The Hindu Business Line : TU urges recap funds for primary co-op banks

"The recapitalisation is due to the co-operative banks, as they have suffered interest losses from the year 1990, when the banks waived loans up to Rs 10,000 under the "Agriculture and Rural Debt Relief (ARDR) scheme of the Central Government," the Federation's General Secretary, Mr P. Balakrishnan, said here.

It has been estimated by the Balasaheb Vikhe Patil Committee that the various primary level co-operative banks would need to be recapitalised to the extent of Rs 8,200 crore. The Committee's estimate upscaled the previous estimate of Rs 6,700 crore, which was announced by the Union Minister for Agriculture, Mr Som Pal, in Parliament on July 15, 2001. In his Budget speech of last year, the former Union Finance Minister, Mr Yashwant Sinha, made a "token grant" of Rs 100 crore from the Budget, for the recapitalisation of the co-operative banks.

The Union Government had also said that the State Governments would have to bear 40 per cent of the recapitalisation burden. Some State Governments, such as Andhra Pradesh and West Bengal, have come forward with proposals for contributing their share.

Mr Balakrishnan pointed out to Business Line that the Governments could recapitalise the banks by issuing recapitalisation bonds, as was done in the case of the public sector commercial banks. The Federation further demanded that all the co-operative banks should be brought under the exclusive control of the RBI, "to end the political stranglehold exercised through the Registrar of Co-operative Societies".

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TU urges recap funds for primary co-op banks