Date:03/12/2005 URL: http://www.thehindubusinessline.com/2005/12/03/stories/2005120303370900.htm

Back Package soon for coop banks

Our Bureau

New Delhi , Dec 2

THE Union Finance Minister, Mr P. Chidambaram, today told the Lok Sabha that a package for cooperative banks was ready.

In response to a query by the JD (U) Member, Mr Prabhunath Singh, on cooperative banks, the Finance Minister said that due to the multi-tier cooperative structure (State cooperatives, district cooperatives and primary cooperative societies), the cost of intermediation at each level adds to the final rate at which borrowers receive the loans.

The spread is as high as 2-2.5 per cent while it should be within one per cent, Mr Chidambaram said, adding that the Vaidyanathan Committee's recommendations were under examination.

"A package is almost ready to be placed before the Union Cabinet", the Minister said adding that the public sector banks have stepped up their farm credit substantially subsequent to the July 2004 package announced by him.

Fiscal deficit: The Finance Minister also maintained that there is no deterioration in the fiscal deficit during the first half of the current fiscal. Adjusted against last year's debt-swap scheme for the States, the current fiscal year's deficit was relatively less than what it was last year, he said, adding that the position would be clearly spelt out when the mid-year review as mandated under the FRBM Act, 2003 is laid in Parliament next week.