Bad loans: credit co-op societies asked to devise OTS scheme


Panaji: In order to speed up the loan recovery and also to provide a relief to the affected borrowers, the department of co-operation has issued guidelines to all the credit co-operative societies (other than banks) directing them to devise a One Time Settlement (OTS) Scheme for their borrowers.

The notification issued by the department states that on scrutiny of functioning of the multi-purpose or urban co-operative credit societies in the state, it is observed that, due to mounting overdue of loans advanced by these co-operative societies they are constrained to make provision towards principal and interest receivable from the members.

It adds that this has resulted into mounting of non-performance assets of the said societies against which the appropriate provisioning needs to be done in the balance sheet to avoid further erosion of owned funds.

The government has asked these credit societies to facilitate proper drafting of the One-Time Settlement Scheme and lay down guidelines for the same.

The notification states that the credit co-operatives shall frame their schemes and obtain approval from their respective board and the general body.

As per the guidelines issued by the department of co-operation, the OTS Scheme shall be applicable to all the primary agricultural credit/multi-purpose/ urban co-operative societies registered in the state of Goa, which are doing the credit and deposit business.

This scheme shall adhere to all the provisions of the Goa State Co-operative Societies Act, 2001 and the rules made there under and shall also comply with the various circulars, notification, and orders issued by the government and Registrar of Co-operative Societies from time

 to time.

It further states that after adopting the scheme, it shall be made applicable to all the members of the society equally without any discrimination except the sitting members on the Board of Directors, ex-directors and their families as defined under the Act.

It also advises that since at any point of time the doubtful-1 type of loan and interest therein would not be exempted/waived, and Rule 40 of the Goa Co-operative Societies Rule, 2003 shall not be applicable to this compromise scheme.

The societies shall be bound to place all the information in relation to the loans covered under this OTS Scheme in the Board of Director’s meeting. Therefore, all the cases considered for OTS Scheme shall be included in the agenda of the Board of Director’s meeting.

“Since the exemption is not allowed in the outstanding balance of principle and interest as appearing in the loan ledger of the loanee members, there is no necessity to make provision in the balance sheet of the society in respect of the exemption waiver as allowed to the loanee member,” the notification states.