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R E G I S T E R E D , N o. D.(D)-72 The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 47] NEW DELHI, TUESDAY, FEBRUARY 20, 1979/PHALGUNA 1, 1900

Separate paging is given to this part in order that it may be filed as a separate compilation.

(287)

1223 GI/78—1.

MINISTRY OF INDUSTRY

(Department of Industrial Development)

RESOLUTION

New Delhi, the 20th Feb., 1979

Sub:—Study Group to review the working of the Reserve Bank

of India Scheme for Handloom Finance.

No. 6(9)/78/Coop.i—The Government of India set up on the 28th October, 1977 by their resolution No. fi/7/77-Coop, a Study Group under the Chairmanship of Dr, M.V. Hate, to study in depth the working of Reserve Bank of India Scheme for Handloom Finance and to make suitable recommendations for proper working of the Scheme. The composition of the Study Group was as follows :—

1. Dr. M.V. Hate, Chief Officer, Agricultural Credit Deptt.,

Reserve Bank of India, Bombay.

2. Shri B.C. Patanik, Dy. Secretary, Banking Wing, Deptt. of Economic Aifairs, Govt. of India, Ministry of Finance, New Delhi .

^. Shri M.M. Batra, Director of Textiles, National Cooperative

Development Corporation, New Delhi.

4. Shri P. Shankar, Director of Handlooms & Textiles, Govern-

ment of Tamil Nadu, Madras.

5. Shri S.N. Shukla, Director of Handlooms, Government

of Uttar Pradesh, Kanpur.

6. Shri M.P. Pinto, Director of Handlooms & Textiles, Go-

vernment of Maharashtra, Nagpur.

7. Shri B.B. Mohanty, Director of Handlooms & Textiles,

Government of Orissa, Bhubaneswar.

8. Registrar of Cooperative Societies, Government of Bihar

Patna.

9. Managing Director of State Cooperative Bank, Karnafaka.

10. Managing Director of State Cooperative Bank, Andhra

Pradesh.

11. Shri L.V. Sabtharishi, Deputy Development Commissio-

ner for Hindlooms Member—Secretary

The terms of the reference of the Study Group were as

follows :•—

(a) To review generally the working of (he scheme for financing of handloom weavers through Co-operative Societies/Banks out of refinance from the Reserve Bank of India and to suggest modifications and improvements in the working of the scheme, if required.

(b) To study the specific role played by he Centra' Coope- rative Banks and State Co-operative Banks in arriving at the quantum of credit required for financing of handloom weavers and to indicate a more effective role for the banks for the purpose so thai the credit estimates and the credi limit applications are realistic,

(c) In the light of the above, to assess the credit requirements of handloom weavers' co-operative societies including the Apex Societies during the next two or three years and to give a broad indication of the magnitude of fincnaial requirements and in It is connection make suitable recommendations in regard to strengthening of the primary weavers societies/Apex Societies etc. and also of the co-operative financing panks.

(d) To study the present position in regard to arrangements for co-ordination at the State level and district/regional level in regard in handloom financing between the Cooperative Department, Industries Department/Di- rectorate of Handlooms and Co-operative Banks and to point out the existing inadequacies, if any, and make suitable recommendations for remedying them,

(e) To consider any other problem which is relevant to the above terms of referenco and make recommenda- tions,

The report submitted by the Study Group contained 53 recommendations relating to various aspects of scheme of handloom finance. Those recommendations were scrutinized in depth by an Inter-Ministerial Committee headed by Shri Mani Narayanswami, Development Commissioner for Handlooms. The decisions arrived at on each of tho recommendations as a result of such consideration are indicated in Aiir.exure.

The recommendations of the Study Group as accepted by Government of India are required to be implemented by various agencies in charge of Handloom Industry and those responsible for development and providing institutional finarce for the Industry.

ORDER

Ordered that the Resolution be published in the Gazette

of India.

Ordered also that a copy of this Resolution be communicated to Private and Military Secretaries to the President, Prime Minister's Office, All Ministries of the Government of Tndia, All State Governments/Union Territories Administrations, Tho Planning Commission, the Controller crii Aucitor General of India, State Director of Har.dlorms/lndustrics. Registrar of Cooperative Societies, State Apex Cooperative Banks, District Central Cooperative Banks, All Nationalised Banks, National Cooperative Development Corporation.

Statement showing the decisions taken on the recommenda- tions of the working of the Reserve Bank of India Scheme for Handloom Finance.

Recommendation

Decisions

SI. No

1

2

3

1.

Department of the State Go- vernments should draw up a time bound programme for the rehabilitation of weavers societies and also their reor- ganisation where necessary so that at the end of the Sixth Plan period there will be only viable societies which are cap- able of absorbing the refinance facilities provided by the Re- serve Bank under the Scheme for Handloom Finance, The State Governments may avail themselves of the central sche- mes for share capital assistance for revitalisation/reorganisa- tion of weavers societies with a view to increasing the co- operative coverage of hand- looms and handloom weavers. (Para 3.7)

The State Govrnments/ Union Territories Ad- ministrations have beer requested in the Confe rence of Handloom Ministers presided ovei by Union Minister oj Industry held on 811 June, 1978 to draw up a time bound programme for rehabilitation oj Weavers societies and also their reorganisatior during the 6th Plan per iod and try to achieve not only the target of 6% cooperative coverago bu, also higher levels oi coverage wherever pos- sible. The State Go- vernments amy also avaii themselves of the provi- ded under the Central Plan Scheme for revitali- sation of weavers' socle ties and for the forma- tion of new societies.

