GST to affect balance-sheets: Ramgarhia Co-op Bank

”Implementation of the new tax system GST (Good and Service Tax) will affect the balance sheet of our bank in the next financial year i.e. 2017-18. The lack of clarity about fundamentals of GST and compliance obligations is a problem facing the cooperative banking sector,” said Ajit Singh Sehra, Vice-Chairman, Ramgarhia Cooperative Bank recently in Delhi.

He added “GST will affect balance sheets especially of small cooperative banks earning a profit of less than Rs 5 lakhs. The implementation of Good and Services tax was done too hastily and as it came on the trail of demonetization we had hardly time to get ready”, he felt.

Talking about demonetization, he said “We exchanged new currency notes of about 35 crore and our bank did not indulge in any wrong practices.” He however added that the work load on staff members had increased a lot. I welcome the decision of Narendra Modi to eliminate black money from the country but recovery of loan from the members was the major concern that we have faced during the demonetization, he recalled.

A.S Sehra urged the Modi Government to give write off loan facility to cooperative banks on the lines of commercial and nationalized banks. He demanded some relaxation in GST regime and an ease on co-op sector from Income Tax burden. “Despite several representations made by top leaders of cooperative sector in this regards, the government has not paid heed so far”, he lamented.

Recalling the history of the Bank, Sehra said ” the bank was established in 1941 in the name of Central Ramgarhia Thrift and Credit Cooperative Society in Paharganj, Delhi under the leadership of Late Dr. Sunder Singh, Late Ratan Singh Sehra, Late Kripal Singh Sangat and several others contributed a share of capital of about a lakh rupees.

”Since I joined as Vice-Chairman of the bank in 2007, my efforts have yielded desired results in terms of expansion of branches and installation of CBS, he said patting himself on the back.

”The Bank is having more than 14,500 members with a share capital of about 4 crore and deposits of about Rs 170 crore. The bank has four branches in the capital region. Our Vishnu Garden branch alone claims a whopping deposit of 60 crore,” said the Vice-Chairman.

”The RBI has never imposed penalty on us and we are working under the RBI norms. The Bank does not give loans to the directors and their Relatives” Sehra emphasized.

In an era of technology, the bank has installed CBS and provided facilities such as NIFT and RTGS to its members as well as account holders, Sehra informed.

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    GST will affect balance sheets especially of small cooperative banks earning a profit of less than Rs 5 lakhs.
    The Federations of Cooperative Institutions must take up a proposal before GST council and get the exemptions. Otherwise the Cooperative institutions cannot declare dividend to its members.
    What is a ‘Dividend’
    A dividend is a distribution of a portion of a Cooperative earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments. A dividend or distribution that a co-operative pays to its members or investors.
    Therefore, federations should take up a proposal to the Ministry for the exemption.

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