abhishreshthaa
Abhijeet S
A highly distressing fact of co-operative credit is the heavy overdues of co-operative credit institutions, now estimated between Rs.9,000 crores to Rs.10,000 crores.
According to the RBI study team on overdues “lack of will and discipline among cultivators to repay loans was the principal factor responsible for the prevalence of overdues of co-operatives.
Defective lending policy pursued by co-operatives, the apathy of management in taking quick action against recalcitrant members and absence of favourable climate were other contributing factors.”
Apart from these commonly factors normally responsible for a high level of overdues, intervention of external forces such as loan waivers, concession in various forms towards repayment of principal and interest has also affected the recovery performance of credit institutions to a significant extent.
The problem is further aggravated on the account of the state governments in ability to meet the financial commitments to co-operative banks.
In recent years, the farmers are getting organized and one of their chief demands of the farmer union is to cancel their debts to the co-operative societies and banks. States have meekly surrended to such demands to write off the debts in a matter of extreme concern, as it hampers the recovery of dues from the farmers.
The problem of loan overdues is a matter of serious concern, as it affects the recycling of funds and credit expansion on one hand and economic viability of the lending institutions, specially the co-operatives and RRBs, on the other.
According to the RBI study team on overdues “lack of will and discipline among cultivators to repay loans was the principal factor responsible for the prevalence of overdues of co-operatives.
Defective lending policy pursued by co-operatives, the apathy of management in taking quick action against recalcitrant members and absence of favourable climate were other contributing factors.”
Apart from these commonly factors normally responsible for a high level of overdues, intervention of external forces such as loan waivers, concession in various forms towards repayment of principal and interest has also affected the recovery performance of credit institutions to a significant extent.
The problem is further aggravated on the account of the state governments in ability to meet the financial commitments to co-operative banks.
In recent years, the farmers are getting organized and one of their chief demands of the farmer union is to cancel their debts to the co-operative societies and banks. States have meekly surrended to such demands to write off the debts in a matter of extreme concern, as it hampers the recovery of dues from the farmers.
The problem of loan overdues is a matter of serious concern, as it affects the recycling of funds and credit expansion on one hand and economic viability of the lending institutions, specially the co-operatives and RRBs, on the other.