BANKING TRADE AND COMMERCE

CO-OPERATIVE MOVEMENT

The co-operative movement in this district had attained considerable importance during recent years on account of its numerous activities, such as extension of agricultural credit, reorganisation of agriculture, processing and marketing of agricultural produce, sale of agricultural and domestic requisites, organisation of subsidiary industries and formation of unions by producers or suppliers of various commodities. Activities for the welfare of backward classes have also been brought within the co-operative fold. The co-operative movement, in other words, envisages the growth of agricultural co-operative credit societies, multi-purpose societies, land-mortgage banks, non-agricultural credit societies such as urban co-operative banks, salary earners' society and a district central co-operative bank. The following pages review the evolution, the functioning and the progress of these societies in the district.

The co-operative movement started in this district at the beginning of the present century when in 1907, the first Agricultural Credit Society, was registered at the village Bodhe in Man taluka. Since then the principle of the movement gradually gained popularity with social workers and rural masses and similar societies were registered in various parts of the district. In early days of their existence the societies had no share capital; they were run mainly on the funds collected from the members by way of savings and deposits. As there was no financial agency to supplement the funds of societies, the deposits had added significance. For, the movement had to rely upon local savings and restrict its activity to the provision of credit to the needy agriculturists. Growing needs of agricultural finance and the realisation on the part of the people of the importance of forming societies on a co-operative basis, led to the development of a new outlook towards them. Consequently, the co-operative societies had to undergo changes as regards their legislation as well as their structure. Accordingly, the system of share capital was introduced. At the same time two central financing agencies—the North Satara Central Co-operative Bank and Shri Laxmi Central Co-operative Bank—were formed and co-operatives with limited liability and with the object other than provision of credit (such as supervision, education, supply of agricultural requirements, etc.) came into existence. In the beginning the idea of single-purpose society was predominant and in order to keep the members in close touch with each other's needs and affairs, society was allowed to enroll more than hundred members. It is for this reason that in some villages we still find a number of societies only undertaking the supply of agricultural credit.

The idea of a single-purpose society being predominant the necessity of organising other societies serving entirely a different end was felt by the people, with the result that different kinds of societies such as Sale and Supply Societies, Better Farming and Better Living Societies Taluka Development Boards, etc. were formed. Similarly, in due course of time, Supervising and Marketing Societies of a federal type working at taluka levels came into existence. Gradually, however, the idea of single-purpose societies gave way, having lost its significance to that of the multi-purpose society. This has revolutionised functioning of the societies and changed them from purely credit supplying societies to service organisations.

The history stated above will help understand the present structure and development of the co-operative organisations and the significance of new trends visible in their operations. The progress of the movement was slow till the year 1945, whereafter it accelerated as could be seen from Tables No. 3 and 4 to follow.

Agricultural Co-operative Credit Societies.

These societies form the corner-stone of the co-operative movement as the development of the movement in all other fields depends upon their efficiency and successful working. A large number of these societies are organised in rural areas. The societies are engaged in the supply of short-term and intermediate-term (i.e., not exceeding five years) finance to agriculturists. The area of operation of such a society is usually a large village, although in some cases smaller villages where it is not possible to organise separate societies are also included in its jurisdiction. Membership of these societies is open to all residents of that area on certain conditions. The societies function under the principle of unlimited liability.

Funds.

The societies raise their funds in any or all of the following ways:—

(a) by entrance fees; (b) by issue of shares; (c) by receiving deposits from (i) members or (ii) non-members residing within the area of operation of the society, (d) by raising loans and overdrafts from other co-operative credit societies or from financing institutions; (e) by donations. The face value of each share is generally Rs. 5 and the maximum number of shares a member is allowed to hold must not exceed 600. The societies accept savings deposits and fixed deposits of a duration of not less than six months. The rate of interest is approved by the financing agency.

Nature of loans.

The societies grant short-term and intermediate-term loans for agricultural as well as domestic purposes. Short-term loans are granted for meeting expenses on seed, manure, working capital, etc. Intermediate term loans are granted for purchase of bullock carts, iron implements, etc. and for the payment of old debts and works of land improvement. The loans are granted for a period of five years.

The rate of interest charged by agricultural co-operative credit societies depends upon their financial position as well as on the rate of interest at which they borrow from the financing agency. The rate of interest charged in 1960 was 6¹/4 per cent.

