NAFSCOB Managing Director Bhima Subramainyam has written letters to the cooperative fraternity highlighting the vicious role being played by the UCO Bank in weakening the Primary Cooperative Societies.
UCO Bank has published an advertisement on the backside of the Savings Bank Passbook issued by the Bank and its branches to the Savings Bank holders. It reads ““Reserve Bank does not regulate the activities of the PACS, as they are not covered by the Banking Regulation Act, 1949 (As applicable to Cooperative Societies), and that the deposits maintained with PACS are not insured by the Deposit Insurance and Credit Guarantee Corporation”.
It appears that since UCO Bank does not have anything to publicise about their own achievements, they have resorted to this type of advertisement, with a sole intention aimed at weakening the deposit base of PACS, adds NAFSCOB MD.
A pained Subramaniyam further writes “Prima facie, it appears the authorities of UCO Bank involved in approving such publicity do not appear to have a basic knowledge about the PACS. The PACS, grass root level organisations, are part of the federal Three Tier Short Term Cooperative Credit Structure (STCCS) in major States and two tier STCCS in India.
As long as PACS are allowed to mobilise deposits from their own members, it does not call for regulation of their activities by Reserve Bank of India (RBI). Though the deposits maintained with PACS are not insured by the Deposit Insurance and Credit Guarantee Corporation, the deposits mobilized by PACS in some States are covered under the State Deposit Guarantee Scheme and this is at par with the Deposit Guarantee Scheme of the Deposit Insurance and Credit Guarantee Corporation.
Further, the PACS are encouraged to mobilise deposits in order to become self-reliant and they have also been advised from time to time to mobilise deposits by exploiting the savings potential available in the rural areas.
The resources mobilized from their members by PACS in the form of deposits are largely utilized by the District Central Cooperative Banks (DCCBs) for providing crop loans to their farmer members and the share of the cooperatives in such financing have been very significant over the years.
The above facts have been ignored by the UCO Bank while issuing such an unethical advertisement on their Savings Bank Passbook. UCO Bank does not have any business to issue such message. UCO Bank should know that RBI does not intervene and infact allow the PACS to mobilise the deposits from their members.
The intention of the UCO Bank is to exploit the savings potential of the members of the PACS, mobilise their resources and augment the resource position of the UCO Bank. Further, the motive behind such an unethical publicity is to dissuade even the members of PACS to deposit with PACS.