CHAPTER-I

INTRODUCTION

INTRODUCTION OF BANKING IN INDIA

Modern banking in India originated in the last decade of the 18th century. Among the
first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829–
32; and the General Bank of India, established in 1786 but failed in 1791.

The largest bank and the oldest still in existence, is the State Bank of India (S.B.I). It
originated and started working as the Bank of Calcutta in mid-June 1806. In 1809, it was
renamed as the Bank of Bengal. This was one of the three banks founded by a presidency
government, the other two were the Bank of Bombay in 1840 and the Bank of Madras in 1843.
The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's
independence, became the State Bank of India in 1955. For many years the presidency banks had
acted as quasi-central banks, as did their successors, until the Reserve Bank of India was
established in 1935, under the Reserve Bank of India Act, 1934.

In 1960, the State Banks of India was given control of eight state-associated banks under
the State Bank of India (Subsidiary Banks) Act, 1959. These are now called its associate
banks. In 1969 the Indian government nationalized 14 major private banks; one of the big banks
was Bank of India. In 1980, 6 more private banks were nationalized. These nationalized banks
are the majority of lenders in the Indian economy. They dominate the banking sector because of
their large size and widespread networks.

The Indian banking sector is broadly classified into scheduled and non-scheduled banks.
The scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India
Act, 1934. The scheduled banks are further classified into:

 Nationalized banks;

 State Bank of India and its associates;

 Regional Rural Banks (RRBs);

 Foreign banks; and

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  Other Indian private sector banks.

The term commercial banks refers to both scheduled and non-scheduled commercial
Banks regulated under the Banking Regulation Act, 1949.

Generally the supply, product range and reach of banking in India is fairly mature-even
though reach in rural India and to the poor still remains a challenge. The government has
developed initiatives to address this through the State Bank of India expanding its branch
network and through the National Bank for Agriculture and Rural Development
(NABARD) with facilities like microfinance.

INTRODUCTION OF CO-OPERATIVE BANK

History of Cooperative Banking in India

Cooperative movement in India was started primarily for dealing with the problem of rural
credit. The history of Indian cooperative movement started with the passing of Cooperative
Societies Act in 1904. The objective of Cooperative Society Act in 1904 was to establish
cooperative credit societies “to encourage thrift, self-help and cooperation among agriculturists,
artisans and persons of limited means.”
Many cooperative credit societies were set up under Cooperative Society Act. The
Cooperative Societies Act, 1912 recognized the need for establishing new organizations for
supervision, auditing and supply of cooperative credit.
These organizations were-
(a) A union, consisting of primary societies;
(b) The central banks; and
(c) Provincial banks.
Although beginning has been made in the direction of establishing cooperative societies and
extending cooperative credit, but the progress remained unsatisfactory in the pre-independence
period. Even after being in operation for half a century, the cooperative credit formed only 3.1 per
cent of the total rural credit in 1951-52.

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FORMATION OF COOPERATIVE BANKS
Cooperative Banks are registered under the Cooperative Societies Act, 1912 and regulated
by the Reserve Bank of India under the Banking Regulation Act, 1949 and Banking Laws
(Application to Cooperative Societies) Act 1965. But the Cooperatives Societies are registered
under the Cooperative Societies Act, 1912. And regulated by the State Act only. To start a
Cooperative Society there should be minimum 10 members with few things in common like,
working in the same organization, living in the same residence area, etc,.

Cooperative banks can accept deposit from non-members also and can give loan to both
members and non-members where the societies are limited to accept deposits and give loan to
its members only. Co-operative Societies capital is low in both the terms of deposits and share
capital compared to Co-operative Banks. And the Banks even can be sold to the public in Share
Market. Co-Operative Banks can offer many services to its members like cheque and the insurance
cover from the Deposit Insurance and Credit Guarantee Corporation but not available for society
deposit accounts and have limitation by RBI to not to use Bank’s in their name.

All Co-operatives works with the principle of “one member, one vote” and “no profit,
no loss”. They basically formed by the volunteer group of people with the object to meet their
Economic,

Social and

Cultural need

Through a jointly owned enterprise. But the Cooperatives Societies have limits to lend money to
only its members for agriculture and other purposes in rural areas where Cooperative Banks can
give loan to non-members and small businesses in both urban and rural areas.

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STRUCTURE OF COOPERATIVE BANKING
There are different types of cooperative credit institutions working in India. These
institutions can be classified into two broad categories- agricultural and non-agricultural.
Agricultural credit institutions dominate the entire cooperative credit structure.
Agricultural credit institutions are further divided into short-term agricultural credit institutions
and long-term agricultural credit institutions.
The short-term agricultural credit institutions which cater to the short-term financial needs of
agriculturists have three-tier federal structure-
(a) At the apex, there is the state cooperative bank in each state;
(b) At the district level, there are central cooperative banks;
(c) At the village level, there are primary agricultural credit societies.
Long-term agricultural credit is provided by the land development banks. The whole structure of
cooperative credit institutions is shown in the chart given.

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STRUCTURE OF CO-OPERATIVE INTITUTIONS

Cooperative credit Institution

Agricultural credit institution Agricultural non-credit institution

Short term credit institution Long term credit institution

Central cooperative Primary cooperative credit

State cooperative
bank society

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Evaluation of Cooperative Banking:
Effective steps taken by the government and the Reserve Bank of India, the cooperative
banking system in India made tremendous progress after independence. The cooperative credit
which was only 3.1 per cent of the total rural credit in 1951-52, rose to 15.5% in 1961-62 and to
22.7 per cent in 1970-71.
The total amount of short-term credit granted by the cooperatives increased from Rs. 23
crore in 1951 -52 to Rs. 203 crore in 1961-62 and further to Rs. 1425 crore in 1979-80. Thus,
during the period of about two decades (i.e., 1960-61 to 1979- 80), the short-term and medium-
term loans increased by more than seven times.

PROGRESS OF COOPERATIVE BANKING

Programme 1985-86 1995-96 1999-2000 2002-2003

Short-term loans 2787 8331 14845 20247

Medium-term loans 505 505 505 505
Long-term loans 582 582 582 582

Total 3874 10479 18363 24296

Table shows that cooperative credit increased significantly from Rs. 3874 crore in 1985-86 to Rs.
10479 crore in 1995-96, and further to Rs. 24296 crore in 2002-03. Short-term cooperative credit
increased from Rs. 2787 crore in 1985-86 to Rs. 8331 crore in 1995-96 and to Rs. 20247 crore in
2002-03. Medium-term and long-term cooperative loans increased from Rs. 1087 crore in 1985-
86 to Rs. 2148 crore in 1995-96 and to Rs. 4049 crore in 2002-03.

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INSTITUTIONS CREDIT TO AGRICULTURE

Agricultural Credit 2002-2003 (%) 2006-2007 (%) 2009-2010 (%)

Cooperative Banks 23716 (34) 33174 (22) 32925 (20)

RRBs 6070 (9) 15170 (10) 20065 (12)

Commercial Banks 39774 (57) 100999 (68) 112449 (68)

Total 69560 (100) 149343 (100) 165439 (100)

10th Five Year Plan (2002-03 to 2006-07), agricultural credit from cooperative banks increased
from Rs. 23716 crore (34%) to Rs. 33174 crore (22%). In 2009-10, it was Rs. 32925 crore (20%).

