Bengal co-operative bank seeks cheap money

After the farm loan waiver around 700,000 new farmers in the cooperative sector would be eligible for fresh loans in the state.

To meet this incremental demand WBSCB had approached National Bank for Agriculture and Rural Development (Nabard) for an additional allocation of Rs 730 crore, over and above normal allocation of Rs 580 crore at a concessional rate of 3.5 per cent.

However, Nabard had indicated that the additional liquidity support would be extended but for this the interest rate would be as high as 9 per cent.

"Having the funds at 9 per cent and routing it through a two or three tier cooperative structure, the interest rate for the ultimate borrowers cannot be less than 13 per cent whereas the small and marginal farmers are entitled to a rate not exceeding 7 per cent on their crop loan," said Samir Ghosh, chairman of WBSCB, in his letter to the minister.

However, Nabard has stated that it could reduce the rate of interest provided it received adequate government subvention.

The farm loan waiver amounted to Rs 525 crore for WBSCB.

Till March 31, 2008, WBSEB has disbursed Rs 950 crore as crop loans. "If Nabard did not provide liquidity support to the to the Cooperative banks at a particular rate of interest of around 2.5 per cent, it would be impossible to issue fresh loans," Ghosh added.