State Governments may draw up a scheme for writing off the bad debts and losses of the weak handloom weavers' co- operative societies in order to make them eli- gible for finance from the Banks. The Central Govern- ment will consider for- mulating a scheme of managerial assistance to these societies on receipt of ther proposals from the State Governments.

There is a central sector scheme under which assistance is gra- nted to weak central coope- rative banks to write off the bad debts of the members of primary agricultural credit societies. A similar scheme may be formulated for weak weavers societies also to ena- ble them to write off their bad debts under certain circums- tances and thus become eli- gible for finance from the banks. Provision may also be made for managerial assis- tance to these societies. (Para 3.8).

3.

\cceptcd, State Govern- ments are being reques- ted to take appropriate action on these lines. The pattern and scale of staff to be appointed would however depend upon actual needs in each State.

There is conspiouous imba- lance in the impact of the Scheme of Handloom Finance in different states. The rea- sons for the poor porgress of the scheme in many states are mainly relatable to the weak structure of the weavers co-operative arising from factors such as lack of co-ordination between Indus- tries Department and the Co- operation Department, the absence of serious efforts to revive the weak or dormant societies and the lack of sufficient promotional interest taken by the financing banks. The structure of the weavers co-operatives at primary and also apex levels in many states is characterised by dor- mant and weak societies and is not capable of absorbing the refinance facilities provided by the Reserve Bank under the scheme. Many of the so- cieties still do not conform to the pattern of working recog- nised by the Reserve Bank. They are not organised on production-cum-sale pattern. As on 30 June, 1976 the num- ber of dormant societies in 16 States/Union Territories was more than J of the total number of socielies and in states like Bihar, Himachiil Pradesh, Karnataka, Punjab, Rajasthan, Tripura and Uttar Pradesh the number of dor- mant societies was between 45 per cent and 94 per cent of the total number of societies. Farther, in states like Hima- chal Pradesh, Rajasthan and Tripura the membership of dormant societies was more than that of active societies and in states like Karnataka, O.issa, Uttar Pradesh and Wcs. Bengal the membership ofdotmant societies was very large. We, therefore, recom- mend that (he Co-operation and Industries/Handlooms

The Staff available for super- i vision over weavers societies, by and large, is quite inade- quate, The norms for super- vision over these societies have been laid down by Go- vernment of fndia in 1956. These norms provided that for every 10 societies there should be one suprevisor and for every 3 supervisors there should be one inspector to supervise their work. We re- commend that the State Go- vernments should appoint adequate stall" for close sup- ervision over the weavers so- cieties. The stall" must be attached to the Department which is responsible for for- mulating and implementing the programmes for hand- loom development. They

must work in close coordina- tion with the supervisors/ins- pectors of the banks finan- cing the weavers societies. (Para 3,9).

As at decision on Recom-

4. Under the Sixth Plan it is en-

mendation No, 1.

Registrar of Coopera- tive Societies in this regard. Motivation cam- paigns will be organised by the Development Commissioner for Hand- looms in coordination with Reserve Bank of India all over the coun- try for the greater in- volvement of the Coo- perative Banks in the financing of the hand- loom sector to a subs- statial extent in the co- ming years.

visaged that the cooperative coverage ol" handlooms must be raised to 60 per cent of ihe total number of hand- looms in the country. The credit support for this pro- gramme cannot be achieved unless the coverage is in res- pect of active looms. We, therefore, strongly recom- mend that the state govern- ments should make efforts to bring more number of active looms within the coopera-

tive fold. (Para 3.10).

the banks to the problems of the weavers societies is, in our view, unjustified. Hand- loom industry in a priority sector. The new industrial policy of the Government of India laid before Parliament on 23 December, 1977 by the Minister of Industry has emphasized the need for assistance to this industry on a priority basis. We, there- fore recommend that the state cooperative banks should in their own interest and in the context of national policy, involve themselves to a substantial extent in the financing of apex weavers societies. They should treat the funds provided by the Reserve Bank as supplemen- tary only. The central coope- rative banks may also step up their advances to the eli- gible weavers societies as they are assured of full refinance from the Reserve Bank. (Para 3.13).

\ccepted. State Govern- ment will be informed accordingly.

5. Many of the banks in states like Rajasthan, Uttar Pra- desh, Bihar, West Bengal, Punjab, Haryana and Assam have yet to start getting used to providing finance to wea- vers societies and handling the scheme for Handloom Finance. We recommend

7. There have been inordinate i delays in the settlement of interest subsidy claims of the banks and the rebate claims of the weavers societies by the State Govornment. We, therefore, recommend that the State Governments should make adequate budgetary provisions for the annual plan schemes which must be reasonably sufficient to meet the interest subsidy and re- bate claims on the govern- ments and the amounts must be paid within say, 3 months of the date of the claims. Higher provisions for inte- rest subsidy will have to be provided in the annual state plans in the coming years in view of the flow of larger volume of credit. (Para 3.14).

