Ordinance May Be Extended To Co-Operatives

The new minister of state for finance and company affairs, Anandrao V Adsul, said that the government was considering extending the ambit of the non-performing assets (NPA) Ordinance, empowering banks and financial institutions with more powers to recover bad debts, to include co-operative banks.

"The securitisation ordinance was not applicable for cooperatives. But I have talked to finance minister on this issue and the ordinance may cover co-operatives also," Adsul said after assuming office here.

On the financial irregularities in cooperatives, Adsul said, "Any financial institution which comes under the Banking Regulation Act should be regulated by the Reserve Bank of India (RBI)." He attributed the problems in the sector mainly to the dual control of RBI and the state governments.

Adsul said the government was considering stringent norms for cooperatives including quarterly disclosures of financial results including data on advances and investments.

Apart from ensuring higher credit flow from cooperatives, he said that the bank credit still does not reach the needy.

"The schemes are made for common man and small farmers. But even if it reaches to the rural sector, the bank branches don't ensure they reach to the needy," the Shiv Sena MP from Maharashtra, who was sworn in as minister on Monday, said.

He also said that a part of the problem owes its origins to the interference of politicians in the cooperative sector.

Adsul also said there was a need to increase insurance penetration and cover majority of the population.

"LIC and GIC has done a commendable job in all these years but more needs to be done," he said. In the backdrop of droughts virtually every alternate year, Adsul said "there was a need to bring in more farmers under crop insurance schemes".

All the schemes that has been announced by banks and insurance companies need to be implemented properly in order to yield the desired results, he added.