RBI sets up panel for strengthening rural credit structure

The Reserve Bank today constituted a committee to suggest ways to strengthen the rural cooperative credit structure in the country.

The panel headed by Nabard Chairman Prakash Bakshi will review the existing Short Term Cooperative Credit Structure (STCCS), focusing on structural constraints in rural credit delivery system.

It will also explore ways to strengthen the rural cooperative credit architecture. The seven-member panel will make an in-depth analysis of the STCCS and examine various alternatives with a view to reducing the cost of credit, the RBI said in a release.

It will also look at the feasibility of setting up of a two-tier STCCS as against the existing three-tier structure. STCCS target the credit requirement of the small and marginal farmers in the country.

"The Committee will submit its report within three months from the date of its first meeting," it said. According to terms of reference, the committee will mainly assess the role played by state and district cooperative banks in fulfilling the requirement of agriculture credit.

It will identify cooperative banks that may not be sustainable in the long run even if some of them have met the diluted licensing criteria for the time being, the release said.

It will also suggest pro-active measures needed to be taken by cooperative banks, government, and the RBI, it added.