that state cooporativo banks and the cooperative depart- ment maust pay special atten- tion to familiarising the central banks with the Sche- me for Handloom Finance. The banks should be in a position to suitably guide, advise and instruct the wea- vers and the societies about the procedure, disciplines to be observed etc. in the im- plementation of the scheme, We further suggest that the Reserve Bank/State Govern- ments may organise suitable training courses for the offi- cers of the concerned depart- ments of the Stato Govern- ments and cooperative banks on the financing of wea- vers' cooperatives under the scheme. (Para 3.11)

(i) While the Vaikunth Mchta Na tionfll Ins- titute of Cooperative Management will or- ganise programmes for marketing and manage- ment, (ii) The Reserve Bank of India will or- ganise Training Courses for higher level officers of the State Govern- ments and the Chief Ex- cutives of Coopera- tive Banks on the Rese- rve Bank of India Sche- me of financing of hand- loom weavers' coope- rative societies in the college of Agricultural Banking at Pune. (iii) The Department of Civil Supplies and Coopera- tion may also arrange in consultation with the National Council for Co- operative Training, tra- ining for intermediate and junior level func- tionariso of the Co- operative Banks in regio- nal cooperative train- ing colleges and junior training centres.

Accepted. The State Go- vernments will be re- quested to execute a single continuing guaran- tee for a period of three years.

8. In some cases there has also been delay on the part of the State governments/Central Government in the case of Union Territories in exe- cuting the guranteo deeds for the credit limits sanctioned by tho Reserve Bank under section 17(2) (bb) read with section 17(4)(c) of the Reser- ve Bank of India, Act. 1934

Reserve Bank of India will issue a circular to the Co-operative. Banks and

6. Some of the central banks are not taking due interest in the financing of weavers socie-

and regular meetings of the State Level Coordi- nation Committee al- ready functioning in the States in teims of the circular No. 15015/1/76/ Coop, dated 20-11-1976 of Development Com- missioner for Handlocms will seek to achieve these objectives.

increased in absolute terms, the proportion of such ad- vances to the total ad- vances made by the banks has been more or less static during the last three years. This is not at all a satisfactory posi- tion. We recommend that the state and central cooper- ative banks should give high priority to the financing of weavers societies. They should involve themselves in an in- creasing measure in the finan- cing of these societies as in the case of financing of small farmers. (Para 4.2)

for financing of weavers so- cieties. We, therefore, recom- mend that the governments should execute a single con- tinuing gnrnntce for a period of 3 years at a time for the advances proposed to be availaed of by the state co- operative banks from the Reserve Bank for the finan- cing of weavers societies us well as for financing of the 22 broad groups of cottage and small scale industries for which also refinance is available from the- Bank. (Para 3.15).

9.

2

Accepted. Central Govern- ment will formulate a scheme for giving finan- cial assistance to the cooperative societies for appointment of staff. The State Governments will also be requested to consider granting the societies some mana- gerial subsidy for the purpose from their own Annual Plan provisions.

Accepted. Suitable instru- ctions will be issued by Reserve Bank of India and State Governments to Ihe Cooperative Banks.

The reorganisation of existing i societies on a viable basis and the organisation and promo- tion of now viable societies are the responsibility of the concerned departments of the State Governments. In these programmes of the State Governments the state and Central Cooperative Banks have a vital role to play and govern- ments will have to heavily relay on their assistance. It will, therefore, be necessary for the banks to widen their developmental and promo- tional role and actively assist the State Governments in their i^vMopmsntal Programmes. (Para 4.3)

3. The control cooperative banks can make advances in an in- creasing measure only to weavers societies which arc viable units and having their own paid staff. Societies not having paid secretaries are common in many parts of the country. Unless the so- cieties have their own paid secretaries, it will not be possi- ble for them to expand and manage their business effectively. V/e suggest that Government of India may formulate a scheme for giving financial assistance to the societies for appointment of staff. The State Governments may avail themselves of such assistance from Central Go- vernment and in turn assist the societies in the appoint- ment of staff. The state go- vernments may also consider granting the societies some managerial subsidies for the purpose from their own annual plan provisions. (Para 3.17)

i

10.

<

l

I

i

1

(

R.cserve Bank of India will write to Director oflndustrles/Handlooms, Registrar of Cooperative Societies who will in turn issue necessary instructions to the Hand- loom Weavers' Primary Cooperative Societies in this regard.

i

1

t Wo recommend further that 1 the societies must advance yarn to the weavers to the extent required for the econo- mic working of the warp against one or two sureties only. They should also make advance payment of wages to the weavers at least to the extent of 25 per cent of the value of the total number of knots of yarn issued to them. (Para 3.18)

1

11. '

t Though the advances made by i the banks to the weavers societies for their production and marketing purposes have

Vcccpted. Motivation cam- paigns as proposed at Recommendation No. 6 (Para 3.13) and frequent eserve Bank of India and State Governments will issue instructions to the State Cooperative Banks in addition to the instructions already issued earlier by them.

The working Group on R Industrial Financing through Cooperative Banks had re- commended (1968) the setting up of a separate industrial section by every state co- operative bank and the bigger imong the central cooperative banks. This section is to be 1 juidod on policy and allied 1 matters by technical groups i set up for the purpose. But nany banks have not imple- mented these recommendation :ra the group that since their business with the industrial- 1 cooperative is not much, < the setting up of an industrial jection and technical group may not be a remunerative sroposition. We suggest ;hat the banks must take a ong term view of the matter is they can expect adequate justness with the industrial 1 locietics when once the exist- ng societies are reorganised i

on a viable basis and new viable societies are also set up. (par;i 4.4),

14.

than stipulated by Re- serve Bank of India for the handloom sector and take appropriate corrective action in the matter under intimation to Development Com- missioner for Handlooms.

