Thiruvananthapuram: The state government has diluted the reserve creation standards for delinquent loans in cooperativesthus allowing many of them to project themselves as profit-making entities.
The reserve to be constituted on the benefit of outstanding loans as well as the interest on these loans, in force since 2007, was reduced by a circular from the Registrar of Cooperative Societies of July 12, consulted by TOI. He lowered the reserve currency on unsecured loans past due for 1-3 years from 10% to 7.5%, for 3-6 years past due from 100% to 80% and secured loans past due for 3-6 years. years from 50% to 30% for 2021. -22, whose cooperatives will soon be audited.
The circular also indicates that the reserve to be created for interest on overdue loans must be calculated by excluding interest for the last three months of 2021-22. The government cited the Covid-19 pandemic to water down the standards.
These reserves will be reflected in a cooperative’s profit and loss account as a higher percentage of reserve will reduce its profit. “Such measures will only allow the cooperative to present itself as a for-profit entity on the books. It will neither help the public who take out loans or deposit money, nor the cooperative to remain strong,” said a leading source within the cooperative audit division.