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INTRODUCTION OF CO-OPERATIVE CREDIT INSTITUTIONS

The co-operative credit movement in the world started in Germany. Intolerable adverse
condition for the poor in Germany led to the growth of a new economic organization known as the
co-operative credit society. The emergence of the co-operative credit society in this country was
the result of an enormous amount of work done by two men Raiffesen and Schulze. Harman
Schulze, who conceived the idea when he founded the first People’s Bank in Germany in 1850.
The origin of co-operative movement can be traced back to the first half to the 18th century. Those
were the days of scarcity and shortages in whole of Europe.

Co-operatives movement was introduced in India as a bulwark against the moneylender,

his trade and malpractices. With persistent efforts made over a number of years, it has been able
to eradicate this evil with a varying degree of success in different regions. Almost everywhere
generate gone down and at least in Punjab, Maharashtra and Tamil Nadu, the moneylender is
completely off the track.

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Features of a Cooperative Society

 As it is a voluntary association, the membership is also voluntary. A person is free to join a

cooperative society, and can also leave anytime as per his desire. Irrespective of their

Religion,

Gender & caste,

Membership is open to all.

 It is compulsory for the co-operative society to get registration. The co-operative society is a
separate legal identity to the society.

 It does not get affected by the entry or exit of its members.

 There is limited liability of the members of co-operative society. Liability is limited to the
extent of the amount contributed by members as capital.

An elected managing committee has the powers to take decisions. Members have the right
to vote, by which they elect the members who will constitute member-owned financial
cooperatives. Their principle is of people helping people. They provide credit and financial services
to the members at competitive prices. Each and every depositor has right to become a member.
Members attend the annual meeting and are given rights to elect a board of directors.

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TYPES OF COOPERATIVE SOCIETY

Marketing Cooperative Society

With an aim of helping small producers in selling their products, these societies are
established. The producers who wish to obtain reasonable prices for their output are the members of
this society. For securing a favourable market for the products they eliminate the middlemen and
improve the competitive position of its members. It collects the output of individual members. Various
marketing functions like transportation, packaging, warehousing, etc, are performed by the
cooperative societies to sell the product at the best possible price.

Housing Cooperative Society

To help people with limited income to construct houses at reasonable costs, these societies are
established. Their aim is to solve the housing problems of the members. A member of this society
aims to procure the residential house at lower cost. They construct the houses and give the option to
m embers to pay in installments to purchase the house. They construct flats or provide plots to
members on which the members themselves can construct the houses as per their choice.

Agricultural Cooperative Society

An agricultural cooperative, also known as a farmers' co-op, is

a cooperative where farmers pool their resources in certain areas of activity. A broad typology of
agricultural cooperatives distinguishes between 'agricultural service cooperatives', which provide
various services to their individually farming members, and 'agricultural production cooperatives',
where production resources (land, machinery) are pooled and member’s farm jointly. Examples of
agricultural production cooperatives include collective farms in former socialist countries, and
Nicaraguan production co-operatives.

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CREDIT CO-OPERTATIVE SOCIETY:

A credit Co-operative Society is a business which is generally owned by those people

only who use that co-operative society’s services. The control of such society remains among the
society’s members equally. Credit co-operative society secures low cost credit, market products
and also secures various services such as irrigation, insurance, electricity and finance.

There are numerous Credit Co-Operative Societies and all of them are registered. If a credit
cooperative society is functioning at one state, then the state government looks into the matters of
it. It appoints a Registrar for registration.

If the credit cooperative society is functioning in multiple states, it is called a multi-state

cooperative society. Adarsh Credit Cooperative Society is a multi-state credit cooperative society
registered with the Ministry of Agriculture.

Various advantages of cooperative credit institutions are given below

I. Alternative Credit Source
The main objective of cooperative credit movement is to provide an effective alternative
to the traditional defective credit system of the village money lender. The cooperative banks tend
to protect the rural population from the clutches of money lenders. The money lenders have so far
dominated the rural areas and have been exploiting the poor people by charging very high rates of
interest and manipulating accounts.
II. Cheap Rural Credit
Cooperative credit system has cheapened the rural credit both directly as well as
indirectly
(a) Directly, because the cooperative societies charge comparatively low interest rates,
(b) Indirectly, because the presence of cooperative societies as an alternative agency has
broken money lender’s monopoly, thereby enforcing him to reduce the rate of interest.

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III. Productive Borrowing
An important benefit of cooperative credit system is to bring a change in the nature of
loans. Previously the cultivators used to borrow for consumption and other unproductive purposes.
But, now, they mostly borrow for productive purposes. Cooperative societies discourage
unproductive borrowing.
IV. Encouragement to Saving and Investment
Cooperative credit movement has encouraged saving and investment by developing the
habits of thrift among the agriculturists. Instead of hoarding money the rural people tend to deposit
their savings in the cooperative or other banking institutions.
V. Improvement in Farming Methods
Cooperative societies have also greatly helped in the introduction of better agricultural
methods. Cooperative credit is available for purchasing improved seeds, chemical fertilizers,
modern implements, etc. The marketing and processing societies have helped the members to
purchase their inputs cheaply and sell their produce at good prices.

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THE CO-OPERATIVE CREDIT STRUCTURE

Agricultural credit may be both short term and long term. The short-term co-operative
credit has a sort a federal structure, a three storied organization. In every state, the structure insist
of state co-operative banks at the apex or top, primary credit societies at the village level with
central banks coming in between at the district level. The short period co-operative credit structure
can be shown in the following manner. The urban structure is different to above federal structure.
The long-term credit structure has also not being organized three tire system. It is based on two-
tire system.

On the top, there is the central land mortgage bank and,

At lower level, there are primary land mortgage banks.

The non-credit co-operative are also linked up with the state co-operative bank in the matter
of finance. In the case many such societies’ attempts have been made to setup federal organization
for giving the necessary guidance and encouragement. In some cases this provide finance also.
Many of the status have state marketing federations to coordinate and improve the activities of the
marketing societies. Similarly, a broad institutional framework of consumer co-operatives has been
built up. This framework comprised a national federation to which state federations are affiliated.

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STRU CTURE OF CO-OPERATIVE CREDIT SOCIETY:

Cooperative Credit Society

National Bank for Agricultural Rural

development

State Cooperative Bank

Central Cooperative Bank at district level

Primary credit society at village level

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LONG TERM CREDIT INSTITUTIONS

Besides short-term credit, the agriculturists also need long-term credit for making
permanent improvements in land, for repaying old debts, for purchasing agricultural machinery
and other implements. Traditionally, the long-term requirements of agriculturists were mainly met
by money lenders and some other agencies. But this source of credit was found defective and has
been responsible for the exploitation of farmers.
Cooperative banks and commercial banks by their very nature are not in a position to
provide long-term loans because their deposits are mainly demand (short-term) deposits. Thus,
there was a great need for a specialised institution for supplying long-term credit to
agriculturists. The establishment of land development banks now known as cooperative and rural
development banks (CARDBs) is an effort in this direction.

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SHORT TERM CREDIT INSTITUTIONS

In rural India, there exists a 3-tier short-term rural cooperative structure.

