Indian Cooperative has received a mail from Rajiv Padia who also finds NABARD role vis a vis cooperative banks not constructive. Debate being soul of intellectual process we produce below his take on the subject. Excerpts
Hello Sir,
NABARD and RBI both are are responsible for this condition of CCI. They always put restrictive policies on State and District Central Cooperative Banks.
They never allow these banks to come out of artificially crafted well in frog-in the well manner.
While in the matter of financial discipline and economic prudence they are treated at par with Commercial Banks but when it comes to doing profitable business, they are reminded of their puniness.
In the given scenario CCIs can survive only if they are allowed to venture out and do business in other sectors and are not entrapped to agriculture or PACS alone.
RBI and NABARD still think that State and District Cooperative Banks are meant for PACS only.
We have visited USA and studied working of credit unions. It has been observed they survive even where big banks fail in USA.
RBI and NABARD must have some positive policies for State and District coop Banks.
Rajiv Padia
July 17th, 2012 at 19:59
Mr Rajiv Padia
It is indeed sad that cooperative banks think that RBI and NABARD create road blocks for their growth. There are so many success stori
July 17th, 2012 at 20:02
There are so many success stories in the coop bank sector,- they have achieved so much during last 60 years or so. I am also surprised why cooperative banks are complaining and only others do
January 19th, 2013 at 12:43
Out look of Mr.Rajiv Padia is correct. If a serious analysis of Indian co-operative movement and the trends in Indian economy is made one may come across the facts that RBI and central Government are the arch rivals of co-operative movement. The weapons they use to demolish the movement are the same that were used in the past to protect and nurture the co-operatives viz. committees and commissions and enactment of laws on the recommendations. The victims and target of these committees are:-
(1) Vaidyanathan committee- Central package- PACS, DCBs,St CBs-
(2) Madhavrao Committee- Banking law amendment act 2012- Primary credit societies,urban banks
(3) Malegam committee 2011- Umbrella organisation,BOM, CRAR ,licencing norms- Urban Banks.
(4) Prakash Bakshi committee 2012- Report yet to come St CBs, DCBs
See the main terms of reference of the last committee:-
i. To assess role played by State and District Central Cooperative Banks in fulfilling the
requirement of agriculture credit, the primary purpose for which they were set up
ii. To identify Cooperative Banks that may not be sustainable in the long run even if some
of them have met the diluted licensing criteria for the time being
iii. To suggest appropriate mechanism for consolidation by way of amalgamation, merger,
takeover, liquidation and delayering
Co-operators can anticipate a report with recommendation for the merger of these co-operative banks and strict regulatory matters. There are reasons to afraid of a possibility of recommendation such as these banks should either become a full pledged commercial bank else confine business within co-operative sector only.
They may be asked even to sell shares in IPO and to list in stock market to comply with CRAR stipulation.
January 19th, 2013 at 16:06
There is a proverb in Kannada “Ollada gandanige mosaralli kallu means “The disagreeable husband finds stones in curds”. Let us welcome the changes with open mindset.
March 20th, 2013 at 17:29
“RBI and NABARD still think that State and District Cooperative Banks are meant for PACS only.” No. Now they think PACS are for District Co-operative Banks. Dr.Prakash Bakshi committee report recommends PACS to hand over the share capital, loans, and deposits to DCBs and act as their Business Associate.
March 20th, 2013 at 17:43
Delicencing of weak DCBs and St CBs and even conversion of these Banks into Urban banks are also the recommendations of Dr.Prakash bakshi committee. The committee recommends CRAR @4% within 31-03-2013, 7% within 2014-15 and 9% within 2016-17. NAFSCOB has informed their protest to RBI governor. Co-operators of some Sates who are aware of the situation are also agitating against the recommendations of the committee.
PACS and the entire STCC system are going to perish in case the recommendations are implemented.