FM unhappy with working of Apex Cooperative

New Delhi, Mar 20: Apex Cooperative Banks today (Mar 20, 2006) came under fire from Finance Minister P Chidambaram, who denounced the way most of them are functioning 'in the hands of the worst people'.

Replying to debate on the Finance Bill 2006-07 in the Lok Sabha, he poured forth his anguish at the "mismanagement" of apex cooperatives and said the move to bring them under taxation was only to ensure a semblance of discipline in their functioning.

He said only four categories of banks such as Urban Cooperative Banks, State Cooperative Banks, Central Cooperative Banks and State Cooperative Agricultural Rural Development Banks were sought to be brought under taxation.

''All these banks are mismanaged. They are in the hands of the worst people,'' he remarked, even while defending his decision to make it mandatory for these banks to file annual income tax returns.

He said there were only 2288 banks in the category of apex cooperative banks which needed to file returns.''Out of the 2288 apex banks in the four category, half of them are making losses.

They are making losses because there is no one to look into their losses.'' Some of these banks, Mr Chidambaram said, were lending even to non members. ''They make nominal members by charging Re one and give them loans.'' In this context, he even referred to a few mismanaged banks by their name, including one in his constituency and a few in Gujarat and Maharashtra.

He said the budget proposal to bring such banks under taxation net ''is an important step to ensure some discipline in their functioning. Afterall, they are doing banking business. There must be discipline.''

In this context, he clarified that 105,735 Primary Agricultural Credit Societies and 768 Primary Agricultural Rural Development Banks would not have to file their returns. "They would continue to enjoy exemption under Section 80 (P) of the Income Tax Act".

UNI