The Hindu Business Line : Chidambaram to hold talks with CMs on co-op credit

THE Parliamentary Consultative Committee of the Ministry of Finance on Wednesday endorsed the report of the task force appointed to recommend an action plan for reviving the rural cooperative credit institutions in the country.

Addressing the meeting, the Finance Minister, Mr P. Chidambaram, said that he would convene a meeting of the Chief Ministers soon to discuss the report.

He said that if States were ready to accept the conditionalities of bringing about legal, administrative and structural changes and share its financial liabilities, the Centre would release financial assistance linked to the conditionalities.

Mr Chidambaram said that the report of the task force, headed by Prof Vaidynathan, if implemented, would bring about considerable improvement in functioning and viability of credit institutions in the rural sector.

The task force has felt that any financial restructuring without addressing the root causes of the weaknesses of the cooperatives by bringing about structural reforms would not result in a sustained revival of the system.

The financial restructuring will also not be effective without specific legal measures for enabling cooperatives to evolve into democratic, self-governing and financially well-managed institutions.

The committee has, therefore, recommended that the approach for financial restructuring should be contingent on commitment to and implementation of legal and institutional reforms.

The recommendations envisage a bottom up approach in as much as without strong Primary Agricultural Co-operative Societies (PACS), the superstructure cannot become and remain strong.

The major aspects of the financial restructuring include criteria for determining the eligible purposes and institutions, quantum of assistance required, pattern of sharing the liability, conditionalities attached and the time frame.

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