The State government of Maharashtra has appointed a nine-member committee to understand the impact of COVID-19 on cooperative credit systems in the State. There are more than two lakh cooperative organisations in the State and they will need financial assistance in the post-lockdown period if they are to function at all. The committee has been tasked with making recommendations to ensure they get this. State Cooperative Commissioner Anil Kawade will chair the committee and hand over its report within two months.
The cooperatives operate on a three-tier cooperative credit system, and have a total membership of 5.5 crore and more than three lakh employees. Their floating capital is Rs.3.5 lakh crore. The three-tier credit structure has the Maharashtra State Cooperative Bank (MSCB) at the helm, followed by District Central Cooperative Banks (DCCBs) and the Primary Agricultural Cooperative Societies (PACS) that operate at the village level. The apex MSCB is responsible for refinancing and the DCCBs provide the actual agricultural and crop loans to farmers.
The structure works in a top-down manner with the Central Financing Agencies Department of the MSCB looking after the finance aspect of the DCCBs for providing agricultural and non-agricultural advances under various refinance schemes of the National Bank for Agriculture and Rural Development (NABARD). The final disbursal of funds is through the PACS and sometimes the DCCBs.
The coronavirus crisis will affect banking across the board, so the government has set up a committee to monitor the COVID-19 impact on urban cooperative banks and urban and rural non-agricultural credit organisations. This committee will be chaired by Vidyadhar Anaskar, who is the president of the Maharashtra State Urban Banks Federation, and will also submit its report in two months.
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