Neeraj Rohmetra
JAMMU, Oct 30: Chief Minister, Omar Abdullah will seek personal intervention of Union Finance Minister, P Chidambaram to provide some concessions for the three ailing Cooperative Banks of the State, which have failed to meet the license procurement deadlines of September 30 set by the Reserve Bank of India (RBI).
These banks, which are in red, included the Jammu Central Cooperative Bank (JCCB), Anantnag Central Cooperative Bank (ACCB) and Baramulla Central Cooperative Bank (BCCB).
Official sources stated that the Chief Minister’s office had few days back sought the details from the Cooperative Department regarding the status of these banks. “About a month back also, the Chief Minister’s office had written official letter to the Union Finance Ministry while dwelling to the subject and sought some relief for these ailing banks in view of the situation in the State”, sources asserted.
Sources said, “though recently the State Cabinet had on October 9 this year also discussed a bail out package for these Cooperative Banks, there was no consensus on the issue. One of the major concerns of the Government is that the bail-out package for these banks has financial implications of nearly Rs 300 crores”, adding, “therefore, the Government has decided to approach the Union Finance Ministry and other concerned Ministries to put on hold the conditions imposed by RBI”.
Minister for Cooperatives, Manohar Lal Sharma while talking to EXCELSIOR admitted that no final decision had been taken with regard to the three Cooperating banks. However, he said, “the Chief Minister was taking personal interest in the issue and recently we had submitted all the necessary details to his office. We have written two official letters to the RBI Governor and the Union Finance Minister on the issue. I had also personally brought the matter of the RBI Deputy Governor, who had recently visited the State”.
The Cabinet in its meeting on October 9 this year had discussed that the recapitalization of these banks is imperative not only to bail them out of the financial crisis but will also pave the way for their securing the licensees from the Reserve Bank of India.
As per the proposal submit before the Cabinet, a separate Monitorable Action Plan had been prepared for Anantnag Central Cooperative Bank (ACCB) in consultation with RBI/ NABARD and a copy of the same had also been submitted to RBI. According to details available, the bank required funds to the tune of Rs 98.86 crores for achieving the target of 4% CRAR. This Action Plan for the revival would work only when the Central Government (Rs 30.89 cr), State Government (Rs 9.96 cr) and the Bank (Rs 14.78 cr) itself provide sufficient assistance in favour of the ACCB under Vaidayanathan Package in one go.
In case of Baramulla Central Cooperative Bank, as per the Monitorable Action Plan (MAP) NABARD had worked out the funds required were to the tune of Rs 26.43 crores. The Cabinet was apprised that if the Vaidyanathan Package is reopened for the State, it would require contribution from Government of India (Rs 23.54 cr), State Government (Rs 0.72 cr) and Bank’s share (Rs 26.38 cr)
Similarly, in case of Jammu Central Cooperative Bank, NABARD had worked out that JCCB required Rs 187 crores to attain 4% of CRAR and to become eligible for license. The action plan for the revival of the Bank would work only when the assistance is released in favour of the JCCB by the Government under the settlement of remaining dues of the JAKFED account (Rs 43.85 cr), recoverable under the Vaidyanathan Package and any other form of assistance by the Government in one go.
“It had also been discussed in the Cabinet that the three banks need to be handled by professionals so as to compete with their counterparts. To overcome the shortcomings and to make the working of Banks more effective and professional, it had also been agreed that as per the Jammu and Kashmir Cooperative Societies (Amendment) Act of 2010, the elected management of the Bank be directed to co-opt such number of professionals with full voting rights as per the norms laid down by the RBI and NABARD”, sources added.
Earlier this year, the RBI had banned these banks from accepting fresh deposits on account of a high negative net-worth. It had stipulated September 30 as the deadline for these banks to improve their minimum Capital Adequacy Ratio (CAR) and net worth. CAR is a percentage of the bank’s risk-weighted assets and it should be around 4% in case of these banks
Meanwhile, sources in RBI have confirmed that Apex institution is yet to convey its decision on the State Government’s request for extension of the license procurement deadline for three ailing Cooperative Banks in the State. “The decision will be in synchrony with other financial institution as there are around 134 similar bank across the country and we haven’t received any information from the headquarters in this regard so far”, sources said.
Commissioner Secretary Cooperatives Dr Syed Muhammad Fazlullah when contacted told EXCELSIOR that no decision had been taken yet regarding the issue so far. “The Government had been trying its utmost to provide some relief these ailing institutions, which have failed to meet the RBI deadline”, he added.
The Government of India over a period of time had been thinking of recapitalization of the weak Cooperative Banks so that they could be brought at par with other Cooperative Banks, which were viable and licenses given to them by RBI. In this process, a Committee was framed headed by Prof Vaidyanathan to suggest the ways and means for the accomplishment of this task. The Committee had submitted its report along with a set of recommendation for the Central Government, State Government, NABARD, RBI and the concerned Banks.
The Chief Ministers’ of few other States, who were facing a similar scenario in case of Cooperative Banks in their territory, have also approached the Union Finance Ministry on the issue. Most of these banks were either have a negative net worth or their Capital to Risk Assets Ratio (CRAR), is lower than four per cent.
Trending Now
E-Paper
Follow our WhatsApp channel