Lok Sabha Question No. 3469 (UNSTARRED), answered on 2019-07-15
Subject: Revival of Cooperative Societies
Ministry: FINANCE
Asked by: Janardan Singh Sigriwal

## Government of India Ministry of Finance

## LOK SABHA UNSTARRED QUESTION NO. 3469

ANSWERED ON-15.07.2019 (Monday)/Ashadha, 24, 1941 (Saka)

## REVIVAL OF COOPERATIVE SOCIETIES

## 3469. SHRI JANARDAN SINGH SIGRIWAL:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has proposal to announce any package for revival of co-operative societies in rural areas;
- (b) if so, the details thereof;
- (c)  whether  the  State  Governments  have  submitted  proposals  for  strengthening  the  said  societies  through  special package; and
- (d) if so, the details and the present status thereof, State-wise?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG THAKUR)

(a) to  (d):  Cooperative  Societies  is  a  State  Subject  under  Entry  32  of  the  State  List  of  Seventh  Schedule  of  the Constitution  of  India.  National  Bank  for  Agriculture  and  Rural  Development  (NABARD)  has  informed  that  the functioning of Cooperative Banks is guided by the Cooperative Societies Act of the respective States. At the State level, the Registrar of Cooperative Societies (RCS) of respective States exercises control over the Cooperative Banks. However, the banking functions of the Cooperative Banks are regulated by Reserve Bank of India under the Banking Regulation Act, 1949 (as applicable to Cooperatives).

The Government has taken the following measures to revive the Short Term Cooperative Credit Structure (STCCS).

a. Based  on  the  recommendation  of  Vaidyanathan  Committee,  Government  implemented  a  revival  package  for STCCS encompassing legal and institutional reforms, measures to improve the quality of management and financial assistance  as  necessary  for  their  democratic,  self-reliant  and  efficient  functioning.  Under  the  revival  package, Government of India released ` 9,245 crore.

- b. Recognizing the need to revamp ailing Cooperative Banks so that they are able to cater to the needs of farmers at their doorstep, the Union Government in 2014 announced implementation of the Scheme for revival of 23 Unlicensed DCCBs in the four States i.e Uttar Pradesh, Maharashtra, West Bengal and Jammu & Kashmir. The entire share of Union  Government  of ` 673.29  crore  under  the  Scheme  was  released  to  NABARD  for  onward  transmission  to Cooperative Banks as per the scheme provisions.

The  scheme  guidelines  prescribed  achievement  of  certain  deliverables  by  DCCBs  which,  inter  alia,  included attainment  of  the  minimum  level  of  CRAR,  reduction  of  NPA  level,  enhancement  deposits,  building  up  strong Management Information System (MIS) and implementation of Core Banking Solution (CBS) etc.

To enable Cooperative Banks to meet the crop loan and term loan requirements of farmers, Government has set up two  Funds  in  NABARD, to  be  met  out  of  the  shortfall  in  priority  sector  lending  targets  by  commercial  banks,  as under:

- i. Short Term Cooperative Rural Credit (Refinance) Fund: Through this Fund NABARD provides concessional short term refinance to Cooperative Banks for their crop loan lending.  Such refinance is given to banks at an interest rate of 4.5% per annum, provided the banks lend to the ultimate borrower at an interest rate of 7% per annum upto an amount of ` 3 lakh per borrower. An amount of ` 45,000 crore has been allocated for the said Fund during 2018-19.
- ii. Long Term Rural Credit Fund (LTRCF): This fund has been set up for the purpose of providing long term refinance support to Cooperative Banks and Regional Rural Banks at a concessional rate of interest for their lending towards investment  activities  in  agriculture.  Government  has  allocated  additional  resources  of ` 15,000  crore  to  this  Fund during 2018-19.