Lack of ?bank? status is pushing all state agri co-ops in the country to acute resource crunch, while commecial banks hog the best of the Nabard refinance pie.
According to National Co-operative Agricultural and Rural Banks Federation (NCARBF), expediating the Rs 4,839-crore co-ops modernisation package prescribed by Vaidyananthan Taskforce was vital to correcting this anomaly.
The Centre has convened a meeting of state government representatives in New Delhi on October 10 to chalk out a roadmap for co-ordinating the reform package between the Centre and states. The taskforce report was submitted in August 2006. At present, it is a bone of contention whether Agricultural and Rural Development Banks (ARDBs) are `banks’ or just `co-ops’.
“Vaidyanathan Taskforce has told RBI to consider bringing ARDBs under Banking Regulation Act, 1949, on merit. However RBI is yet to evolve norms for giving licence to ARDBs,” says K Sivadasan Nair, chairman, NCARBF.
Accumulated refinance gap of ARDBs have reached Rs 1807 crore on March 2007. The gap started widening ever since Nabard dropped the practice of accommodating refinance backlog to agri crops in the current year with next year’s allocations.
“This is, while Nabard has more than doubled the allocations to commercial banks,” Nair told FE. NCARBF has urged that Nabard should stop allocating lion’s share of its resources to commercial banks with a shortfall in agricultural lending out of own resources.
The state agri co-ops are not for all the recommendations of the Vaidyanathan Taskforce Report. For instance, the report says that all ARDBs with 50% recovery rate should be given a second chance through the Rs 4,839-crore revival package. The agri co-ops have sought their respective state governments to pitch for downpegging the recovery rate minimum to 30%.
