Saturday, December 29, 2007

Rs 10,000 cr revival plan for co-op banks

The centre is likely to provide about Rs 10,000 crore (Rs 100 billion) for reviving cooperative banks and is in talks with multi-lateral agencies World Bank, ADB and KfW for raising a portion of the amount.The Finance Ministry has finalised the package and it would be sent to the Cabinet for approval shortly, a senior ministry official said on Tuesday.He said the centre may provide Rs 10,000 crore while the remaining Rs 4,500 crore (Rs 45 billion) would have to come from states and cooperative sector.
Though Vaidyanathan panel had proposed about Rs 15,000 crore (Rs 150 billion) package for revamping cooperatives be shared by centre, states and cooperatives in the ratio of 53:31:16, the official said the share of centre will increase considerably to about 70-75 per cent.Cooperatives may be allowed to come up with about 5 per cent of the total amount. The government is unlikely to provide budgetary support for this and the money may be borrowed from the market or from multi-lateral agencies.
"World Bank is willing to provide funds for capacity building. KfW of Germany and Asian Development Bank are also willing to participate in the revival of cooperatives," the official said.While agreeing to hike its share of the bailout, the Finance Ministry is likely to insist on a stringent pre-conditions for cooperatives to avail the financial package.The states will be asked to reduce their shareholding in cooperatives to a maximum 25 per cent.

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