Of the total amount, state government would contribute Rs 1,464.59 crore, state governments Rs 673.29 crore and NABARD Rs 237.54 crore, said a statement issued after the Cabinet meeting here.
"Government of India has decided to revive and infuse capital in 23 cooperative banks in the country," Law Minister Ravi Shankar Prasad told reporters after the Cabinet meeting.
According to Prasad, there are 23 unlicenced district level banks including 16 in Uttar Pradesh, three each in Jammu and Kashmir and Maharashtra and one in West Bengal. These banks were on the verge of closure.
These banks have deposits base of about Rs 6,839 crore and loan book of around Rs 3,774 crore.
The Minister said the government wanted to revive these banks as people from lower strata of society and small businessmen have deposits in these institutions.
He said that the central government will fully cooperate with states to revive these banks through NABARD.
According to the statement, Centre's share of Rs 673.29 crore would be released through NABARD as interest-free loan and would be converted into grant on fulfilment of conditionalities/deliverables outlined in the scheme.
These conditionalities include bringing the NPAs to at least half of the current levels by March 31, 2017; making 15 percent growth rate of deposits for next two years; drawing up of a monthly Monitorable Action Plan; placement of competent CEOs fulfilling 'Fit & Proper' criteria; and putting Corporate Governance Systems in place.
The assistance from NABARD would be in the form of loan to the respective state governments under Section 27 of NABARD Act, 1981.
The scheme for revival of these unlicensed DCCBs will help in revival of these cooperative banks.
This will result in protecting the interests of depositors and catering to the credit needs of farmers.
Once revived, these cooperative banks would become eligible for obtaining licenses from RBI for continuing their operations in rural areas and would also be able to meet CRAR (Capital to Risk-Weighted Assets Ratio) requirement prescribed by RBI. This means 7 percent CRAR by 31st March, 2015 and 9 percent CRAR by 31st March, 2017.
For the purpose of implementation of the scheme, a tripartite agreement in the form of Memorandum of Understanding (MoU), stipulating conditionalities and deliverables, will be signed between the Centre and state and NABARD.
During the implementation of the scheme, operations of these 23 unlicensed DCCBs would be closely monitored by NABARD and RBI, so that they meet the licensing requirement within the time frame as prescribed in the scheme, it said.

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