The failure of New India Cooperative Bank has once again highlighted deep-rooted issues in the cooperative banking sector, including weak governance, lack of internal controls, regulatory lapses, and political interference.
Cooperators associated with the cooperative banking sector and credit societies stress the need for structural reforms, stronger RBI oversight, professional management, and technology-driven monitoring to prevent such crises.
Some advocate for merging small banks to ensure financial stability, while others emphasize vigilance among shareholders and stricter board accountability as key to restoring trust in the sector.
Excerpts:
Satish Marathe, RBI Central Board Director and Sahakar Bharati Founder Member
The root causes of this crisis are dynastic control, a debased work culture, and a complete absence of checks and balances. The bank’s board is solely responsible for its collapse, and the Board of Management (BOM) appears dysfunctional. Shareholders must remain vigilant.
Such incidents negatively impact the entire UCB sector, spreading uncertainty and mistrust.
The RBI acts like a soldier on the frontier, but internal lapses and wrongdoing are first noticed by staff, management, auditors, and the board—they must take responsibility.
Laxmi Das, President, Nafcub
The episode of New India Cooperative Bank is undoubtedly a setback for the cooperative sector. It not only raises concerns about governance but also creates a negative perception among the general public, which can harm the credibility of the entire cooperative movement.
Incompetence and deliberate mismanagement must be prevented at all costs. We must identify the “black sheep” within the system who exploit cooperative institutions for their personal interests rather than serving the true purpose of cooperation. The hardworking and honest members of the sector should not suffer due to the wrongdoings of a few.
Regulatory authorities must act swiftly and decisively to ensure transparency and accountability so that such unfortunate incidents do not recur. Restoring trust in the cooperative model is crucial, and for that, strict action against defaulters and robust safeguards are necessary.
Sharwan Manta, MD, Himachal Pradesh State Cooperative Bank
In most cases, it is urban cooperative banks (UCBs) that bring disrepute to the cooperative sector. We must focus on better governance, human resources (HR), and IT infrastructure.
Since banking technology is costly, larger cooperative banks with professional board members are needed. Small banks should be merged into bigger entities that can afford the latest technology. The mushrooming of cooperative banks must stop to ensure financial stability.
Rajesh Kumar Kulshrestha, MD, UP State Cooperative Bank
This episode should serve as a wake-up call for the entire cooperative banking sector. Structural reforms, better governance, and stronger RBI oversight are essential to prevent such failures.
Depositors and stakeholders must closely monitor financial reports, governance standards, and RBI’s regulatory actions to ensure their bank’s stability.
Jagdish Kashyap, CEO, Janata Sahakari Bank, Pune
As of now, this bank’s failure has had no direct impact on cooperative banks in Pune. However, there is a need to change the mindset of employees in cooperative banks. Policies and procedures exist on paper but are often not implemented effectively.
Top management should create a conducive work environment where junior employees can work fearlessly and report malpractices without hesitation. If the Reserve Bank provides technology-based monitoring tools, the sector’s efficiency and credibility will improve.
Vishram Dixit, CEO, Nashik Merchants Cooperative Bank
The failure of New India Cooperative Bank is due to its repeated failure to act on RBI’s warnings. While the immediate impact on other cooperative banks is minimal, NICB customers are suffering immensely. The inability to access their accounts makes them feel helpless.
A better approach would be compulsory mergers of struggling banks instead of simply imposing restrictions after financial distress signals appear.
Manjunatha Kanchan, Former CEO, Mahanagar Cooperative Bank
The primary cause of fraud is lack of internal control and supervision. The Board of Directors must be competent enough to understand the bank’s routine operations. The audit committee must review risk audit reports every quarter to prevent financial instability.
Prashant Bhalerao, Chairman, Shri Renukamata Multi-State Credit Cooperative Society
The cooperative sector is facing numerous challenges, and this is one of them. Well-managed institutions are in a better position to handle such crises. The frequent failures in the sector stem from lack of knowledge, weak regulatory control, public attraction to high-interest rates, political interference, and erosion of ethical values.
