Land Development Banks (LDBs) or Cooperative Agricultural and Rural Development Banks (CARDBs)

Land Development Banks (LDBs) or Cooperative Agricultural and Rural Development Banks (CARDBs)

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

Agriculturists require long-term financing in addition to short-term finance for Land improvement projects, debt repayment, and the purchase of agricultural equipment and other tools. Traditionally, financial institutions and other organisations tended to handle the long-term needs of farmers. However, this credit source was revealed to be flawed and was the cause of the exploitation of farmers. Due to the majority of their deposits being demand (short-term) deposits, cooperative and commercial Banks are by definition unable to offer long-term loans. As a result, there was a huge need for a specialised organisation to give farmers long-term financing. An initiative in this regard was the founding of Land Development Banks, often known as cooperative and Rural Development Banks (CARDBs). The Land Development Banks have limited liability but are registered as cooperative societies. These Banks are organised in two tiers:

(a) There are State Cooperative Agricultural and Rural Development Banks (SCARDBs), or state or central Land Development Banks, at the state level, usually one for each state. Prior to this, they were known as Central Land Mortgage Banks,

(b) State Land Development Banks, also known as SCARDBs, have local branches, as do primary Land Development Banks, which are now known as primary cooperative agricultural and Rural Development Banks (PCARDBs).

The state Land Development bank's branches serve as the major Land Development Banks in several states. The state cooperative bank serves as the state Land Development bank in Madhya Pradesh. There are multiple state Land Development Banks in various states including Andhra Pradesh, Kerala, and Maharashtra. Similar to this, each state has its own organisational structure for the main Land Development Banks. The All-India Land Development Banks' Union is a federation of Land Development Banks that has been established at the national level.

Capital - Share capital, reserves, deposits, loans and advances, and debentures are some of the sources of funding for Land Development Banks. The largest source of funding is through debentures. The state Land Development Banks are the ones who issue the debentures. They have a fixed interest rate, a 20 to 25 year maturity, and the state government guarantees them. Cooperative Banks, commercial Banks, the State Bank of India, and the Reserve Bank of India have all subscribed to these debentures. The Land Development Banks also offer rural debentures for up to 7 years in addition to the regular debentures. Farmers, panchayats, and the Reserve Bank all put money down on these debt obligations. By providing money to state governments so they can contribute to the share capital of these Banks and by investing in regular and rural debentures, the Reserve Bank significantly aids in the financing of Land Development Banks.