I includes state cooperative banks (SCBs) at the state level;
II includes central cooperative banks (CCBs) at the district level; and
III includes primary agricultural credit societies (PACSs).

1. State Cooperative Banks (SCBs)

State cooperative banks occupy a unique position in the cooperative credit
structure because of their three important functions
(a) They provide a link through which the Reserve Bank of India provides credit to the cooperatives
and thus participates in the rural finance,
(b) They function as balancing centers for the central cooperative banks by making available the
surplus funds of some central cooperative banks. The central cooperative banks are not permitted
to borrow or lend among themselves,
(c) They finance, control and supervise the central cooperative banks, and, through them, the
primary credit societies.

2. Central Cooperative Banks (CCBs)

Central cooperative banks are of two types
(a) There can be cooperative banking unions whose membership is open only to cooperative
societies. Such cooperative banking unions exist in Haryana, Punjab, Rajasthan, Orissa and Kerala.
(b) There can be mixed central cooperative banks whose membership is open to both individuals
and cooperative societies. The central cooperative banks in the remaining states are of this type.
The main function of the central cooperative banks is to provide loans to the primary cooperative
societies. However, some loans are also given to individuals and others.

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INTRODUCTION OF PRIMARY AGRICULTURAL COOPERATIVE SOCIETY

Agriculture is the most important and major occupation in India. Majority of the
people in India depend on this occupation to a large extent. As the population in India is mainly
spread in the villages, people in rural areas depend mostly on agriculture for their living. At the
beginning of the twentieth century, it was possible for them to meet their basic needs through
income generated from agriculture. But later on as the population went on increasing, the income
from agriculture proved insufficient. As the rural population has no other means of livelihood, it
had to depend only on this occupation, so the farmers started making an effort to produce more
from the available land. To increase the agriculture production, the farmer had to take recourse to
the adoption of new technologies. Improved methods of farming, etc. and for this he felt the need
to take loan. At the beginning he had to mainly depend on the

Money lender,

Traders and

Merchants to fulfill this need.

The farmer being illiterate, was exploited on a large scale by these people providing credit.
The primary agricultural co-operative "credit societies constitute the foundation of the three-tier
co-operative credit structure being developed over the past decades with a view to institutionalize
farm credit in the country. Latest additions to these societies are the farmer’s service societies and
the large size advice multi-purpose co-operative societies.

Origin and history of primary agriculture co-operative credit societies

The first efforts to find out a suitable organization for providing institutional creditor
farmers were made towards the turn of the 19th century when Mr. Nicholson was deputed by the
then provincial government of Madras to study the land bank system in Europe and make
recommendation to introduce a suitable system to provide institutional credit to the poor peasants
and save them from the clutches of the usurious private moneylenders.

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 Mr. Nicholson summed up his report by stating “Find Raiffeisen.” That signified the
organization of primary agricultural co-operative credit societies at the village level on the basis
of unlimited liabilities and area of operation limited to a single village, that is to say, on the basis
of principle one village to one society ‘ and ‘one society to one village’. That organizational model
as a suitable for private Money lender was accepted and introduced to country by means of co-
operative society’s act 1904. Thus a co-operative form of organization at the village level was
born out of the above piece of legislation which was intended to gradually cover all the village in
the country so as to relive the poor peasant from the stranglehold of the moneylenders by providing
institutional credit to them which would not only help them in reducing their private indebtedness
but also provide them cheap and facial credit for increasing their agricultural production and
through that the standards of their living.

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ROLE OF PRIMARY AGRICULTURAL COOPERATIVE SOCIETY

Co-operative Credit Society, commonly known as Primary Agricultural Co-operative

Society (PRIMARY AGRICULTURAL COOPERATIVE SOCIETY) may be started with 10
or more persons, normally belonging to a village. The value of each share is generally
nominal so as to enable even poorest farmer to become a member.

Primary Agricultural Cooperative Society occupy a predominant position in the co-

operative structure and form its base. A Primary Agricultural Credit Society is organized
at grass-root level of a village or a group of small villages. It is the basic unit which
deals with rural (agricultural) borrowers, gives those loans and collects repayments of
loans given. It serves as the final link between the ultimate borrowers on the one hand
and higher financial agencies, namely the RBI/ NABARD on the other hand. At the end of
June 1989 there were 87000 Primary Agricultural Cooperative Society.

These societies covered about 90% of 5.8 lakh villages. Their membership of 9 crores
covered about 65% of the total estimated population of about 14 crores of rural households.
More than half of members of Primary Agricultural Cooperative Society are persons of small
means-

Small farmers,

Agricultural laborers,

Rural artisans, and

25% of them belongs to SC/ST.

The working capital of the Primary Agricultural Cooperative Society derived mainly
from borrowings from Central Co-operative Banks (CCBs) and the small proportion from
owned funds and deposits. That the Primary Agricultural Cooperative Society have failed
to attract deposits is not so much a reflection of low savings habits of the rural
population as a reflection of the availability of better assets to rural savers of both rate
of return and riskiness. High net borrowings from Central Cooperative Banks shows that
Primary Agricultural Cooperative Society act mainly as distribution channel for funds
mobilized elsewhere. Only the members of a Primary Agricultural Cooperative Society are

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entitled to borrow from it. Most loans are for agricultural purpose and are such purpose of
machinery (mostly pump sets for irrigation) and cattle are also given. But, consumption loans
given mostly to

 Landless laborers,
 Artisans, and
 Marginal farmers.

The share of loans given going to weaker sections is usually about 40% of
loans. A varying number of Primary Agricultural Cooperative Society also undertake non-credit
activities such as

 Handling the supply of farm requisites,

 Distribution of consumer goods,
 Among their members,
 Constructing go down and
 Marketing of agricultural produce and process of it.

The management of the society is under an elected body consisting of President ,

Secretary and a Treasurer. The management is honorary, the only paid membership being
normally, the accountant. Loans are given for short period normally for one year, for
carrying out agricultural operations, and the rate of interest is low. Profits are not
distributed as dividends to shareholders but are used for the construction of the well or
maintenance of the village school and so on. The Primary Agricultural Cooperative Society
have stepped up their advances to the weaker sections particularly the small and marginal
farmers. This progress has been quite spectacular but not accurate considering the demand
for finance from farmers. However, the primary credit society has continues to remain
the weakest link in the entire co-operative structure.

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Objectives of Primary Agricultural Cooperative Society:

 For the membership of co-operatives credit society members should belong to

located at village of co-operative societies.
 The work of Primary Agricultural Cooperative Society should limited to its village only.
 The liability of Primary Agricultural Cooperative Society should be unlimited.
 Primary Agricultural Cooperative Society is liable for to the deposits and loans on its
account.
 Primary Agricultural Cooperative Society provides loans to its members only.
 Loans repayment schedule can be decided by the co-operative society as per the
significance purpose of the loans.
 Primary Agricultural Cooperative Society provide the loan only for medium and short
term purpose.

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Organizational structure/ general body

The management of the primary agricultural co-operative credit societies in Junnar,

Ambegaon and Khed taluka is same as the managements of other societies in Maharashtra on the
principles of democracy. It is based on the principles, ‘one member one vote.’ The management
is entrusted to two bodies –

The general body and

Managing committee.

