The latest rulings of NABARD has angered cooperative bank leaders and officials no end. The Managing Director of NAFSCOB, the apex body of co-op banks has mailed an open letter to the Indian Cooperative. We produce it verbatim-Editor
Dear Sir
NABARD issued directives to SCBs and DCCBs on 22-07-2013.The main directives are as follows:
1.To transfer assets and liabilities of PACS to DCCBs/SCBs
2.The assets of PACS arisen out of all lending operations will stand transferred to the books of DCCBs /SCBs along with the related liabilities.
3.All deposits collected by the PACS would also be transferred to the DCCBs/SCBs.
4.PACS will not accept deposits on its account and will not do lending operation of any kind on its behalf henceforth under the arrangement .
5 However, they will carry out the services both in respect of lending operations and collection of deposits on behalf of DCCBs on pre decided commission or fee basis.
6.PACS would ,however , do other businesses as an independent entity out of its own fund and earn income.
7.The share capital mobilised by the PACS from its members by way of share linked capital of the loans provided will now stand transferred to the books of DCCBs/SCBs and form part of share capital of DCCBs.
8.The borrowing members and the depositors will have to become the members of DCCBs/SCBs.
9.DCCBs/SCBs will make arrangements to ensure transfer of relevant securities /documents executed in the name of PACS on its name.
10. Necessary arrangements be entered between the PACS and DCCBs/SCBs to ensure implementation of the above directors.
Issues to addressed:
1.whether NABARD has the power to direct the DCCBs/SCBs to execute these directives.
2.Whether SCBs/DCCBs can exercise power to implement these directives of NABARD
3.Why NABARD is shy of or feeling guilty of holding discussions with State Governments (as cooperation is state subject.) on the feasibility of implementing the recommendations of Expert Committee set up by RBI under the chairmanship of Dr.Prakash Bakshi?
4.How can NABARD issue directives to DCCBs / SCBs to ensure legal provisions?
5.NABARD questions the fundamental rights of cooperatives. NABARD appears to be against autonomy, democratic management, cooperative principles and concept of member driven organisations.etc.
6.NABARD strongly believes in Delayering. It appears to be systematically and strategically planning to delayer first PACS and then SCBs. Thirdly and finally and over a period of time, NABARD may encourage and sponsor some other organisations and route out the remaining one link of DCCBs out of the cooperative sector. If it is the case, why to recapitalize?
I shared these new negative developments with few of our well wishers of Rural credit cooperatives and sought suggestions on each of these issues. One suggestion predominantly emerged was (pending detailed discussions)
1.Seek justice in the court of Law, against this unlawful directives of NABARD, to protect well conceived structure, not to allow PACs to be weakened, allow PACS to be member driven, autonomous and democratic. etc. Further to question the jurisdiction of NABARD on the matters of structural changes and its power to issue directives to those who also do not have power for provocating DCCBs/SCBs to eliminate PACS from the grassroots. To seek explanation for making fun of Revival Package
2.Obtain stay orders from implementing these unauthrised directives abd to seek to penalise them for issuing such directives.,for stepping into the shoes of State Governments etc.For making fun of Revival package
3.File PIL application
4.Leadership of cooperatives –may be need to reoriented to face this challenge as they may have limited oppotunities to persue their ambitions.
Before, I really conclude the finalising action plan to ensure continuation of 3 Tier short term cooperative structure in its present form,I sincerely request you kindly assist me with workable solutions.-Urgent pl.
Thanks & with cooperative greetings
Bhima Subrahmanyam
Managing Director
National Federation of State Cooperative Banks (NAFSCOB)