BANKING TRADE AND COMMERCE

CO-OPERATIVE MOVEMENT

The Co-operative Movement may he said to have started in Amravati district on 13th November 1904 when the first co- operative society was registered at Nandgaon Peth under section 6 of the Co-operative Societies Act. This society was registered as a Rural Credit Society with unlimited liability and had in the beginning 13 members. On 19th August 1947, the society was converted into a crop loan society with limited liability. It advanced loans to its members for raising crops on short-term basis. Subsequently, many such societies were started in Amravati district. These were mainly credit societies and received short-term loans from the Central Financing Agencies. During the Great Depression of thirties the loans advanced to the societies were frozen and numerous acres of land came into the possession of the Central Financing Agencies. Consequently, the liquidated assets of the Agencies were negatived with the result that the Government had to rush to the rescue of the movement and amend the Act suitably to safeguard the interests of the Agencies as well as the depositors.

During the Second World War the prices of agricultural lands went up. This proved very much advantageous to the Movement, as lands in possession of the Agencies were sold at favourable prices and with good profits.

During the War a number of consumer's and multipurpose societies were organised for the distribution of controlled articles. The societies flourished well so long as controls existed but with the removal of controls many of them had to be liquidated. This gave a set-back mostly to the non-credit activities of the societies.

From 1952 onwards the work of distribution of Sindri chemical fertilizers through the co-operatives was undertaken in the district. This considerably improved the position of most of the purchase and sale societies. At this time the Central Financing Agencies also granted medium-term loans direct to the cultivators to enable them to purchase pumping sets.

After the reorganisation of the States a new life was injected into the co-operative movement. The Government of Maharashtra took active interest in expanding it by contributing to the share capital and granting loans and subsidies to them under various schemes. This led to the formation and organisation of a number of industrial co-operatives, housing societies, forest labour societies, labour contract societies, farming societies and supervising unions. The organisation and functions of these societies are detailed below: -

Agricultural Co-operative Credit Societies.

These Societies constitute the bulk of the co-operative credit societies in the district. They are engaged in the supply of short-term and intermediate-term (not exceeding five years) finance to agriculturists. Each society has usually a single village as its area of operation, but in some cases, hamlets and smaller villages in the neighbourhood for which it is not feasible to organise separate societies are also included under its jurisdiction. Membership is open to all residents of that area who satisfy certain conditions laid down in the bye-laws. The liability of the members is unlimited.

The funds of the society are raised in any or all of the following ways, viz.,

(a) entrance fees, (b) issue of shares, (c) receiving deposits from: (i) members and (ii) non-members residing within a radius of five miles from the village of the society, (d) raising loans and overdrafts from other co-operative credit societies or from financing institutions, and (e) donations.

The societies also accept savings deposits and fixed deposits for not less than six months. Savings deposits. are accepted from members only on conditions laid down in the bye-laws. The rate of interest on deposits is fixed by the managing committee with the previous approval of the financing agency. Loans are granted by these societies for both agricultural and domestic purposes. They may be for a short-term (not exceeding one year) or for an intermediate-term (not exceeding three and in some cases five years). Short-term loans are granted for purposes of meeting expenses on seed, manure, weeding, etc. Intermediate-term loans are granted for two purposes, viz., (i) purchase of bullock-carts, iron implements, etc., the period of the loan being three years and (ii) payment of old debts and works of land improvement. The period of the loan extends to five years.

Normal credit is fixed for each member and loans beyond this limit are not advanced to him. The total outstandings by way of loans cannot exceed ten times the amount of shares standing to his credit in the society. Loans are given mostly on the personal security of the borrower. The society may also take mortgage of immovable property or of crops as collateral security. Loans are given in cash. Where the purpose of the loans permits and a suitable organisation exists, loans are advanced on the security of land.

The rate of interest charged by agricultural co-operative credit societies depends upon their financial position as also on the rate at which they borrow from the financing agency. The Government have offered various facilities by way or subsidies to meet certain expenses of the societies.

