Hooda seeks interest subsidy for cooperative banks

Chandigarh, Sep 8 (UNI) Haryana Chief Minister Bhupinder Singh Hooda today strongly urged the Union Finance Minister P Chidambaram to provide interest subsidy of Rs 70 crore to the cooperative banks of the state.

Mr Hooda was participating in a meeting of Chief Ministers called by Union Agriculture Minister in New Delhi to discuss the modalities to operationalise the announcement made by Union Finance Minister in the budget to provide short term agricultural credit to farmers at 7 per cent rate of interest.

The Chief Minister pointed out that the lending by cooperative banks in Haryana was the highest in the country.

He said that 14 per cent of the total loans extended by cooperative banks in India were advanced by cooperative banks of Haryana.

He said during 2005-2006, the total quantum of agriculture loaning by cooperative banks was Rs 4,393 crore and this was 19 per cent higher than the previous year.

Mr Hooda specially pointed out that the cooperative banks were providing credit facility to the small and marginal farmers whereas commercial banks were extending loans mainly to the big farmers.

He reiterated that the Haryana government was fully committed to the welfare of the farmers and all its schemes were framed with this objective. The rate of interest on agriculture loans had been reduced from 11 per cent to 10 per cent in May 2005.

He also suggested that NABARD should increase the level of refinance from 40 per cent to at least 70 per cent so that the mini banks did not face any difficulty in providing credit to the farmers.

The Finance Minister had announced in his budget speech that after giving anxious consideration to market conditions, government had decided to ensure that the farmers receive short term credit at seven per cent with an upper limit of Rs 3 lakh on the principal amount. This policy would come into force with effect from Kharif-2006-07.

Mr Hooda appreciated this policy decision aimed at boosting the economy of agrarian states like Haryana.

He said the Central government had already announced interest subvention in respect of commercial banks.

He said the Government of India had clarified that the subventions from it in case of cooperatives covered only lending out of refinance drawn from NABARD. He pointed out that the Haryana State Cooperative Apex Bank Limited, Chandigarh expected, on an average, Rs 3,500 crore as outstanding of crop loan during the current financial year. Out of this, only 35 per cent would be available as refinance from NABARD.

Therefore, the cooperative banks in Haryana would be required to involve the balance of Rs 2,340 crore out of their own funds. As such, the cooperative banks would have to subsidise to the extent of 3 per cent in case of their own involvement to enable them to provide crop loans at a interest rate of 7 per cent to the farmers.

Mr Hooda said the amount of subsidy for the current financial year worked out to be Rs 70.20 crore.

He also urged the Union Finance Minister that the system of minimum support price be revamped in the interest of farming community keeping in view the higher cost of agricultural inputs specially in Haryana and Punjab.

UNI MA VJ BST1815