The State Agricultural Credit Corporations Act, 1968 was enacted on December 29, 1968 with an intention to provide for the constitution of States and Union Territories of Agricultural Credit Corporation and other issues connected with the subject. The Act defines ‘agricultural marketing society’ as the co-operative society established for the purpose of marketing the agricultural products. An ‘agricultural processing unit’ is a co-operative society which consists of progression of agricultural products. The ‘co-operative farming society’ is the co-operative society the purpose of which is to cultivate the land on a co-operative system.
The Act provides for the constitution of Agricultural Credit Corporation in any State or Union Territory by the appropriate Government. But in certain States Corporation shall be established only under the advise of the Central Government and the advise shall be given by the Central Government only after discussion with the Reserve Bank of India. The corporation shall have the status of a body corporate with continuous succession and common seal, with authority to purchase, hold and sell off property and enter into agreement and the right to litigate. The authorized capital of the Corporation shall be fixed by the appropriate Government but it shall not be lower than rupees one crore or more than five crores. But where the capital determined is less than five crores, the appropriate Government shall enhance the capital to a maximum of five crores. For this purpose the appropriate Government shall seek the advice of the Central Government. Further, the authorized capital shall be parted into different number of shares as fixed by the appropriate Government and shall be issued to the parties as fully paid-up shares in the manner determined by the appropriate Government.
From the capital issued the forty percent of the share capital shall be subscribed by the Central Government and twenty percent by the State Government, where the Corporation is established in a State. But where the Corporation is constituted in the Union Territory, fifty percent shall be subscribed by the Central Government of the share capital. Additionally, the Reserve bank can also subscribe share capital of twenty percent. The Food Corporation, State Banks, Corresponding new banks, subsidiary banks and other banking companies, if needed, can subscribe thirty percent from the aggregate share capital. The Act provides that the share of a Corporation shall not be transferred.
The administration, direction and supervision of the activities and business of the Corporation shall be carried out by the Board of Directors who is to perform the functions and powers that are to be performed by the Corporation. The Board shall comply with the principles of business and shall consider public interest while discharging functions. The Corporations shall be assisted by the directions in the policy matters consisting public interest, as the Central Government may assign to it under the advice of Reserve Bank. Under the Corporation, the Board of Directors shall comprise of:
- One director who is designated by the Central Government and he shall act as the Chairman of the Board;
- Two directors designated by appropriate Government out of which one of the director shall have special knowledge of co-operation and who does not work under the Central or the State Government, Reserve Bank, Corresponding Bank, Subsidiary Bank, State Bank, Food Corporation or Banking company;
- One director designated by the Reserve Bank;
- Two directors elected in the manner specified by the share holders as per the provisions of the Act;
- A managing director who is appointed by the Central Government after advice of the Board.
The Board is empowered to constitute executive committee to perform the responsibilities as delegated to it by the Board. The Board shall grant loans, issue letters of credit, deal with shares, debentures, securities, purchasing and selling bonds, negotiate loans and advances, conduct agency business, purchase and sell properties etc. The Corporation shall manage two funds viz; Agricultural credit fund or Stabilization fund and the Reserve Fund.
The Act applies certain provisions of the Reserve Bank of India Act, 1934, The Bankers’ Books Evidence Act, 1891 and Banking Regulation Act, 1949 to the activities of the Corporation. The Act also made changes to the Agricultural Refinance Corporation Act, 1963 through amendment.