Activities of the Co-operative Credit Societies Other Than Lending.

A large number of agricultural credit societies in this district have been converted into service co-operatives. In other words, although all these societies are primarily agencies for supplying credit, in order to increase their usefulness to their members, they also cover certain other aspects. Thus it is made obligatory on members to sell their produce through a cooperative society. The society is also permitted to open a provident fund account for its members and to contribute to it out of its profit.

In Amravati district there were 651 agricultural credit co-operative societies in 1962-63. Of these four were central co-operative banks, 511 service co-operatives, 101 primary agricultural credit societies, 30 large-sized societies and five multipurpose societies.

The following statement shows the position of the Agricultural Co-operative Credit Societies in Amravati district by the end of 1960: -

(Figures of Rs. are in lakhs.)

Land Development Bank, Amravati.

Till 1962-63 the Land Development Bank Ltd., Amravati, was the only primary land development bank in the district. It provided long-term finance to agriculturists on the security of landed property for land improvement, repairs to old wells, digging of new wells, construction of bunds and installation of engines and pumping sets for lift irrigation purposes, etc. The following table gives the statistics of the working of this bank for the past few years in Amravati district.

TABLE No. 4

WORKING OF LAND DEVELOPMENT BANK, AMRAVATI

(Figures in lakhs)

(Figures in lakhs)

* Figures not available.

The Land Development Bank received subsidies from Government for financing construction and repair of wells, bunding, installation of machinery, etc. The scheme of subsidy was sanctioned on a permanent basis and was introduced in 1948. The amount of subsidy was equal to the difference between the economic lending rate and the rate of interest for Tagai loans. In 1962-63, the economic lending rate and the Government lending rate were 7¼. per cent and 4½ per cent, respectively, for construction of wells.

Another scheme known as the wells scheme had also been applied to Amravati district along with other districts of Vidarbha. Under this scheme Government used to give to the Bank, subsidies equal to the difference between the economic and the concessional rates of interest. A special scheme on the same basis for granting loans and subsidies for oil-engines, electric motors and pumping sets required for agricultural purposes was also being implemented in Amravati district along with other districts of Vidarbha.

District Central Co-operative Bank (Central Financing Agency).

Till 1962, there were four central co-operative banks in the district located at Amravati, Achalpur, Morshi and Daryapur, respectively. Each of them worked as the Central Financing

Agency to the primary co-operative societies within its jurisdiction or area of operation. In January 1962, these banks were amalgamated with the Amravati Central Co-operative Bank Ltd., Amravati, which then functioned as the Central Financing Agency through its four regional offices, 16 branches and two other offices.

The Central Banking Agency sanctions loans or maximum credits to agricultural credit societies on the basis of their total requirements, undertakes other banking activities including collection and discounting of bills, opening current accounts, purchase and sale of securities, issue of cheques, drafts, etc., and in some cases also makes arrangements for the sale of agricultural commodities, especially of the agriculturists who are under he Agricultural Debtors' Relief Act and who are allowed to become nominal members for obtaining crop finance. It has now undertaken to cater to the needs of the co-operatives in respect of finance for industries.

The membership as well as the working of the Central Financing Agency in the Amravati district is given in the accompanying table.

TABLE No. 5

WORKING OF THE CENTRAL FINANCING AGENCY, AMRAVATI

(Rs. in lakhs)

Non-agricultural Credit Societies.

These societies are formed generally by traders, factoryworkers, salary-earners, etc., residing particularly in towns. They supply credit to their members on the basis or personal security or mortgage of property. Capital is collected by them by issuing shares or by accepting deposits from their members or by borrowing funds from the Central Financing Agency.

After the Reorganisation of States in 1956, there were in Amravati district 25 societies of this type having a membership of 3,154 persons. By 1962-63, the number of societies went up by 28, and the number of members by 1,943. These societies included 40 salary-earners societies, two mill-workers societies of Achalpur and Badnera and one thrift and credit society. The progress made by these societies is given in the accompanying table.