Reserve Bank of India and State Governments will send suitable instru- ctions to the District Central Cooperative Banks.

Even if they do not seek refin- ancing facilities from the Reserve Bank they should charge only the same rate at which they can get refinance from the Bank if they so desire and claim subsidy from the government. We suggest that all the banks should follow this procedure and if any bank charges a higher rate of interest from the so- cities, the concerned depart- ment of the state governments should take appropriate action in the matter, (para 4.10),

17,

Accepted. Reserve Bank of India/State Govern- ments will issue suitable instructions to the Co- operative Banks.

The relaxation granted to the weavers societies by the Reserve Bank with a view to aiding In their growth like lower margin for borrowings, share linking to borrowings at 1 : 40 etc. should not be diluted by the cooperative banks to the detriment of the societies. (Para 4.11)

IS.

Accepted. Reserve Bank of India will issue necessary instructions.

The slate and central cooper- ative banks will have to en- large their financial and developmental roles in support of the Government of India's programmes to raise the Co- operative coverage of hand- loo us to 60 per cent duriny the ne\t five years. In this context we suggest that every central cooperative bank in whose area of operations there are 5000 or more looms, active, und dormant, must create a separate cell in the bank exclusively to attend to the work of developing and financing weavers coopera- tives. This cell must take the initiative in bringing more number of looms, within the cooperative fold, in explaining to the societies the formalities to be gone through for availing of loans and assist in the financing of the societies in accordance with the prescribed norms and in promptly attend- ing to the grievances of the societies. This coll must also be responsible for collection of data relating to weavers societies and furnishing the same to the Director of Hand looms/Industrics/Re- glstrar and the Reserve Bank. (Para 4.5).

15

Reserve Bank of India and State will issue suitable instructions to the State Apex Cooperative Banks.

, The Reserve Bank has fixed a margin of 25 per cent for additional limits to be san- ctioned to primary weavers societies as against 10 per cent in the case of normal limits. The two different rates of margins appear to us not justified. We, therefore, recommend that the Reserve Bank may prescribe a uniform margin of 10 per cent only for the advances made by the ban- ks to the primary weavers societies both under the nor- mal and additional credit limits. (Para 4.12).

19

Accepted. Reserve Bank of Indian will issue neces- sary instructions.

. We also suggest that in states where there arc 30000 looms or more the state cooperative banks should form a separate coll exclusively for attending to the promotions, develop- ment and financing of weavers societies and coordinating the activities of central co- operative banks vis-a-vis weavers societies, (Para 4.6),

1(

i. We recommend that the addi- tional limits sanctioned to the primary Weavers societies by the Central banks having satisfactory arrangements for supervision over the societies and their stocks must be re- imbursed by the Reserve Bank if the banks submit their sup- plementary credit limit appli- cations and the societies which are financed by the banks are viable/potentially viable and have appointed full time paid secretaries. (Para 4. J3).

>. In the case of weavers societies whose member are all poor, the cooperative banks should provide at least the same facilities which they get from the higher financing agencies if not more. Many banks charge high rate of interest on loans made to weavers societies from their own resources. This is not correct.

Accepted. Reserve Bank of India and State Governments will isnue suitable instructions to the State Cooperative Banks. From time to time the Registrar of Coopera- tive Societies should review the cases of those Banks which charge higher rates of interest

1223GI/78—3

20,

potentially so and hive full time paid secretaries to look after their affairs. (Para 4.19).

Accepted, Reserve Bank of India will issue necessary instructions,

For weavers covered by PACS/FSS/LAMPS the Merest subsidy is to be allowed to these societies do not suffer undue hardship vis-a-vis mem- bers of handloom weavers cooperative societies. Provisions for this could be made uncer the relevant scheme in the annual plan of the State Governments.

If th: owned resources of the central cooperative banks are too inadequate to sustain their investments in weavers finance till th; sanction of credit limits by Iho Reserve Bank, we suggest tint the state co-opera- tive b inks sTnLild assist them by providing necessary interim financial accommodation for th" purpose. This will alsp hslp the central b inks in grant- ing renewal of limits to good, working societies which ob- serve the prescribed financial discipline on expiry of the period of limit without waiting for sanction of credit limit by th- Reserve Bank. (Para 4.16).

21

Accepted. Reserve Bank of India will issue necessary instructions.

The Reserve Bank has recently in M*rch 1978 reduced the refinancing rate for the finan- cing of weavers societies from 1-1/2 per cent below the Bank Rate to 2-1/2 per cent below the Bank Rate. Besides, indi- vidual weavers who arc mem- bers of PACS/FSS/LAMPS can get financial accommoda- tion at 9-1/2 per cent for which refinance is provided by the Reserve Bank at 3 per cent below tho Bank Rate. It may not be possible for the Reserve Bank to contemplate any further reduction of the re- finance rate in the context of overall national policies and considerations. If, however, necessary subsidy could be given by the Government, a lower interest rate could be charged to weavers societies and to invividual weavers who arc members of PACS/FSS/ LAMPS also. (Para 4.21).

Accepted. Reserve Bank of India will isme necessm- instructions.

