Sahakar Bharati organized a Facebook live on “Relevance of UCB & Recent Developments” last week where its Patron and Nafcub President Jyotindrabhai Mehta spoke at length about the same and urged cooperative banks not to distribute dividends for conserving capital after post Covid-19.
In his over 40-minute speech, Mehta added that, “There is a need to reserve the capital and I urge cooperative banks to hold the payment of dividends for the year. There will be a lack of business in near future so there is an urgent requirement to reserve capital for future emergency”.
Besides, Nafcub President focused on several developments which will be the game changers for the cooperative banks. Discussing the recent developments, he said, “Our long pending demand for enhancement of DICGC cover for deposit in banks from Rs 1 lakh to Rs 5 lakh has been fulfilled. It will help in increasing the faith of the public among the cooperative banks”.
“Another big development is that now the Sarfaesi Act is applicable to cooperative banks which help them to recover the loans from the delinquent borrowers under the act. Recently GOI has passed the Banking Regulation Act (Amendment) Bill 2020 but due to lockdown it can’t be implemented but we have written a letter to the central government in this regard and requested them to bring in an ordinance for its implementation.
He further added that, the other big development is umbrella organization for urban cooperative banks and credit societies that finally took birth as a new entity known as Apex Coop Finance and Development Limited” has been registered under the Company Act. It will be the game changer for strengthening the cooperative banks across the country.
Apart from these developments, Mehta informed the viewers about the Extension of credit guarantee cover for all UCBs by the credit guarantee fund trust for micro and small enterprises (CGTMSE) allow all cooperative banks to get the credit guarantee cover of upto Rs 2 crore advances. Earlier CGTMSE was applicable to only Scheduled banks but now all co-op banks including DCCBs can avail the benefit.
There is a vast network of cooperative banks in the country. As PM Narendra Modi asks India to go local and the cooperative bank, credit societies, DCCBs, Amul, Kribhco and even IFFCO are examples of local.
Meanwhile, Mehta also talked about the Gujarat model of giving loans to small borrowers at a negligible rate of interest up to one lakh through the cooperative network of the state.
