Odisha suggests Rs 1,000-cr corpus fund for cooperative banks

State finance minister says Centre needs to issue directions to commercial banks for opening brick and mortar branches in 4,597 unbanked gram panchayats

To help provide technical and financial support to the central and state cooperative banks, the Odisha government has suggested creation of a corpus fund of Rs 1,000 crore at the level of National Bank for Agriculture and Rural Development (Nabard).

“A corpus fund may be created at the level of Nabard which could provide financial and technical support to the state and central cooperative banks for putting a mechanism to capture early warning signals of weakness and put necessary corrective measures for revamping at the right time. The proposed corpus fund would provide financial assistance to the weak banks for a turnaround within a specific time frame,” state finance minister Pradip Amat said at the pre-Budget meeting of state finance ministers called by the Union finance ministry.

The minister cited that availability of adequate resources for development of infrastructure and cooperative enterprises is critical to the furtherance of the cooperative movement and a cooperative development fund is required to augment the capacities of the cooperatives. The fund will also help provide incentive for formation and development of cooperatives for women, unemployed youth, landless labourers, artisans, scheduled castes and scheduled tribes. Amat also stressed on formulating a national programme for promotion of cooperative development.

Touching on the issue of financial inclusion, Amat said, the Government of India (GoI) needs to issue suitable directions to the commercial banks for opening brick and mortar branches in each of the 4,597 unbanked gram panchayats in the state by March 2019.

The State Level Bankers Committee (SLBC) has been sensitive to this issue and has decided to open a brick & mortar branch in each of the 4,597 unbanked gram panchayats of the state, he said.

The minister vented his grievance over inadequate crop loan disbursements by commercial banks in the state.

“Although the share of commercial banks in dispensation of crop loans has reached a level of around 83 per cent of total crop loans at national level, in Odisha, their performance is not satisfactory. In order to motivate the commercial banks/regional rural banks to increase their share in crop loan dispensation, the state government is providing substantial interest subvention on crop loans bringing down the effective interest rate to two per cent. Unfortunately, this has not helped improve the matter. The Union finance ministry may kindly review the matter and urge upon the commercial banks to perform better,” he added.

The state government has also urged the GoI to make available loans at concessional rates to fishermen, weavers, dairy farmers and women self-help groups (WSHGs).