Constitution of a ‘Committee on comprehensive financial services for small businesses and low-income households’ has triggered a fresh controversy in the cooperative sector.
The Reserve Bank announced on September 23 the setting up of the committee under the chairmanship of Nachiket Mor, member on the central board of directors.
Representatives of new generation banks and corporates dominate the committee, cooperative activists told
The cooperatives sector, which has pioneered the financial inclusion drive in the country for more than a century, feels let down after failing to find representation on the committee.
Public sector banks managing to push in S. S. Mundra, Chairman and Managing Director, Bank of Baroda, as their candidate was the only saving grace.
The country’s short-term cooperative credit system has 50 per cent more accounts than the commercial banks and regional rural banks put together.
It consists of State cooperative banks, district central cooperative banks and primary agricultural cooperative societies.
RANGARAJAN VIEW
It commands membership of more than 120 million rural people, making it one of the largest rural financial systems in the world.
The Rangarajan committee on financial inclusion had in its report said that a financially sound cooperative structure can do wonders for financial inclusion given its extensive outreach.
The activists pointed out that the latest challenge comes not too soon after the National Bank for Agriculture and Rural Development’s (Nabard) directive on the future of primary cooperative societies.
The directive, withdrawn since, had sought transfer of assets and liabilities of societies to district and State cooperative banks before converting themselves as business correspondents of the latter.
This was based on the recommendations of the expert committee on rural credit cooperatives headed by Prakash Bakshi, Nabard Chairman, who is likely to demit office at the end of his term on Monday.
PREYED ON
Incidentally, Bakshi has been inducted as a prominent member of the new committee on financial services headed by Nachiket Mor.
This also unsettles the cooperative sector, which fears that the day is not far off when member-societies get swallowed by new-generation banks and powerful corporates/business houses.
What the predator entities are eyeing is the huge deposit base of these societies built over the years, the activists allege.
The century-old vital link in the rural financial market could well be lost in the name of technology adoption, direct transfer of benefits and safety of deposits, they fear.