UPSC Prelims 2020 Question:

Consider the following statements

1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
   
   

Which of the statements given above is/are correct?

Explanation:

• District Cooperative Central Banks (DCCB) is a rural cooperative bank that operates at the district level and was founded to provide financial services to the agricultural industry in the rural hinterland. Majority of its branches are located in rural and semi-urban areas.
  
  
• Scheduled commercial banks contributed the major share (78–80 percent) in agricultural and allied credit. Co-operative institutions also play a significant role in extending agricultural credit and the share of all co-operative banks/institutions i.e. State Cooperative Banks (StCBs), DCCBs and PACS (Primary Agriculture Society) put together constituted 15-16 per cent.  So, statement 1 is not correct.
  
  
• The most importance function of DCCB is to provide financial support to the primary co-operative societies that are affiliated to it in the district. These societies belong to highly diverse categories like the primary agricultural credit societies, the producers’ cooperative societies, handloom and handicrafts co-operative societies, salary earners co-operative societies consumers co-operative societies, primary urban co-operative banks etc. So, statement 2 is correct.
  
  
• Other important functions of DCCBs are:

• To meet the credit requirements of member-societies
• To act as balancing centre for the PACS by diverting the surplus funds of some societies to those which face shortage of funds
• To maintain close and continuous contact with PACS and provide leadership and guidance to them
• To supervise and inspect the PACS
• To provide a safe place for the investment of the resources of PACS.
  
  

Therefore, option (2) is the correct answer.

Subject: Economics | Money and Banking