In a bid to address the impasse surrounding the distribution of welfare pensions, the Kerala government has opted to borrow a loan of Rs. 2,000 crores from cooperative banks within the state. The funds will be coordinated through a consortium comprising primary cooperative societies and banks, facilitated by a dedicated company established for this purpose. Mannarkad Rural Co operative Bank will act as the fund manager, offering a competitive interest rate of 9.1%.
This marks the third occasion in the past eighteen months that the government has turned to cooperative banks to fulfill its financial obligations in pension disbursement. Presently, the government owes upwards of Rs. 4,000 crores to cooperative banks, previously acquired for the same purpose.
In the first phase, the Government had planned to secure Rs. 2000 crores followed by Rs. 1,500 crores in the second phase. However they could not secure even Rs. 500 crores in the second phase due to alleged reluctance on the part of cooperative banks to extend loan to Government which had failed to pay back in time.
For those unfamiliar, co operative societies and banks successfully amassed Rs. 24,000 crores via an investment collection campaign launched at the beginning of the year. Despite falling short of their target during the second phase, the Government is pinning its hope on this investment.
The loan proceeds will be channeled into a joint pool account overseen by the Mannarkad Rural Co op Bank, the designated fund manager, and the registrar of cooperative societies. The funds will be obtained from the societies in the form of loans. A formal contract will be signed between the fund manager and the welfare pension company, outlining the terms of repayment of loan.
