"Below, you'll find the most probable ECON 242 questions tailored for exam preparation."
Q.1) Define co-operation. Enlist different principles of Co-operation and explain any one of them.
Co-operation - Co-operation is a form of organization in which persons voluntary associate together on the basis of equality for the promotion of their economic interest OR any similar definition.
Principles of Co-operation (Listing)
1. Principle of open and Voluntary membership
2. Principle of democratic control.
3. Principle of service.
4. Principle of self help and mutual help
5. Principle of equal distribution of profit
6. Principle of political and religions neutrality.
7. Principle of education
8. Principle of thrift
9. Principle of publicity
10. Principle of Honorary service
1.Principle of open and voluntary association:
The admission and membership into a co-operative society is open to everybody irrespective of caste, religion, any social and political affiliations. It does not allow any discrimination. The membership is open as well as voluntary. It implies that there is no compulsion exercised on any individual to join the cooperative. Once an individual joins as a member, there is no compulsion on him to continue as such. At any time he has every freedom to withdraw from the society.
2.Principle of Democratic organization:
Co-operatives are organized and managed based on the principle of democracy. Each member is given equal right to vote irrespective of his share capital in the society. “One man one vote” is the important principle of cooperation. The elected board of management will work based on the acts, rules and laws guiding the matters of co- operation.
3. Principle of service:
Co-operatives main aim is to cater to the needs of its members. Unlike
business organizations, the cooperatives are more service - oriented rather than profit - oriented. This spirit of service invokes loyalty among the members.
4. Principle of self-help and mutual help:
The funds of society are contributed by the members in the form of share capital. In co-operatives generally, the members are financially weak. The society can barrow required capital from different financial sources at lower interest rates and offer the same to the members for productive purposes. This may not be possible at individual level. Hence, in co-operatives, the principle of self-help and mutual-help can work for the welfare of the members.
Q.2) a)Define agricultural finance. Explain the scope and importance of agricultural finance.
b) Write in short about Co-operative movement in pre-independence period in india.
(a) Agricultural finance:
- "Murrey" has defined - it is an economic study of borrowing funds by farmers of the organization and operation of farm lending agencies of soeicty's interest in credit for agriculture.
- "Tondon & Dhondyal" - Agricultural finance as a branch of agril. eonomics which deals with the provision and management of bank services and financial resources related to individual farm units.
Explain the scope and importance of agril. finance on the following points
1. Explain at macro and micro level finance
2. In the agro-socio- economic development of the country
3. Its catalytic role strengthens the farming business
4. Accretion to farm assets
5. Contribute to reduction in regional economic imbalances
6. To stimulate the productivity
7. To promote the well- being of the society
8. Strengthening and development of both input and output market
9. To creating the supporting infrastructure for adoption of new technology
Needed investment on to carry out major and minor project and other programmes
in the country.
(b) Co-operative movement in pre- independence period India
In Ancient India, co-operation took four principal forms Viz, Kula, Grama, Shreni and Jati.
Pre- Independence period
1. Period of Initial effort and planning (between -1904 & 1912)
2. Period of Hurried Expansion (1912 to 1918)
3. Period of Unplanned Expansion (1918 to 1929)
4. Period of set back and Reorganization (1929-1939)
5. Period of recovery (1939-1946)
Q.3) Enumerate different sources of Agricultural credit. Explain in short about:
a) Professional money lender.
b) Co-operative credit structure in India & Maharashtra.
These are two sources of agricultural credit available to the farmers like private/ non institutional and institutional
Non institutional sources of agricultural credit
1) Professional money lender
2) Commission agent
3) Relative
4) land lord.
Institutional Sources of agricultural credit
1) Cooperative credit society.
2) land development bank
3) Commercial bank
4) Regional rural bank
5) Government rural credit
Professional money lender.
1) In rural area, an agriculturist may money lender who combines farming with money lending
2) Primary he may be interested in Farming but he can carry on money lending as a side business
3) The village Shop -keeper can also act as a money render
4) He maintains a Close and personal contact with be borrower
.png)
Q.4) Enlist Methods of Project Appraisal and Explain:
A) Discounted measures of project appraisal.
