Cooperative banks have lost another business prospect with CBDT asking the Agency banks not to enter into any tie-ups with non-agency banks for collection of direct taxes. Non Agency banks also include scheduled and non scheduled co-operative banks spread across the country and those that have been catering to the banking requirements of a large numbers of customers.
Agency banks are mainly nationalised banks with a few of big private banks such as HDFC, ICICI , Axis Bank etc. enjoying this status. B Cooperative banks collecting tax from their customers and depositing the same same thru agency banks is a very customer friendly arrangement which cannot be considered as allocation of govt business to private or cooperative banks as the collected amount goes only to the government account thru agency banks.
Providing this type of facility for several years now has helped cooperative banks fetch a lot of business from tax payers (individual and business entities) among others for their survival in this competitive environment.
Needless to mention, withdrawal of this facility has forced existing customers of cooperative banks to close their accounts with cooperative banks and start depositing tax thru agency banks by opening their individual accounts with them.
No customers would like to open two accounts (one with non agency bank for normal business transactions and other one with agency banks for tax deposit ) and certainly will opt to open only one account with the agency banks to meet their purposes.
Making a request Attar Chand Parmar, Advisor Kangra Co-operative Bank has said “ CBDT, CCA and RBI may kindly reconsider their decision and at least allow Co-operative banks to continue with the practice of collecting tax from its customers and deposit the same in agency banks which will definitely help small cooperative banks retain their clientele acquired with great difficulties over a period of time.
Funds collected with the existing arrangements by the non agency/cooperative banks are not being utilized by them in any manner as the equal amount immediately needs to be released from their ( non agency/cooperative banks) accounts maintained with the agency banks which finally goes to the govt account maintained with the same agency banks on the same day, Parmar says.
“We request your portal to take up the matter with the concerned authorities for continuation of the existing operational arrangements”, Parmar concludes.