TABLE No. 6

WORKING OF NON-AGRICULTURAL CO-OPERATIVE CREDIT SOCIETIES, AMRAVATI DISTRICT (FROM 1956-57 TO 1962-63)

(Rs. in lakhs)

Rural Credit Societies.

The rural credit societies occupy a prominent place in the co-operative movement of Amravati district. In fact, the extent of co-operative movement was restricted to the credit aspect in the beginning, and co-operative societies advanced credit to their members for specific purpose. Gradually their scope expanded and in the shape of service or Seva Societies they undertook a number of other activities. In 1962-63 there were 677 primary agricultural societies of which 608 were service societies. Of the remaining, 30 were large-sized societies, 35 crop loan societies and 4 multipurpose co-operative credit societies.

 The statistics of these societies is given in the following table: -

TABLE No. 7

WORKING OF RURAL CREDIT SOCIETIES, DISTRICT AMRAVATI (FROM 1959-60 TO 1962-63)

(Rs. in lakhs)

The importance of these societies can he gauged hy the following few facts. In the first place, these societies had the widest coverage, covering as they did 98 per cent villages in the district during 1962-63. The membership of these societies had also gone up considerably. In 1962-63, as the table shows, the societies had 61,545 members. The position of share capital had improved quite substantially. The increase was due mainly to the contribution from the government. There were also efforts to property link share collection with the advances. It could also be observed that since the conversion of the primary societies into service co-operatives, these societies could render greater service and attend to the needs of the members to a larger degree.

The service co-operatives were organised on the basis of the recommendations contained in the policy resolution of the National Development Council. Generally, they were organised in villages with a population of over 1,000 persons. Where villages were small, they were organised for a group of 2 to 3 villages. The operational area of service co-operatives was generally identical with that of the Gram Panchayat. The membership was open to all and included mostly cultivators, artisans and labourers. The object of these societies was to provide credit for agricultural operations, for purchase of raw material, etc. But they helped the marketing of agricultural produce and covered all economic activities of the rural population so as to create a cohesive, self-reliant and prosperous village community.

Crop Protection Societics.

Among rural societies, crop protection societies form an im-portant category. In Amravati district there were 16 such societies in 1960-61. The following are the statistics pertaining to these societies: -

Cattle Breeding Societies.

There were in 1960-61, four cattle breeding societies in Amravati district, of which one was dormant. They had in 1960-61 a total of 199 members. The paid-up share capital of these societies was Rs. 1,825, while their reserve and other funds amounted to Rs. 3,558. During the same year the working capital of these societies was Rs. 5,896. The Kurha Pashu Sudhar Society received a subsidy of Rs. 3,532 from the Block Development Officer of Chandur Railway Block.

Poultry Farming Societies.

The number of poultry farming societies in Amravati district during 1960-61 was two, and their membership, 125. In the same year, the paid-up share capital of these societies was Rs. 600 and their reserve funds, Rs. 263. They had borrowed Rs. 2.195 in 1961.

Consumers' Co-operatives.

Most of the consumers' societies in Amravati district were formed during the World War II when there was scarcity of consumers' goods. The distribution of these goods at reasonable prices was found necessary also to check the rising trend in prices and their fluctuations. These societies were entrusted with the work of the distribution of commodities like food-grains, sugar, etc. These goods were supplied to them by Government. The consumers' movement subsequently expanded considerably and by 1962-63 there were 77 consumers' societies in the whole of the district. Most of these societies, however, operated in the urban area. The following table illustrates the progress of these societies: -

TABLE No. 8

WORKING. OF CONSUMERS' CO-OPERATIVES IN AMRAVATI DISTRICT IN 1959-60 AND 1960-61

Co-operative Farming Societies.