B) Net Present worth
Methods of Project Appraisal
A) Undiscounted measures of project worth
1. Ranking by inspection
2. Pay-back period
3. Proceeds per unit of outlay
4. average income on book value of investment
B) Discounted measures of project worth
1. Net present worth
2. Internal rate of return
3. Benefit cost ratio
4. Profitability index
- Net present worth (NPW) or net present value (NPV)
The most straight forward discounted measure of project worth is the net present worth. This is simply the present worth of the incremental net profit or incremental cash flow stream. The net present worth may also be computed by finding the difference between the present worth of the benefit stream less the present worth of the cost stream. Although the net present worth may be computed by substracting the total discounted present worth of the cost stream from that of the benefit stream. it is easier and usual practice to compute it by discounting the incremental net benefit stream or incremental cash flow.
Q.5) Define Loan / Define Credit / Define Agricultural Credit & Classify on the basis of:
1) Security
2) Time of repayment period.
Credit: Credit of loan are certain amount of money provided for certain purpose on certain condition with some interest which should be repaid sooner or later.
Agricultural credit: The credit which is used for agriculture is called as agricultural credit
Classification of credit
1. On the basis of Time of repayment period.
This classification is based on the repayment period of the loan. It is sub-divided in to 3 types
Short–term loans: These loans are to be repaid within a period of 6 to 18 months. All crop loans are said to be short–term loans, but the length of the repayment period varies according to the duration of crop. The farmers require this type of credit to meet the expenses of the ongoing agricultural operations on the farm like sowing, fertilizer application, plant protection measures, payment of wages to casual labourers etc. The borrower is supposed to repay the loan from the sale proceeds of the crops raised.
Medium – term loans: Here the repayment period varies from 18 months to 5 years. These loans are required by the farmers for bringing about some improvements on his farm by way of purchasing implements, electric motors, milch cattle, sheep and goat, etc. The relatively longer period of repayment of these loans is due to their partially-liquidating nature.
Long – term loans: These loans fall due for repayment over a long time ranging from 5 years tomore than 20 years or even more. These loans together with medium terms loans are called investment loans or term loans. These loans are meant for permanent improvements like levelling and reclamation of land, construction of farm buildings, purchase of tractors, raising of orchards ,etc. Since these activities require large capital, a longer period is required to repay these loans due to their non - liquidating nature.
2. On the basis of security
The loan transactions between lender and borrower are governed by confidence and this assumption is confined to private lending to some extent, but the institutional financial agencies do have their own procedural formalities on credit transactions. Therefore it is essential to classify the loans under this category into two sub-categories viz., secured and unsecured loans.
Secured loans: Loans advanced against some security by the borrower are termed as secured loans.
Various forms of securities are offered in obtaining the loans and they are of following types.
I. Personal security:
Under this, borrower himself stands as the guarantor. Loan is advanced on the farmer’s promissory note. Third party guarantee may or may not be insisted upon (i.e. based on the understanding between the lender and the borrower)
II. Collateral Security:
Here the property is pledged to secure a loan. The movable properties of the individuals like LIC bonds, fixed deposit bonds, warehouse receipts, machinery, livestock etc, are offered as security.
III. Chattel loans:
Here credit is obtained from pawn-brokers by pledging movable properties such as jewellery, utensils made of various metals, etc.
IV. Mortgage:
As against to collateral security, immovable properties are presented for security purpose For example, land, farm buildings, etc. The person who is creating the charge of mortgage is called mortgagor (borrower) and the person in whose favour it is created is known as the mortgagee (banker).
Mortgages are of two types
a) Simple mortgage:
When the mortgaged property is ancestrally inherited property of borrower then simple mortgage holds good. Here, the farmer borrower has to register his property in the name of the banking institution as a security for the loan he obtains. The registration charges are to be borne by the borrower.
b) Equitable mortgage:
When the mortgaged property is self-acquired property of the borrower, then equitable mortgage is applicable. In this no such registration is required, because the ownership rights are clearly specified in the title deeds in the name of farmer-borrower.
V. Hypothecated loans:
Borrower has ownership right on his movable and the banker has legal right to take a possession of property to sale on default (or) a right to sue the owner to bring the property to sale and for realization of the amount due. The person who creates the charge of hypothecation is called as hypothecator (borrower) and the person in whose favor it is created is known as hypothecate (bank) and the property, which is denoted as hypothecated property. This happens in the case of tractor loans, machinery loans etc. Under such loans the borrower will not have any right to sell the equipment until the loan is cleared off. The borrower is allowed to use the purchased machinery or equipment so as to enable him pay the loan installment regularly.
