The international awardee Kaka Koyte, who recently grabbed media attention, has indeed been experimenting with new ideas to help credit co-ops. One of such ideas is the establishment of a Stabilization Fund to help the crisis ridden credit co-ops.
The novel concept has been put to practice in the Ahmednagar district of Maharashtra with astounding results. In the Ahmednagar district of Maharashtra, an organization namely Ahmednagar District Cooperative Patsanstha Stabilization Fund has been founded which is an equivalent to Assets Reconstruction Companies (ARCs) in the area.
“There are 850 credit cooperatives in Ahmednagar and out of which 400 societies are our members. We are not only safeguarding the interest of depositors of credit co-ops as DICGC is doing in the case of a bank but also helping to save them from the liquidation process”, Koyte said to this correspondent on the phone.
He further added, “If a credit co-operative is facing a liquidity crunch then we will help them by infusing capital or taking over their NPAs, so that they can concentrate on normal activities. The credit societies have to give one percent of their total deposits in the form of investment”.
Besides, we are also giving the interest on their investment and the ROI will be one percent higher from Ahmednagar District Cooperative Bank. With this stabilization fund, we have helped over 16 credit co-ops and at present the total deposit is Rs 36 crore, he informed.
After being elected as the Treasurer of Association of Asia Confederation of Credit Unions, Omprakash Dadappa Alias Kaka Koyte briefed about the several initiatives being undertaken by Maharashtra Federation of Cooperative Credit Societies (MAFCOCS), in the interest of credit co-ops of the state.
Koyte who doubles as the Chairman of MAFCOCS stated that, this concept of Stabilization Fund could be replicated in other districts also as we are the first in India to protect the interest of depositors of credit co-ops.
Highlighting his future plans, he said the banking ecosystem is gradually moving towards branchless banking. That means if the credit co-op is operating in one district then the other district’s residents can also park deposits as well as take loans online. We are making efforts to make it mandatory for credit co-ops to give the loan on the basis of CRASS, as banks are doing by checking CIBIL score.
There are over 16,000 credit cooperatives in Maharashtra out of which 60 percent are functional. Their deposits are around Rs 1.10 lakh crore and loans are about Rs 70k crore.