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Co-operative credit structure: Committee recommendations


The committee on revitalisation support to the co-operative credit structure, headed by minister of state for finance Balasaheb Vikhe Patil has recommended that financial support for each such credit institution be split between the Centre and the respective State Governments in the proportion of 60:40. However, for the North-Eastern States and Jammu and Kashmir, it has suggested that the Centre's proportion be raised to 90 per cent.

Committeee has recommended that the revitalisation assistance could be in the form of bonds issued by the Centre and State Governments. These bonds should be self-extinguishing in nature, and after 10 years, the bonds will be extinguished without any redemption of the principal amount.

The committee has also said that a panel be constituted comprising of the Secretary (Finance), Secretary (Agriculture), Deputy Governor, RBI, and Chairman, Nabard and representatives of State Governments for policy direction, review, and monitoring of the cooperative credit institutions. Similar committees may be constituted at the State-level, it added. The panel has said that the decision on de-layering of the credit system should be left to the individual State.

For computation of assistance to the co-operative banks the committee has suggested that accumulated losses and interest overdue for over three years should be the basis of calculation.

The committee has also said that scheduling of district co-operative banks will allow them to borrow funds from Reserve Bank of India and National Bank for Agriculture and Rural Development (Nabard) which will reduce their dependence on state co-operative banks.

Committee hopes that recapitalisation would help the co-operative banks transform themselves into scheduled commercial banks.



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