Consider the following statements : 1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks. 2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies. Which of the statements given above is/are correct ?
- (a) 1 only
- (b) 2 only ✓ UPSC's answer
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Why the answer is (b)
• The short-term cooperative credit structure is three-tiered: State Cooperative Bank → District Central Cooperative Banks (DCCBs) → Primary Agricultural Credit Societies (PACS).
• Statement 2 is correct: DCCBs' core function is to refinance and supply funds to PACS, which lend directly to farmers.
• Statement 1 is wrong: scheduled commercial banks now provide the bulk (roughly 70–75%) of agricultural credit; the cooperatives' share has fallen to about 10–15%.
• NABARD refinances the cooperative structure.
• Hence 2 only, option (b).
Why the other options are wrong
- (a) 1 only
- Statement 1 is wrong: commercial banks deliver far more farm credit than DCCBs.
- (c) Both 1 and 2
- Statement 1 is wrong.
- (d) Neither 1 nor 2
- Statement 2 is correct: DCCBs fund PACS.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.