The Hindu Business Line : Agri coop banks to get Rs 13,596-cr funds infusion

THE funds-starved agricultural cooperative banks are set to receive Rs 13,596 crore, with the Union Cabinet having cleared the sanction in order to revitalise the sector.

Hailing the move, the All India Cooperative Bank Employees' Federation (AICBEF) General Secretary, Mr P. Balakrishnan, said this would help the cooperative banks re-emerge stronger.

Of the amount cleared, Rs 9,245 crore is to be borne by the Central Government and the rest by the States. Mr Balakrishnan said that Rs 3,807 crore of the States' share would go towards compensating the losses suffered by the Primary Agricultural Cooperative Banks/Societies due to their involvement in the public distribution system. "Considering the poor financial health of the State Governments, the Centre is prepared to extend soft loan assistance. The responsibility of the cooperative credit institutions have been slashed to 4 per cent and even here, these institutions would have to bear only those losses to which they are solely responsible," he explained.

He lauded the Government's decision to limit re-capitalisation to those PACS that collected 30 per cent of the outstanding amount (as on June 30, 2004.) He suggested that this can be extended to all PACS/Banks, without insisting on the minimum collection of 30 per cent, provided the losses were due to bona fide and directed lending. "The State Governments could get the assistance from the Centre. They have nothing to lose, but for some reduction on their hold over the cooperative credit institutions in collection and disbursement of loans."

The AICBEF has once again reiterated its demand for bringing the cooperative banks under the supervision and control of the Reserve Bank of India.