The agriculture ministry has finalised a Rs 8,000-crore package for the rehabilitation and restructuring of the co-operative credit infrastructure.
The co-operatives, under the package, will be allowed to float 10-year bonds in the market, and the Centre and the state governments will pay 10 per cent interest on these bonds. These funds can be utilised by the co-operatives to cleanse their balance sheets.
Announcing this at the meeting of the state co-operative ministers on economic reforms, agriculture minister Ajit Singh said this benefit would be available only to those states that have amended their co-operative laws on the lines of the Multi-State Co-operative Law. The states will also have to initiate reforms in the co-operative sector, such as holding regular elections, professional audit and freedom to the co-operatives to hire their own cadre.
He pointed out the Union government had recently got the Multi-State Co-operative Societies Act passed by Parliament to democratise co-operatives, to provide them with functional autonomy and free them from government control.
Praising the states that had passed similar laws, the minister called upon other states to do the same to free the co-operatives from bureaucratic shackles. He mentioned the National Co-operative Development Corporation (NCDC) Bill had been passed in this session of Parliament, which would facilitate direct lending by the NCDC to the co-operatives without guarantee by the state governments.
During the meeting, the states agreed to implement the legal and credit sector reforms, finalised by the task force constituted for the implementation of the new national co-operative policy.
The states also agreed to carry out other reforms, such as simplification of registration procedures, providing deemed registration status if the society was not registered within three months, not superseding the co-operative boards by the government or the registrar of co-operatives unless the state has got over 51 per cent equity holding.
There was agreement on enabling the co-operatives to function as autonomous, self-reliant, member-driven and democratically managed institutions. The societies will have the freedom to float subsidiaries and holding companies and enter into joint ventures. They will be completely free to take their financial decisions for raising resources and investing their funds.
Besides, the co-operative societies will be allowed to conduct audit on their own through chartered accountants. To provide credit at a cheaper rate, the primary agricultural co-operative societies will be permitted to be converted into mini banks.
