New Delhi: Opposing the three-tier structure of co-operative credit institutions, the Union Agriculture Minister Ajit Singh has said that multiple layers considerably raise the interest to be paid by farmers and other loanees.

"We have to seriously think in terms of cutting down costs by doing away with the three-tier structure in co-operative credit bodies," he said, addressing a seminar 'Challenges and Opportunities before Co-operative Agriculture and Rural Development Banks' on April 22.

The presence of multiple layers at state, district and primary levels led to considerable increase in the interest rates payable by the farmers besides high operational costs.

"Is it still necessary to continue the three-tier structure? With high-tech communication facilities and revolution in information technology, multiple layers can be avoidable to make it cost effective," Singh said.

The minister said that the traditional multiple-layered system had been done away with in Karnataka and that could be followed in other states as well.

Stressing the need for reforms in the co-operative sector to make it face the challenges of globalisation and World Trade Organisation (WTO) regime, Singh said that the Multi-State Co-operative Bill seeking to replace the old Act would free the co-operatives from the "clutches" of governmental control and interference.

"On their part, co-operative societies would have to perform. They must transform themselves into responsible, democratic and professional bodies," he said.

The seminar was organised by National Co-operative Agriculture and Rural Development Bank's Federation.

PTI