The general structure of organization and management of primary agricultural cooperative

credit societies in Junnar, Ambegaon and Khed taluka is as follows

GENERAL BOARD OF
MEMBERS

MANGING COMMITEE

CHAIRMAN

VICE CHAIRMAN

SECRETARY

CLERK

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General Body

Subject to the provisions of the co-operative societies act and rules framed there under, general
body of members is the supreme authority in any society. The general body can exercise its control
over the board and management in two ways,

1. By attending the general body meeting and bypassing resolutions.

2. By electing the managing committee by voting.

They can take any decisions with in the limit of co-operative society’s act, the rules formed
under it and bye- laws of the society for effective control, it is necessary for members to have
sufficient knowledge of the working of the co-operative society and its policies to be able to form
a rational judgment upon them.

They can participate in the meetings and discuss things freely but generally members of
the society are found uninterested about the working and performance of the society. The byelaws
of the co-operative society provide that the general meeting of the societies should be held before
14th November every year. But generally the meetings of the societies are not held in stipulated
time.

A. Meetings:

The general meetings is called once a year. The following business is transacted:

1. To sanction:

 The receipts and disbursements during the previous co-operative year.

 The profit and loss account for the year
 Balance sheet as at the close of the year.

2. To accept the Auditors report presented by the managing committee.

3. To accept the admission of the new members.

4. Fixing the limit up to which the funds may be borrowed.

5. To accept or rectify the sub-codes if necessary.

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6. Any other matter which has been specifically mentioned in the byelaws.

b. Power and duties of the general body:

Besides exercising the powers and performing the duties as laid down in the co-operative
law, the general meeting of a service co-operative exercises and performs the following powers
and duties respectively, viz.;

 Subject to the specific provisions as contained in the byelaws elsewhere , to decide the
policy and limit up to which fund may be raised from outside (outside borrowing limit) for
the ensuring year.
 □Subject to the provisions as contained in sec. 44 of the M.C.S. Art and rules No. 42 and
43 of the M.C.S.

Rules, to fix-up credit limit of each members also the limit for grant of loans against the
security of goods:

 To decide the agricultural requisites, house – hold articles and articles for other use which
may be supplied and the commission and incidental charges to be fixed for the purpose.
 To grant permission for purchase of machinery, agricultural implements etc. For being
supplied to the members on hire system and to fix the rates for hire, incidental expenses
etc.
 To decide the rates commission and incidental expenses to be charged for marketing of a
grill.

The chairman of the society shall preside over the General Meeting. In his absence the vice
chairman shall occupy the chair. In the absence of both, the members present at the meeting shall
elect a president for that particular meeting and under his president ship the business of the meeting
shall be transacted.

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Funds of primary agriculture co-operative credit societies:

A primary agriculture co-operative credit societies can raise funds for carrying out its
activities by following means:

a) By way of share capital to be raised from members and indirect government, share capital
contribution through the apex co-operative bank and the district central co-operative bank.

b) Deposits from members

c) Loans.

d) Donations.

e) Entrance fee.

Interest Rates:

The interest on loans is charged at a rate which is more by three percent per annum than
the rate of interest charged by the D.C.C. Bank to the society. However, the borrowers repaying
their loans through the system of “Linking credit with marketing” are eligible for remission in
interest at the rate of 1 percent annum. In the other hand, the unauthorized defaulter are charged
penal interest at 2 p.c. per annum.

Where the loans are issued in the form of food-grains, the interest charged on such loans is
at the rate of 20 pc. Per annum. If such loans are defaulted the areas due are charged additional
interest at the rate of 25 p.c. of the original rate 20 p.c.

Repayment of loans:

While the recovery of drop loan is linked to the harvesting seasons, the medium term loan
is repayable within a period of five years by annual installment. If the borrower applies for
extension of period repayment of his loan on the ground that observance of the repay met schedule
is beyond by the borrower the Managing committee is convinced of the reasons advanced by the
borrower it grants extension for repayment of the loan up to one year. The applications for
extension beyond, however requires the approval of the D.C.C.B. in case the society is indebted
to it. Where the society is not indebted to the D.C.C.B. the recommendations of the general body
are required to be referred to the registering authority for his approval.

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 No extensions can be permitted without the written consent of the surety (if any there
is any), foregoing provisions not with - standing. If the overdoes are not cleared even after
persuasive actions and written notices given to the borrowers and their sureties (if there are any),
necessary legal measures as provided for under the M.C.S. act. are resorted to.

Loans and advances against the security of agricultural produce and other goods:

Loans and advances are granted for a maximum period of six months on the pledge of
agricultural produce or other goods, upon sixty percent of its current market price at the rate of
interest which is higher by 2 percent than the rate charged for such loans by the D.C.C.B. The
Replacement period can be extended by three months on suitable conditions. The pledged goods
are to be stored in the go down approved by the society. The goods are insured at borrowers cost.
The society also makes arrangements for its security against a theft. The cost incurred on this
arrangement is to be borne by the borrower. The society also takes precautions to save the goods
from any deterioration in its quality.

In case, the pledged goods are sold during the currency of the loan period, the sale proceeds
are liable to be appropriated towards society’s dues of any kind against the borrower. The borrower
has to execute an agreement with the society for this type of loan which may contain all the above
conditions as also the other, which the managing committee may like to include.

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DOCUMENTS REQUIRED FOR THE REGISTRATION OF COOPERATIVE SOCIETY:

1) The first Step is to get 10 Individuals together who are desirous of forming a Society.

2) A Provisional Committee should be formed and a chief Promoter should be elected from
amongst them.

3) A Name for the Society has to be selected.

4) An Application has to be made to the Registration Authority for reservation of Name and a letter
to that effect has to be obtained confirming the reservation of Name. The name once reserved is
valid for 3 Months.

5) The entrance fees and share capital has to be collected from the prospective members.

6) A Bank account has to be opened in the name of the proposed society as per the directions of
the registration Authority. The entrance fees and share money has to be deposited in the bank
account and the certificate from the bank has to be obtained in that respect.

7) The registration fees have to be deposited with the Reserve Bank of India and receipted
1challan thereof is to be obtained.

8) The application for registration of the society should be submitted to the Registrar of
Societies of the concerned municipal ward. The documents to be submitted for registration are as
follows:

a. Form No.

b. A in quadruplicate signed by 90% of the promoter members

c. List of promoter members

d. Bank Certificate

e. Detailed explanation of working of the society.

f. 4 copies of proposed bye-laws of the society.

g. Proof of payment of registration charges.

27
9) Other documents like affidavits, indemnity bonds, any documents specified by the Registrar
also have to be submitted.

10) The Registrar will enter the particulars in register of application maintained in Form “B” and
give serial number and issue receipt in acknowledgment of the same.

On registration, the Registrar will notify the registration of the Society in the Official Gazette and
issue Registration Certificate.

28
 CHAPTER III

COMPANY PROFILE

HISTORY OF THE SOCIETY:

PROFILE OF THE PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY

BANK : Primary Agricultural Cooperative Credit Society

PHONE NUMBER : 95421 - 2362918

NO. OF DIRECTORS : Seven

PRESIDENT : P. Rakiyappan

VICE PRESIDENT : S. Thangavel

SECRATORY : S. Kalamani

ASSISTANCE SECRATORY : K. Saravanan

CASHIER : J. Subramanian

CLERK : P. Rajashwari

JWELLARY ASSESOR : K. Siva

ADDRESS : Kittampalayam(po), Annur Road, Sulur Taluka,

Coimbatore.

