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NABARD setting up datawarehouse to find solutions

Keynote address by Chief Guest Shaji K. V., Deputy Managing Director, NABARD at FCBA 2021. Edited excerpts:

If we see the cooperative sector as a whole, it has transformed since liberalization. If we look at the recent economic survey 2021, the share of agriculture in GDP has reached almost 20% for the first time in the last 17 years. The rural agricultural and retail sector has changed but whether the cooperatives have changed to meet emerging challenges of the sector is there to be seen. Considering the agriculture sector, it has changed from deficit agriculture or subsistence agriculture to surplus agriculture that means the mode of interventions to these sectors needs to be different. So, cooperatives have to polish their strategies from pure production credit providers to processing credit or post-harvest credit providers.

The government of India also recognized the importance of the sector and the need for transformation, so it has created a separate ministry of the cooperative sector in July 2021. Cooperatives are different from private enterprises because they are community-focused with a governing structure, and they are well placed to help inclusive and sustainable growth. Since establishment, NABARD has been an active part of the cooperative sector development.

There are 34 state cooperative banks, 358 district central cooperative banks (DCCBs), and approximately 97,000 primary agriculture credit banks (PACS). In the last 5 years, the rural cooperative’s number of accounts was stagnating at around 15 million and per credit very less when compared to commercial banks. In market share, 10% is with the cooperatives, but this 10% is dwelling very fast. In the last 5 years, only 3% is the outcome of cooperatives, elsewhere 36% by RRBs.

So, NABARD is initiating a project in association with GOI to improve the liquidity of rural cooperative banks. It is refinancing them with the help of state and district cooperative banks as they can’t improve it through rural individuals as there is very less outcome. Most importantly, it is ERP based software in which there is a payment network and Aadhaar enabled system. NABARD is thinking to give credit guarantee lending for the community so that they access other modes of finance for example from commercial banks or RRB apart from refinancing.

Now, digitalization is the only way to go forward as it provides so many benefits and cooperatives have to include this process for their growth and survival. In this way, it will have access to all its customers digitally and can be maintained. With the quick survey, we had found that the southern part of the country is performing well in terms of financial performance and dispensing credit. North-east and central India are not doing that well.

Recently, the cooperation minister has announced that more primary agricultural credit societies should be formed and every village should have this facility. NABARD is supervising the activities of state and district cooperative banks. It is trying to protect the interest of the sector, depositors, financial institutes for this it is developing software for doing it in an efficient manner. It has set up a portal for data collection and cyber security is also being improvised. NABARD is in the process of setting up a data warehouse. It is intending to take one-time data and enrich that data on a periodical basis through this warehouse. It will use this data analytics and business analytics to come out with solutions. The initial data will be ready within a month and activities are started; by January data warehouse will be ready. This data warehouse is for state and central cooperatives sectors.

The GOI wants that all the cooperatives should be brought into payment mechanisms, CBS platforms, and members should have unlimited access to payment services.

NABARD had come out with E-SHAKTI – a digital platform for SHG. All other activities like how often they are meeting, how thrift is happening, how internal lending is happening all these things will be captured and then it will provide a base to the lending banks.

At present NABARD is focusing on the short term especially the KCC because they have limitations for resources. At the DCC level or state level, it sets up PACS development cells where experienced people can be engaged from the market and then help the PACS  to diversify the products.

Loan management system is essential for credit-related activities. They are having other activities like storage, PDS, fertilizers supply, etc – these are all done manually which is creating a lot of instability. The loan management system will be part of it and cyber management aspects, payment device infrastructure will be there and PACS themselves can offer their services as touchpoint services. It will be game-changing and NABARD is trying to take off from there and the pacs software will be a differentiator. It will not be as normal as CBS.

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