Task forces, called state-level implementing monitoring committee (SLIC), have been set up to revive rural credit institutions. Such collaboration will help in detecting problems and taking prompt action to arrest any slippage.
SLIC could gain from the experience of the RBI's task force for urban cooperative banks (UCB) in reforming cooperative banks. We are thus thinking of approaching the central bank, Nabard chairman Umesh Chandra Sarangi said.
SLIC has representation from Nabard and state registrar of cooperatives. It will meet every quarter to review the progress in reforms and monitor financial health and governance practices in rural bodies, Sarangi said. Another Nabard official pointed out, "While it will be useful to learn from the UCB revamp, we also have to keep in mind that the pattern of working and nature of problems faced by rural credit bodies is different."
Most of UCBs' problems were about mounting bad loans, whereas many rural bodies also have had to face issues of political interference and governance.
Almost 20 states covering 95 per cent of the primary agriculture credit societies have signed a memorandum of understanding (MOU) with NABARD to revamp rural credit institutions in the respective states.
Besides financial assistance, the packages involve upgrading accounting practices, undertaking reforms in governance and training the staff.
The share of the cooperative credit institutions in agricultural credit has fallen from 62 per cent in 1992-93 to 34 per cent in 2002-03, according to NABARD data. Their financial health has also seen a downturn. The accumulated short-term credit losses are estimated to be Rs 10,000 crore and those in the long-term advances are about Rs 4,000 crore.
