Bengal co-op bank waives penal interest

In view of spurt in crop loan defaults for the year 2007-08, the West Bengal State Cooperative Bank(WBSCB) has decided to waive the penal interest of 4 per cent, over and above 7 per cent, on about 4.5 lakh crop loan defaulters.

The total outstanding dues were Rs 440 crore. Last year, the total short term credit disbursed by cooperative banks as crop loan in the state was Rs 947 crore.

Thus, about 4.5 lakh defaulters will have to pay an interest of Rs 7 per cent, against the stipulated amount of 11 per cent. The sudden rise in defaults was in anticipation of extension of debt waiver scheme to the year 2007-08, said Samir Ghosh, chairman of the bank.

Earlier, WBSCB had appealed the Union finance ministry to extend the debt waiver scheme, so as to give some relief to the borrowers who had taken crop loans after March 2008. The Central debt waiver scheme, at a cost of Rs. 71,680 crore, was applicable to borrowers who had taken loans up to March 2007.

The total demand for the short term cooperative credit in West Bengal was about Rs 551 crore, from 6.4 lakh defaulting borrowers. Till now, about Rs 308 crore, or 56 per cent of total dues, had been made available to the state cooperative bank sector.

"An amount of Rs 243 crore is still due, which should be disbursed to the borrowers urgently, to enable the cooperative banks to cater to fresh loan demand," said Ghosh. At a meeting of central cooperative banks, including WBSCB, at Digha in West Bengal, the Union government was urged to to consider debt waiver relief to defaulters who had taken loans before 1997, as they had been excluded under the scheme.

The total number of such defaulters in the state was estimated at 3 lakh, with total outstanding loan at Rs 300 crore. This year, the total short term cooperative credit in the West Bengal was pegged at Rs 1,450 crore.

It was also decided at the conference, that the state would issue five lakh more Kisan Credit Cards (KCC), during 2008-09, taking the total number of KCC cards issued in the state at two million.

Renewed efforts would be made to extend credit to rural poor by increasing the total number of self help groups sponsored by the cooperative sector from the existing 1,65,000 with 1.3 million members. The conference appealed to the state government to increase deposits at cooperative banks, as they would soon switch to core banking solutions.