1

. Tjndcrthcdisciplineprescribed b/ th? R':wve B ink for fi Kin- cing tho shirt-term credit structure, the cental co- operative b")k is not eligible for refinance if its overdues exceed 60 percent of the de- mand for the year. Hence in such circumstances ths pri- mary agricultural credit socie- ties as well as the weavers sock-ties are debarred from refinance facilities from the Reserve flank. We feel that thei.' are no convincing and " cogent reasons for the Reserve Bank to link the sanction of limits for financing weavers societies with the sanction of limits for financing snort term agricultural operations. We, therefore, suggest tnat as long as weavers societies satisfy the norms prescribed by the Re- serve Bank and they also follow the prescribed proce- dure, th; Reserve Bank, may consider sanctioning credit limits to the central co-opera- tive banks for financing these societies irrespective of whether or not they hive b:en sanctioned short term credit limits for agricultural opera- tions on account of h?avy overdues provided however the financial position and working of the binks i-. not in such a bid condition thit they arc incapa- ble of absorbing any 'credit extended to them by the higher financing agencies. The wea- vers societies

We feel that the banks will assume more responsibilities and exercise greater care if the societywiso scrutiny of loan applications is vested in them. we, therefore, recommend that the Reservo Bank may consider sanctioning overall credit limits to tho central co- operative banks for financing weavers, societies on the basis of the lending programmes and past performance of the banks and leaving the responsibility for fixing credit limits to indi- vidual weavers societies lo the banks themselves on the basis of certain norms laid down by 1he Reserve Bank. The Bank miy lay down the neces- sary guidelines in this behalf for the guidance of the central cooperative banks and obtain such periodical returns from the banks as may be necessary to monitor the flow of credit. The sanction of overall limits by the Bank may, however, be restricted to only those central bonks and weavers societies which have adequate supervi- sing arrangements. (Para 4.23)

27.

24,

Necessary action his been taken by the Reserve Bank of India.

National Cooperative De- velopment Corporation has been requested to drawn up a detail scheme in this regard, We also recommend that the Reserve Bank may consider removing the ceiling fixed for sanction of limit to an apex weavers society at 3 times its owned funds in view of the ceiling that the limit sanction- ed to an apex society should not exceed 9 times its dispos- able owned resources. (Parfl 4.24).

25.

We further recommend that the apex weavers societies may make larger use of the facilities provided by the National Cooperative Deve- lopment Corporation. The Corporation may also assist the apex weavers societies through the state governments not only in the construction and oponing but also in the renovation of show rooms and godowns. It should assist i:i construction of work sheds, etc. for primary weavers so- cieties. (Para 5.13).

2K.

This is an on-going pro- gramme and majority of the States are taking full advantage of this Scheme. All the States arc being requested to undertake this programme on top- priority basis.

Accepted. Reset vc Bank of India will undertake the first such review of norms of financing handloom weavers cooperative so- cieties by December, 197S and thereafter re- views will be undertaken as per the recommenda- tions.

. Oflate the state Governments have not been quite earnest in strengthening the share capital of weavers societies. We re- commend that the governments give priority consideration to contribution of share capital to weavers societies and revive the scheme in this behalf with appropriate- allocation of res- sources in the Sixth Plan period by taking maximum advantage of scheme under central funds which are avail- able. (Para 5.4).

26.

. The cost of production of handloom cloth is increasing ycar^ after year. 1 horc must, therefore, be some mechinism for periodical review of the per loom scales of finance fixed by the Reserve Bank. We suggest thit the Reserve Bank may undertake a review of the scales of finence for the financing of weavers societies, say once in three years or earlier if necessary. (Para 5.14).

29.

Accepted in principle. The National Co-operative Development Corpora- tion has been requested to draw up a detailed scheme,

Accepted. Reserve Bank of India will issu-.¹ suitable instructions to State Go- vornments.

It was observed that some of the central co-operative banks were not financing the societies according to scales of finance which were eligible for re- imbursement from tho Reserve Bank. We recommend that the central cooperative banks should finance the primary weavers societies ut the per loom scale of iViancc in respect of th- new looms registered with them provided they aie satisfied about arrangements for supervision, viability and the need for finance, The Re- serve Bank may agiee to fully reimburse such advances pro- vided the registering of new looms with th; socioties nre certified by the Director of Handlooms/other competent authority of the state govern- ment. (Para 5.15).

.10,

Accepted. Reserve Bank of India will issue suitable institutions to the Re- gistrar of Cooperative Socioties and Coopera- tive Banks.

. Due to various financial cons- traints the state government may not be able lo participate in the share capital of the weavers societies in any big way. The governments must, therefore, be assisted by some financing institutions by giving loans for share capital parti- cipation in weavers societies. It appears to us that the National Cooperative Deve- lopment Corporation is the appropriate agency to assist the state governments for contributing to the Shire capital of primary weavers societies. Since the Corpora- tion his not been provided with additional funds on continual and effective basis to take up this responsibility, the Corporation is presently extending assistance to only the apex/regional weavers societies out of its funds and no assistance is being given lo the primary weavers societies. We, therefore, recommend that the Corporation may be provide with adequate funds by Government of India to enable it to provide financial assistance for participation in the share capital of primary weavers societies. (Pnm 5.9),

