State to lose control over agri co-ops

State to lose control over agri co-ops

RBI to have major say in its functioning to avoid political interference

The government has decided to amend the Karnataka Cooperatives Act by way of promulgating an ordinance for this purpose. Once the Act is amended, it will help in streamlining the agriculture credit cooperative institutions in the State, Principal Secretary to Finance Department M R Sreenivas Murthy, who is also in-charge Development Commissioner told the State Level Bankers’ Committee meeting held at Vidhana Soudha on Wednesday.

To free these institutions from the State government’s clutches and reviving the short-term cooperative credit institutions are recommendations of Prof Vidyanathan Committee report. The report has also recommended for even retiring the share capital contributed to cooperative societies by the State government.

Once it is implemented, official sources said that the RBI would have the power to appoint top officials of these institutions, including the CEO and decide about investment of funds. Over and above, the RBI will bail out sick and loss making institutions. “The RBI has agreed to release Rs 600 crore to make good the loss incurred by the cooperative credit institutions in the State with March 3, 2004 as the cut off date,” officials explained.
Political interference in the administration of these institutions has contributed to their loss and many are on the verge of closure. Besides, Sreenivas Murthy urged all banks to speed up the process of identifying drought-affected farmers and provide them with loans as relief measures.

NABARD Managing Director H N V Prasad said steps have been initiated to achieve 100 per cent target in providing credit to farmers in the State. It is estimated that about Rs 24,153 crore of credit has to be given to farmers, who are hit by drought and floods in the State.

The RBI will organise an international convention on ‘Financial Inclusion and Financial Education’ in Bangalore in March 2010. The Union Finance Minister will chair the convention, RBI Regional Director B Srinivas said.