Punjab and Haryana will seek a reduction in rate of interest on refinance by Nabard to state cooperatives and also demand speeding up of financial inclusion exercise in rural areas with Union Finance Minister P Chidambaram tomorrow.
Chidambaram will meet Chief Ministers of the northern states and heads of public sector banks tomorrow to review the credit requirements and the progress of central schemes.
“We will demand (in the meeting) that the rate of interest on refinance to cooperatives for short-term agriculture loan by Nabard should be brought down to give relief to state cooperatives,” a senior official of Punjab Finance Department told PTI here today.
Terming the current rate of interest on refinance as “very high” for cooperative societies, he said National Bank for Agriculture and Rural Development (Nabard) should reduce the rate of interest from 4.5 per cent to 2 per cent.
Echoing similar views, Haryana Finance Secretary Sanjeev Kaushal said, “We want (from Centre) that refinance rate to cooperative banks by Nabard should be cut down and this issue will be raised in tomorrow’s meeting“.
Punjab and Haryana have 21 and 20 cooperative banks with short term lending to the tune of Rs 4,500 crore and Rs 4,000 crore per annum, respectively.
Both agrarian states will also seek that Nabard should provide at least 75 per cent of total farm credit of cooperatives on refinance basis.
“Currently, only 45 per cent of total cooperative credit is available on refinance terms but we want this percentage should be enhanced to 75 per cent so that minimum deposits of cooperative banks could be deployed for that purpose,” he said.
Punjab and Haryana also want banks to gear up to provide banking facilities in each village under the financial inclusion programme.
“Banks need to gear up to open branches in villages, provide banking services to rural people,” Kaushal said.
“We want each member of family in a village should have a bank account to have an access to banking services either by setting up a branch or through banking correspondent,” Punjab official said.
The delay in appointing common Business Correspondent (BC) in Punjab also posed problems in implementing financial inclusion programme, official said.
Punjab National Bank has been allotted a cluster comprising Punjab, Haryana, Himachal Pradesh and Jammu and Kashmir to appoint a common BC for covering 4,794 villages.
Punjab and Haryana will also demand that the imposition of income tax on state cooperatives should be rolled back, citing that these institutions facilitate only farm credit.
Keywords: rate of interest on refinance by Nabard to state cooperatives, Finance Minister P Chidambaram, Haryana Finance Secretary Sanjeev Kaushal, Business Correspondent, financial inclusion programme.