India: Rural Cooperative Credit Restructuring and Development Program

Evaluation Document | 3 September 2015

The role of finance is a critical input for strengthening the rural economy and agricultural production base in India. However, the response of the formal rural finance system had been increasingly inadequate. The rural financial paradigm, for the most part, was driven by credit expansion through government-owned or controlled financial institutions, particularly within the credit cooperative structure comprising of primary agricultural credit societies, district central cooperative banks, and state cooperative banks. Given its role in rural transformation, it was of vital importance to reform the credit cooperative structure to make financial services to the rural poor more efficient and less expensive. Greater access to capital would support agricultural growth, which would contribute to increased income and employment for the poor. The Asian Development Bank (ADB) approved a $1 billion loan for the Rural Cooperative Credit Restructuring and Development Program in December 2006 to help the government carry out its reform agenda to improve rural households’ access to affordable financial services through an efficient CCS. The program supported the reforms of credit cooperative structure in five participating states—Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra, and Rajasthan—with the design based largely on the work of India’s Vaidyanathan Committee, which was convened by India’s Ministry of Finance in December 2004.

This report validates the completion report’s assessment of the project. IED overall assessment: Less than successful.