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| Rather ridicules critics for malicious campaign on CMA | | | EARLY TIMES REPORT
JAMMU, Jan 24: Terming the new Cash Management Agreement (CMA) with RBI as a supplementary agreement, necessitated to have high degree of financial prudence, the Minister for Finance Abdul Rahim Rather today said the new arrangement is a major structural reform measure which is in the overall interest and benefit of the people, depositors, J&K Bank and the government.
Addressing a press conference in Civil Secretariat, here this afternoon Rather said the Over Draft(OD) facility with J&K Bank was meant to be used to meet a temporary miss-match between the availability of cash (receipts) and expenditures for only few days but
due to its continued non-liquidation, the OD facility had become a permanent structural liability deficit in the State finances adding that the OD limit of Rs. 1700 crore had now exceeded to all time high of Rs. 2300 crore during last fiscal, in violation of the RBI guidelines.
This negative tendency, if not checked forthwith, could have proved very disastrous for J&K Bank as RBI have many a times passed strictures against the bank for exceeding the over draft limits. “Reputation and credibility of J&K Bank was continuously at risk and the trust of investors would have fallen at any movement resulting into catastrophe for J&K Bank,” Rather added.
Rather said as the arrangement of OD through J&K Bank was not governed by Fiscal Responsibility Legislation (FRL), the successive Government continued to get OD facility beyond the limits without liquidation, with the result the OD which was only Rs. 800 crore in 2002, when PDP took over Government it continued to swelling up to Rs. 23000 crore by ending March 2009, when the present dispensation came to power again. “Moreover, the State Government had also to pay a whopping interest of Rs. 235 crore over the overdraft from J&K Bank, the Minister said. The OD facility was gradually issued for higher and higher limits and for considerably long periods as it neither required approval of the legislature nor the cabinet.
Ridiculing the critics of the new cash management system, Rather described it a deliberate and malicious campaign to confuse people and meet narrow political scores. It seems, there is lack of understanding among the critics about the new structural and fiscal reforms.
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