Mr Satish Marathe the National President of Sahakar Bharati – a cooperative arm of Sangh has written a letter to the Prime Minister on the issue of RBI’s proposal of conversion of co-op banks into commercial entities should they wish to grow. The entire cooperative fraternity is agitated on the issue with NCUI President also drawing Union State Minister Mohan Bhai Kundariya’s attention to the issue in the recently concluded Co-op Week inauguration. Marathe writes to the Prime Minister saying the entire Co operative Banking fraternity has rejected this recommendation with one voice. Sensing its importance we produce below the entire text of the letter and hope that since Sahakar Bharati is ideologically close to current dispensation its voice would be heard. Perhaps! –Editor
Honorable Shri Narendra Modiji
Prime Minister of India
Namaskar
At the outset, I wish you a very Happy Diwali and a Prosperous New Year.
Sahakar Bharati is strongly opposed to conversion of Urban Co-op Banks into Joint Stock Companies as proposed by the High Powered Committee (Gandhi Committee) of the Reserve Bank of India (RBI). The entire Co operative Banking fraternity has rejected this recommendation with one voice.
Urban Coop Banks should be allowed to grow to their full potential and restrictions need not be imposed on their justified aspirations. We are in favour of not only Licensing of new Urban Co Op Banks but also RBI liberalizing the regulatory framework for those Urban Co Op Banks that fall under the category of Financially Sound and Well Managed Banks.
The mechanism put in place since 2005-06, after the signing of MOU between the RBI and the State Governments and the constitution of TAFCUBs at the National and State levels, is working satisfactorily. As a consequence, the Urban Co Op Banks have registered improved performance. The same is reflected by significant progress on important parameters viz. CRAR, Gross NPA and Net NPA levels, implementation of Core Banking Solution, compliance of KYC Norms, etc. The Gandhi Committee has also acknowledged this satisfactory performance.
It is the considered opinion of Sahakar Bharati that the move to privatise Urban Co Op Banks is ill advised and needs to be rejected outright. The entire Co Operative Sector which has a long tradition, has over the years, produced illustrious Co Operators and several successful Coop Institutions.
Conversion of just a few Urban Co Op Banks out of 1S00 and odd Urban Coop Banks into Private Banks will not make any meaningful impact on the Regulatory Comfort of the RBI. There are several models, in different countries, that can be adopted to strengthen the Urban Co Op Banking Sector while ensuring Regulatory Comfort for RBI.
We have Vide our letter dated 14″ August, 2015 (copy attached) requested Hon Shri Radha Mohan Singh ji, Union Minister of Agriculture & Co-0peration, not to incorporate the section in the proposed Amendment Bill to the Multi State Co-Operative Societies Act to Convert a Co-Operative Society into any other entity. The relevant portion in our Above letter is reproduced here below for your ready reference
“We ate Worried that an enabling provision in the Amendment Bill to convert a Multi- State Co Operative Society into any other form of entity, including a limited Company is fraught with risks and is likely to be used by various authorities and vested interest to pressurise the managements of Co Operatives to convert themselves into limited Companies.
Further, Co Operative is a State subject and we ate of the considered view that the States will not enact such an amendment which enables a Co Operative to get converted into a limited Company.”
In view of the above, we request that a new broad based Committee be constituted by the RBI / Union Government to formulate policies for Licensing of new Urban Coop Banks and also for RBI liberalizing the Regulatory framework for Financially Sound and Well Managed Banks.
Satish Marathe
National President , Sahakar Bharati