A beginning in the formation of co-operative farming and lift irrigation societies was made by an allotment of a number of acres of waste land, scattered over numerous villages in Amravati district, to landless persons on condition that they would form a co-operative farming society. Accordingly some societies were formed in the district in course of time. By 1963 there were as many as 13 co-operative farming societies in the district of which three were joint farming societies organised to undertake co-operative farming on land pooled by members and ten were collective farming societies organised mainly by landless persons to cultivate the waste land owned by the Government. These societies receive assistance from the Government by way of share capital, contributions, managerial loan and subsidy for construction of godown-cum-cattleshed and loan for land development. Following table gives the extent of financial assistance received by these societies: -

TABLE No. 9

FINANCIAL ASSISTANCE TO CO-OPERATIVE FARMING SOCIETIES IN AMRAVATI DISTRICT

The working of the Co-operative Farming Societies is given in the accompanying table.

TABLE No. 10

WORKING OF CO-OPERATIVE FARMING SOCIETIES, AMRAVATI (1959-63)

Dairy Societies.

A number of agriculturists pursue dairying as a subsidiary occupation. By 1962-63 there were 28 dairy societies, one co-operative union and one federation. The progress and working of these societies is given in the accompanying table.

TABLE No. 11

WORKING OF THE DAIRY SOCIETIES IN AMRAVATI DISTRICT

Most of these dairy societies were affiliated to Anjangaon Milk Supply Union. The latter along with the five feeder societies in 1960-61 secured Rs. 28,625 as loans and Rs. 8,275 as subsidy from the State Government.

In 1962-63 a federation of all these societies was organised in the district. A sum of Rs. 16,000 was extended as loans under the Government milk scheme to this federation. The federation collected milk from the affiliated societies and supplied it to the Government milk centre.

Processing Societies.

In Amravati district there were in 1962-63 four processing societies doing both ginning and pressing work. There were also two large societies at Pathrot and Karajgaon which had undertaken ginning activity. Besides, there were other processing societies such as fruit and vegetable societies, oil ghanis and palm-gur societies which fell under the category of the agricultural processing societies. By 1962-63, there were 13 such societies, of which one was fruit and juice canning society, 10 were oil and ghani societies and two were Neera and palm-gur societies.

Co-operative Marketing Societies.

The aim of these societies is to secure fair returns for the produce of their members by undertaking its sale. They also supply agricultural requisites such as fertilisers, improved seeds, farm implements and machinery required by the agriculturists. The co-operative purchase and sale unions constitute an important link between the primary credit societies and the central banks and these institutions arc utilised for implementing the scheme of supply ot credit in kind and recovery of loans made to the agriculturists through the sale-proceeds of their agricultural produce. Thus, these societies realise the linking of agricultural credit with the marketing of produce raised thereby. All these societies have undertaken the distribution of the consumers' articles as per the centrally sponsored plan of consumers' co-operatives in rural areas. The purchase and sale societies at the tahsil level have been authorised to work as wholesalers for the import and distribution of sugar.

By 1963, there were 12 co-operative marketing societies in Amravati district. The progress and working of these societies is given below: -

TABLE No. 12

WORKING OF CO-OPERATIVE MARKETING SOCIETIES IN AMRAVATI

DISTRICT (FROM 1959-60 TO 1962-63) (Figs, in lakhs)

In spite of the growth of these types of co-operative societies no significant success was achieved in linking credit with marketing. This is evident from the fact that the percentage of sale of marketable agricultural produce through the co-opera- tive agency to the total of such surplus produce marketed in the district worked hardly to nine per cent.

Industrial Societies.

These societies consist of District Industrial Association, the weavers' societies, the forest labourers' and the labour contract societies and other industrial societies like the khadi and village industries societies, the cane and bamboo workers' societies, the tanners' and leather workers' societies, the pottery and brick-workers' societies, etc. During 1960-61, there were in all 107 industrial co-operative societies in Amravati district. Their growth is entirely due to Government initiative and financial assistance under various schemes implemented for the development of small-scale and cottage industries. During 1960-61, there were 10 oil ghani societies in Amravati district, with 155 members and with a share capital of Rs. 9,369.

