An ace cooperator Dileep Sanghani knows how to overcome the limitations of state laws. The matter relates to RBI not allowing distribution of dividend to shareholders of co-op banks in the wake of pandemic.
Hitting upon a novel idea, Sanghani led Amreli District Central Cooperative Bank decided to offer rebates in the accrued interests on loans taken by the shareholders associated with hundreds of small co-op societies in this case. “A brilliant way to fulfil both the RBI norms and help farmers!”, cheered co-operators.
Talking to Indian Cooperative Sanghani said “We cannot give dividend but there is no law which can stop us from offering the interest rebates”. Amreli DCCB is perhaps the first co-op bank to do so, he added.
Sanghani also said that more than 300 co-operative societies are going to benefit from the interest-rebate scheme. Amreli DCCB is preparing to forgo about Rs 4.25 crore under the scheme, making it as well as distributing dividends.
It bears recall that RBI has through a circular dated 17 April 2020 restricted all the banks from paying out dividends from profit. Amreli DCCB’s interest rebate falls beyond the gamut of this circular.
Earlier, before taking over the reins of NCUI, Dileep Sanghani, as the Chairman of National Federation of State Cooperative Banks (NAFSCOB) had demanded that the co-op banks be allowed to pay dividends which ultimately benefits the farmers. He had also written to Nirmala Sitharaman Union Finance Minister on the issue.
According to Sanghani 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 farmers, says Sanghani.
To restrict the dividend pay-out from Co-operative banks will affect the financial health of PACS ultimately depriving farmers of dividend on their share capital investment, he underlines.
Readers would know that maintaining his grip on the Amreli DCCB, Sanghani won for the sixth term as the Chairman last month in March. Arunbhai M Patel has been re-elected unopposed as the Vice-Chairman of the bank.