There were 576 agricultural credit societies in 1960 in this district with a membership of 65,790 and Rs. 1,02,31,901 as working capital. These societies also include multi-purpose societies in the district.

During recent years agricultural credit societies or village primaries (as they are called) are being converted into multi-purpose societies with the object of making them broad-based so as to enable them to cater to the multifarious needs of the members. Since the implementation of the pilot scheme the process of conversion of these societies into large-sized multi-purpose societies received an impetus and many new multi-purpose societies are formed either anew or by amalgamating weak and uneconomic units.

The multi-purpose societies serve the rural sector in many ways. In addition to the supply of finance, they also undertake various activities for the betterment of the village populace such as providing pure and improved seeds and agricultural implements, effecting consolidation of holdings, marketing the produce of the members, etc.

TABLE No. 2.

STATISTICS AND WORKING OF AGRICULTURAL CREDIT SOCIETIES (UNLIMITED).

TABLE No. 2. contd.

Note.—The date for the years 1941-42 to 1944-45 and for 1949-50 was not available.

TABLE No. 3.

 STATISTICS AND WORKING OF AGRICULTURAL CREDIT SOCIETIES (LIMITED).

TABLE No. 3. contd.

Note—The data for the years 1941-42 to 1944-45 and for 1949-50 was not available.

The total amount of liability a multi-purpose society can incur is calculated from the amount of its actual liability, deducting therefrom a sum equal to amounts, which it borrows from a central financing agency on the security of agricultural produce.

The village primaries and multi-purpose societies together serve as many as 1,152 villages and 15 towns. That is to say they cover 92 per cent, of the target figure fixed under the Second Five-Year Flan. In terms of agricultural population these societies cover about 36.5 per cent, of the cultivating population. The accompanying tables indicate the progress made by these societies in the Satara district.

Land Mortgage Banks.

Land mortgage banks are specially organised and equipped to perform the essential function of providing long-term credit to the cultivator. The area of operation of such a bank is generally a district or a part thereof not smaller than a taluka. The main purposes for which banks advance loans are debt redemption, adoption of improved methods of cultivation, purchases of land for development and its improvement, installation and purchase of costly agricultural plant and machinery. Loans of not less than Rs. 400 and not more than Rs. 1,500 are given to an individual for a definite object, subject in every case to the sanction of the State Co-operative Bank. Loans are granted against the security of landed property. The land offered in mortgage by the applicant should be of his absolute ownership, free from prior encumbrances and not subject to any restrictions and alienations. Loans are given upto 50 per cent, of the value of immovable property mortgaged to the bank. The period of repayment of loan varies from five years to twenty years.

The Satara District Land Mortgage Bank Ltd., Karad, is the only land mortgage bank which is at present catering to the long-term requirements of the whole district. The bank operates both in Satara and Sangli districts. The table No. 4 indicates the operations of this bank for the years 1945-46 to 1955-56.

During 1958-59, total loans to the extent of Rs. 6,72,150 were disbursed to 362 applicants for the following purposes: —

TABLE No. 4.

STATISTICS AND WORKING OF LAND MORTGAGE BANK.

TABLE No. 4. contd.

Note.-The data for the years 1948-49 and 1949-50 was not available.

This group of societies forms an important part of the co-operative movement and is almost equal in magnitude and importance to the group of Agricultural Co-operative Credit Societies. It consists of urban banks, salary earners" societies and factory workers' societies.

Non-Agricultural credit Societies

The area of operation of a society of this type is usually restricted to a town or a part of a town or even a factory or a department. Membership is open to all persons, residing within the area of operation and the liability of members is limited. No person, however, can become a member of more than one society, without the sanction of the Registrar or Assistant Registrar. Capital is raised by issue of shares, accepting deposits on current, savings and fixed accounts and borrowing from the Central Financing Agency. The limit to outside borrowing is restricted to eight times the paid-up share capital plus the accumulated reserves and building fund minus the accumulated losses. The following table will give an idea of the progress made by this class of societies.

TABLE No. 5.

SATARA DISTRICT—STATISTICS AND WORKING OF NON-AGRICULTURAL CREDIT SOCIETIES (UNLIMITED).

TABLE No. 5.