Merging DCCBs will destroy rural credit flow: Sanghani

Reacting to RBI issuing guidelines for merging district central cooperative banks with state cooperative banks, NCUI President Dileep Sanghani said that this is unjustified, and it will destroy the rural cooperative credit institutions in the country causing lot of problems to the farmers, read a press release issued by NCUI.

“The Banking Regulation (Amendment) Act, has been notified for State Cooperative Banks and DCCBs with effect from 1 April,2021. RBI has come up with guidelines under which RBI will consider amalgamation of DCCBs with State Cooperative Banks, subject to various conditions, including that a proposal should be made by the state government concerned”, the release noted.

NCUI release also put up Mr Bhima Subrahmanyam, Managing Director, National Federation of State Cooperative Banks statement in which he said that the intention of RBI guidelines is to destabilize and dismantle the three-tier cooperative credit structure in the country. The notification is uncalled for, and is provocative, prompting and mischievous, he said.

RBI issuing guidelines has come a few months after a National Conclave of District Cooperative Banks inaugurated by Shri Parshottam Rupala, Hon’ble Union Minister of State for Agriculture, was organized in 1st week of March,2021 in which there was vehement opposition of merger of district central cooperative banks with state cooperative banks.

Earlier, Sahakar Bharati leaders issued statements criticizing the RBI move. Talking to Indian Cooperative Sahakar Bharati leaders said there are 363 DCCBs at the centre of the 3 Tier Rural Credit Delivery System and cover 6.93 lakhs villages through a network of 14,224 Number of branches and 95,238 No of PACS in the Country. In the process, DCCBs through its branches and through PACs, cumulatively serve Banking and Financial needs of over 13 Crore Shareholders / Members, they noted.

If DCCBs are disbanded, the new entity would not be able to meet the requirements of such a large body of Shareholders and hence, it is highly necessary that the middle Tier of DCCBs needs to be strengthened for achieving the twin objectives of Doubling Farmers’ Income and making India Atma Nirbhar, they argued.

Explaining further they said a National Policy should be first made before granting any such amalgamation to co-op banks. There is a need to set up a broad-based Committee of representatives of GOI, State Governments, NITI Aayog, RBI, NABARD, Federal Cooperatives and Co-operators to define the Roles of Co-operative Financial Institutions, particularly, PACs, DCCBs and State Co-op Banks, they underlined.