Paper
Institutional Credit through Cooperatives in Maharashtra: A Region-wise Analysis
This paper recommends ways to rejuvenate the rural credit delivery system in Maharashtra, India
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11 pages
The paper states that:
- The rural credit delivery system is plagued by the non-performing assets (NPAs) of rural financial institutions (RFIs);
- Though NPAs are seen across the country and across various institutional types, PACS in Maharashtra have the highest number of NPAs;
- There is a need to restructure cooperatives to make rural credit delivery more efficient.
The paper presents the following findings:
- The reason for the poor performance of PACS is the adverse environment created by financial sector reforms;
- These reforms have given cooperatives the flexibility to invest in non-target avenues like shares and debentures of corporate organizations leading to a diversion of funds meant for farm finance;
- Credit cooperatives in Maharashtra also have other deficiencies, such as low operational efficiency, high-incidence of overdue, low-level of recovery, etc.
Finally the paper suggests that:
- The major problems faced by cooperatives, such as high transaction costs, poor repayment performance, etc. should be tackled with more fiscal jurisprudence;
- There is a need to focus on strategies that tackle issues such as sustainability and viability operational efficiency recovery performance small farmer coverage and balanced development.
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