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Our Bureau

Bangalore , Oct. 23

THE Centre is examining a proposal to allow post offices to begin disbursal of credit in the rural regions.

Speaking at the launch of the platinum jubilee function of Vijaya Bank, the Finance Minister, Mr P. Chidambaram, said that a pilot project was in the process of being launched in Maharashtra.

"If the results are positive, we will launch the project in the rest of the country as well." For the purpose, some amendments would have to be made in the statutes, he added.

According to Mr Chidambaram, the Government is determined to enhance credit delivery in the rural areas.

Restructuring PACs: With this intention, the States have been included for upgrading and restructuring the primary agricultural societies (PACs). Discussions have already been held with the Chief Ministers on the subject, he said.

Based on the recommendations of the States, the Centre is prepared to place the proposal before the Cabinet. The cost of restructuring of the PACs in the country has been estimated at Rs 15,000 crore, he said. "We are prepared to bear the expenditure for the purpose."

In addition, the Centre is also prepared to meet the cost of setting up a separate contingency fund to revival of the co-operative sector, he added.

Besides, the Finance Ministry has asked Prof A. Vaidyanathan, who had recommended the restructuring of the PACs, to also suggest restructuring of the long-term rural lending institutions like land mortgage banks, Mr Chidambaram said.

Revival of these institutions is essential to ensure sustained growth in the farm sector, he added.

However, the long-term aim of the Government is to completely root out rural moneylenders and replace them with strong lending institutions such as commercial banks, co-operative banks, regional rural banks, micro-finance institutions, and PACs.

Rural credit on the rise: On the performance of the Government in rural credit delivery, he said that the banks had advanced farm credit equivalent to Rs 1,15,000 crore last year, well in excess of the target.

This year, the Government has fixed a target of Rs 1,41,000 crore and the Finance Minister was confident of surpassing it. Similarly, the Government is hopeful of setting up 5.85 lakh self-help groups in the country over a three-year period.

Later, speaking to newspersons, Mr Chidambaram said that the Government was monitoring inflation. "If necessary, we are prepared to resort to monetary or fiscal measures to contain it."

Vijaya Bank cuts rates: Earlier, Mr M.S. Kapur, Chairman and Managing Director of Vijaya Bank, announced a reduction in lending rates by 0.5 percentage points to housing, farm, education, and small-scale sectors.

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