29
Agricultural is an important resources in and around the kittampalayam village. So, a group of
people in the village join together and form a Kittampalayam Primary Agricultural Co-operative
Credit Society. Kittampalayam Primary Agricultural Co-operative Credit Society was
registered on 30th April 1949 under Co-operative Societies Act, 1912 and started to run on 30th
May 1949. This Co-operative Credit Society is also useful for other villages like

Vadugapalayam,

Kulathupalayam,

Mopiripalayam,

Ganapathipalayam,

Kittampalayam,

Vagarayampalayam and,

Valayapalayam.

30
MEETINGS OF THE SOCIETY:

A meeting is the gathering or coming together of at least two persons for

a lawful purpose. A meeting then consists of two or more persons. When members of a co-
operative society come together to discuss matters concerning their cooperative, the meeting is
lawful. The meeting of a co-operative society is said to be private because only members can attend
and participate in passing resolutions.
Meetings are important for the success of any organization.
There are two main classes of meetings in co-operative societies.
General Meetings
Committee Meetings

General Meetings
General meetings are meetings where all members of a co-operative society attend. The
supreme authority of a co-operative society is vested in the general meeting. This is where
members have the right to attend, participate and vote on all matters. The two types of general
meetings are:
Annual General Meetings
Special General Meetings

Annual General Meetings

The functions of the annual general meetings are: (section 27 of the Act)

Consider and confirm the minutes of the last annual general meeting. The annual general
meeting of a co-operative society is convened each year by the committee. it should be held within
four months after end of the financial year(Section 27 of the Act). This is when members exercise
their authority.

 Reading the notice convening the meeting

 Consider the minutes of the last annual general meeting and any other intervening
general meeting.
 Consider reports of the committee and any from the commissioner.

31
  Consider and adopt audited accounts.
 Determine the manner in which any available surplus is to be distributed or invested.
 Approve the estimates of income and expenditure of the ensuing year.
 Carry out elections to fill any vacant positions.
 Determine, where necessary, the maximum borrowing power of the society.
 Appoint auditor for the ensuing year.
 Transact any other general business of the society of which notice has been given to
 Members in the manner prescribed in the by-laws.
 The quorum of AGM of any Sacco Society shall be as laid in by-laws

The annual general meeting is the mirror of the society. If the co-operative is growing and
making progress, this will be seen in the annual general meeting. This is the occasion when
members exercise their ownership, authority and control of the co-operative.

Special General Meeting

A Special General Meeting of a co-operative society may be convened by:

 The committee for the purpose of discussing any matter which may arise in the
society before the annual general meeting is due.
 The committee on receipt of a written notice for such meeting signed by such number
of members of the co-operative society as may be prescribed in society’s by-laws and
stating the objects and reasons for calling the meeting. If the committee fails to convene a
meeting within 15 days of receiving the notice from the members, the members demanding
the meeting may themselves convene the meeting by giving notice to the other members
of the co-operative society stating the objects and reasons for the meeting and the fact that
the committee has failed to convene the meeting.
 The Commissioner for Co-operative development, who may direct the matters to
be discussed and who may preside at the meeting will not need a quorum

There is no fixed number of special general meetings to be held in a year. The number will
depend on the frequency at which urgent issues arise. As much as possible, all important matters
should be properly planned for and addressed during the annual general meeting.

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Committee Meetings
In every registered co-operative society, members elect the committee to run the affairs of
the society on their behalf. The committee should consist of five, seven or nine members.
In order to carry out duties entrusted by the general meetings, the committee members hold regular
meetings. The frequency of the committee meetings depends on the business of the society, but
they should normally be held monthly and at least quarterly. The discussions during the meetings
include:
 To consider and confirm the minutes of the previous meetings.
 To discuss and check the accounts of the society (liquidity position).
 To receive and discuss various reports of the society (includes activity and
subcommittee reports).
 To discuss the financial obligations of the society (creditors and other commitments).
 To discuss any other matters that affects the running of the business of the society.
 To discuss membership growth, withdrawal, staff matters
 To discuss product and services development
 To discuss loan delinquency management among other things
Sub-committees – When the committee finds that some matters need more detailed work and
reports, sub-committees are elected from among the elected members of the committee. Such
committees have only delegated powers and have to report back to the main committee on their
work.
The number of sub-committees and the frequency of sub-committee meetings is dictated by
the volume and nature of business.
All meetings should have meeting schedules prepared and approved by the full board. this will
assist in proper planning and budget allocation. Sub-committees should normally meet earlier and
then present their reports to the full committee meeting for adoption and discussion.
Committees – these may be formed to address specific tasks, and they will cease to exist when
the work assigned to them is accomplished.

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Joint Meetings
The management committee and the supervisory committee are expected to hold joint
meetings quarterly. This is after the supervisory committee has compiled its quarterly report.
The Supervisory Committee should present its report to the meeting for discussion and response
from the society committee on the various issues raised. After presenting the report, the
management committee should be left to make decisions on how to address the issues raised and
not yet addressed.
The manager of the society should attend all committee meetings to offer advice on
technical and professional matters.
Managing Committee:

Formation of a committee:

The managing committee in the co-operative societies are formed in order to run daily
working smooth. The managing committees generally contain 7 to 11 members depending upon
the total number of members in a society .The managing committee is elected through the members
of the society for a period of 3 years. Every member of a society who is not a defaulter is eligible
to be a member of the society. Generally election for this body is taken at time of annual general
meeting every five years. After election of members for the managing committee, a chairman is
elected from amongst the members of managing committee, along with vice chairmen. The
managing committee looks after the day to day problems of administration. But the decisions of
the managing committee have to be made according to resolution passed by general body at the
time of annual general meeting.

Depending upon the necessity of the society, various committees, such as loan committee,
price control committee, business and working of the co-operative society. It is not possible for all
the members to look into the day to day affairs of the society. Therefore, the general body of a
society should constitute a committee in accordance with the byelaws and entrust the management
of the affairs of the society to such committee. The committee is called ‘the managing committee’
or ‘board of directors.’

According to the sub-code in co-operative law, all the members are elected by secret ballot voting
for the management of co-operative society. Generally, nine directors are elected.

34
Classification of directors:

S.NO. KIND OF MEMBERS NUMBER OF

MEMBERS
1 Debtors 6

2 Non Debtors 1

3 Members from the weaker section 1

4 Members belonging in schedule caster 1

Total 9

The managing committee has a full right to conduct the work of the society as it is formed
by the sub-code and resolution taken general meeting. The membership of the managing
committee gets cancelled if he remains absent successively for three meetings otherwise he must
furnish convincing explanation for his absence.

Rights, duties and responsibilities of the managing committee:

The managing committee of an ideal multipurpose cooperative society should perform the
duties and responsibilities prescribed by act, rules and bye- laws of the society.

1. To decide over the application regarding the proposal of the membership.

2. To recover the loan and amounts of the shares.

3. To sanction the expenditure.

4. To examine the transaction of the secretary and the balance amounts.

5. To decide the conditions of the acceptance of deposits and to sanction loan.

6. To decide the applications of seeking the loan and to examine they create of the member.

35
7. To prepare the annual report, profit and loss accounts and the balance sheet report.

