The Hindu : Be cautious on lending, Vishwanath tells co-op. banks

Online edition of India's National Newspaper
Monday, Dec 23, 2002

Southern States

Southern States - Karnataka

Be cautious on lending, Vishwanath tells co-op. banks

By Our Staff Correspondent

MADIKERI Dec. 22. The Minister for Cooperation, H.Vishwanath, said here on Sunday that he had left it to the cooperators to decide whether they wanted the Karnataka Cooperative Act or the "Souharda Act" aimed at improving the cooperative sector in the State.

He was inaugurating the Kodagu District Merchants Cooperative Society and a banking counter built by the Kodagu District Chamber of Commerce. The minister made clear his intentions to bring in far-reaching changes to the existing Act to make it more people-friendly. The most important among them was to do away with the procedural delays, he said.

Mr. Vishwanath said the cooperative system was based on the principles of trust and confidence, and therefore a revamp was imperative. No other sector had helped the lot of farmers in the country as the cooperative sector. Winning the confidence of the people to invest by inculcating in them a sense of trust was the key for the success of the cooperative movement, he said.

Asking managements to exercise caution while dealing with investors' money, Mr. Vishwanath said the depositors' money should be used only for providing short-term loans and not long-term loans. The Dharwad Cooperative Bank, which used depositors' money to advance long-term loans to sugar mills and others, could not pay the money to the depositors on maturity and landed in trouble.

Referring to the poor performance and closure of some cooperative banks in the State, the minister said imprudent lending of funds and poor recovery had impeded the progress of such banks. The Government wished to provide loans to farmers at reduced rates of interest through the Kisan Credit Cards. It had waived Rs. 127 crore towards interest on loans availed by farmers from cooperative banks in the current year, he said.

The Minister of State for Excise, M.M.Nanaiah, who inaugurated the complex of the District Chamber of Commerce, stated that the newly-opened bank here should cater to the needs of merchants, particularly those in distress. Only economic security could usher in social security, he said.

Mr. Nanaiah told businessmen not to depend on or expect too much from the Government for concessions, but strive on their own to develop trade and commerce. Citing the nationalisation of banks in 1969, Mr. Nanaiah said that the step had ushered in the industrial revolution as banks lent loans to industries. But recession, poor recovery, and other factors had jeopardised the industrial prospects, he said.

The Minister of State for Muzrai, Suma Vasant, who inaugurated the banking counter, said that the cooperative movement was strong in the district. She called for keeping politics out of the cooperative sector.

The Somwarpet MLA, M.P.Appachu Ranjan, who released the share certificates, advised the board to lay stress on transparency. He said the bank should tie up with insurance companies to provide extra guarantee to the investors' money.

The President of the Kodagu District Cooperative Central (KDCC) Bank, M.A.Ramesh, observed that the previous generation had made the cooperative movement formidable in Kodagu, and the present generation to continue their good work. He emphasised on good recovery of loans for better performance.

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