The Hindu Business Line : Bengal provides relief to co-op banks on crop loans

Kolkata, July 13 The West Bengal Government, through an order dated July 11, of the Department of Co-operation, has agreed to provide the desired additional subvention (subsidy) of 2 per cent on own fund involvement of co-operative banks from 2006-07 onwards. This is expected to provide relief to co-operative banks disbursing crop loans, more than two-thirds of which are funded by the co-operative banks themselves from own fund/deposits.

The short-term co-operative credit structure (STCCS) establishment had approached the Government of West Bengal for this benefit as otherwise they would suffer a considerable loss.

According to a statement issued by Mr Samir Ghosh, Chairman of the West Bengal State Cooperative Bank, here today, some 17 District Central Cooperative Banks and three regional offices of State Co-operative Bank have together disbursed crop loans of Rs 835 crore in 2006-07 to about 15 lakh farmers in the State, 90 per cent of whom are small and marginal farmers.

The current year’s (2007-08) target is Rs 1,075 crore, 30 per cent more than the 2006-07 disbursals. Effective 2006-07, the commercial banks, regional rural banks and cooperative banks were required to provide crop loan to farmers up to a maximum per capita borrowing of Rs 3 lakhs at the rate of 7 per cent per annum. In order to make up the shortfall between cost of fund and 7 per cent lending rate, the Government of India had extended to Commercial banks and RRBs interest subvention of 2 per cent which was initially denied to the co-operative sector, though the latter was the largest provider of loans to small and marginal farmers.

Facing protests over this discrimination, and after a considerable delay, the same relief was extended to the co-operative sector also. However, this was found inadequate for the three tier co-operative credit structure, as the village-level primary co-operative societies lending to the farmers needed a margin of at least 2 per cent from the higher tier financing coop banks at the district/State level.

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