8. To inspect the loan expenditure.

9. To consult the audit memo to correct it and to send it to the hon. auditor within a month. In the
next general meeting the audit-memo and the short coming rectified report is presented.

10. To check the accuracy of the register mentioning goods record and the balance goods.

11. To acquire the land or to hire the land, go down for the convenience of the society.

12. To manger the purchasing centers of seeds, fertilizers, pesticides, corn and other instruments
which are necessary for agriculture in the working range of the society. To fulfill the needs of the
members in the area.

13. To check instruments of measurements used by the society.

In these selected multipurpose co-operative societies the rights, duties and responsibilities of the
managing committee are followed but this is not done very strictly.

Some other powers and duties of the managing committee are

1. Assessment of member’s requirement regarding agricultural inputs like seeds. Fertilizers, others
agricultural requisites, folder, food grains, industrial and house- hold articles. The Managing
Committee may also arrange for stronger and distribution of the aforesaid articles on behalf of
members on such demand from them, at their cost and risk.

2. Undertaking of activities for the amelioration of the economic conditions of the a manner,
economically weak persons and the landless laborers in a manner described under the heading - “
objects” of the service co-operatives and provision of funds for such activities.

3. Inspection of the goods. Machinery and implements in stock.

4. Obtaining on rent or otherwise suitable structures for office use and storage goods.

5. Arrangement for fire insurance of the go downs and stocks stored there in with the insurance
company approved by the register.

36
6. Acceptance of goods for the purpose of marketing arrangements for its gradation if necessary
and possible and decisions as regards the goods on the security of which loans may be issued.

7. Preparation of a list of the trustworthy commission agents and trades. Through and to whom,
respectively, the goods are to be sold on credit with attendant risk and fixation of their credit limit.

8. Obtaining of appropriate security under Rule 107 ( b) of the M.C.S. Rules from the secretary
and other staff of the society handling cash, stocks, important and securities belonging to the
society.

9. Other duties and functions incidental to the powers and duties specifically started as above.

Office staff:

The office of the co-operative society include the

 Chairman,
 Vice-chairman,
 Secretary,
 Clerk and,
 Peon etc.

The managing committee elects the chairman and vice-chairman from amongst themselves
and the secretary is also elected similarly or is to be appointed has a full - time paid officer. The
chairman, the vice chairman and the secretary should take active part in the management of the
co-operative society. They are the person mainly accountable to the members of the society .
Moreover, success or failure of the society depends upon the competence of the staff. They must
have full knowledge of the managerial personnel of the society, features and principles of co-
operation, leadership etc.

The duty of the chairman is to do everything which is necessary for the efficient
management and proper development of a co-operative society.

The secretary should be responsible for the executive administration of the society he has
to look after both the secretarial and general managerial functions.

37
Authority and responsibility of secretary:

A secretary is known as sole authority in the society. The secretary is responsible for the
routine work for the multi- purpose co-operative society. In order to serve efficiently and fulfill
the responsibilities smoothly the secretaries are given the following rights and responsibilities:

1. To sell the general meeting of the society and the committee. He has to remain present for all
the meetings.

2. He has to not down the work of the meeting in the proceeding book.

3. He has to keep the correspondence and provide the necessary information to the members of the
society.

4. He has to maintain all the records, accounts and registers as it is the rule in the co-operative
society.

5. To guide the servants who are paid by the society to check their work and control over them.

6. He has to accept the money and spend for reasonable purposes. This right is given specially by
the managing body to him.

7. To sign on the bills given no behalf of society.

8. To keep the record of the members of the society who have transacted from time to time. To
prepare the audit memo for the consideration of the managing committee.

38
SHARE CAPITAL OF THE SOCIETY:

The shares of cooperative society are not issued to general public by advertisement
and can be issued any time. Shares can be withdrawn member /society as prescribed by rules in
their byelaws. Shares are issued to general public or by invitation. In a company shares cannot
be withdrawn by a shareholder.

The total share capital of the primary agricultural co-operative credit society is 9.54 lakhs.

The total deposit of the primary agricultural co-operative credit society is 102.70 lakhs.

The total loans of the primary agricultural co-operative credit society is 313.64 lakhs.

39
 CHAPTER III

DEPARTMENTS AND ITS FUNCTIONS

CREDIT LOAN

Credit unions have the purpose of promoting thrift, providing credit at reasonable rates,
and providing other financial services to its members. Its members are usually required to share
a common bond, such as locality, employer, religion or profession, and credit unions are usually
funded entirely by member deposits, and avoid outside borrowing. They are typically (though not
exclusively) the smaller form of cooperative banking institution. In some countries they are
restricted to providing only unsecured personal loans, whereas in others, they can provide business
loans to farmers, and mortgages.

MEDIUM-TERM LOANS:

“Medium-term loans” Medium-term loans are advanced for moderately longer lived assets such
as

 Machinery,
 Diesel Engine,
 Wells,
 Irrigation Structure,
 Threshers,
 Shelters,
 Crushers,
 Draught and
 Milch animals,
 Dairy/Poultry Sheds, etc.,

Where he returns accumulate from spread in farm assets in increase over more than one
production period. The normal repayment period for medium-term loans is from fifteen months to
five years.

40
CROP LOAN:

Crop Loans8 Crop Loans are also called short term loans for “Seasonal Agricultural
Operations.” The Seasonal Agricultural Operations mean such actions as are start in the process
of raising a variety of crops and are seasonally chronic in nature. The activities comprise, among
others,

 Plugging and
 Arrange land for sowing,
 Wedding, and

Transplantation where essential, obtain and apply inputs such as

Seeds,

Fertilizers,

Insecticides etc. and

Labour for all activity in the field for increase& harvesting the crops.

41
 The credit is necessary to meet the current expenses for raising the crops on land till the
crops are harvested is construe as production or short term credit for seasonal agricultural
operations. Rate of interest and collateral requirement on crop loans In terms of the Govt. of India
instructions for 2013-14, all the crop loans up to Rs. 3 lakh are being disbursed at the interest
rate of 7% p.a. Govt. of India also provides interest subvention of 3% p.a. to prompt repaying
farmers, thus making available the crop loans to them at 4% p.a. To bring more and more farmers
within the institutional credit fold, the Government has extended this scheme to crop loans
borrowed by farmers from Private Sector scheduled commercial banks in respect of loans given
within the service area of the branch concerned. Crop loans beyond Rs. 3 Lakh are being
disbursed by the banks at the rate of interest as per RBI and other conditions as approved by
their Board of Directors. In terms of RBI instructions, no separate security is required for crop
loans up to Rs. 1 Lakh. Beyond Rs. 1 lakh the security is decided by the individual bank in terms
of RBI guidelines. 8Agricultural finance sub-committee report.

