A number of district central cooperative banks in Maharashtra are reported to be in desperate straits and efforts to help them return to a healthy and viable condition have failed.
The crisis of these banks is mainly attributable to a tight stranglehold the unscrupulous politicos have long exercised over them. Additionally, the banks have seriously been damaged by a series of financial scandals.
The DCCBs get money from the banks that in turn get their fund from National Bank of Agriculture and Rural Development (NABARD). As these banks play an important role in the distribution of agricultural credit, their collapse would have serious consequences.
Considering this is a matter involving the depositors’ interest the RBI has been asking these banks to clean up their act but they have done absolutely nothing to improve their financial management.
The lingering crisis has fuelled speculation that the apex bank may soon ask them to stop their banking operations. If this happens, they will cease to be banks and become mere cooperative societies. In consequence, they will stop getting funds from NABARD.