In terms of short-term credit delivery to the agriculture sector

Consider the following statements:

  1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
  2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1and 2
  4. Neither 1 nor 2

Answer: B

Explanation

In institutional sources, for the agricultural credit, it includes commercial banks, cooperative credit institutions, regional rural banks. Under institutional sources, commercial bank entered this field very recently. The cooperative institutions play an important role in providing credit to agricultural sector.

The district central co-operative bank occupies a key position in the co-operative credit structure. But the District Central Cooperative Banks (DCCBs) does not provide quantitatively more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks. So, statement 1 is not correct.

Although statement 1 is not correct, the above pie-chart demonstrates share of total agricultural credit and not short-term credit. In short-term credit, share of SCBs is around 60% and that of Cooperative Banks is around 30%.

The most significant functions of the district central co-operative bank is to provide financial support to the primary co-operative societies that are affiliated to it in the district . These societies belong to highly diverse categories like the primary agricultural credit societies, the producers’ cooperative societies, handloom and handicrafts co-operative societies, salary earners co-operative societies consumers co-operative societies, primary urban co-operative banks etc. However, one of the most significant roles of the district central co-operatives bank is to support and develop the primary agricultural credit societies. So, statement 2 is correct.

  • Exam Year: 2020