42
PIGGERY LOAN:

The Pig Farming Co-operative bank, commercial bank, NABARD etc, also provide Pig
Farming loan to farmers. For piggery development schemes with very huge outlays, complete
project information will have to be prepared. In Pig farming project farmer should include
information on

 Land,
 Livestock markets,
 Availability of water,
 Feeds,
 Veterinary aid,
 Breeding facilities,
 Marketing aspects,
 Training facilities,
 Experience of the farmer and

The type of assistance available from State Government Regional Pig breeding centers.
The substance such as land development, building of sheds and other structures, purchase of the
breeding, equipment, feed cost up to the position of income generation are generally measured
under bank loan. Other items of investment will be measured on required basis after providing the
adequate information. The price of land is not considered for lend. However, if land is purchased
for setting up the piggery farm completely, it can be measured as beneficiaries’ margin money.
The loan provider bank also needs information regarding number and types of animals to be buy
their breeds, production and cost. Based on this, the total cost of the project, margin money to be
provided by the beneficiary, necessity of bank loan, projected annual expenses, returns revenue
and loss statement, settlement period, etc. included in the project cost.

43
44
DAIRY FARMING LOAN:

The Dairy Farming11 Dairy farming is a big unorganized sector in India and a major source
for income in rural areas. In an attempt to get in structure into the dairy farming and gives support
for setting up dairy farms, the Department of Animal Husbandry, Dairying and Fisheries launched
the “Venture Capital Scheme for Dairy. The scheme offers interest free loans for setting up dairy
units in India. Dairy farming is great business in India and according to “Assocham report”, milk
production in India is likely to reach 190 million tons by 2015 with an annual turnover of over
Rs.5 Lakh Crores. In an effort to further reinforce dairy farming in India, the NABARD funding
for dairy farming has been launched. The objectives of the scheme include:

 To encourage setting up of modern dairy farms for production of clean milk

 To promote heifer calf education thereby preserve good breeding stock

 To bring structural transform in the unorganized sector.

 To bring about development of quality and traditional technology to handle milk on a commercial
scale

 To produce self-employment and offer infrastructure mainly for unorganized sector.

The following types of persons and association of persons are eligible for receiving the NABARD
Dairy Farming Subsidy:

 Farmers

 Individual Entrepreneurs

 NGOs

 Companies

 Groups of un-organized and organized sector etc.

 Groups of organized sector include Self Help Groups, Dairy Cooperative Societies, Milk Unions,
Milk Federations, etc.

45
 Growth of milk production is shaped by socio-economic, technological and institutional
factors, which act both on the demand and the supply sides. The demand-related economic factors
which influence milk production include per capita income, population growth, urbanization, the
price of milk and its substitutes, the income and expenditure elasticity and consumption pattern.

46
AGRICULTURE LOANS:

Agriculture loans are commonly supplied by the Farm Service Agency (FSA) of the
United States Department of Agriculture (USDA). You may be able to find state or local loans as
well, but the federal programs are often the most well-funded and easy to secure. Consider these
programs if you are looking for an agriculture loan.

Farm Storage Facilities Loans

Farm Storage Facility Loans (FSFL) can help you afford the cost to build an on-farm
storage facility for your crop and products. To qualify, the commodities you are storing must fall
into the categories of: corn, oats, wheat, barley, rice, soybeans, peanuts, oilseeds, lentils, peas, hay,
biomass, fruits, vegetables or grain. If you qualify, you can obtain up to $500,000 in direct
financing from the federal government.

Farm Operating Loans

Operating loans assist farmers in day-to-day needs or expansion requirements. They come
in both direct and indirect options. An indirect loan is provided by a private lender but may be
guaranteed by the FSA. This makes the loan more affordable. A guaranteed, indirect loan may be
issued in an amount as large as $1,112,000, with a guarantee up to 95 percent. Direct loans may
also be issued to credit worthy individuals who do not qualify for private loans due to other
circumstances. These loans may be as large as $300,000.

Farm Ownership Loans

Like operating loans, ownership loans provided by the FSA come in both guaranteed and
direct loan form. The limits are she same as those limits provided by the operating loan program.
This money must go directly toward the purchase of land, livestock, crops or machinery needed to
assist in acquiring ownership of a farm meant for commercial production. In addition to credit
requirements, the farm owner must have experience in the farming industry to promise successful
operation of the new business.

47
 JEWEL LOAN:

Corporation Bank offers three different variants of gold loan for the benefit of borrowers.

 Agriculture Jewel Loan (ACADL / ACAOD)

Under this type, borrowers can pledge their gold jewellery to get a suitable loan amount which
they can use towards agricultural purposes. This loan amount can be used as short term crop
loan and can be used to purchase any farm asset.

 Pledge of Gold Jewellery

Under this scheme, customers can pledge their gold jewellery as security and use the loan
amount to meet personal and business fund requirements.

 Jewel Loans other than Agriculture (CADL / CAOD)

Borrowers can place their gold jewellery as security to avail a loan which they can use for a
range of purposes like housing, education and personal expenses.

Features and Benefits of Corp Gold Loan Scheme

Given below are some of the advantages of a Corporation Bank Corp Gold Loan.

 Corporation Bank Corp Gold Loan is a versatile credit product. Customers can avail this loan to
meet the costs of education. Housing, business requirements or personal expenses.
 The rate of interest for Corporation Bank Corp Gold Loan is very nominal and affordable.
 Corporation Bank offers flexible repayment tenures for Corp Gold Loan Scheme.
 The documentation required is very simple and the entire sanction process is transparent and
hassle - free.

48
Corp Gold Loan Scheme Interest Rates:
The interest rates for Corporation Bank Corp Gold Loan schemes are outlined below.

GOLD LOAN SCHEME RATE OF INTEREST

Tenure up to 12 months - 10. 60 per cent per annum

Agricultural jewel loan For tenure above 12 months and up to 24 months - 11. 10 per
cent per annum

Jewel Loan towards short term crop production - 7 per cent

per annum

Loan by pledging gold Linked to base rate, 10. 65 per cent per annum at present.
jewellery

Jewel Loans for purposes other Loan amount up to Rs. 2 lakhs - 11. 60 per cent per annum
than agricultural requirements
Loan amount exceeding Rs. 2 lakhs - 12. 60 per cent per
annum

Eligibility for Corp Gold Loan:

The eligibility conditions to apply for a Corporation Bank Corp Gold Loan is described below.

 Individuals involved in activities like small business, retail trade, small manufacturing units can
apply for Corporation Bank Corp Gold Loan. Also, agriculturists, self-employed individuals and
professionals can apply for a Corporation Bank Corp Gold Loan.
 Salaried individuals and pensioners can apply for a Corporation Bank Corp Gold Loan.

Documentation Required for Corp Gold Loan Scheme

Given below are the documents that a customer must submit at the time of application.

 Completely filled application form

 Recent passport size photographs
 Address Proof documents (any one of the following)

49
  Passport
 Driving License
 Aadhar Card
 Voter ID Card
 Ration Card
 Identity Proof documents (any one of the following)
 PAN Card
 Passport
 Aadhar Card
 Voter ID
 Driving License

FUNCTIONS.

