A delegation of Sahakar Bharati comprising Satish Marathe, D N Thakur, Uday Joshi, among others. met Union Finance Minister Nirmala Sitharaman and submitted its wish list on various aspects of the cooperative sector.
The leaders impressed on the FM that Co-Ops need to raise Long Term Funds and Capital for their Expansion, Modernisation, Diversification and for augmenting their Working Capital requirements. Therefore, a new platform needs to be created for CoOps on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) to raise Funds by issue of Bonds and Equity by Public Issue/Private Placement Basis.
Talking to India Cooperative soon after the meeting, Uday Joshi, National General Secretary of Sahakar Bharati said that the Minister was receptive to their ideas and he hoped for a better treatment of the cooperative sector in the upcoming budget. This platform should also be enabled for trading of these Instruments to expand and deepen the flow of Funds. To facilitate Listing & Trading of Equity and Bonds issued by CoOps on Stock Exchanges, GOI should issue necessary Guidelines, he added.
To cover Securities issued by UCBs, DCCBs and StCBs, RBI should issue Guidelines under the Securities Contract Regulation Act. This is now possible as RBI is empowered after the amendment to the Banking Regulation Act 1949, said Joshi. Empowering CoOp Banks to raise Capital will obviate the need for Central and State Govts to contribute Capital to CoOps. Needless to say, CoOps should follow all guidelines that SEBI and Sectoral Regulators may stipulate for raising the Capital, felt Joshi.
Sahakar Bharati’s exhaustive list also talks of changes in several other sectors of co-ops including PACs, DCCBs, State Co-op Banks, Kheti Banks, UCBs, Umbrella Organizations, credit co-ops, BR Act, training, raising capital by co-ops, Dairy, Fisheries Housing Co-ops and the ease of doing business.
Sahakar Bharati talks of providing Deposit Insurance Cover for Deposits mobilised by PACs to channelize Rural Savings in the formal Financial System. It also demands permitting PACs to set up Agro Processing Units and access Financial Assistance as is being provided to Farmer Producer Organization (FPOs) and Farmer Producer CoOps (FPCs).
On DCCBs/ StCBs, Sahakar Bharati wants a review of the CMA guidelines and an increase in the limits for Non-Agricultural advances. It demands Recapitalisation support as recommended by the Task Force on Revitalisation of CoOp Credit Institutions. It also called for more DCCBs arguing there are more than 650 Districts whereas, presently, there are only about 250 viable and operational DCCBs. On SCARDBs and PCARDBs, Sahakar Bharati said a Study Committee may be constituted to consider merging SCARDBs and PCARDBs with StCBs /DCCBs.
Stressing the need to have more UCBs given the Indian population, Sahakar Bharati wants RBI to formulate Entry Point Norms for setting up new UCBs and initiating the Licensing process “On Tap Basis”. UCBs should also be recognised as Lending Institutions (LI) for disbursement of Mudra Loans as 90 % of Loans sanctioned by the UCB Sector are with limits below Rs 5 Lakhs, it said. Initiate a process to confer Scheduled Status on all eligible Urban CoOp Banks, demanded Sahakar Bharati.
The recent amendments to the Banking Regulation Act, 1949 stipulate that a Shareholder can remain a Director for 8 years. This provision is inconsistent with the Model Bye Laws approved by the RBI and also with the 97th Constitution Amendment which provides a term of 5 Years for an Elected Board. A Law cannot contravene the provisions of the Constitution. Therefore, there is an urgent need to amend the BR Act,1949, argues Sahakar Bharati.
Welcoming the permission given by the RBI for setting up Umbrella Organisation for the UCB Sector, Sahakar Bharati demanded that the govt should through the Ministry of CoOperation infuse Capital which may be redeemed in a phased manner over a period of 5 Years.
On Credit CoOp Societies, the Report says that IT Act be relaxed in their cases and that Large CoOp Credit Socs complying with Entry Point Norms and the RBI Prescriptions relating to Income Recognition, Provisioning, CRR, SLR, etc be nudged to voluntarily convert themselves into UCBs.
The report also touches on Housing, dairy, fisheries and Weavers’ CoOp Societies and CoOp Mills, etc. It also says we need to concentrate on Training and Capacity Building and develop a robust set up across the Country.