Co-operation · Ch 7 — District Central Co-operative Bank
The Three-Tier Co-operative Credit Structure — Where the DCCB Stands
The Three-Tier Co-operative Credit Structure — Where the DCCB Stands
A single village co-operative society is a small thing. It has a few hundred members, a modest pool of share capital and deposits, and it can lend only within its own village. When the sowing season comes and every farmer in the village wants a loan at the same time, that little society soon runs out of money. And when, after the harvest, the society has surplus funds lying idle, it has no safe place to keep them earning a return. Left on its own, the primary society is either short of money or has nowhere to put its spare money to work. The answer that the co-operative movement found was to build the societies into a pyramid, so that a strong body above could feed money down to the small society below and take its surplus up when it had extra.
In the field of agricultural (rural) credit, this pyramid has three tiers (three storeys), and the District Central Co-operative Bank stands in the middle:
| Tier | Institution | Area | Its members |
|---|---|---|---|
| Top (apex) | State Co-operative Bank (SCB) | The whole state | The district central co-operative banks |
| Middle | District Central Co-operative Bank (DCCB) | One district | The primary societies of the district |
| Base | Primary Agricultural Credit Societies (PACS) and other primary societies | One village or a small group of villages | The individual farmers and villagers |
At the base are the thousands of village-level primary agricultural credit societies that deal directly with the individual farmer. At the top is the single State Co-operative Bank, the apex body for the whole state, which is the link between the co-operative movement and the Reserve Bank of India and NABARD. Between the two stands the District Central Co-operative Bank — one for each district — which links all the primary societies of its district with the State Co-operative Bank above.
The Core Idea in One Line
The District Central Co-operative Bank is the middle storey of the three-tier rural credit structure — it is the district's own co-operative bank, whose members are the primary societies of the district, and it passes money down from the State Co-operative Bank to the village societies and their surplus back up.
Because it sits in the middle, the DCCB is often called the balancing centre of the district's co-operative movement: it balances the surplus of societies that have spare funds against the needs of societies that are short of funds, and it balances the whole district's requirement of money against the resources of the apex bank. Understanding this middle position is the key to everything else in this chapter — the DCCB's meaning, features, functions and sources of funds all flow from the simple fact that it sits between the base and the apex.
The pyramid arrangement of rural co-operative credit in three storeys — primary agricultural credit societies at the base (village level), district central co-operative banks in the middle (district level) and the state co-operative bank at the apex (state level) — through which credit flows down and surplus flows up.
A village-level co-operative society formed by farmers to provide short-term and medium-term credit to its members; it forms the base of the three-tier structure and is itself a member of the District Central Co-operative Bank.
A common description of the DCCB — it balances the surplus funds of some primary societies against the credit needs of others within the district, acting as the pivot between the village societies and the apex state bank.