The National Federation of State Cooperative Banks (NAFSCOB) has submitted a detailed memorandum to Union Finance Minister Nirmala Sitharaman, placing a set of comprehensive recommendations for consideration in the Union Budget 2026–27 to strengthen the rural cooperative banking sector.
In its representation, NAFSCOB highlighted the need to ensure autonomy, democratic functioning, financial stability, and long-term sustainability of Rural Cooperative Banks (RCBs) and Primary Agricultural Credit Societies (PACS), in line with the government’s vision of “Sahakar se Samriddhi.”
Among the key demands is clarity on regulatory issues, particularly the demarcation of dual control, greater flexibility for RCBs to raise capital through innovative instruments without diluting their cooperative character, and a more clearly defined role of the Reserve Bank of India, including granting scheduled status to District Central Cooperative Banks (DCCBs).
NAFSCOB also sought continuation of the Interest Subvention Scheme with a minimum 2 percent subvention on crop loans up to Rs 3 lakh per farmer, while flagging delays in claim settlements that strain banks’ liquidity. It recommended constituting a new committee to reassess recapitalisation needs of rural cooperative institutions, citing gaps in the earlier Vaidyanathan Committee implementation.
The federation further proposed a centrally sponsored One-Time Settlement mechanism for long-pending agricultural NPAs, continued funding under the Central Sector Integrated Scheme on Agricultural Cooperation, and procedural clarity on Single Nodal Agency accounts.
Other major suggestions include incentives for PACS to diversify into storage, processing and FPO support, implementation of a comprehensive HR and transformation package for PACS, resolution of taxation anomalies, creation of an Institutional Protection System, and a dedicated digital and cybersecurity fund for RCBs.
The memorandum was signed by NAFSCOB Managing Director Bhima Subrahmanyam, with detailed annexures submitted separately.