National Study on Financial Cooperatives in the Context of ...

[Pages:111]National Study on Financial Cooperatives in the Context of Financial Inclusion in India

Submitted to United Nations Development Programme

Delhi BY

Bangalore, August 2015

Contents

Study on Financial Cooperatives in the Context of Financial Inclusion in India

Abbreviations

5

Acknowledgements

10

The Executive Summary

15

1 Introduction

29

1.1 Background and Rationale of the Study

30

1.2 Conceptual Framework of the Study

31

1.3 Methodology

32

2 The Enabling Environment for Cooperatives in India

36

2.1 History and Experiences of Cooperatives in

India and Abroad

36

2.2 Cooperative Regulations in India

40

2.3 Structure of the Cooperative System

45

2.4 Cooperative Training Institutions

54

2.5 Providing a Positive Enabling Environment to

Indian Cooperatives

58

3 The Ground Reality of Cooperatives in India

59

3.1 Membership of Cooperatives

59

3.2 Member Involvement and Governance

60

3.3 Products and Services of Cooperatives

64

3.4 Information Gaps

70

3.5 Financial Ability and Sustainability

70

3.6 Interest Free Microfinance

72

3.7 Knowledge and Capacity Building

75

3.8 Assessing Ground Reality

78

4 Role of Cooperatives in Financial Inclusion

79

4.1 The Rationale

79

4.2 The Definition of Financial Inclusion

80

4.3 The Extent of Financial Inclusion in India

81

4.4 The Initiatives and Challenges of Financial Inclusion in India 83

4.5 Participation of Cooperatives in Financial Inclusion

87

5 Need for a Paradigm Change

88

5.1 The Gender and Social Inclusion Framework

88

5.2 Assets and Services

89

5.3 Norms and Institutions

90

5.4 Enhancing Voice, Influence and Agency of Cooperatives

91

5.5 A Change of Paradigm

93

6 Recommendations

95

6.1 Changes in Norms and Institutions

95

6.2 Building Strong Cooperatives

96

6.3 Professional Management of Cooperatives

98

7 References and Documents Studied

102

Contents

List of Annexures

List of people covered Case studies of Cooperatives

List of Figures

Figure 1: Dependence Trap

38

Figure 2: Impact of 97th Amendment

41

Figure 3: Rural Cooperative Institutional Arrangement

45

Figure 4: The Karnataka Souharda Federal Cooperative Ltd.,

Karnataka

46

Figure 5: Prathamika Krishi Pattina Sahakara Sanghas Niyamita,

Nagora and Gadgi

51

Figure 6: DCCB Bidar

53

Figure 7: Assam Apex Bank

53

Figure 8: Duar Bagori Multipurpose Credit Society

60

Figure 9: Composition of the Board of DCCB, Pune

61

Figure 10: Uttarakhand Microfinance and

Livelihood Promotion Cooperative Institution

64

Figure 11: Ajabpur Primary Agricultural Society, Uttarakhand

71

Figure 12: Bhagini Nivedita Cooperative Bank, Maharashtra

72

Figure 13: Technical Support to APCOB and TSCAB

77

Figure 14: Access to Financial Services

79

Figure 15: Cooperative City Bank

85

Figure 16: Financial Inclusion through

Community Based Microfinance Institutions

87

Figure 17: Mann Deshi Mahila Sahakari Bank, Satara

92

Figure 18: Financial and Social Impacts of Collectivisation

93

Figure 19: Konoklata Mahila Urban Cooperative Bank

93

List of Tables:

Table 1: Selection of States

32

Table 2: Sample Size (number of states and Cooperative cases)

34

Table 3: List of the Cooperatives interviewed

35

Table 4: State-wise Training Centres

55

Table 5: Interest Rate allocation of Ajabpur PACS

66

Table 6: Dehradun District Central Cooperative Bank's loan products 67

Table 7: Mismatch between demand and supply of trainings

76

4

Abbreviations

AC

-

ADWDRS

-

AGM

-

AIBEA

-

AICTE

-

AIDS

-

AIRCS

-

AIU

-

AM

-

AMUL

-

APCOB

-

APMAS

-

APVS

-

ASCOF

-

ATM

-

BC

-

BDP

-

BIRD

-

BM

-

BOD

-

BR

-

CAB

-

CAR

-

CBMFIs

-

CBS

-

CCM

-

CCS

-

CCTV

-

CD

-

CEO

-

CGS

-

CICTAB

-

CIT

-

CMD

-

CME

-

CR

-

CRAFICARD -

CRAR

-

CRISIL

-

CRP

-

CRR

-

Air Conditioner Agricultural Debt Waiver and Debt Relief Scheme Annual General-Body Meeting All India Bank Employees Association All India Council for Technical Education Acquired Immune Deficiency Syndrome The All India Rural Credit Survey Association of Indian Universities Assistant Manager Anand Milk Federation Union Limited Andhra Pradesh State Cooperative Bank Andhra Pradesh Mahila Abhivruddhi Society Annapurna Pariwar Vikas Samvardhan Assam State Cooperative Federation Automated Teller Machine Business Correspondents Business Development Loans Bankers Institute of Rural Development Branch Manager Board of Directors Banking Regulation College of Agricultural Banking Capital Adequacy Ratio Community Based Micro Finance Institutions Core Banking Solutions Centre for Cooperative Management Credit Cooperative Structure/ System Closed Circuit Television Credit to Deposit Chief Executive Officer Centre for Gender Studies Centre for International Cooperation and Training in Agriculture Banking Centre for Information Technology Chairman and Managing Director Centre for Management Education Community Representative Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development Capital to Risk (Weighted) Assets Ratio Credit Rating Information Services of India Limited Centre for Research and Publication Cash Reserve Ratio

