Govt guarantee for Nabard refinance loans to co-ops

The State Government will stand guarantee to refinance loans from the National Bank for Agriculture and Rural Development (Nabard) to the counterpart apex bank at the State-level.

This would translate into incremental Nabard refinance loans to the Kerala State Co-operative Agricultural and Rural Development Bank (KSCARDB), according to the Chief Minister, Mr Oommen Chandy.

DEPOSIT TAKING

The Chief Minister said this at a function here on Wednesday held on the occasion of the State-level apex agricultural and rural development bank being authorised to accept deposits from the public.

The Chief Minister handed over the sanction certificate to Mr Solomon Alex, President of the KSCARDB.

He hoped that the farmers and rural people in the State would benefit from enhanced access to low-interest loans through the primary co-operative land banks.

There are 46 such primary co-operative land banks with KSCARDB at the helm. The KSCARDB proposes to disburse up to Rs 1,000 crore in loans during the current financial year.

ADDITIONAL EQUITY

The Chief Minister said the State Government would only be too willing to forego the claim of commission on the guarantee, if the KSCARDB were to accept the same in lieu of infusion of additional equity of an equivalent amount in the bank.

This would in turn enable the bank pass on the savings to ordinary borrowers in the rural areas even as the State Government's equity in the bank increases by the same extent.

Until now, the KSCARDB was allowed to merely route refinance loans from NABARD and National Cooperative Development Corporation (NCDC) to its customers.

With the bank now winning sanction to accept deposits from the general public, it could work on expanding its resource base.

MOU WITH CENTRE

The Chief Minister also sought to use the opportunity to clarify the State Government's position with regard to implementing the Vaidyanathan Commission recommendations for cooperatives on a ‘selective basis.'

The State Government has decided to sign a memorandum of understanding with the Centre in this regard with a view to reforming the co-operative sector through legislations.

This has invited criticism from sections of largely politically-oriented cooperative sector in the State.

PACKAGE BENEFITS

Mr Chandy said he was aware of the fears being expressed over the decision to sign the MoU with the Centre.

“Even my own Cabinet colleague in charge of co-operatives has raised some apprehensions. But we can articulate them before the Centre and get them corrected,” he said.

The moot point is that an opportunity to avail of the benefit as offered by the package aiming to strengthen the cooperative sector should not be wasted, he added.

vinson@thehindu.co.in