Hypothecated loans again are of two types viz., key loans and open loans.
a) Key loans :
The agricultural produce of the farmer - borrower will be kept under the control of lending institutions and the loan is advanced to the farmer . This helps the farmer from not resorting to distress sales.
b) Open loans:
Here only the physical possession of the purchased machinery rests with the borrower, but the legal ownership remains with the lending institution till the loan is repaid.
Unsecured loans:
Just based on the confidence between the borrower and lender, the loan transactions take place. No security is kept against the loan amount
Q.6) Explain Feasibility test of Credit management & explain in brief about:
a) 7P's of credit,
b) 5 C’s of Credit,
c) 3 R’s of Credit.
Details about five (5) 'C' s of Credit:-
To judge economic viability of investment or borrowing activity 5 'C's are important
Explain the following five aspects
i) Character
ii) Capacity
iii) Capital
iv) Condition
v) Commonsense
7 P's of Credit Analysis
Principles of farm finance or seven 'P's of agril. Credit.
1. Principle of productive purpose.
2. Principle of personality.
3. Principle of Productivity
4. Principle of phased disbursement
5. Principle of proper utilization.
6. Principle of payment and
7. Principle of protection
3 R’s of Credit
1. Return from the investment
2. Repayment capacity
3. Risk bearing ability
Q.7) Enlist different types of loan repayment plans? Write in detail about amortized repayment plan?
Different types of repayment plans
Types of loan repayment plans
i) Single repayment or lump sum repayment plan
ii) Partial repayment plan.
iii) Amortized Repayment plan.
iv) Variable repayment plan
v ) Reserve or future repayment plan.
Amortized repayment plan:
It means repayment of entire loan amount in a series of installment
a) Amortized decreasing repayment plan.
b) Amortized even repayment plan
a) Amortized decreasing repayment plan
In his repayment plan, the principal component remains constant over the entire repayment period, while the interest part decreases continuously. With the principal amount remaining fixed and interest amount decreasing, the annual installment amount decreases over the years. The loan advance made for the purchase of machinery is one of the suitable examples under this category. for the machinery does not demand much repairs in the initial years of loan payments enabling the farmer to repay a large amount of installments in the initial years.
b) Amortized even repayment plan
This is called equated annual installment method. The annual installment over the entire loan period remains the same in this method. The principal portion of the installment increases continuously, while the interest part declines gradually. This method is mostly adopted for term loans. Loans granted for farm development, digging of wells, deepening of old wells, construction of god owns, dairy, poultry units, orchards etc..
Q.8) Regional Rural Bank (RRB) [Explain Functions/ Management/ Objectives/ Characteristic Features
Objectives
1. To develop rural economy
2. To provide credit for agriculture and allied activities
3. To encourage village industries, artisans, carpenters, craftsmen etc.
4. To reduce dependence of weaker sections on money-lenders
5. To fill up the gap created by morotorium on borrowings from money-leaders
6. To help the poor, financially for their consumption needs
7. To make backward and tribal areas economically better by opening new branches.
Functions
The main functions are, to grant loans and advances particularly to small and marginal farmers, agricultural labourers, cooperative societies, cooperative farming societies for agricultural purposes, artisans, small entrepreneurs etc., within the operational area of the RRB. They have been asked to extend other banking facilities like issue of drafts, collection of cheques etc. They act as vital instruments in schemes, like IRDP. 20-point economic programmes etc.
Management:
The management of the bank is in the bands of a Board of Directors numbering eight. healed by Chairman who is a officer of the sponsoring banks Of the eight Directors. three ore nominees of the sponsoring bank, two from the State Government dealing with district developmental programmes and three from the Central Government. The Regional Rural Banks are sponsored by Commercial banks, generally the lead bank in the district. In some areas State Cooperative Banks and private commercial banks are allowed to sponsor RPH Live sponsoring, bank provides assistance to RRBs for the first five years.
Jurisdiction:
The operational area to be covered by each RRB varies from one to two districts for efficient functioning. The number of branches in the area covered by each RRB may range from 50 to 70, keeping in view operational and financial efficiency Coming to the population to be served by each branch, it has been kept at 20.000 roughly. However, these are subject to changes as per the direction of the Central Bank of the country.
Q.9) Define Crop Insurance. Give in detail salient features of "Comprehensive Crop Insurance Scheme".
