Development banking is more than a mantra

Finance Minister P. Chidambaram in his budget speech of 2007 focused more on agriculture and infrastructure. In fact, agriculture and allied activities in rural areas can only yield results with quality infrastructure. When core infrastructure are built in rural areas, private investment for other infrastructure development comes in naturally. For example, a good road network makes marketing rural produce easier. The government has launched the Bharat Nirman programme to build core infrastructure for rural areas. The government’s nod to the Vaidyanathan Committee’s recommendation to revitalise cooperative banks with an allocation of Rs 13,596 crore is aptly timed as the process of co-operatising the farmers needs to be hastened amid a manipulative market economy.

The Indian banking fraternity, with more than 60,000 credit outlets in rural areas, can nurture a healthy credit cycle, which will help millions of farmers reap the benefits of globalisation. For a healthy credit cycle, banks have to adopt development banking practices. An independent commission set up by the All India Bank Officers Confederation has proposed the revival of development banking. It is here that a farmer club is useful. A farmer club consists of enterprising farmers formed with the help of a bank. It can help create a healthy credit cycle to free villages from the clutches of moneylenders. The branch manager has to identify a resourceful chief volunteer. With their help, the branch manager has to groom a group of 15 to 20 members. The club members are trained to apply for loans. They identify good borrowers and help banks in their recovery drives. Farmer clubs form a bridge between the bank, the villagers and government extension departments. They educate villagers about the healthy credit cycle and how it helps them to take up various enterprises with the help of credit.

If farmer clubs are active, subsidies reach the deserving groups, which in turn makes the best use of local energies. Developed nations with advanced farm technology, biotech seeds and a capacity to dole out high subsidies to their farmers often make a mockery of globalisation. Bankers and villagers cannot take up global issues. But conscious villagers can work to organise themselves in small units with the single purpose of building integrated villages. Today nearly 18,000 farmer clubs are operating in 41,000 villages across India. All banks must now internalise the farmer club concept into their operations.