Date:23/02/2006 URL: http://www.thehindubusinessline.com/2006/02/23/stories/2006022303770800.htm

Back Chidambaram calls for revamp of co-op credit

Our Bureau

New Delhi , Feb 22

THE Finance Minister, Mr P. Chidambaram, has urged State Governments to play an active role in ensuring the revamp of the cooperative credit structure in the country.

Replying to questions in the Rajya Sabha on interest rates on loans to farmers, the Finance Minister pointed out that cooperative credit was the primary instrument of lending for the farm sector.

He also said the guidelines on the interest rate that public sector banks (PSBs) are permitted to charge on crop loans up to Rs 50,000 could be revised if the overall interest rates in the economy were to come down.

Currently, the Indian Banks' Association (IBA) has advised PSBs to charge a rate of interest of not more than 9 per cent per annum on crop loans up to Rs 50,000.

The Finance Minister stressed the need for adding more farmers to the formal banking channel for their credit needs. He hinted that the achievements made so far by the UPA Government on this front would find mention in his forthcoming Budget speech on February 28.

"We have added 50 lakh farmers to the formal channel for their credit needs. We need to add more and wean them (farmers) away from the usurious money lenders," Mr Chidambaram said.

After consulting the States on the recommendations of the Task Force on short-term co-operative credit structure, a revival package has been approved and sent to the State Governments for acceptance.