Crop Insurance- To safe guard the farmers again crop loss due to risk and uncertainty the crop insurance is one of the measures.
Main features of comprehensive crop insurance scheme:
1. Scheme covers all the farmers availing crop loan and it was limited to rice, wheat, millets, pulse and oilseeds.
2. Crop insurance risk is shared by GIC and state Government in the ratio 2:1
3. The sum insured is subject to 100% of crop loan limited to Rs.1 0,000/-
4. Premium fixed is 2% of sum insured for cereal crops and 1% for pulses and oilseeds.
5. In case of small and marginal farmers, 50% of premium is subsidized
6. Indemnity payable under the scheme is linked with threshold yield of crop.
Q.10) State Objectives, Functions, Mandates of NABARD.
Objectives of NABARD.
As an apex refinancing institution. NABARD purveys all types of credit needed for the farm sector and rural development. It is also vested with the responsibility of promoting and integrating rural development activities through refinance. The bank is also providing direct credit to any institution or organization or an individual. subject to the approval of the Central Government. It has close links with RBI for guidance and assistance in financial matters. As an effective catalytic agent for rural development and in formulating appropriate rural development plans and policies, its rile in remarkable.
Functions of NABARD
1. It works as an apex body to look after the credit requirement of the rural sector.
2. It has an authority to supervise the functioning of the Cooperative sector through its Agricultural Credit Department.
3. It provides short term credit (up to 15 months) to State Cooperative Banks for seasonal agricultural operations (crop loans), marketing of crops. purchase and distribution of fertilizers and working capital requirements of Cooperative Sugar Factories.
4 It provides medium term credit (15 months to 7 years) to State Cooperative Banks and RRBS for approved agricultural purposes purchase of shares of Processing Societies and conversion of short term crop loans into medium term loans in affected natural calamities.
5. It provides medium and long term credit (not exceeding 25 years) for investment in agriculture under systematic including to State Cooperative Banks, LDBS, RRBs and Commercial Banks.
6. It provides long term loans (assistance to the State Government for a period.
7. It has been given the responsibility of inspecting Central and State Cooperative Banks and RRBS. The inspection of State LDBs and other federations /Cooperative is undertaken on voluntary basis.
8. It maintains a research and development fund to be used to promote research in Agriculture and Rural Development so that projects and programmes can be formulated and designed to suit the requirements of different areas.
It needs to be noted that being apex institution. NABARD does not deal directly with farmers and other rural people. It grants assistance to them through Cooperative Banks. Commercial Banks, RRBs, etc.
Q.11) Enlist different higher financing agencies & explain IMF/ any two of them
Higher financing agencies are:
1) World bank
2) International Monetary Fund
3) International finance cooperation
4) international Development Agency
5) RBI
6) NABARD
International Monetary Fund (IMF) : Establishment on 27" December 1945. Agreement with UNMO for mutual co-operation from 15"h November 1947 Headquarter at Washington D.C. U.S.A. 185 countries are the members of IMF
NABARD:
National Bank for Agricultural and Rural Development (NABARD) was set up in July 1982. It took over from RBI all the functions that the latter performed in the field of rural credit. ARDC which was set up in 1963 to meet the long term credit needs of the rural areas has also been merged with NABARD. Also Agril. Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of RBI were merged with NABARD. The authorized share capital of NABARD is Rs. 500 crores and paid up capital is Rs. 100 crores (contributed equally by RBI and Govt. of India). Two funds have been set up in NABARD viz. National Rural Credit (long term operations) Fund and the National Rural Credit (stabilized) Fund.
Write short notes:
A) Regional Rural Bank (RRBs)
- In order to fulfill the objectives of the 20 point programme, the first batch of Regional Rural Bank (RRB) was established by the Government on 2nd October 1975.
- The main objective of RRB is to provide credit and other facilities to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. so as to develop agriculture, trade. commerce, industry and other productive activities in rural areas.
- Initially, five RRBS were set up on 2.10.1975 at Moradabad, Gorakhpur (UP). Bhiwani (Haryana). Jaipur (Rajasthan) and Melda (West Bengal). These banks were sponsored by Syndicate Bank. SBI. Punjab National Bank, UCO Bank, United Bank of India, respectively.
- Each RRB had an authorized capital of Rs. 1 crore and paid up capital of Rs. 25 lakh.
- The share capital of RRB is subscribed by the Central Government (50%). State Government (15%) and sponsoring Commercial Bank (35%).
