In view of the financial assistance given to co-operatives under the agricultural debt waiver and debt relief scheme of 2008, the fund allocation for the revival of long-term co-operative credit structure in the forthcoming Union Budget could be less than what was envisaged by the Vaidyanathan Committee.
In its report in 2006, the Vaidyanathan Committee had proposed a package of Rs 3,074 crore (Rs 30.74 billion), with the Central government's contribution pegged at Rs 2,642 crore (Rs 26.42 billion), for the long-term revival of the sector.
Subsequently, the government constituted another taskforce headed by GC Chaturvedi in September 2009, with representatives from the Reserve Bank of India and National Bank for Agriculture and Rural Development (Nabard), to look into the various aspects of the long-term co-operative credit structure with respect to viability, relevance of a separate package and strategy for implementation.
The panel was likely to submit its report tomorrow and the size of the package could be less than Rs 3,000 crore (Rs 30 billion), taking into account the debt-waiver scheme, said KG Karmakar, managing director, Nabard. "There have been various meetings on the long-term co-operative credit structure. The package might get reduced due to the debt-waiver scheme. It should be announced in the Budget," said Karmakar.
Regional rural banks (RRBs) might be mandated to maintain a capital-to-risk weighted assets ratio (CRAR) of not less than 7 per cent, he added.
"Currently, there is no regulatory directive on CRAR of RRBs. It should be not less than 7 per cent. The committee is likely to submit its report shortly," said Karmakar. On the basis of the recommendations of a committee on the financial sector assessment, the annual policy statement of April 2009 proposed to introduce CRAR for RRBs in a phased manner, taking into account the status of recapitalisation and amalgamation.
The government had constituted a committee under KC Chakrabarty, deputy governor, RBI, with representatives from the government, sponsor banks, RRBs and Nabard to examine the financials of RRBs and suggest a road map to raise the CRAR of RRBs to 9 per cent by March 2012.