Kochi: Six district cooperative banks are understood to have resisted the government’s move to make them advance Rs 25 crore each to the troubled cooperative department store chain Consumerfed.
The banks voiced their opposition to the move at a meeting Chief Minister Oommen Chandy convened on Friday, citing instructions from Nabard.
“All the banks have already extended loans to Consumerfed which have become bad debts,” said Manayath Chandran, president of the Kozhikode District Cooperative Bank.
“Nabard has clearly told us not to grant any more money to Consumerfed as they are also likely to become non-performing assets.
“We are under the control of Nabard, the Reserve Bank of India as well as the State government. We cannot defy an instruction from Nabard,” Mr Chandran said.
The meeting the Chief Minister convened on Friday asked the banks to give loans to Consumerfed to tide over the financial crisis it has landed itself in.
The store chain owes more than Rs 400 crore to its suppliers, who have since stopped business with it. The State cabinet in May had decided to stand guarantee to the loan applications Consumerfed will submit to the six district cooperative banks for Rs 25 crore each. The banks, however, showed no interest even to give loan application forms to Consumerfed given their experience.
“The presidents of the six banks had met then and decided against advancing more money to Consumerfed. This decision stands as of today,”Mr Chandran said.
Mr Chadran said the banks have suggested two ways to tide over the impasse. “One, to convene a meeting of bank presidents along with representatives of Nabard and get them agree to the suggestion to give fresh loans. The other way is to loan to primary cooperatives. They can then lend to Consumerfed as they do not come under Nabard,” he said.
