MP co-op banks to get Rs 80 cr relief

Despite the poor performance of district co-operative banks (DCBs), which have advanced virtually no farm credit to farmers in the first quarter of this financial year, the MP government is ready to shell out Rs 80 crore to loss-making district co-operative banks and an additional relief of Rs 120 crore to 2.6 million farmers of the state.

These banks neither show interest in doubling the agri credit nor issue kisan credit cards.

As many as 28 of the 38 district co-operative banks are unable to comply with the Banking Regulation Act, which requires they have capital and reserves with a real and exchangeable value of Rs 25 lakh or more, according to a Nabard study for 2004-05.

Like the previous government, the Shivraj Singh Chauhan dispensation is also extending subsidy from the state exchequer. The central government, on the other hand, is offering grants repeatedly.

"The state government will stump up Rs 80 crore to compensate for losses incurred by these banks in offering short-term agri loans at cheaper interest rates," a chief minister secretariat statement said.

After a recent decision of the state government to slash the interest rate on crop loans from 11 per cent to 7 per cent, state-owned DCBs are expected to disburse loans worth Rs 1,000 crore in the coming rabi season. At the same time, these banks are likely to go deep into the red.

An amount of Rs 1,600 crore has been disbursed during the current kharif season.

As many as 38 district co-operative banks had disbursed Rs 2,000 crore on lending rates ranging from 10.5 per cent to 16.5 per cent during 2004-05, a chief minister secretariat statement said, adding, "2.6 million farmers receive loans from district co-operative banks".

So far (up to June this year), the district co-operative banks, with a network of 791 branches in the state, have sanctioned Rs 1,090.58 crore to only 12,779 farmers.