Thiruvananthapuram: The Kerala Government has announced relaxations in norms governing the cooperative societies and banks in its bid to showcase them as profitable. This move comes amidst a series of scams that rocked the cooperative sector in the state.

The relaxation is regarding the stipulation that a fixed percentage of the outstanding loans should be set aside from the profits as reserve and that there should be reserves for outstanding interest.

The Registrar of Cooperative Societies, Kerala, issued the circular in this regard on July 12, with an aim to increase the trust of the public in cooperative societies.

New reserve ratio

Accordingly, the 10 percent reserve for loans provided on personal guarantee, and turned Non-Performing Asset (NPA) for one to three years, has been reduced to 7.5 percent. Similarly, the 50 percent reserve for loans provided against properties, and turned NPA for three to six years, has been slashed to 30 percent.

The 100 percent reserve for loans provided on personal guarantee basis, and turned NPA for three to six years, has been reduced to 80 percent.

Regarding the norm that 100 percent reserve should be maintained for pending interest, the last three months of the financial year 2021-22 were exempted.

The societies have been demanding the relaxation for a long period. If the old reserve requirements were in place, the cooperative institutions would record heavy losses during an audit.

Relaxations on maintaining reserve funds were given to the cooperative institutions in the last two years on account of the COVID-19 pandemic. The continued presence of Covid is cited for extending the relaxations.

Audit software, identity scrutiny too

The Department of Cooperation has started promoting the use of Aadhaar card as identity documents for members of the cooperative societies.

The move is aimed at curbing illegal financial dealings and frauds and preventing a single person from taking memberships in multiple names.

The decision was taken in the secretary-level meeting called by the chief secretary to discuss the arrangements for conducting the audit in various departments, including the Cooperation.

The department will also introduce an audit software to determine the maximum loan that can be extended to a society member, which could be assessed by employees at various levels.

Presently, using the Aadhaar card as an identity document in cooperative societies is not mandatory. The department, though, has made it compulsory the follow the stipulations issued by the Reserve Bank of India on Identity documents when the Primary Agricultural Cooperative Banks were incorporated with the Kerala Bank.

The move to popularize Aadhaar-based identity documents in cooperative societies is aimed at increasing the trust in the cooperative sector.

Meanwhile, the Central Board of Direct Taxes under the Central government has made it mandatory to quote either PAN or Aadhaar for depositing or withdrawing over Rs 20 lakh.