The RBI has been exercised by the existing weak rural cooperative credit structure in the country. The three tier structure-State Cooperative Bank,District Cooperative Bank and PACS may go for a revamp.
RBI has formed a committee headed by Nabard Chairman Prakash Bakshi and given it the required authority to re-examine the Short Term Credit Structure (STCCS) and offer a slew of suggestions for making major improvements in rural credit delivery system.
According to the RBI, the committee will thoroughly analyze the STCCS and offer alternative ideas of bringing down the cost of credit. It will also carefully investigate all options including the feasibility of establishing a two tier STCCS as against the present three tier arrangement.
It is worth mentioning that STCCS is meant to meet the credit needs of the small and marginal farming population in the country.
The RBI adds the committee will primarily focus its attention on the role being played by the state and district cooperative banks in meeting the agricultural credit needs.
It will also try to find out the cooperative banks that are not capable of continuing for a long time, the diluted licensing criteria laid down by the RBI notwithstanding.