Q.Explain the three-tier structure of cooperative banking in rural India.

Rural cooperative credit is deliberately organised in three linked tiers so that credit reaches the individual farmer while still being backed by larger, better-resourced institutions above it.

India's rural cooperative credit structure has three tiers:

1. Primary Agricultural Credit Societies (PACS) — the base-level, village-level society that lends directly to farmer-members for short and medium-term crop needs.
2. District Central Cooperative Banks (DCCBs) — one per district, refinancing and supervising all the PACS within that district, providing them funds and technical guidance they cannot arrange on their own.
3. State Cooperative Banks (SCBs), also called Apex Banks — the top-tier cooperative bank of each state, financing and coordinating the DCCBs and itself linked to NABARD for refinancing from the national level.

This layered structure lets credit flow from the national refinancing agency (NABARD) down through the state and district tiers to the individual farmer at the village level, while allowing each tier to focus on the scale of operation it is best suited for.

Reversing the order of the tiers, or omitting NABARD's role in refinancing the top (State Cooperative Bank) tier.