Dileep Sanghani, Chairman of National Federation of State Cooperative Banks (NAFSCOB) has demanded that the co-op banks be allowed to pay dividends which ultimately benefit the farmers.
Addressing Mrs Nirmala Sitharaman Union Finance Minister through a letter titled “Declaration of dividends by banks” Sanghani RBI circular No. RBI/2019-20/218 dated 17 April 2020 which has restricted all the banks from paying out dividends from profit.
NAFSCOB Chairman argues that the constitution of Co-operative banks is totally different from Nationalized/Private banks. There is a two/three tier structure working in our country for short term credit facilities.
Accordingly, State Co-operative banks pass the dividends to District Central Co-operative Banks (DCCB), DCCBs pass dividends to Primary Cooperative Credit Societies (PACS) and PACs to their members most of them are farmers, says Sanghani.
To restrict the dividend pay-out from Co-operative banks will affect the financial health of the PACS as well as ultimately deprive farmers of dividend on their share capital investment, he underlines.
Requesting the FM for a rethink on the issue Sanghani says “Therefore, I request to allow all Co-operative banks to pay-out dividends for the financial year ended 31.03.2020.”
NAFSCOB President also demands that for the conservation of capital and absorption of losses, relaxation should be given to pay Income tax for the current year to all Co-operative banks.