Besides PACS, Union Ministry of Cooperation led by Amit Shah is focussing majorly on recasting Kheti Banks for revolutionizing farming in the country and in this connection, it has sought the opinion of experts.
The Nabard Consultancy Service (NABCONS) has prepared a draft report on reforms, restructuring and innovations in ‘Agriculture & Rural Development Banks’ (ARDBs) and submitted it to the Union Ministry of Cooperation.
In its 321-page study report, the committee under the leadership of Arvind Kumar Srivastava suggested measures on the basis of examination of different aspects of functioning of ARDBs and role of various stakeholders. The committee suggested the guarantee cover to the deposits, baking license for SCARDBs, Umbrella Organization of SCARDBs, financial package for PCARDBs/SCARDBs and others.
Stating the important points of the study report in a nutshell, National Cooperative Agriculture & Rural Development Banks Federation Ltd (Nafcard) Managing Director K.K. Ravindran said there are many new things in the report that will strengthen the long- term credit cooperative structure.
“The committee suggested that there should be some form of guarantee cover to the deposits raised by the SCARDBs/PCARDBs to instil confidence in the depositors. In this connection, the Deposit Guarantee Scheme for cooperatives implemented by Government of Kerala needs a mention and the same may be examined by other States for implementation, with suitable modification”, Ravindran informed.
It further suggested, “In order to provide a level playing field to ARDBs, there has been a demand for provision of banking licenses to SCARDBs. This demand, if met, will provide equal opportunities to SCARDBs to mobilise all types of deposits from the public.
Besides, the committee felt that there is a need to explore the possibility of establishing an Umbrella Organization (UO) for SCARDBs to provide professional services to support their functions, including investment operations. ARDBs should also be provided an equal opportunity to serve as CSCs to expand their footprints and enhance their business.
The report has also examined the issue of establishment of a new multi-State ARDB/ conversion of existing SCARDB into multi state ARDBs in the light of Amendment in the MSCS Act in the year 2023.
Amendments to the Cooperative Societies Acts, on the lines of its recommendation on STCCS, which will provide full autonomous status to PCARDBs, besides allowing flexibility in borrowings and investments, the committee felt.
Besides, it was suggested that a rough estimate of Rs 10,000 crore has been made as the financial package required in this regard for LTCCS. The implementation of the financial package suggested in the Study Report may provide an opportunity to assess the financial position of individual PCARDBs.
At present 13 functional SCARDBs are operating under unitary, federal and mixed structures. The SCARDBs in Manipur, Madhya Pradesh and Maharashtra have been liquidated. Odisha has taken a decision to liquidate the structure and started implementing it.
The LTCCS in Bihar and Assam are non-functional. The Structure in Andhra Pradesh and Chhattisgarh have been merged with STCCS. A total of 603 PCARDBs are operational at ground level in different States in specified geographical areas having federal structure, the committee reports read.
The union Ministry of Cooperative has forwarded the report to NAFCARD for seeking their comment.
Already in 9 states, SCARDBs are nonexistent. Remaining 603 PCARDBs can be merged with PACS. Much water has flown since this LT structure has been set up. It’s relevance is lost now, as seen with SCARDBs merger/liquidations. Moreover, at ground level, it’s competitors in RRBS, Commercial banks are delivering both ST &:LT loans from a branch. Off Late small banks, NBFCs have come to play..As it is there are enough governance issues with existing cooperative banks for RBI, why add more by bringing left over PCARDBs into banking domain.