In a strategic move, the Kerala government has decided to secure a Rs 2,000 crore loan from cooperative societies to fulfill its social security pension obligations. The finance department has granted approval for the creation of a new consortium of cooperative societies for this purpose. Madai Co-Operative Rural Bank LTD in Kannur district will act as the fund manager for this consortium. Cooperative societies are invited to join this initiative.
The government has utilized similar consortiums in the past, with Mannarkkad Rural Service Cooperative Bank serving as the previous fund manager. The loan will be acquired at an interest rate of 8.8% per annum for six months, backed by a government guarantee. If the amount is not repaid within six months, the loan will be renewed. Importantly, the consortium will not maintain permanent members; cooperatives have the flexibility to exit at any time, while new societies can join.
This loan acquisition is managed by the Kerala Social Security Pension Limited (KSSPL), a body established to distribute social security pensions. Presently, pension disbursements for the months of August and September are pending. However, there is a complication regarding the categorization of KSSPL’s loans as state debt by the union government. Kerala has expressed discontent with this decision and is exploring potential legal actions against the union finance ministry.