Nabard Control: Reactions pour in rejecting Anaskar proposition

Several co-operators have reacted to Vidyadhar Anaskar’s proposition of allowing NABARD to control UCBs rather than the RBI. While Sahakar Bharati has rejected the idea by convening an emergency meeting, there are several others who are equally unhappy with this proposal. We cannot publish all reactions but here are a few.

Atul Khirwadkar

A news item that UCBs should be governed by NABARD rather than by RBI has been in circulation for some time now. My views on the story are and I would repeat an old proverb “Grass is always greener on the other side “. I have a similar feeling about the story.

Basically, I’m unable to believe that NABARD has the wherewithal to regulate and supervise UCBs in the first place. The formation of NABARD, as its title suggests, is for the rural economy, rural institutions and agricultural businesses etc. A look at the functions and responsibilities of NABARD will clarify which is available on their website.

But having said that, I would like to dwell upon the idea as to how NABARD is not having the DNA to regulate and supervise UCBs. UCBs by far have been doing business in urban India with large concentration in three states and minor presence in other states.

The UCBs thrive on urban agglomeration and typically nothing “agricultural” about it. It is another topic that the UCBs have ceased to be “UCBs” in truest sense and are virtually following into the footsteps of Commercial Banks. This was one of the reasons for the

Government of India for amending the Banking Regulation Act with 56^th amendment very recently evaporating the State control on UCBs, even if “cooperation” is a state subject. I do not intend to hint that NABARD is incapable, but have a look at the following arguments to buttress what I am driving at :

1. The idea about having UCBs en-mass under the control of NABARD instead of RBI needs to be seen from the merits of the reasons cited. The whole article stipulates only one reason that NABARD understands UCBs better than RBI. But having said that, one has to look at the control mechanism of NABARD in terms of regulatory norms, the professionalism and knowledge pool available with NABARD besides the regulatory control mechanism available with NABARD. Unfortunately, the present state of NABARD is not encouraging in this regard for various reasons well-known in the co-operative sector;

2. Mooting of such ideas requires amendment in the BR Act and NABARD would be required to be introduced as regulatory authority on par with RBI. However, instead of such amendment, the structure of UBD at RBI can always undergo a change wherein the NABARD Officials who are claimed to know the nerves of UCBs can always be inducted.

3. The demand or expectations (as one understands from this article) to trim or end the control of RBI over the UCBS would take UCBs to stone-age rather than being able to compete with SCBs or SFBs on a fair ground. It would have been a pleasure to see a demand mooted by UCBs to give level-playing field with SCBs / SFBs rather than demanding curtailment of regulatory aspects which are the essence of any banking entity.

Benugopal Mukhopadhyay

Cooperative Banks were like pariahs for a few years under reforms. Without appreciating their roles in our nation building and the cause of farmers’ well-being, they were made to fend for themselves. In our country where more than fifty per cent of our people are in the rural areas who are dependent on the farm sector for their livelihoods and jobs, it is sheer stupidity to undermine their roles. It will be really great if Hon’ble Minister Gadkariji can nudge the Hon’ble Finance Minister to this end. Cooperatives will be another pillar to transform rural India in line with our Prime Minister’s vision to protect the lives and livelihoods of our rural people.

Jayant Marathe

The idea of NABARD being brought in control instead of RBI is convincing since NABARD is a prestigious institution capable of handling agricultural refinancing and almost all PSBs look towards it for guidance in rural developmental activities.

However, NABARD has its area of operations confined to a specific financing field particularly the rural development via agricultural and allied activities. It has to be noted that the spread of urban cooperative banks and their financing is primarily concentrated in urban and semi urban areas and seldom up to the taluka levels. Their presence in villages is mostly for deposit collection and small loan advances with a miniscule portion being lent to direct agricultural activities.

Most importantly, NABARD cannot be trusted with authority for regulatory operations of cooperative banks. Under the given circumstances, the idea mooted by you and placed before the honorable minister is a matter of intense debate.