It may happen that some of the looms registered with a society may hive to be kept idle for some reason or the oilier, We suggest that the society may be sanctioned limits on per loom .scale of finance in respect of these

have not developed to such an extent as to make it possi- ble to have more than 3 times the turnover of working capi- tal. We, therefore, recom-. mend that the Reserve Bank may undertake a detailed state-wise study of the apex weavers societies with a view to finding out the practicable ratio of working capital to sales turnover and, if found necessary, revise the norms for sanctioning credit limits for the apex weavers societies, (Para 5.22)

looms also if the society wishes to activise such looms after some-time, provided the looms arc In good working conditions. The sanction of the limit should be on the special re- commendation of the field staff of the Department of Handlooms/Industrics indi- cating the reasons why the looms had to remain idle and whether they are now in a good working condition and such advances made by the banks may be eligible for re- imbursement by the Reserve Bank. (Para 5.15)

34.

31

Reserve Bank of India will issue suitable instructions to the Registrar of Coope- rative Societies and Co- operative Banks in this regard.

Accepted. Reserve Bank of India will issue suitable instructiens 1o the Regis- trar of Cooperative So- cieties and Cooperative Bonks.

We recommend that the State Cooperative Banks may be permitted by the Reserve Bank to reckon as cover (he aggregate rebate claims certi- fied for payment by the Direc- tor of Hand loom* or the other competent authority of the SUte Government in the past 3 months instead of 2 months as at present or the actual out- standing under all such claims preferred from time to time as at the end of the preceding month, whichevei is less. (Para 5.24)

35.

. We suggest that when societies submit any concrete and acceptable production pro- gramme supported by such supervising arrangement* as may be necessary in this be- half, ihe Reserve Bank may accept the same and their re- quirements must be assessed accordingly. Normally, how- ever, the Reserve Bank may go by the norm of assessment of anticipatory production at 20 per cent over the produc- tion during the previous year. (Para 5.17)

3

Reserve Bank of India will issue suitable instructions to the Registrar of Coope- rative Societies and Co- operative Banks in this regrard.

Accepted. Reserve Bank of India will issue suitable instructions to the Regist- rar of Cooperative So- cieties and Cooperative Banks in this regard.

We also recommend that the aggregate of claims presented to the Treasuries/Government Departments in the past 3 months in respect of credit sales of handloom cloth made to Government servants instead of 2 months as at pre- sent may also be reckoned as caver for the borrowings of apex weavers societies. (Para 5.25.)

36.

2. We recommend that in the case of new weavers societies and dormant societies to be activised, their credit require- ments may be assessed by the banks on per loom scale of finance for the first two years of their working instead of one year as at present and the Reserve Bank may fully reim- burse the banks of such ad- vances granted b y them to the societies (Para 5.18)

3

Accepted. Reserve B"nk of • India/State Governments will issue suitable instruc- tions to the Cooperative Bunks over this matter.

Accepted. This study will be undertaken by the Rcswve Bank of India by 30th November, 1978 and appropriate decision taken on the basis of the Study.

. We recommend that the Regis- trar as well us the State Coope- rative Banks must take early action to ensure that every Central Cooperative Bank complies with the instructions of the Reserve Bank and relea- ses the reserve fund deposits of the weavers societies imme- diately for their use in the business of the societies. (Para 5.26)

37

3. According to the existing norms, the credit limits of apex weavers societies arc fixed bj the Reserve Bank at 25 per cent of their anticipatory sales during the year. This is based on the assumption that it is possible to have 4 times the turnover of the working capital during the year. It is pointed out by some apex societies that this is possible only under ideal conditions of marketing but tha t the marke- ting condiiions in the country

. We suggest that the Reserve Bank may as a special case fix the scale of finance at Rs.5000 per loom using pol- yester fibre so that the banks can start financing the socie-

Accepted- The per loom scale of finance fixed for production of Polyester Fabrics by Ihe handloom weavers cooperative so- cieties as fixed at the

the banks for the purpose arc eligible for reimbursement from the Reserve Bank. (Para 5.29)

40.

ties without delay. If need be, the position can be reviewed next year on the basis of studies taken up in this behalf. (Para 5.27)

Accepted. As for the ex- pert credit requirements of these Apex societies are concerned, Reserve Bank of India will Issue suitable instructions (o all concerned.

level of Rs. 5,000 by Reserve Bank of India will cover all men-made and blended fabrics. Re- serve Bank of India will issue suitable instruction, cirulars to the State Govts./Cooperative Banks indicating the scale of financing for production of this fabrics.

3S.

The Reserve Bank may take into account the need for export marketing credit of the apsx weavers societie.; while sanctioning credit limits to them, The value of goods exported but not paid for by the buyers for a period upto 3 months may be allowed to be rccokened as cover for the borrowings of the societies from the banks.

Accepted. The State Go- vernments have taken up a programme of reorgani- sation/rchabilitaticn of dormant handloom wea- vers cooperative ^ccictio since 1976-77 with Cen- tral Plan assistance, The programme needs to be stepped up to reach the 60 % active coverage and also exceed this level wherever possible.

As far as primary weavers societies ore concerned, a study will be under- taken by 30th November, 1978 to determine the needs of these societies for exporl credit in additiona to the normal credit limits available.

