DISTRICT CREDIT PLAN POTENTIAL LINK PLAN, FEATURES, OBJECTIVES AND PLANNING

PROCESS

District Credit Plan

• Credit Plans were prepared under Lead Bank Scheme by all Credit Institutions.

• First DCP was prepared in March, 1978.

• RBI issued fresh guidelines for preparing DCPs as per Plan Period (five year plan) in the year 1979-80.

• It included overall District Development Plan by all Institutions.

• New DCP emphasized on the concept of participative planning.

• District Consultative Committee (DCC) was formed for approval of plans prepared by different institutions/Banks.

• DCC includes

(a) District Planning Officer (from DRDA),

(b) Lead Bank Officer (LBO)- as Convener,

(c) Representatives of few Banks.

• An Annual Action Plan was also to be prepared by all Banks.

• Banks were preparing their Annual Action Plans.

• Government Departments were also having their Annual Plan layout in the Budget (for that year).

O B J E C T I V E S

1. Removal of Unemployment and under-employment by providing credit facility for some economic activity generating income.

2. To raise the standard of living of the poorest section of the population.

3. Basic needs of the poor is to be fulfilled.

These objectives for Banks were taken as :-• To provide loan facility to poor person to create

certain Assets and generate income for employment –cum- income generating activity.

(for example : Giving loan for purchase of Cows/Buffalos as income generating activity.)

• To provide Agricultural and Allied to Agril. loans to poor person to increase the productivity of land and allied activities to reduce under-employment and increase income levels of the poor.

• To provide loans to Weaker Sections of population i.e. MF and SF, Agril. Labourers, Rural Artisans, and SC/ST for productive purposes.

• -Banks prepared Block-wise and purpose –wise plans

• -Term-loans, Working Capital loans, and Crop-loans were shown separately.

• Scale of finance and norms of Agril. Finance for all Credit Institutions were kept same (as decided by the DLTC)

• The DCPs prepared by various Banks were not uniform earlier. Therefore, it was felt that DCP should be based on District Development Plan (DPP)to maintain uniformity.

FORMATION OF DISTRICT CONSULTATIVE COMMITTEE

• Credit Planning work was given to DCC. The Convenor of DCC is LBO of the District.

• All Credit Institutions i.e. Banks are members to DCC.

• Officials of Development Departments/Agencies are also member to DCC.

• Chairman of DCC was District Collector to coordinate, guide and direct the Bankers in the district for sanction and issue of loans to poor people.

• Non-Officials (M.P. and MLA and Zila Pramukh) are also invited in special meetings at least once in a year to take advantage of their experience in the field of development in the district.

• DCC meetings are conducted on Quarterly basis

– to review the progress of plan implementation, – to identify the difficulties faced by banks and to solve

them in the meeting.– To prepare and send Agenda of meeting and then Minutes

of the meeting are sent by LBO to all members (recording presence of members and progress of all Credit Institutions.

STANDING COMMITTEE OF DCC

For better implementation of District Credit Plan, the RBI have set-up an Standing Committee of the following officials:-

1. District Planning Officer (DRDA)2. One or Two Bank Officers (having larger

number of branches in the district.)3. Officer from LDB.4. Lead District Officer of the RBI (from

Regional Office of RBI).5. L.B.O. (as Convenor from Lead Bank).

FUNCTIONS OF STANDING COMMITTEE

• Identifying the feasibility of formulating new bankable schemes and assisting in the review of the District Credit Plan,

• Looking into the questions of availability of necessary infrastructural facilities and supply of inputs, etc. for the schemes,

• Examining the factors impeding the flow of credit under any of the schemes,

• Making suggestions for rationalization of loaning policies and procedures of institutional credit agencies,

• Looking into the problems concerned with the end-use of credit and recovery of dues,

• Devising ways and means to ensure proper co-ordination among all the concerned agencies,

• Following up closely the decisions taken at the DCC meetings and ensuring prompt submission of data, etc.

• In short, the Standing Committee is to function as the Executive Committee of the DCC and look after the implementation of the district credit plan.

Improvement in DCC

• The District Collector use to function as Chairman of the DCC till recently. But due to busyness of the Collector now this work has been given to CEO of DRDA who is also an IAS officer.

• The DCC should shoulder the following responsibilities:-

• Preparation of the credit plan, its acceptance by consensus allocation of shares, responsibilities among financing agencies and responsibility among various departments of the District Administration.

• Examining the nature of and availability of supporting services required for implementation of the credit plan and securing the acceptance of the various agencies for their filling the gaps.

• Overall guidance in the preparation of viable development schemes which attract finance from the credit institutions.

• Identifying the potential for and assistance in formulation of new credit schemes.

• Monitoring the implementation of the credit plan on a detailed sector wise, scheme wise, block wise and bank wise basis.

• Examining other factors impeding the flow of credit viz., legislative, administrative , procedural, etc. and making suitable suggestions thereon for action at higher level and taking suitable action at their level, and

• Looking into problems concerned with end-use of credit and recovery of dues and suggesting remedies.

ROLE OF NABARD

• The NABARD will have to play an active role in finalisation of the DCP.

• NABARD should equip itself as a major instrument of RURAL DEVELOPMENMT.

• NABARD being on high power committee on the Lead Bank Scheme should keep track of implementation of DCPs.

• NABARD’s Experience in Planning at District Level:

– Potential Linked Plans (PLPs) – for estimation and development of potential with credit support in various sectors ( for all 597 districts).

– District Rural Industrial Projects for development of Rural Non-Farm Sector ( for 80 districts).

POTENTIAL LINKED CREDIT PLAN (PLP)

• Approaches/strategies of Nabard are as under:-• A district level document estimating the potential

available for development in various sectors like-– Minor Irrigation,– Animal Husbandry– Fisheries,– Seasonal crops,– Non-Farm sector etc. and assessment of credit support

required.

• Base plans prepared co-terminus with the five year plans and annually updated thereafter. Estimate long term potential with reference to resource endowments (permanent income).

• Identifies critical gaps in infrastructure in various sectors.

• Projects the credit requirement taking into account availability of infrastructure, extension services, marketing support etc.

MAJOR HEADS/CONTENTS OF POTENTIAL LINKED PLAN ARE AS UNDER:

• Short Term Credit for Production & Marketing –• Crop Loans.• Investment Credit for Agril. & Allied purposes. • Agriculture Sector.• Minor Irrigation• Land Development.• Farm Mechanisation• Plantation and Horticulture

• Forestry and Waste Land Development• Allied Sector• Animal Husbandry

– Dairy Development– Poultry Development– Sheep, Goat & Piggery Development– Fisheries Development– Storage Godowns / Market yards.– Renewable Source of Energy and Waste

Utilisation– Other Allied activities- Bullock Carts. Etc.

• Non Farm Sector.• Investment Credit for NFS activities.• Working Capital Requirements for NFS

activities. • Agro and Food Processing• Other Priority Sector.

• Infrastructure support.• Support for Govt. Sponsored

Programmes.• Policy Initiatives.