Cane and Bamboo Workers' Societies.

In 1961 there were three societies of this type in the district. They had 41 members and had a share capital of Rs. 760.

Tanners' and Leather Workers' Societies.

These societies numbered thirteen in 1961 and had a membership of 348. Their share capital amounted to Rs. 29,463 while the reserve and other funds stood at Rs. 6,283. Their activities were mainly restricted to tanning and production of foot-wear. They had a working capital of Rs. 88,712, and the value of the goods produced and marketed by them amounted to Rs. 24,507 and Rs. 28,783, respectively, in 1961. Carpentry and Smithy Co-operative Societies. The societies had undertaken both carpentry and smithy work, the former on a large-scale but the latter on a small-scale due to the shortage of iron and steel.

In 1961, there were twelve societies with 212 members, a share capital of Rs. 15,706, and working capital of Rs. 55,352. In the same year the value of their production and sales amounted to Rs. 85,852 and Rs. 95,393, respectively.

Pottery Workers' Societies.

There were 17 societies of this type functioning in the district during 1960-61. They had 302 members. Their working capital was Rs. 88,833 and reserve funds, Rs. 1,116 during the same year.

Co-operative Movement in Community Development Blocks.

The societies in the Blocks are divided into groups with an aggregate working capital of rupees one lakh. A secretary is put in charge of each group. Thus, out of the 1,567 villages in the district, 1,502 villages were covered by the agricultural credit co-operatives in the Blocks in 1960-61. In other words a majority of the agricultural population in the villages is served by the village societies.

Under the Second and Third Five-Year Plans the organisation of large-sized multipurpose societies has been discontinued. Instead, service co-operatives are organised on a large-scale. A plan for conversion of agricultural societies into service co-operatives and organisation of new service co-operatives for the areas yet to be covered by the co-operative movement is being  Worked Out.

The targets fixed under the Second Five-Year Plan in respect of extension of agricultural credit, development of marketing schemes, and organisation of milk producers' societies and unions were achieved in the Development Blocks. However, requirements of the agriculturist for long-term loans for improvement on land were not met, due perhaps, to the weakness of the credit structure of the District Land Mortgage Bank.

The foregoing account shows that the co-operative movement has made remarkable progress in all the directions and is making its influence felt in every sphere of economic activity. With the successive Five-Year Plans the co-operative societies have acquired a new significance, since they are trying to do away with the intermediaries with a view to giving the producers full return for their products as also to organising the sales of agricultural commodities to better results. Although the performance on the part of the co-operatives, whether in the agricultural or in the industrial field, is quite fair and encouraging, certain drawbacks from which the movement is at present suffering become apparent. Although the agricultural primaries, for example, have increased in number, their membership does not keep pace with what was visualised during the plan periods. Here, more vigorous efforts are necessary for increasing the number of members as also to extend the activities of the agricultural primaries. It was also seen that many of the co-operative societies could not grow because they could not recover the dues from the members. Unless the recovery position of the co-operative societies is improved, the societies would not find it advisable to make new loans. Here, what is required from the point of view of popularising the co-operative movement is to create a " paying mind ", amongst the agriculturists. For, this will change tbeir attitude considerably towards the cooperatives and they will come to regard the co-operative organisation not as a substitute for money-lenders but as their own organisation to promote self-help and mutual aid.

The progress in the field of co-operative marketing, is a problem so far as the credit and marketing activities are not properly linked with each other. The marketing societies are required to be strengthened so as to be able to gain and command the confidence of agriculturists and would induce them to bring agricultural produce only to co-operatives. Of late the Government has been granting liberal financial assistance to them. A financial corporation is also being established. All these steps are sure to bring about far-reaching changes in the working of the co-operative movement.

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