The Hindu : Tamil Nadu / Chennai News : Mixed reaction to plan for cooperatives

Online edition of India's National Newspaper
Monday, Sep 12, 2005

Tamil Nadu

Tamil Nadu - Chennai

Mixed reaction to plan for cooperatives

S. Vydhianathan

Classification of banks opposed

CHENNAI: Recommendations made by the task force set up by the Centre under the chairmanship of A. Vaidyanathan to suggest ways for reviving cooperative institutions in the country have elicited divergent views.

Prime Minister Manmohan Singh had recently convened a meeting of Chief Ministers and Finance and Cooperation Ministers to discuss the recommendations and steps to implement them.

Managing Director of the National Federation of State Cooperative Banks B. Subrahmanyam termed the recommendations "unimplementable" as they failed to address the basic issue of cooperative bodies "in their true perspective." The overall objective of the task force should be to revive and revitalise cooperative institutions.

Mr. Subrahmanyam opposed imposition of conditions on cooperative bodies for receiving the recapitalisation fund. Opposing the classification of "eligible" and "ineligible" cooperative banks on the basis of their financial position, he said it would further reduce the number of cooperative institutions eligible for resource support.

Revitalisation scheme

The Managing Director of the Federation, an apex body of state cooperative banks, said the overall objective should be to convince all stake holders/agencies to participate in the revitalisation scheme. The time frame suggested by the task force would unnecessarily delay the process of recapitalisation assistance.

General secretary of the All-India Cooperative Bank Employees Association, P. Balakrishnan, said the committee had sincerely tried to accomplish the task entrusted to it. It had brought to the fore the essentials of cooperative credit movement, the need to revamp them and suggested ways and extent to which they could be given aid.

Mr. Balakrishnan said the panel had also suggested amendments to relevant laws by taking into account political, economic and social factors surrounding the cooperative credit institutions for decades. But he expressed concern over non-inclusion of long-term agricultural credit institutions, namely, the State and primary agriculture and rural development banks. Recapitalisation to cooperative banks normally included ARD banks.

Recapitalisation fund

A top official of the State Cooperative Department here said the recapitalisation fund suggested by the report would be insufficient. Primary agricultural cooperative banks (PACB) in Tamil Nadu alone required Rs. 4,000 crores. But if the eligibility criteria were applied, nearly two thirds of them would have to be closed. As the PACBs met the credit needs of small and marginal farmers their closure would be disastrous. In the absence of institutional credit, poor and marginal farmers would have to borrow at usurious rates from money-lenders.

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