No plans to write off coop institutions’ debt: State to HC

Source: newindianexpress.com

KOCHI: THE state government on Wednesday submitted before the Kerala High Court that it has not taken any decision to unconditionally write off the debts of three cooperative institutions. The affidavit was filed in response to a High Court directive that asked the state to inform it about the steps taken for merging the banks and pay off their debts.

The petitioners had pointed out that the government had decided to write off the loans granted to Kerala State Rubber Cooperative Ltd (Rubco), Kerala State Co-operative Marketing Federation Ltd (Marketfed) and Kerala State Cooperative Rubber Marketing Federation (Rubbermark) to tide over their losses. The state made it clear that the institutions have the obligation to repay the loans with interest to the government within a stipulated time. An analysis has found the major reason for the accumulated loss was the high-value loans taken by a few cooperative institutions such as Rubco and Marketfed. To tide over the crisis, the government sanctioned Rs 305.75 crore as one-time settlement (OTS) to pay off the loans.

These institutions are bound to repay the OTS amount with interest at the rate of 9.5 per cent annually and penal interest in case of default. Besides, they have to pledge their assets with the government equal to the OTS amount, the state told the High Court.

The government also informed the Court that the Reserve Bank of India is expected to give the final approval for the formation of Kerala Bank soon. The government said that of the 14 district co-operative banks, 13 have passed resolutions agreeing to be merged with the Kerala State Cooperative Bank.

Submission by petitioners
The petitioners submitted that the government had decided to write off the loan granted to Kerala State Rubber Cooperative Ltd, Kerala State Co-operative Marketing Federation Ltd and Kerala State Cooperative Rubber Marketing Federation to tide over their losses.

They will have to repay: State
The state made it clear that the institutions are bound to repay the OTS amount with interest at the rate of 9.5 per cent annually within a stipulated time and penal interest in case of default