Land Development Banks

Land Development Banks in India are of quasi-commercial type. Although they are all registered under the Co-operative Societies Act, they are associations of borrowers as well as non-borrowers organized on the principle of limited liability.

The working capitals of LDBs are raised from share capital, deposits and debentures, and borrowings from the State Bank of India, commercial banks and the State Co-operative Banks. However, a large part of their funds are raised through long-term debentures. The debentures can be issued only by the Central Land Development Banks and not by the Primary Land Development Banks.

Under its federal structure, the LDB consists of two-tier institutions: (i) the Central Land Development Bank at the State level, and (ii) the Primary Land Development Bank at the district or Taluka level.

1. Primary Land Development Bank at district level with branches at taluk level

These banks were originally organized to cover one or a few taluks in the district. At present they are eligible to cover one development block. All land owners are eligible to become members and borrow funds by mortgaging their land. The principal borrower is enrolled as „A‟ class member and others who have interest in the mortgaged property are admitted as „B‟ class members.

2. Central Land Development Bank

These members of the CLDBs are the PLDBs and a few individual promoters. It grants long-term loans to agriculturists through the PLDBs and branches of CLDBs. It raises funds through floating debentures, which are guaranteed by the State Government. When PLDB obtains loan from the CLDB, it assigns the mortgage deeds obtained from the borrowers to the CLDB. The CLDB floats debentures and raises funds against the security of these properties. The NABARD and LIC subscribe for the debentures in large amounts and the former also extends refinance assistance to LDBs.

All primary Land Development Banks are federated into Central Land Development Bank at the State Level. In some States, there is “ Unitary structure” wherein, there is only one State Land Development Bank at the state level operating through its branches and sub-branches at district and below levels.

Practice question:

1. Under the farm sector, the long-term loans are advanced for which of the following purposes?
1. For digging of wells
2. For establishment of sprinkler irrigation
3. For Land Reclamation
4. For Village and cottage industries


a) 1 and 2

b) 1. 3 and 4

c) 1, 2 and 3

d) All

Ans: c
Exp: Village and cottage industries comes under non-farm sector.