Co-operation · Ch 8 — Maharashtra State Co-operative Bank
The Three-Tier Co-operative Credit Structure
The Three-Tier Co-operative Credit Structure
Before we can understand the Maharashtra State Co-operative Bank, we must first see where it sits in the larger scheme of rural credit. A single village society is small; it can gather only the modest savings of a few hundred members, and in a bad season — when the crop fails and every member needs money at once — it may not have enough to meet all its demands. To make small societies strong, they are joined together in a pyramid, so that money can flow from where it is plentiful to where it is scarce. This pyramid is the three-tier co-operative credit structure for short-term and medium-term agricultural credit.
The three tiers are:
- Base (village level) — Primary Agricultural Credit Societies (PACS). At the bottom stand thousands of small village societies. Their members are the farmers of the village. They collect the savings of the village and lend directly to the cultivator for seeds, fertiliser, and other short-term needs. They are the point of contact with the ordinary farmer.
- Middle (district level) — District Central Co-operative Banks (DCCBs). Each district has a central co-operative bank whose members are the primary societies of that district (together with some individuals). The DCCB acts as a balancing centre: it takes the surplus funds of societies that have more than they need and lends to societies that are short, and it links the village societies to the apex bank above.
- Apex (state level) — the State Co-operative Bank. At the very top of the pyramid, one bank for the whole state serves as the apex institution of the entire co-operative banking structure. In Maharashtra this apex bank is the Maharashtra State Co-operative Bank (MSC Bank). Its members are chiefly the district central co-operative banks and other large co-operative institutions of the state.
The Pyramid in One Picture
Farmer → Primary Agricultural Credit Society (village) → District Central Co-operative Bank (district) → State Co-operative Bank (state apex). Savings and loans move up and down this three-step ladder, and the Maharashtra State Co-operative Bank stands at the very top.
The importance of the apex bank flows from its position. Because it sits at the top and deals with the Reserve Bank of India and NABARD on the one hand and with all the district central banks on the other, it is the channel through which national credit reaches the smallest village society, and the leader that guides and controls the whole co-operative banking movement of the state.
The pyramid of rural co-operative credit made of primary agricultural credit societies at the village base, district central co-operative banks in the middle, and the state co-operative bank at the apex — through which short-term and medium-term credit flows up and down.
The topmost institution of the co-operative banking structure in a state; in Maharashtra it is the Maharashtra State Co-operative Bank, which leads, finances and guides the district central co-operative banks below it.
The role of the district central co-operative bank, which pools the surplus funds of some societies and supplies the deficit of others, balancing the flow of funds within its district.