Rs 14,500-cr package for revamp of co-op banks

The finance ministry has finalised a Rs 14,500-crore package spread over three years for restructuring co-operative banks.

"The Centre is expected to provide Rs 10,000 crore and the rest would be funded by the state governments and the co-operatives. Various agencies like the World Bank, ADB and KFW Development bank have approached us for funding the restructuring," a senior ministry official said.

Germany financial institution KfW has proposed to provide a support of $10 million (Rs 462 crore). The Centre is mulling soft loans from multilateral agencies to finance the package.

Budgetary support may be provided, if required.

According to the proposal, the states will be asked to reduce their shareholding in cooperatives to a maximum 25 per cent. The proposal is expected to be sent to the Cabinet for approval shortly, the official said.

The Centre has also relaxed the eligibility requirements for the co-operatives to avail the funds from the package.

"Instead of limiting the funds to those co-operatives which have shown 50 per cent recovery of loans, we have relaxed it to 30 per cent recovery with 10 per cent recovery every year," the official added.

While the Vaidyanathan Task Force had suggested a ratio of 53:31:16 for sharing the financial burden of the Rs 15,000 suggested by it, the official said the share of Centre will be much higher at about 70-75 per cent.