IDEAS home Printed from
   My bibliography  Save this paper

Mapping Strategies for Efficient Rural Credit Delivery System through Cooperatives in Maharashtra


  • Deepak Shah

    (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India)


This paper attempts to assess the performance of various credit cooperatives operating in different districts and regions of Maharashtra with the extension to evaluating the viability of these institutions in forward and backward regions of the state. In this study, the credit cooperatives operating in Maharashtra have not only shown slower growth in their institutional finance coupled with much slower growth in their membership but also faster growth in outstanding loans as against their loan advances during the reform period. The reason for this dismal scenario is traced in adverse environment created by the financial sector reforms, which have reduced the entire rural credit delivery through cooperatives to a moribund state. Since the financial sector reforms accorded greater flexibility to cooperatives to invest in non- target avenues like shares and debentures of corporates, units of mutual funds, bonds of public sector undertakings, etc., this has adversely affected credit flow from these major institutions operating in rural Maharashtra as most of their loans meant for farm finance are diverted to investments. The credit cooperatives in Maharashtra are also noticed to be beset with several other deficiencies, which mainly relate to their low operational efficiency, high incidence of overdue, low level of recovery, distributional aspects of their loan advances, coverage of SC/ST members, etc. The findings of this investigation clearly show lackadaisical approach of PACS towards SC/ST members, particularly in terms of their coverage, pattern of loan advances to them and recovery pattern. The deficiencies do not confine to this but extend to other concurrent issues. Wide variation in total and crop loan advances across various districts and regions is other important issue that need to be taken cognizance of in ensuring effective rural credit delivery through PACS operating in Maharashtra. Although decline in their loan advances with rise in GCA is another issue, the most important one among all is the mounting overdue and NPAs of cooperatives operating in both forward and backward regions of Maharashtra. Due to substantially high NPAs, while BDCCB operating in backward region has shown gross inefficiency in its functioning during the reform period, the SDCCB operating in forward region is marked with deterioration in its financial health during this period. In order to rejuvenate rural credit delivery system through cooperatives, the major problems facing the system, viz., high transaction cost, poor repayment performance, mounting NPAs, distributional aspect of credit, coverage of SC/ST members, etc., need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, particularly large farmers.

Suggested Citation

  • Deepak Shah, 2005. "Mapping Strategies for Efficient Rural Credit Delivery System through Cooperatives in Maharashtra," Finance 0512002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpfi:0512002
    Note: Type of Document - doc; pages: 13

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Strategies For Efficient Rural Credit Delivery;

    JEL classification:

    • G - Financial Economics

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpfi:0512002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.