Three-tiers structure of banking to be strengthened
Assistance to be sought from Union Govt for recapitalization
Mohinder Verma
JAMMU, Feb 14: The much-hyped merger of 9 Cooperative Banks in the Union Territory of Jammu and Kashmir has been put on hold on the instructions of the Union Ministry of Cooperation headed by Amit Shah and now focus will be laid on their strengthening and long pending recapitalization as early as possible.
Keeping in view the poor financial condition of these 9 Cooperative Banks, the Government of Union Territory of Jammu and Kashmir in the month of February 2020 decided to merger these banks and accordingly vide Government Order No.07-Coop dated February 26, 2020 a committee was constituted for carrying out the task.
The committee headed by Registrar Cooperative Societies J&K and comprising representatives of Finance Department and Law Department not below the rank of Special Secretary, Joint Registrars (Special) Cooperative Societies, representatives from the Reserve Bank of India and NABARD was directed to explore the feasibility for merger of the banks by taking into consideration the financial position of the Cooperative Banks, assess the requirement of capital infusion, human resource issues and physical and financial assets and liabilities.
The committee was further asked to recommend the modus operandi for merger of these banks to the Cooperative Department within a period of one month. The committee held various meetings on the subject and even some officers were deputed to Punjab where such banks were merged in the recent past to study the model.
Thereafter, the issue was debated in numerous meetings of the Committee of Secretaries headed by Chief Secretary Dr Arun Kumar Mehta and accordingly different timelines were fixed for the committee for the completion of task.
“However, the Union Ministry of Cooperation headed by Amit Shah has advised the J&K Government not to merger these banks and instead focus on strengthening the three-tiers structure of cooperative banking”, official sources told EXCELSIOR. The three-tiers are Primary Agricultural Credit Societies at the village level, Central Cooperative Banks at the district level and State Cooperative Banks at the State level.
Disclosing that merger of 9 Cooperative Banks namely J&K UT Cooperative Agriculture and Rural Development Bank (SCARDB), J&K State Cooperative Bank, Jammu Central Cooperative Bank, Baramulla Central Cooperative Bank, Anantnag Central Cooperative Bank, Jammu Citizen’s Cooperative Bank, Urban Cooperative Bank, Anantnag, Devika Urban Cooperative Bank, Udhampur and Kashmir Mercantile Cooperative Bank, Sopore has been put on hold, sources said, “now the Government will chalk out a strategy to infuse new lease of life into these banks by way of capital infusion”.
“An amount between Rs 600 to Rs 700 crore is required for much needed and much delayed recapitalization of these banks and strategy in this regard will be worked out by the Government shortly so that these banks are brought out of the financial mess”, sources said, adding “the Government of J&K Union Territory will vigorously pursue the requirement of funds in this regard with the Union Ministry”.
They further said, “as the Government of India is laying much focus on strengthening of cooperative sector, the J&K Government is hopeful of receiving sufficient financial assistance for recapitalization of these nine Cooperative Banks”.
“The Union Ministry has already announced that it will lay focus on computerization of Primary Agriculture Societies (PAC) and link these with the District Central Cooperative Banks that in turn will be linked with State Cooperative Banks and the National Bank for Agriculture and Rural Development (NABARD) to establish a seamless and transparent financial system for Cooperative Banks”, they added.
When contacted, a senior officer of the Cooperative Department confirmed that merger of the Cooperative Banks has been put on hold on the direction of the Union Government and now strategy will be chalked out for their strengthening by taking all possible measures.
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