Chief Minister Pinarayi Vijayan has sounded a note of caution about the interest-free financial institution under the cooperative sector started here under the aegis of the district Communist Party of India (Marxist) [CPI(M)] to woo investments from what its promoters term ‘sections of people’ unwilling to invest in normal interest-based financial institutions.
The Chief Minister’s call for caution directed to the promoters of Halal Fayidah Cooperative Society (HFCS), the interest-free financial venture, was made in his address after inaugurating it here on Sunday.
Appreciating the stated objectives of the HFCS, he told its promoters that they should ensure that the society was functioning as per the rules concerned to avert any future intervention by the government department concerned.
“When this society’s operation shifts to a larger canvas, naturally there must be certain rules and regulations or else there is the possibility for misunderstanding,” Mr. Vijayan said in his address.
Unless the society was operating as per those rules and regulations set for cooperative institutions, inconvenient situation would arise that warranted the intervention of the Cooperative Department, he said.
Stating that loans and loan repayments were regulated by specific norms, the Chief Minister said that any deviation from such norms was normally not possible. If interest was not levied for loans, it would attract some official interventions, he said.
He recalled the firm intervention of the National Bank for Agriculture and Rural Development (NABARD) when steps had been taken to give interest-free agricultural loans. He said that it was also not possible under the existing system to reduce the interest rates unilaterally without attracting official intervention.
Mr. Vijayan said there were objections earlier to proposals for starting financial institutions that would offer interest-free loans. The HFCS was an experiment and, therefore, involved risks, he said. The objectives of the HFCS such as initiatives for projects aimed at reducing global warming and for investing in means of production were good, he said.
CPI(M) leader and president of the HFCS M. Shajar said there was communal propaganda against the new venture. This was not an institution for people belonging to a particular section or religion, he said adding that it was planned as an institution for people unwilling to invest in interest-based banking establishments.
Kannur Corporation Mayor E.P. Latha presided. Ports Minister Ramachandran Kadannappally; K.K. Ragesh, MP; CPI(M) district secretary P. Jayarajan; and Joint Registrar of Cooperatives K.K. Sumesh were among those present at the function.
