Cooperators associated with the cooperative banking sector are not excited with the decision of Uttar Pradesh based Shivalik Mercantile Cooperative Bank to go the private way and convert into a Small Finance Bank (SFB).
Majority of co-operators said that they are not interested in following the suit. Some even went to the extent of putting the number of those interested to just 2-3 banks, from the list of more than 1500 UCBs in the country.
Nafcub Director and Kangra Cooperative Bank Chairman Laxmi Dass said, “Cooperative Bank should not go for privatisation. If there are difficulties, they should be resolved from within the co-op framework but to go for privatisation is not the right decision, he added.
Dass felt there is need to promote the cooperative movement and such conversions would weaken the movement by reducing their number in the country.
Bassein Catholic Cooperative Bank, Director, Onil Almeida said, “Neither the State governments nor the Central government is taking the issues related to cooperative banks seriously. Despite challenges, co-op banks are doing a wonderful job but there are issues that force them to opt for privatization sometimes.
Almeida urged the leaders of urban cooperative banks not to go for privatization as it will harm the sector. “We would find a solution remaining within the framework of cooperative fold, he sounded confident.
Sharing his reaction on the development, Maharashtra based TJSB Sahakari Bank CEO Sunil Sathe said, “This development would not harm the cooperative sector especially the cooperative banking sector in the long run. It might be one’s personal choice to convert a bank into SFB for benefits. After all, everyone wants to do business in his own way, but majority of us intend to remain within the co-op framework, he added.
It may not be out of place to mention here an interview given by the Chairman of the largest UCB in the country, Saraswat Bank. Reacting on the issue, Gautam Thakur had declared that cooperative is in his DNA and he never thinks in terms of converting into a private bank.
Jayant Kakatkar of Janata Sahakari Bank, Pune was, however more forthright. He said, “It might be their personal choice but not all cooperative banks would go for privatization. I feel not more than 2-3 banks would finally go for privatization.
Amidst all this, there is a media report that Maharashtra based Scheduled Multi-state Bank, New India Cooperative Bank has also called a meeting of shareholders to discuss converting the bank into SFB.
It bears recall that highlighting the weakness of working within a cooperative framework, Uttar Pradesh based Shivalik Mercantile Cooperative Bank has decided to make a transition into a Small Finance Bank.
Its MD Suveer Kumar says his UCB faced a number of issues in running the bank as a cooperative entity including limited sources for raising capital. Issues like inability to give credit card services to the customers are also weighing heavy on his mind.
“As a Small Finance Bank, we will avail various facilities to attract more and more customers and would be able to get government business”, he said.
In the wake of the Punjab and Maharashtra Co-operative (PMC) Bank scam, the apex bank tightened the screw and proposed that UCBs should severely restrict their business model and bring in single and group exposure norms. Half of their portfolios should comprise of loans of not over Rs 25 lakh.
The multi state-Shivalik Mercantile Cooperative Bank is said to be the fast growing bank in North India. The bank has a deposit base of around Rs 1200 crore and loans and advances of about Rs 750 crore. The bank is spread across UP and MP having 31 branches. In the last financial year 2018-19 the bank earned a net profit of Rs 3.85 crore.