Cooperative Credit Institutions and Rural Credit in India under Neoliberalism

Credit cooperatives are the oldest serving financial institutions in the country. These institutions, premised on the principles of self-help, mutual aid and  cooperation, were established with the vision of promoting growth and development in the rural  hinterland and strengthening the rural economy by integrating the weaker and marginalised sections into the larger development strategy through the provision of formal credit.  Established with the primary mandate to enhance credit flow to agriculture and to the weaker  sections of the rural population as well as to displace the informal sources of credit, they soon  became the ‘veritable bed-rock of the rural economy’. However, the introduction of neo-liberal reforms has undermined the importance of these institutions by seeking to shrink the cooperative sector on grounds of financial viability. This article makes an assessment of the performance  of the cooperative banks during the period 1993–94 to 2016–17 based on financial indicators like profitability, productivity, asset quality as well as their achievement of socio-economic  indicators like provision of agricultural credit and financial inclusion of the weaker sections.