What is the History of the Land Development Bank

There are 18 Central Land Development Banks and 893 Primary Land Development Banks across the country. Which has 1740 Primary Committees and Branches, which is inadequate and like a drop in the sea. The number of loans given by land development banks increased to Rs 489 crore in 1981. In our country, the maximum limit for providing loans up to 12 parts of the value of land held as Land Development Bank security ranges from 10 thousand to 15 thousand rupees.

Loans below Rs. 400 are provided by primary credit societies and are given at a rate of interest ranging from 4% to 51.2%. In our country, so far, most of the loans have been given by these banks for amortization and only 10 per cent for land reform works. The number of loans given by these banks to individual individuals during 1983-84 was Rs 158302.

In 1975-76, loans of Rs 230 crore were given by these banks. Then in 1976-77, these banks gave loans of Rs 330 crore to farmers. In 1990-91, these banks gave Rs 902 crore as loans to the farmers and in 93-94 AD, the target was Rs 15100 crore.

What is Land Development Bank? 

Land Development Banks are those institutions that give loans to farmers for the long term by keeping the land mortgaged. They give long-term loans to farmers. These types of banks are called land mortgage banks or land development banks.

These are also called land mortgage banks. Land development banks have been established to meet the long-term financial needs of farmers. These banks arrange long-term loans for farmers to buy land, make permanent improvements on land or pay off old loans, etc.

The structure of these banks is two-tier. Central Land Development Bank has been established at the state level and Primary Land Development Banks at the district or taluk level. In some states, such as Jammu and Kashmir, and Uttar Pradesh, this structure is unitary, that is, there are Apex Land Development Banks, which carry out their activities directly through their branches at the district level.

Types of Land Development Bank

There are many types of land mortgage banks. They can be mainly divided into three categories, which are as follows:

co-operative land development bank

This type of bank is set up on a pure cooperative basis. The persons who want to loan together form an association. Mortgage bonds are obtained by withdrawing interest at a fixed rate and are payable to the carrier. Apart from this, capital can also be obtained through loans. Examples of such banks are found in Germany.

non-cooperative land development bank

These banks serve the purpose of profit. It gives long-term loans to farmers under the guise of land. In practice, such banks are controlled to some extent by the government. This type of bank is found in all the countries of Europe, but there is no such bank in India.

mixed land development bank

This type of land mortgage bank is a composite form of the first two types of banks and is established by a consortium of borrowers. They have share capital and work on a limited responsibility basis like joint stock companies. There is a similar bank in India.

Functions of Land Development Bank

Land Development Bank gives loans to farmers for the long term by keeping the land mortgaged. Long-term loans are given for the following purposes:

(i) To repay old loans

(ii) For consolidation of land and other reforms to make it fertile.

(iii) For purchase of land.

(iv) Construction of wells for irrigation and purchase of valuable machinery. These loans are usually given for a period of 4 years to 20 years. So far in practice, the land mortgage bank gives loans only to repay the loan.

Reason for the slow progress of land development banks

In India, land development banks have not shown any promising progress in other states except Madras state. Some of the main reasons for the slow progress of these banks are as follows:

(i) the functioning of these banks is inefficient and these banks are run by unskilled employees,

(ii) Data on agricultural income and expenditure is not available in our country. As a result, land mortgage banks are not able to accurately estimate the credit requirement of the farmer before giving loans,

(iii) So far, 90 per cent of the loans by these banks have been given for payment of old loans, and only 10 per cent of the loans have been given for productive works;

(iv) the lending system of these banks is faulty and unscientific,

(v) Public does not have much faith in debentures issued by land development banks. As a result, these banks have failed to raise the necessary funds, and

(vi) The agricultural economy in our country has not yet seen a more comprehensive and practical form of land reform works. The report of the All India Village Credit Survey Committee states that regarding the land development banking system in India, it can be said that it collects an insufficient amount of capital in such a way that it has a defective relationship with demand and often it lends in such a way that it is not related to development. This system works as if old loans and not production have a primary claim on it. They are mainly accessible to big farmers and that is too late.

Suggestions for the progress of land mortgage bank

The All India Rural Credit Survey Committee has given some suggestions for the development of land mortgage banks as follows:

(i) Priority should be given to productive loans by land mortgage banks,

(ii) The Central Land Development Bank should contribute the share capital of the Primary Land Development Bank to raise adequate funds with the Primary Land Mortgage Banks,

(iii) Debentures should be issued to collect the capital of the Primary Land Development Bank. They should be purchased entirely by the Reserve Bank of India, the State Bank of India, and the State Government. Letters of credit issued by land development banks abroad are very popular among the public and they appropriate their money in it with full confidence. Unfortunately, this is not the situation in our country. Therefore, the State Governments in India guarantee the principal and interest of these debentures,

(iv) The State Governments should give some relaxation in stamp tax and registration fees etc. to the Land Development Banks and the State Governments should assist in their management and expenditure for the successful operation of these banks in the underdeveloped areas;

(v) Training centers should be set up to train employees of land mortgage banks and

(vi) Loans should be given to these banks at a low rate of interest.

If you liked this article, you have got to learn something from it, then please share this post on social networks such as Facebook, Google+, Twitter, etc. to show your happiness and curiosity.