Financial Daily from THE HINDU group of publications
Tuesday, Jun 18, 2002
Agri-Biz & Commodities
Industry & Economy - Rural Development
Nabard panel plans to boost rural credit system
CHENNAI, June 17
AS part of a programme to strengthen rural credit system, the National Bank for Agriculture and Rural Development (Nabard) held a meeting of State Government representatives, senior executives of leading commercial banks and regional rural banks from Karnataka, Tamil Nadu, Kerala and Andhra Pradesh.
At a press conference following the meeting in Chennai today, Prof V.S. Vyas, Chairman, Expert Committee on Rural Credit (ECRC) - a committee constituted by Nabard, said that the committee hoped to sensitise the stakeholders to the need for changes in the existing system.
The committee, which recently submitted its recommendations had looked into the institutional changes needed against the backdrop of the changes in agriculture sector in the last decade, the policies needed to support the institutions and the strategies for human resource development.
In addition, the committee had also looked into the role of the co-operatives, the regional rural banks and commercial banks, the RBI and the Nabard.
Responding to questions, Mr Vyas said that the committee had highlighted the need for strengthening the primary agriculture co-operative societies and the enabling environment to be created by the State Governments.
The financial health of the co-operative societies should be restored and greater involvement of its members.
The committee had been strongly against the one-time settlements unless necessitated by exceptional circumstances such as natural calamities.
It has also called for integration of long and short-term credit disbursal structures. Short-term credit institutions must be permitted to disburse long-term credit, he said.
Dr B. Samal, Chairman and Managing Director, Allahabad Bank, stressed that the commercial banks cannot afford to withdraw from rural credit.
With 19,000 bank branches, out of the total 46,000 located in rural areas, a comprehensive infrastructure was in place.
The Rural Infrastructure Development Fund, created out of the shortfall of lending to agriculture, should not be seen as an escape route from investing in agriculture.
The committee was constituted by Nabard in August 2000 to discuss and make recommendation on various aspects such as structure of rural credit system, role of the tiers in co-operative credit systems and reducing the cost of credit delivery, development policies and support systems, strategies to meet gaps in supply in rural credit and the legal issues.
The committee submitted its recommendation in July 2001.
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