The investment of funds in production of special varieties of cloth for export either on own account or through the p.-iiiiry societies should be treated as proper use of the limits sanctioned to the so- cieties, In the case of pri- m iry wjavers societies which have secured export orders, thi Reserve Bunk may consi- dersanction of higher limits on their bshalf if after a study of economics of production of these varieties of cloth invol- ved a higher quantum of loan is fjund to be necsssary to carry out the export orders by the sodtic.*. (Para 5.30)

11,

Ac;opteJ. Ii addition to the existing Central Plan Scheme and the States schemes, new schemees to give effort to this recom- mendation would bo drawn up. The possi- hlity of securing medium term/long term assistance from Cooperative Banks for such activities on liberal terms should be

i explored.

r

The Cooperative Banks in the North Eastern States of Assam Meghalaya, Arunachal Pra- desh, Nagaland, Tripimi and Manipur have not taken any interest in the development, promotion and financing of the weavers societies. In fact the scheme for handloom finance has not been imple- mented in any of these States. We arc given to understand that the majority of the socie- ties in these States are either week or dormant. In Assam out of 1531 weavers societies as on 30 November, 1977 av many as to 845 were dormant. In Nagaland out of 15 socie- ties only 3 were active. In Tripura out of 72 societies, 43 were dormant. In Manipur out of 382 societies 170 were dormant and in Mizoram out of 9 societies 6 were dormant. The co-operative coverage of handloom In these States was very low and ranged bet- ween 0.2 per cent in Nagaland and 6.5 per cent in Manipur, The State Governments must take early acttion for the rcor- ginisation/rehabilitation of these societies on a viable basis so that the societies become eligible for finance from the banks. The banks must also widen their developmental and promotional roles and help the growth of Weavers societies in their region. The imple- mentation of this programme needs special emphasis on a priority basi-. and urgent ac- tion from the Government of India as wel!. (Para 5,28)

i

Parpo.ii like purchase, reno- vation and modernisation of looms require medium-term loans with high elements of subsidy as the repaying capa- city of the handloom weavers is very much limited. We feel that it is the responsibility of the State Governments to assist the weavers and the societies for these purposed. We, therefore, recommend tint the State Government' may make adequate budgetarj provisions in th:ir annual State plans for assisting th. weavers/societies In the pur- chase, renovation and moder- niMition of looms. The Gov- ernment of India should sup- port the State Governments in this programme. (Para 5.31)

42.

Accepted. Necessary instru- ctions will be issued t> the Rescue Brnk of India.

Accepted. The State Gov- emment/Union Territo- ries will be requested to : associate the Central Co- s operative Banks In I'.e

Thsrc may arise situations when new societies are regis- tered in the area of good work- ing societies and hence the banks are reluctant to (Inane*

J. The societies must make ear- nest efforts to achieve llie targets set for them for the production of Jania varieties of cloth. The working capi- tal requirements granted by

organisation of new so- cietios/rovitalisalion of dormant ones.

ing the technical staff the apex societies may be granted financial assistance by the State Governments. (Para 6.9)

such new societies. Such situitlois- can very well be avoided if the central coopera- tive bank isassociated in the organisation of new societies. (Para fi.2)

43.

Accepted. Reserve Bank of Jndia will issue suitable instructions in this regard.

Accepted. The State Gov- ernment/Union Territo- ries will be requested to take necessary action in this matter.

We feel Ihtt th? presence of some non-olficials on tne State level comniittecs may in many cases help the committee in Ih-'ir work. We would wel- come such a move leaving it to ihc State Oo\crnmcnts the manner nnd extent of associa- tion of non-ofllcials with such committees. (Par;) 6.3)

We suggest thul in areas where there is concenttation of weavers societies, the concerned Central Coopera- tive Banks should give re- presentation to these socie- ties even by amending their by-laws. Apex/regionul weavers societies should he represented on the Board (if Directors of the State Coop- erative Banks. (Para 6.10)

44.

47.

Accepted. Suilcrlc guide- lines will bt issued by Central Guvernment in consultation with the State Government/ Union Territories on which constitutes a viable society in a particular Stale.

We recommend thai the State Level Committees who know the conditions in their States better may lay down norms for viability of a society. Unless this is done there may arise chances for misutiliza- tion of the various facilities provided by the Central and State Governments. As a general norm we would say that a weavers society should have at least 100 looms work- ing actively throughout the year and have a minimum sales turnover of Rs .1.50 lakhs. (Para 7.3).

There should not bi dual con- trol over th: fundloom sector segregated inio cooperative sector and others. The de- partment, viz., the Directorate of Handlooms which is res- ponsible for the formulation and implementation of hand- loom development programmes must be in chirge of hand- loom cooperatives. They must be responsible for regis- tration of weavers societies and must hive a say in planning thsir credit requirements as is obtaining in Tamil Nadu. The credit limit applications of the banks may also be for- warded to the Reserve Bank by the same department. (Para 6.6.)

48.

Accepted. The State Gov- ernments/Union Terri- tories will be requested to take necessary action in this matter. The Re- serve Bank of India may also issue clarification to those Directors o^Hand- looms/Industries who have been declared as the ex- officio Registrar/Additio- nal Registrar of coopera- tive societies by their respective Stale Govern- ment/Union Territories. Director of Handlooms/ Industries can send their credit limit applications of the hindloom weavers' cooperative societies di- rect to the RBI uador mtiinition to the State Registrar of Coop. Socie- ties.

45.

