483.

The borrowings of the members of Urban Co-operative Banks is linked

with share capital invested by them as in the case of other types of credit

institutions. In order to assist the Scheduled Caste members of Urban

co-operative banks a sum of Rs.500/- is provided as interest-free share capital

to each of the identified member of Urban Co-operative Bank to increase their

borrowing power. The loan amount is recoverable in five annual equal

installments. Under this scheme, 17,017 Scheduled Caste members have been

given assistance to the extent of Rs.85/- lakhs through Urban Co-operative

Banks during the period from 1992-1993 to 2001-2002. This scheme will be

extended for the year 2002-2003 also484.

In order to increase the borrowing powers of the women members of

Urban Co-operative Banks, a sum of Rs.500/- is provided as interest-free share

capital loan to each of the identified woman member of Urban Co-operative

Banks. The loan amount is recoverable in five annual equal instalments.

Under this scheme a sum of Rs.5/- lakhs has been sanctioned every year. This

share capital loan assistance has been given to 3000 women members of Urban

131. Circular No: RPCD.No.RRB.BC.20/03.05.33/2007-2008 dated 22.08.2007.

132. Annual Report of Kanyakumari District Central Co-operative Bank, Nagercoil,
2002 – 2003, p. 129.

172
Co-operative Banks to the extent of Rs.15/- lakhs during the period from 1998-

1999 to 2000-2001485.

The Urban Co-operative Banks are issuing non-farm sector loans to the

cottage and small scale industries. In the year 2001-2002, a sum of Rs.145.34

Crores has been disbursed upto 31st January 2002 and 62,384 members were

benefitted486. Through all ways and means Primary Agricultural Co-operative

Banks in Kanyakumari District. Make a milestone, in developing the rural

areas of Kanyakumari District. It plays a vital role for economic and social

development of the people of Kanyakumari District. It was in these ways,

special efforts were made by the Co-operative sector to improve the condition

of the other co-operative societies.

133. Government Letter. No.92440/01-1, P. &. A.R. (Per-A) Department,

dated 1.11.2001.
134. Government Letter No.5557/Per-A/01-1, dated 25.1.2001.

173