Task force says Rs 15,000 cr needed to revive co-ops

The finance ministry-constituted task force for revival of co-operative credit institutions has said Rs 15,000 crore would be needed over the next three-four years to revitalise the cooperative banks.

It proposed that the assistance be shared by the Centre, the states and the cooperative credit structure.

Mooting an autonomous and self reliant cooperative system, the taskforce, headed by agriculture economist A Vaidyanathan, said the financial assistance would be contingent to legal, regulatory and institutional reforms.

These include conduct of special audits to ascertain true and fair picture of financial impairment at different levels, changes in the legal framework, conduct of elections and return of government share capital.

The taskforce submitted its report to Finance Minister P Chidambaram on Wednesday. It also suggested that the state governments should cease to interfere in the financial management of state and district cooperative banks.

"Equity contributed by state governments and their representatives on the board have to be retired and they should cease to interfere in matters relating to financial management," the report said adding that users of core services of cooperative credit society (borrowers and depositors) should have full voting rights so that they can meaningfully participate in the management of the institution.

The taskforce has drafted a model legislation to be introduced by state governments either as a stand alone legislation or incorporated as a special chapter in their existing cooperative societies act.

In order to implement its recommendations, the taskforce has suggested the constitution of an empowered implementing and monitoring committee at the national, state and district levels comprising representatives of the principal stakeholders.

Nabard has been designated as the nodal agency for implementation of the phases and other aspects of technical assistance. The report noted that the share of cooperatives in the credit purveyed to the rural sector has been declining over the last decade from around 62 per cent in 1992-93 to around 34 per cent in 2002-03.

Further, accumulated losses of the system today stand at Rs 9,277 crore in 2002-03 and the number of District Credit Cooperative banks not complying with the minimum capital requirements stand at 144 out of 367.