The Government of India has provided for the inclusion of Scheduled State Cooperative Banks and Scheduled Urban Cooperative Banks that meet prescribed eligibility criteria as Member Lending Institutions (MLIs) under the Credit Guarantee Fund Scheme for Education Loans (CGFSEL).
According to a notification issued by the Ministry of Education, Department of Higher Education, the inclusion is subject to the cooperative banks meeting the eligibility conditions prescribed under the scheme.
The notification states that all Scheduled State Cooperative Banks and Scheduled Urban Cooperative Banks in the country fulfilling the specified criteria are included as MLIs under CGFSEL.
Among the prescribed conditions, a bank must be included in the Second Schedule of the Reserve Bank of India Act, 1934, and must not have been under the RBI’s Supervisory Action Framework during the preceding two financial years. It must also not have faced a monetary penalty during the last three years.
The notification further sets financial and performance criteria. These include a minimum Capital to Risk (Weighted) Assets Ratio (CRAR) of 11.5% during the last two financial years, minimum Net Worth of Rs 100 crore as per the preceding audited financial year, Gross Non-Performing Assets (GNPA) below 7%, and Net Non-Performing Assets (NNPA) not exceeding 3%.
The bank must also have earned net profit in at least three of the preceding four financial years. In the case of a net loss in any year, the notification specifies that an Urban Cooperative Bank should have recorded an operating profit in that year.
The annexure to the notification lists 34 Scheduled State Cooperative Banks and 52 Scheduled Urban Cooperative Banks. The listed institutions include cooperative banks from different States and Union Territories.
The National Credit Guarantee Trustee Company Ltd. (NCGTC) will carry out periodic/annual assessments of Scheduled State Cooperative Banks and Scheduled Urban Cooperative Banks to ensure their eligibility and continued compliance with the prescribed criteria under CGFSEL.
The notification, therefore, creates a framework under which eligible Scheduled State Cooperative Banks and Scheduled Urban Cooperative Banks can participate as MLIs under CGFSEL.
Importantly, the inclusion of the categories of cooperative banks in the notification does not mean that every individual cooperative bank is automatically eligible. Banks must fulfil the prescribed eligibility criteria and remain compliant with those conditions, with NCGTC undertaking periodic/annual assessments.
