The Hindu : Employee federation resents reduction in interest rate

Online edition of India's National Newspaper
Monday, Jun 09, 2003

Southern States

Southern States - Tamil Nadu

Employee federation resents reduction in interest rate

By Our Special Correspondent

CHENNAI June 8. A number of employee cooperative societies in the State are facing closure owing to the unhelpful attitude of district central cooperative banks, said the Tamil Nadu Employees Cooperative Societies Employees Federation.

The federation, in a press release here, said the banks, apart from reducing their margin to the societies, were engaged in direct lending to employees up to Rs. 1 lakh.

The federation said earlier the banks gave loans at 12.5 per cent to the societies, which, in turn, advanced loan to employees at 14 per cent keeping a 1.5 per cent margin for overhead expenses. But recently, the Registrar of Cooperative Societies issued a circular reducing the rate of interests for loans to the societies to 12 per cent and the employees to 13 per cent.

The reduction in margin from 1.5 per cent to one per cent would affect the functioning of the cooperative societies. Moreover, the central banks reduced the rate of interest of deposits of the societies with the district banks to 7.5 per cent. These measures, the federation said, would reduce the cash surplus to the societies.

The members of the societies would stage demonstrations in all district headquarters on June 23, the federation said.

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