B) NABARD / Role of NABARD in rural Credit
1. It works as an apex body to look after the credit requirement of the rural sector.
2. It has an authority to supervise the functioning of the Cooperative sector through its Agricultural Credit Department.
3. It provides short term credit (up to 15 months) to State Cooperative Banks for seasonal agricultural operations (crop loans), marketing of crops. purchase and distribution of fertilizers and working capital requirements of Cooperative Sugar Factories.
4 It provides medium term credit (15 months to 7 years) to State Cooperative Banks and RRBS for approved agricultural purposes purchase of shares of Processing Societies and conversion of short term crop loans into medium term loans in affected natural calamities.
5. It provides medium and long term credit (not exceeding 25 years) for investment in agriculture under systematic including to State Cooperative Banks, LDBS, RRBs and Commercial Banks.
6. It provides long term loans (assistance to the State Government for a period.
7. It has been given the responsibility of inspecting Central and State Cooperative Banks and RRBS. The inspection of State LDBs and other federations /Cooperative is undertaken on voluntary basis.
8. It maintains a research and development fund to be used to promote research in Agriculture and Rural Development so that projects and programmes can be formulated and designed to suit the requirements of different areas.
C) History & Origin of Cooperative movement in pre & Post independence India.
a) Pre-Independence Era:
The cooperative movement in India during pre-independence era can be divided in to four phases viz.,
1. Initiation phase (1904-1911)
2. Modification phase (1912-1918)
3. Expansion phase (1919-1929)
4. Restructuring phase (1930-1946)
Initiation phase (1904-1911):
In olden days rural credit service was dominated by non-institutional financial agencies (i.e. private money lenders) charging exorbitant interest rates from farmers. In extreme cases or out of distress the poor farmers have to sell their belongings to clear their debts. This precarious situation triggered a sort of agitation by farmers against private money lenders in certain areas.The revolts found in Poona and Ahemadnagar areas of Maharashtra attracted the attention of government.
Immediately the government passed three acts viz.,
Deccan Agriculture Relief Act (1879)
Land Improvement Loan Act ( 1883)
Agriculturists Loan Act (1884)
In 1892, the Madras government appointed Federick Nicholson to study and examine the village banks
organized on cooperative lines in Germany. After coming from there Nicholson submitted a report and
raised a slogan “Find Raiffeissen”. During 1901, Indian Famine Commission and another committee headed by Sir Edward Law recommended the formation of credit societies on Raiffeissen model. These recommendations resulted in the enactment of Cooperative Credit Societies Act (1904).
b)Post-Independence Era:
Planning commission was established in March, 1950, prepared first
five year plan (1951-1956) in 1951 under which main objectives with regard to cooperatives were
Involvement of cooperatives in rural development programmes.
Development of well organized credit system.
Extending cooperatives to the fields of farming, industry, housing, marketing etc.
Training of higher level personnel engaged in cooperatives.
During the year 1951, All India Rural Credit Survey Committee (AIRCSC) appointed under the
chairmanship of Sri. A.D. Gorwala pointed out two main drawbacks of cooperative credit. They were
Cooperative credit was unevenly distributed.
Cooperative credit was inadequate and mostly lent to the asset-oriented large cultivators rather than
small and marginal farmers.
He also pointed that weakest link in chain of cooperatives was the primary credit societies. The All India Rural Credit Survey Committee also observed that “Cooperation has failed in India but must succeed”. This All India Rural Credit Survey Committee also recommended an integrated scheme as a remedy for the then existing situation. The important recommendations of it were
State/Govt partnership in cooperatives at all levels.
There should be coordination between cooperative credit, marketing and processing.
Development of adequate warehousing.
Giving adequate training for cooperative personnel engaged at all levels.
Under Second five year plan (1956-1961), on the recommendations of All India Rural Credit Survey Committee during the year 1956.
D) Repayment plan
There are six types of repayment plans for term loans and they are
1.Straight-end repayment plan or single repayment plan or lumpsum repayment plan
2.Partial repayment plan or Balloon repayment plan
3.Amortized repayment plan
a) Amortized decreasing repayment plan
b) Amortized even repayment plan or Equated annual installment method
4.Variable repayment plan (or) Quasi-variable repayment plan
5.Optional repayment plan
6.Reserve repayment plan (or) Future repayment plan
1.Straight-end Repayment Plan or Single Repayment Plan (or) Lumpsum Repayment Plan
The entire loan amount is to be cleared off after the expiry of stipulated time period. The principal
component is repaid by the borrower at a time in lumpsum when the loan matures, while interest is paid each year.
