Billion-dollar ADB loan to India
(AFP)Updated: 2006-12-11 17:06
MANILA - The Asian Development Bank said it is lending one billion dollars, its biggest ever regular loan, to India to improve credit facilities for its hard-up farmers.
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Set up 102 years ago, the cooperative structure has evolved into one of the largest rural finance systems in the world.
However, it now suffers from poor governance, weak portfolio management and recurring losses, the ADB said.
"The weaknesses of the cooperative credit structure have immense adverse economic, social and political impacts on the rural sector," said Kunio Senga, director-general of the bank's South Asia department.
"Its reform is critical to rural transformation because it has an all-India membership base of 135 million and has links to the broader cooperative movement comprising processing, marketing, input distribution, dairy and weaving," he added.
The agriculture sector, upon which two-thirds of India's people depend, is on a long-term declining growth trend, the bank said.
The loan matures in 15 years including a three-year grace and commercial interest rates will be charged.
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