Business Daily from THE HINDU group of publications
Tuesday, Dec 12, 2006
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Business Daily from THE HINDU group of publications Tuesday, Dec 12, 2006 ePaper |
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Agri-Biz & Commodities
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Co-operatives Industry & Economy - Rural Development States - Andhra Pradesh 5 States to get $1 b ADB loan for rural finance reforms Our Bureau
`The cooperative credit structure suffers from poor governance, weak portfolio management, and recurring losses.'
Hyderabad , Dec. 11 Andhra Pradesh is among five States that will get a loan of $1 billion from Asian Development Bank (ADB) for the reform of rural finance. The loan is expected to significantly improve the availability of finances in rural areas. The programme is targeted at revitalising the cooperative credit structure to more effectively reach out to the masses of small farmers. The cooperative sector is estimated to have a membership base of 13.5 crore. The credit structure suffers from poor governance, weak portfolio management and recurring losses. "The loan has been approved and sanctioned. But the details are yet to be worked out. What has been approved is just a framework," a senior ADB official told Business Line. After entering into a formal agreement with the Union Ministry of Finance, the Bank officials would sit with representatives of Nabard (National Bank for Agriculture and Rural Development) to work out the details. "Issues such as how to structure the loan will be sorted out in the next few weeks," the ADB official said. Apart from Andhra Pradesh, Madhya Pradesh, Maharashtra and Rajasthan will be beneficiaries. The fifth State is yet to be decided. "The programme will address the problems faced by farmers by undertaking a comprehensive reform of the cooperative credit structure," a bank statement said. "The weaknesses of the cooperative credit structure have immense adverse economic, social, and political impacts on the rural sector," Mr Kunio Senga, Director-General of ADB's South Asia Department, said. "Its reform is critical to rural transformation as the sector has a membership base of 13.5 crore and has links to the broader cooperative movement comprising processing, marketing, input distribution, dairy, and weaving," he said.
More Stories on : Co-operatives | Rural Development | Financial Institutions | Andhra Pradesh
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