2.Partial repayment plan or Balloon repayment plan
Here the repayment of the loan will be done partially over the years. Under this repayment plan, the
installment amount will be decreasing as the years pass by except in the maturity year (final year), during which the investment generates sufficient revenue.
3. Amortized repayment plan:
Amortization means repayment of the entire loan amount in a series of installments. This method is an
extension of partial repayment plan. Amortized repayment plans are of two types
a) Amortized decreasing repayment plan
Here the principal component remains constant over the entire repayment period and the interest part decreases continuously. As the principal amount remains fixed and the interest amount decreases, the annual installment
b)Amortized even repayment plan
Here the annual installment over the entire loan period remains the same. The principal portion of the installment increases continuously and the interest component declines gradually. This method is adopted for loans granted for farm development, digging of wells, deepening of old wells, construction of godowns, dairy, poultry units, orchards etc.
4.Variable repayment plan or Quasi-variable repayment plan
As the name indicates that, various levels of installments are paid by the borrower over the loan period. At times of good harvest a larger installment is paid and at times of poor harvest smaller installment is paid by the borrower. Hence, according to the convenience of the borrower the amount of the installment varies here in this method.This method is not found in lendings of institutional financial agencies.
5. Optional repayment plan:
Here in this method an option is given for the borrower to make payment towards the principal amount in addition to the regular interest.
6. Reserve repayment plan or Future repayment plan
This type of repayment is seen with borrowers in areas where there is variability in
farm income. In such areas the farmers are haunted by the fear of not paying regular loan installments. To avoid such situations, the farmers make advance payments of loan from the savings of previous year. This type of repayment is advantageous to both the banker and borrower. The bankers need not worry regarding loan recovery even at times of crop failure and on the other hand borrower also gains, as he keeps up his integrity and credibility.
E) Comprehensive Crop Insurance Scheme (CCIS)
In the year 1985, the Comprehensive Crop Insurance Scheme (CCIS) was introduced by GIC in all the states. This scheme covers all farmers who availed the crop loan and it is limited to cereals such as paddy, wheat, millets, oil seeds and pulses. The loans given from 1st April to 30th September were considered for kharif insurance business. The loans granted from 1st October to March 31st of next year qualify for rabi insurance. Therefore the insurance cover will be considered as built-in-aspect of crop loan.
Crop insurance risk is taken by GIC and the respective state governments in 2:1 ratio.
The sum insured is 100 per cent of crop loan taken by the farmers during that season. Here the sum
insured was limited to Rs. 10000 /- per farmer for all insurable crops irrespective of the quantum of
loan taken by the farmer.
Only that part of crop loan is insurable which is utilized for the purpose of covering insured crops.
The insurance premium is fixed at 2 per cent of sum insured for paddy, wheat and millets and for
oilseeds and pulses it is one per cent.
The premium is sanctioned as an additional loan to the farmers and should not be deducted from
original loan amount.
For small and marginal farmers, 50 per cent of insurance premium is subsidized by the central and
state governments in equal proportion.
Indemnity payable under the scheme is calculated on the basis of “threshold yield” and it is equal
to 80 per cent of the average yield for a given crop for the previous 5 years .
Normally 80 per cent of the average annual yield of the given crop in a given area over the last
preceding five years is considered as “threshold yield” of that area.
Short fall in yield of crop is difference between threshold yield and actual yield of the crop in
particular area for the year under consideration.
F)Function of MFAL.
Small Farmers Development Agency (SFDA) and Marginal Farmers and Agricultural Labourers Development Agency (MFAL).
Small and marginal farmers were however denied to receive the benefits from
the nationalization of banks due to
Cumbersome lending procedures
Their inadequacy to furnish tangible securities for obtaining loan
Undue delays in disbursement of loans
As a result, the marginal and small farmers depended mostly on the private money lenders for their credit needs paying high rates of interest. To avoid this situation prevailing in rural areas, “All India Rural Credit Review Committee, 1969 under the chairmanship of Sir. Venkatappaiah (AIRCRC) recommended the establishment of SFDA and MFAL in 1969. They came into operation in 1971.
If you have Telegram, you can view and join
Knowledge Escalation right away
