The document discusses the role of the Reserve Bank of India (RBI) in supporting the cooperative movement in India both before and after independence. Prior to independence, RBI's contributions were limited due to legal restrictions under British rule. After independence, RBI took steps like establishing committees, providing financing functions, and taking a promotional and advisory role to better support the agricultural and rural cooperative sectors in India. Key functions of RBI included providing short, medium, and long term financing, undertaking promotional activities, supervision of cooperatives, and performing regulatory functions.

1. ROLE OF RBI
&
CO-OPERATIVE
MOVEMENT

2. PRE-INDEPENDENCE PERIOD
Reasons for less contribution by RBI to Co-
operative Movement.
British rule
• certain parts were not
accountable to RBI on
account of legal existence
• difficult for RBI to
implement the policies.
• credit limits fixed were
very low
• Because RBI - lender of last
resort did not consider it
proper to maintain high
credit limits.
• General policy -was to
provide assistance only to
enable the co-operative
credit institution to
overcome tempory
shortage of funds.

3. POST-INDEPENDENCE PERIOD
convened a conference of people connected with
this movement in 1951 which considered problems
related to this movement.
established STANDING ADVISORY COMMITTEE
ON AGRICULTURE CREDIT to bring close co-
ordination between different co-operative
Institutes
re-designed its agriculture credit department in
order to provide financial assistance to agricultural
sector.
took various steps to ensure that rural credit is
channelized in a proper manner.
Contribution by RBI

4. NATIONAL AGRICULTURAL CREDIT FUND
was established.
financial and promotional functions in respect
of rural credit for development of co-operative
movement.
AGRICULTURAL CREDIT BOARD -
providing financial assistance for agricultural
and rural development.
All functions performed by RBI was
transferred to NATIONAL AGRICULTURAL
AND RURAL DEVELOPMENT BANK
Contribution by
RBI

5. FUNCTIONS OF RBI
FINANCING
FUNCTIONS
PROMOTIONAL
ADVISORY
SUPERVISORY
FUNCTION :
REGULATORY/S
TATUTORY
FUNCTIONS

6. FINANCING FUNCTIONS
• Short term finance loans
- provided for agricultural and marketing operations.
- given at concessional rate of 2% below bank rate.
- provided to build up strong rural credit structure
• Short term finance to weaker sections
- Commercial Banks to finance min of 20% of their short term loans to small and
economical farmers.
• Short term credit for marketing
- RBI brought down the margin limit to 35% of the value of stocks for commodities
like foodgrains,oilseeds,etc

7. • Medium Term Finance
- range from a period of 15 months to 5 years.
- loans for land improvement and maintainence of irrigation sources.
- rate of interest is now 3.5% below bank rate.
• Long term Finance
- extended long term advances.
- RBI began to buy debentures of the land development banks.
- RBI contributes 20% in the debenture issues.

8. PROMOTIONAL ADVISORY SUPERVISORY FUNCTION
• Performs development and promotional functions in the co-operative sector.
• For long term credit agricultural department gives advice to central land development
banks on maintainence of sinking funds , debenture issues, organization functions, etc.
• In promotional activities RBI has developed the co-operative credit movement.
• The RBI has set up agriculture refinance corporations
• The RBI has kept itself in close touch with the co-operative credit institutions and
institutions like NCDC, NFSC and Land Development Banks, etc.

9. REGULATORY/STATUTORY FUNCTIONS
• RBI undertakes periodical inspection of co-operative banks to
tone up efficiency at all levels
• The RBI has set up a committee known as CRAFICARD
committee to review credit for agricultural and rural
developement

10. Assessment Of Reserve Bank’s Role In Co-operation
• Improve operational efficiency
• Reorganise primary agricultural credit society
• Build society in qualitative & quantitative terms
• Direct policies & extend credit to farmers

12. Financer Of Rural And Co-operative Sector
Credit facility to non credit co-operatives
Co-operation between credit departments
Capital to procure food grains

13. Finance to
societies
Capital to
Industrial Co-
ops
Remittance
facility
Finance LDBsOverdraft facility
Help consumer
Co-ops
Co-ordinate with
co-ops
Functions of SBI in Co-
operative Sector

14. Definition :
Co-operative society is defined as “a union of persons established according to the principles
of equality, the purpose is to improve the financial position of its members by joint
performance, provided that all profits made, aims to distribute among members and not in
proportionate to investment”

15. FEATURES OF CO-OPERATIVE
1. Association of Persons
2. Business Enterprise
3. Voluntary Enterprise
4. Democratic Enterprise
5. Body Corporate
6. Spirit of Service

16. NABARD (Nov. 01, 02, 05, May 04, 05, 08)
NABARD is an apex institution for making policy, planning and operations in the field of
credit for agriculture and other economic activities in rural areas. The bank was setup by the
Indian Parliament in 1982. NABARD has paid up capital of Rs. 2000 crores, which was
contributed by the Government of India and RBI in equal proportion.
Functions NABARD:
1. It works as an apex body, which looks after the financial needs of agriculture and rural
development.
2. Provides short-term loans to state cooperatives for seasonal agricultural operations
3. Provides medium-term loans to state cooperatives and RBBs for approved agricultural
operations.
4. Provides log-term loans to state cooperatives, RBBs and commercial banks for investment in
agriculture.

17. PRODUCTION CREDIT
Production and marketing
activities of village cottage
industries, handicrafts,
handlooms, powerlooms,
artisans, small scale and tiny
industries and other rural non-
farm enterprises

18. Eligible institutions
• (a )State co-operative bank (SCBs) (b) regional
rural banks (RRBs)
• Eligible purposes
• (a ) Agricultural production operation and
marketing of crops by farmers, farmers co-
operatives etc.
• (b) Marketing and distribution of inputs like
fertilizers, seeds, pesticides etc.
• (c) Production and marketing activities of village
and cottage industries, handicraft, handlooms,
artisans, small-scale and tiny industries and other
rural non-farm enterprises.
Production credit (short
term)refinance

19. • (1)Institutions eligible for refinance:
• -State co-operative agriculture and rural development
banks (SCARDBs)
• -Regional rural banks (RRBs)
• -State co-operative banks (SCBs)
• - State agricultural development finance companies
(ADFCs)
• (2)Purpose
• -Farm sector: Investment in agriculture and allied activities
such as minor irrigation, farm mechanization, land
development, etc.
• -Non farm sector: Investment activities of artisans, small
scale industries, tiny sector, village and cottage industries,
etc.
• (3)Loans period
• -Upto a maximum of 15 years
Investment credit (medium and long
term) refinance

20. • (6)Ultimate beneficiaries
• -Although refinance is provided to
SCARDBs/SCBs/CBs/RRBs/ADFCs, the
ultimate beneficiaries of investment finance
maybe individual
• (7)Margin money
• NABARD stipulates beneficiary’s contribution
to the project cost in order to ensure his/her
stake in the investment.
• (8)Special focus
• -Removal of regional/sectoral imbalance:
NABARB considers removal of regional and
sectoral imbalance as one of the thrust areas

21. Regional Rural Banks were established under the provisions of an Ordinance
promulgated on the 26th September 1975 and the RRB Act, 1976 with an objective to
ensure sufficient institutional credit for agriculture and other rural sectors. The RRBs
mobilize financial resources from rural / semi-urban areas and grant loans and
advances mostly to small and marginal farmers, agricultural labourers and rural
artisans. The area of operation of RRBs is limited to the area as notified by GoI
covering one or more districts in the State.