1. It promotes economic interest of members in accordance with the co-operative principle.

2. It provides short term and medium term loans.

3. It promotes savings habits among members.

4. It supplies agricultural inputs like fertilizers, seeds, insecticides, and implements.

5. It provides marketing facilities for the sale of agricultural products and

6. It supplies domestic products requirements such as sugar, kerosene etc.

d) Management, Membership and Share Capital of Primary Agricultural Cooperative Society The
general body elects a managing committee which consists of 5 to 9 members and
elects a president, secretary, and treasurer to look after the day today functioning of the
society. All the office bearers render honorary service. The RBI has given a directive to
appoint a full time paid secretary to maintain the accounts for each society. All agriculturist
, agricultural laborers, artisans and small traders in the village can become member of
the society. Primary Agricultural Cooperative Society issue ordinary shares of small value
depending upon the particular society .i.e. Rs.10 and Rs .50 each to their members. The
ownership of shares decides the right and obligations of the holder to the society. Share

50
capital forms an important form or part of the working capital. Members borrowing
capacities were determined by the number of shares held by them. Initially, societies were
form with unlimited liability. The All India Rural Credit Review Committee pointed out
that unlimited liability operates as a restraints on the willingness of the society to
liberalize its loan policies, to admit new members and to extend its area of operation.
Besides, it hinders the society to receive contribution from the State government, whose
liability inevitably has to be limited. In view of these reasons, the societies were formed
with limited liability and existing societies were converted into limited liability societies.
To make all Primary Agricultural Society viable and ensure adequate and timely flow
of co-operative credit to the rural areas the RBI , in collaboration with State Government’s
had been taking a series of steps to strengthen the Primary Agricultural Cooperative
Credit Society and to correct regional imbalances in cooperative development. These
efforts are being intensified by providing larger funds to weak societies to write off
their losses, bad debts and overdue.

Functions of primary agriculture co-operative credit societies:

The primary agricultural co-operative credit societies have to perform the following functions:

1. To arrange the supply of farm requirements, such as improved seeds, fertilizers and insecticides.
Societies should also stock for sale small implements such as sickles, grass-reapers, pickaxes,
ploughs, chaff-cutters and other small improved implements which are generally required by every
farmer. For procuring these implements societies the may establish a link with some industrial
society.

2. To provide short-term credit required for the purchase of farm requirements and also medium-
term loans for agricultural purpose such as reclamation of land, sinking of ordinary wells, purchase
of bullocks and carts, etc.

3. To maintain the supply on hire light agricultural machinery. The range of this machinery will
depend upon local requirements subject to which the society may possess such things as plant
protection equipment like sprayers and dusters, incubators threshers, winnowers etc.

51
4. To provide household requirements. It is not intend that the societies should open full-fledged
general stores. Only essential commodities in short supply such as sugar, kerosene oil, food grains,
etc, may be stocked for distribution.

5. To raise funds for meeting the above mentioned requirements mainly by catering to the saving
of members.

The functions of including the habits of thrift and saving among members are very
important in order to make the people as much self-sufficient as possible. The functions entrusted
to primary agricultural co-operative credit societies were, to a certain extent, being performed by
the earlier credit for short and medium terms; they were at places, supplying credit for short and
medium terms; they were at places, supplying farm and household requirements also and the
encouragement of deposits from members had been one of their important objectives.

The difference, however, lies mainly in the emphasis. The credit societies had a much
simple task to perform. They mostly confined their activity to the grant of loans. Other functions,
if at all performed, received a secondary attention and seldom were the two-credit and production
programmers of the farmers-linked together. In the service co-operatives, the center of gravity has
shifted from the counter in the society’s office to the fields of the cultivators.

Increase in production rather than the mere removal of indebtedness is the core of the
problems to be solved by them. The objectives of these new types of societies are thus
circumscribed by a more dynamic philosophy, which revolves round the field of the cultivator and
the overall problem of low yields and farming inadequacies. In pursuance of the above objectives
the societies should assess the farming needs and take measures to fulfill them. So far as possible
the societies should even create demands for better seed, more fertilizers, better implements, etc.,
by educating the people about their advantages. Further, it is the duty of the society to propagate
the best method of using the fertilizers and provide farm of audience.

52
FIXED DEPOSIT

Fixed deposits are a high-interest -yielding Term deposit and offered by banks in India.
The most popular form of Term deposits are Fixed Deposits, while other forms of term Deposits
are Recurring Deposit and Flexi Fixed Deposits (the latter is actually a combination of Demand
deposit and Fixed deposit).

To compensate for the low liquidity, FDs offer higher rates of interest than saving
accounts. The longest permissible term for FDs is 10 years. Generally, the longer the term of
deposit, higher is the rate of interest but a bank may offer lower rate of interest for a longer
period if it expects interest rates, at which the Central Bank of a nation lends to banks ("repo
rates"), will dip in the future.

Usually in India the interest on FDs is paid every three months from the date of the
deposit. (e.g. if FD a/c was opened on 15th Feb., first interest installment would be paid on 15
May). The interest is credited to the customers' Savings bank account or sent to them by cheque.
This is a Simple FD. The customer may choose to have the interest reinvested in the FD account.
In this case, the deposit is called the Cumulative FD or compound interest FD. For such deposits,
the interest is paid with the invested amount on maturity of the deposit at the end of the term.

SAVING DEPOSITS

A savings account is a deposit account held at a retail bank that pays interest but cannot be
used directly as money in the narrow sense of a medium of exchange(for example, by writing
a cheque). These accounts let customers set aside a portion of their liquid assets while earning a
monetary return.

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RATE OF INTEREST:

Loan Rate of Interest

Jewel Loan 11%

Fixed Deposit 6.85%

Senior Citizen 7.10%

Saving Account 4%

Medium Term Loan 12%

Self Help Groups 12%

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 CHAPTER IV

SUMMARY OF WORK DONE

DATE DETAILS OF WORK LEARNED

13.05.2019 Learned about Types of loans in cooperative society

14.05.2019 Learned about Agricultural jewel loan

15.05.2019 Learned about Gold loan scheme

16.05.2019 Learned about Document for getting loan

17.05.2019 Learned about Agricultural loan

18.05.2019 Learned about Types of agricultural loans

20.05.2019 Learned about Books to be maintained by cooperative society

21.05.2019 Learned about Procedure for becoming member of the society

22.05.2019 Learned Filling details of the membership in the membership register

23.05.2019 Learned about Posting of ledger of the society

24.05.2019 Learned about How to prepare the receipt for the payments of interest

25.05.2019 Learned about Calculation of interest of loans

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27.05.2019 Learned about Fill the form for the deposit of money in the society

28.05.2019 Learned about Rate of interest

29.05.2019 Learned about Medium of loan(MT)

30.05.2019 Learned about Self Help Group(SHG)

31.05.2019 Learned about Saving Bank Account(SB Account)

01.06.2019 Learned about Fixed Deposit Account(FD Account)

04.06.2019 Learned about Common service provided at society

06.06.2019 Learned about Women self-help group

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 CHAPTER V

CONCLUSION

With Cooperation of all the members in the Cooperative society, I have been able to learn
and experience many new things related to the Cooperative society sector and working of the
Cooperative society.

From my internship I learnt about the various types of deposits and services which are
offered by the primary agricultural cooperative credit society, and I came to know about the basic
functioning of the society and problem faced by the staff of the society.

I had experienced the cooperative society service and got the practical knowledge about
the cooperative society and I learnt about the interest calculations of various deposits such as
saving bank account, fixed deposits and loans

From the internship I learnt that cooperative society employees are customer friendly and
I understood the association between the employee of the cooperative society and customer and
how to handle customer’s problem and how to solve the problem of the customer.

This internship training is very useful for me to learn day to day cooperative society
transactions and activities in live environment.

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