5

Abbreviations

DBT DBTL DCCB DCM DDCCB DFID DGM DICGC DIG ECB ECS EMI FAO FD FIF FITF FLCs FLT FPOs FWWB FY GB GDP GESI GIZ GM GoI HDCM HDFC HR IAS ICA ICICI ICM ICT IDBI IFAD IFFCO IGS IIBM IOB IRDA

- Direct Benefit Transfers - Direct Benefit Transfer for LPG - District Cooperative Credit Bank - Diploma in Cooperative Management - Dehradun District Central Cooperative Bank - Department for International Development - Deputy General Manager - Deposit Insurance and Credit Guarantee Corporation - Deputy Inspector General - External Commercial Borrowings - Electronic Clearing System - Equated Monthly Installment - Food and Agriculture Organisation - Fixed Deposit - Financial Inclusion Fund - Financial Inclusion Technology Fund - Financial Literacy Centres - Financial Literacy Training - Farmers Producer Organizations - Friends of Women's World Banking - Financial Year - General Body - Gross Domestic Product - Gender Equality and Social Inclusion - Deutsche Gesellschaftf?r Internationale Zusammenarbeit - General Manager - Government of India - Higher Diploma in Cooperative Management - Housing Development Finance Corporation - Human Resource - Indian Administrative Service - International Cooperative Alliance - Industrial Credit and Investment Corporation of India - Institute Cooperative Management - Information Communication Technology - Industrial Development Bank of India - International Fund for Agricultural Development - International Farmers Fertilizer Cooperative Limited - Indian Grameen Services - Indian Institute of Bank Management - Indian Overseas Bank - Insurance Regulatory and Development Authority of India

6

Abbreviations

IRMA

-

IT

-

JCTC

-

JLG

-

JV

-

KCC

-

KMUCB

-

KVP

-

KYC

-

LAMP

-

LIC

-

LMC

-

LSO

-

LT CCS

-

MACIF

-

MACS

-

MBA

-

MCA

-

MCC

-

MD

-

MDP

-

MFI

-

MCID

-

MIS

-

MLA

-

MoU

-

MP

-

MSCB

-

MSCS

-

MSCSA

-

NA

-

NABARD

-

NABFINS

-

NAFSCOB -

NBCFDC

-

NBFC

-

NCCT

-

NCDC

-

NCDEX

-

NCUI

-

NEDFI

-

Institute of Rural Management, Anand Information Technology Junior Cooperative Training Centers Joint Liability Group Joint Venture Kissan Credit Card Konoklata Mahila Urban Cooperative Bank Kissan Vikas Patra Know Your Customer Large Area Multi Purpose Societies Life Insurance Corporation Local Management Committee Loan and Savings Officer Long-term Cooperative Credit Structure Mutuelle Assurance des Commercants et Industriels de France Mutually Aided Cooperative Societies Master Business Administration Master of Computer Application Micro Credit Committee Managing Director Management Development Centre Micro Finance Institution Micro Credit Innovations Department Management Information System Member of Legislative Assembly Memorandum of Understanding Member of Parliament Maharashtra State Cooperative Bank Multi-State Cooperative Society Multi-State Cooperative Societies Act Not Applicable National Bank for Agriculture and Rural Development NABARD Financial Service Limited National Federation of State Cooperative Banks Limited National Backward Classes Finance wand Development Corporation Non-Banking Financial Company National Council for Cooperative Training National Cooperative Development Corporation National Commodity and Derivatives Exchange Limited National Cooperative Union of Indian North Eastern Development Finance Corporation Limited

7

Abbreviations

NEFT NGOs NHFDC NIA NOC NPAs NPCI NPS NREGA NRLM NSC OBC OCC OD OPD OSS PO PA&RDB PACS PaR PCARDB PCBs PCFs PDS PGDM PKPS PLS PMJDY PoS PRA PRI PSL PSU RBI RCA RCS RD RICM RIDF RMK RoC RRBs RS

- National Electronic Funds Transfer - Non-Governmental Organizations - National Housing Finance Development Corporation - New India Assurance - No Objection Certificate - Non Performing Assets - National Payment Corporation of India - National Pension Scheme - National Rural Employment Guarantee Act - National Rural Livelihood Mission - National Savings Certificate - Other Backward Class - Office of the Comptroller of the Currency - Over Due - Out Patient Department - Operating Self Sufficiency - Post Office - Primary Agricultural and Rural Development Bank - Primary Agricultural Cooperative Societies - Portfolio at Risk - Primary Cooperative Agriculture and Rural Development Banks - Primary Cooperative Banks - People's Credit Funds - Public Distribution System - Post-Graduate Diploma in Management - Prathamika Krishi Pattina Sahakara Sangh - Profit / Loss Sharing scheme - Prime Minster's Jan Dhan Yojana - Points of Service - Participatory Rural Appraisal - Panchayat Raj Institution - Priority Sector Lending - Public Sector Units - Reserve Bank of India - Royal Commission Agriculture - Registrar of Cooperative Societies - Recurring Deposits - Regional Institute of Cooperative Management - Rural Infrastructure Development Fund - Rashtriya Mahila Kosh - Registrar of Companies - Regional Rural Banks - Rupee

8

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