Speaking on the occasion of onboarding of co-operatives on the GeM portal recently in Delhi, Union Minister Amit Shah said that co-ops can no longer be treated in a step motherly manner.
Elaborating the statement, Shah said to co-operators “your CA must have told you that the taxes on co-ops are now at par with that of Corporate. And we did this in the very first three months of the opening of a separate ministry of cooperation”, he stated adding we are not used to publishing our achievements.
All arms of co-operatives would be brought at par with the mainstream economy, said Shah. Taxes and treatment to co-operative banks and urban cooperative banks would also be brought at par with the commercial banks, he underlined.
“Many exchanges with RBI have taken place on the issue and the Ministry is hopeful that an arrangement suitable to both RBI and UCBs would be found sooner than later”, said Shah. We are now preparing for the final meeting with the RBI on the issue, he informed.
Due to the different nature of the event Shah was participating in, he did not dwell on thorny issues between the RBI and co-op banking fraternity. Earlier, talking to Indian Cooperative Nafcub President Jyotindra Mehta gave a brief idea of the issues at stake.
It bears recalling that in the Parliament also during the monsoon session Union Minister of Cooperation Amit Shah has said in a written reply that the government is in talks with the RBI to resolve issues.
Talking to Indian Cooperative Mehta said NAFCUB has drawn the attention of RBI and the Ministry of Co-operation to certain regulatory restrictions which do not apply to other categories of banks, but only to Urban Co-operative Banks as a result of which the growth of the UCB sector has been impeded/adversely affected.
One of such demands is inclusion of UCBs in the second schedule to RBI Act, 1934. Only 54 UCBs out of 1534 are included in the second schedule of RBI Act. All commercial banks are automatically scheduled. RBI had stopped giving scheduled status to UCBs in 2004 just because one of the major UCBs in Gujarat had collapsed.
Though, on paper they withdrew the ban in 2013, very few UCBs have been given scheduled status since then. RBI and the Ministry have been requested to make scheduling of UCBs that reach the required threshold of size to be automatically scheduled, stated Mehta.
Another issue raised by Nafcub is Branch expansion which it says is part of a normal growth process of banks. Commercial banks, RRBs and even SFBs that have come into existence very recently, are permitted to open branches freely just by submitting an annual plan to RBI.
NAFCUB has requested RBI and the Govt to prescribe branch opening norms for UCBs that are identical with those prescribed for commercial banks and SFBs.
RBI has recently permitted all scheduled private sector banks to undertake Government Agency Business and thus there is no justification for not permitting at least scheduled UCBs in participating in the Govt agency business, underlines Mehta.
There are many other issues plaguing UCBs which include Resumption of licensing of new UCBs and a Revisit of the income tax issues, said Mehta adding he is hopeful that with the proactive attitude visible in Amitbhai Shah, these issues will get resolved.