Co-operative credit reforms questioned

The co-operative sector has turned down the report of the Vaidyanathan task force on the revitalisation of the co-operative credit structure, terming its recommendations "impractical".

The task force had suggested a Rs 14,839-crore rehabilitation package, but the sector leaders find the conditions attached to this too harsh. Most of the credit societies will be rendered ineligible for the revival support, they fear.

The task force, headed by A Vaidyanathan, was appointed by the finance ministry on August 5, 2004 to formulate a plan to rejuvenate the rural co-operative credit structure. It submitted its draft final report on December 30 for public debate.

In a recent statement, National Co-operative Union of India (NCUI) President S S Sisodia said the recommendations were impractical and have to be re-examined.

He pointed out that the recommendations were opposed by the leaders of the co-operatives who participated in a national consultation convened by the NCUI and the National Federation of State Cooperative Banks.

It was felt that the phased implementation of the revival package, as suggested by the task force, would be time-consuming. They also disagreed with the recommendation that only those states that had passed the parallel cooperative laws should be eligible for the revival package.

The parallel state co-operative laws had not yielded results and the Centre should introduce reforms through constitutional amendments, the sector leaders felt. The amended central law should make professionalism and democratic functioning of the co-operatives mandatory.

The cooperative leaders also assailed the panel recommendation that the Reserve Bank should be empowered to directly control the district cooperative banks and the state cooperative banks and should supersede the boards of these institutions. The suppression was against the cooperative principles and should be resorted to only in extreme cases, the leaders maintained.

Regarding the suggestion that cooperative training institutes should jointly devise a strategy under the leadership of the Nabard, they felt that the NCUI's national centre for cooperative training, should be made the nodal agency for this purpose.