Accepted. The State level organisations should take full advantage of the National Cooperative Development Corpora- tion scheme for provision of technical staff at the apex level.

Accepted. Studies in product development, market intelligence and promotion of internal and external sale of handloom cloth will be given top priority in the Central Plan sche- mes. In this regard, necessary financial assis- tance will also be given to the Slate level organisations.

M my wcivers societies are facing accumulation of stocks not because of any slump in the market but because they are producing cloth which cannot be sold easily or early. It is for helping the societies in this reg ird that Th? Govt. of [ndia h id suggested in 1956 ths appointments of Desig- nors in every Deputy Regist- rar's Circle. We hive noticed Ihit ihi Tamil Nadu State Hand loom Weavers Society h LS appointed technical staff to assist th; prim iry weavers societies In new production techiiques. We suggest t.jat all np;\ weavers societies m,iy appomt such technical stulf in helping the; primary wea- vers societies. For appoint-

The handlooms in the coop- p:rative sector will have to follow an aggressive marke- ting policy and compete with the organised sector. For this purpose the weavers co- operatives must adopt now techniques of production so us to ensure that what is being produced is acceptable to the consumers. They should also adopt cost reduction programmes so as to ensure thut what is being produced is within the roach of mid- dle class and poor class people since they form the bulk of the consumers of handlooms products. In these two mallei's tlic Go- vernment of India in the Department of Textiles can offer much assistance lo the hanJIooni sector in general ;md to t!ic wvuvers cooper- ative¹! in particular (Mara 7.4)

49,

This suggestion is beirg

examined.

vided the S'atc Governments are agreeable to grant subsi- dies to the societies as sug- gested in the case of hand- loom weaveis. (l*aia 7.7)

51.

In a meeting o( the Sub-group on the Main Working Group on Textiles for Handloom and Powerloom Industries hold in Bombay, Jaiumry 1478, a view was expressed thai if some preference is shown by Government of India in allotting cotton bales to the cooperative spinning mills, the supply o( yarn to weavers coopera- tives may improve, since these mills are required to supply yarn to the weavers cooperatives on priorit} bt.sU. We suggest that Go- vernment oi India may con- sider the feasibility of the above suggestion. (Para 7.5)

50

We recommend thiii the Re- / serve Bank may consider opening a line of credit on bcha.f of eooperal'w spin- ning mills for handloom weavers/hand loom weavers societies as in the caic of cooperative sugar mills for meeting their working capi- tal requirements against ple- dge hypothecation of yarn under Section 17(4)(c) of the Reserve Bank of India Act. Tho Government of India may ulso consider granting subsidy to the mills so as to bring down their burden of interest on borrowings. (Para 7.10).

\cceptablc in principle. The financial nnd other implications of imple- menting this recom- mendation will be fur- ther examined hy ihe Government of India and the Reserve Hark cf India. As far as gran ting interest subsidy to Cooperative Spinning Mills iii respect of their working capiatl finance is concerned, the Government of India will woik oul the modalities of such- schemes in consulta- tion with State Govts,/ Union Territories. The Reserve Bank will take appropriate action in due course.

A suitable Echcrre ft r giving lean to the wcavtis for purchase of shares in spinning mills will be formulated by RBI in consultaion with Development Com- missioner Handlooms & N.C.D.C

52

Accepted Reserve Bank of India will issue suitable instructions to the State Govern- ments/Union Terri- tories and Coopera- tive Banks,

. We recommend that the Re- serve Bank may provide re- finance facilities at conces- sional rates on behalf of weavers societies for run- ning their units for prc- weaving and post-weaving processing operations, if such units satisfy the cri- teria of small scale indus- tries. If they do not satisfy the criteria of small scale industries, they should be treated on par with consu- lnsr typs of cooperative spinning mills for refinance facilities from the Reserve Bank. (Para 7.12).

5.1.

\ccepted. Rescue Bank

of India will issue appropriate instructions to Slate Governments/ Union Territories and Cooperative Banks.

Wo sui^st that the Rcser- ,• vo Bank roiy allow the Cen- tral Cooperative Banks to finance the wiavcrs societies for granting consumption credit to their members under appropriate ceilings and norms prescribed by the Reserve Bank and such ad- vances granted by the banks to the weavers societies may be reckoned as a legitimate charge on the owned funds of the banks. (Para 7.14).

. A study in dopth under- taken by the Reserve Bank at th? instance of the Study Group covering 640 mem- bers of 6? weavers societies in 13 districts in the country revealed that tho average weaver is not by and large interested in the acquisition of shares of Cooperative Spinning Mills and those who are interested do not have the requisite repaying capa- city to enable them to re- pay the instalments of any medium-term loans that may be granted to them by the Reserve Bank through co- operative channel for acqui- sition of shares in consumers type of cooperative L1pinninj> mill. Such loans can be provid.-.i, however, on a selec- tive ba^is to those weavers who have additional income from sources other than weaving and on the basis of a substantial subsidy from Government, at least to the extent of 33 1/3 per cent to 50 per cent of the val ue of shares. The loan amount can be sui- tably deducted by the socie- ties from the wage-, payable to the weavers. We also re- commend that the Reserve Bank may consider the feasi- bility of extending such faci- lities to handloom weaveis societies for acquiring shares in co-operative spinning mills for handloom vvcavcrs/hand- loom weavers, societies pro-

M. A. RANGASWAMY, Special Secy.

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