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Decision on primary agricultural cooperatives functioning as business correspondents will be taken by cooperative banks, the State governments, primary societies themselves and stakeholders.
Neither a related Reserve Bank ‘permission’ nor a circular from National Bank for Agriculture and Rural Development (Nabard) need be viewed as a ‘directive’ in this context.
Neither a related Reserve Bank ‘permission’ nor a circular from National Bank for Agriculture and Rural Development (Nabard) need be viewed as a ‘directive’ in this context.
NEW OPPORTUNITY
Cooperative banks and primary societies should instead see the circular as an opportunity, according to latest Nabard circular dated September 6.
The circular is clarificatory in nature and a follow-up on the contentious predecessor of July 22 on the future role of primary agriculture cooperatives.
It had suggested that they become business correspondents of central cooperative banks or the State Cooperative Bank.
Assets arising out of all lending operations would stand transferred to the books of Central/State cooperative banks along with their related liabilities.
The circular is clarificatory in nature and a follow-up on the contentious predecessor of July 22 on the future role of primary agriculture cooperatives.
It had suggested that they become business correspondents of central cooperative banks or the State Cooperative Bank.
Assets arising out of all lending operations would stand transferred to the books of Central/State cooperative banks along with their related liabilities.
UNREST IN SECTOR
All deposits collected would be transferred too. Primary cooperatives shall not accept deposits on their own account and would not do any financial operations of any kind on its behalf.
In this manner, they would be gradually eased out from business as the bottom-most layer of the short-term cooperative credit structure.
The circular had stirred up the cooperative sector, more forcefully in Kerala where it has an entrenched base, with activists fearing closure of thousands of primary societies.
But Nabard now says the idea was to merely convey the approval of Reserve Bank and clarifications based on its permission for facilitation of primary societies and various cooperative banks.
FINANCIAL INCLUSION
Wherever central/State cooperative banks are fully computerised and are entirely on core banking, they may be allowed to use primary societies as business correspondents. This would help drive the larger financial inclusion programme.
It also recalled that Reserve Bank had already permitted commercial banks/regional rural banks to use the primary societies as business correspondents.
Transactions were to be done through information and communication technology devices integrated to the core banking solution of the bank and accounted on real-time basis.
The Reserve Bank permission is an opportunity for primary societies to play an enhanced role in the rural areas, which will help cooperatives to restore their predominant role in providing agricultural loans.
It will also help them meet the increased demand for agricultural credit and also related services, which will boost the rural economy, the circular added.
vinson.kurian@thehindu.co.in
Source: thehindubusinessline
It also recalled that Reserve Bank had already permitted commercial banks/regional rural banks to use the primary societies as business correspondents.
Transactions were to be done through information and communication technology devices integrated to the core banking solution of the bank and accounted on real-time basis.
The Reserve Bank permission is an opportunity for primary societies to play an enhanced role in the rural areas, which will help cooperatives to restore their predominant role in providing agricultural loans.
It will also help them meet the increased demand for agricultural credit and also related services, which will boost the rural economy, the circular added.
vinson.kurian@thehindu.co.in
Source: thehindubusinessline
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