Strengthening India's Rural Credit Cooperatives

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The Strengthening Rural Credit Cooperatives Project of India will assist in providing members of the Credit Cooperative Bank (CCBs), including small and marginal farmers, with significantly enhanced access to formal finance (credit, savings, etc.), by ensuring that the potentially viable CCBs in the Participating States are transformed into efficient and commercially sustainable institutions. The Project has 4 components: 1) Capacity building Technical Assistance (TA) which will aim to build up the capabilities of CCBs in all three tiers to strengthen their ability to comply with the new legal, regulatory and supervisory framework, improve performance, and achieve longer term financial sustainability; 2) Information technology (IT) which will support the computerization of CCBs within each of the five Participating States (PS) (in a manner that is compatible across states), to enhance the efficiency and transparency of the CCBs through enabling the efficient implementation of the new common accounting system and Management Information System (MIS), and fostering cost efficiencies through facilitating the pooling of costs related to back office transactions; 3) Credit Cooperative System Financial Restructuring Support (FRS), which will support the financial restructuring of potentially viable CCBs by providing recapitalization as a grant (not equity) to wipe out the accumulated losses of CCBs, restore the value of members' capital in the CCBs, and bring these institutions to a minimum capital to risk weighted assets ratio (CRAR) of 7 percent; and 4) Implementation, which will cover the following areas: (a) overall capacity building for project implementation; (b) support for the Special Audits; and (c) support for ensuring effective project monitoring and information flows throughout implementation, covering improved disclosure and accountability mechanisms at all levels (central, state, district and village/grassroots levels).