It may also seriously consider the reverse merger to make RBI and Nabard complementary to each other for the betterment of agriculture and rural development.
These are among the suggestions that VK Bhosale, General Secretary, All India Nabard Employees Association, has made in a communication to Finance Minister Arun Jaitley.
He welcomed the allocation of around Rs1 lakh crore in the budget towards various schemes of Nabard.
As an offspring of the RBI, Nabard shares the work culture, ethos and development orientation of its parent institution. Snapping of this link has led to a great disadvantage for both.
Bhosale was referring to the transfer of 99 per cent of Nabard shares owned by the RBI to Centre. This has weakened any role or participation RBI can have over its activities.
There is also a dearth of national rural credit funds made available to rural financial institutions after stoppage of source funding from RBI since 1993.
This has already affected long-term credit for and capital formation in agriculture. Cost of financing has gone up since market borrowings of Nabard add up to 80 per cent of its resources. Member-driven and de-bureaucratised cooperative structures have to fill-in the gaps of institutional credit left open by commercial banks.
RBI and Nabard may jointly provide effective financial, supervisory, regulatory support as envisaged by the Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development.
Bhosale recalled that the Centre has bifurcated the Chairman and Managing Director posts in commercial banks. In Nabard, these posts are historically separate and the Nabard Act also provides for it.
“We understand that there is a move to merge the posts in Nabard. We request you to discard the proposal. A qualified and experienced development/central banker must be appointed as the Managing Director.”
District Development Offices must be opened or re-established, as the case may be, in all districts. A full complement of supporting staff may be provided in existing offices through fresh recruitment.
Bhosale also recalled the Centre stating that public sector banks have full autonomy to recruit staff at all cadres. It has asked them do succession planning in view of retirements.
But such luxury has been denied to Nabard. This situation needs to be remedied.
Bhosale requested that compassionate appointments be restored since the Centre has restored the same in commercial banks.
This copy has been amended as the headline incorrectly said Nabard bats for reverse merger with RBI. The suggestion has been made by the All India Nabard Employees Association, and not the Nabard management.
Source : Thehindubusinessline