Pawar writes to PM on co-operative banks

NCP supremo Sharad Pawar has written to Prime Minister Narendra Modi to ensure that the “co-operative character” of co-operative banks having a legacy of over 100 years is protected.

In his Independence Day speech, Modi had said: “Bringing co-operative banks under the ambit of RBI, in itself is a guarantee for safety of the money of middle-class families.”

Pawar, a four-time Maharashtra Chief Minister and Union Agriculture Minister for 10 years, in the letter said he welcomes and appreciates the objective of the Centre for the benefit of the small and middle-class sector.

“Indeed, in order to fulfill the objectives, it is essential to bring in financial discipline in the co-operative banks, however, at the same time, I honestly feel that the existence of co-operative banks and their ‘co-operative’ character shall be preserved. The co-operative banking sector has always been the backbone of India’s rural economy. After Independence, from the first five years planning, in every financial planning of our country, a policy is implemented to set up a gram panchayat, a school and a co-operative society in every village of India,” Pawar, a former Leader of Opposition in the Lok Sabha, said in the letter to Modi.

Needless to say, the importance and utility of the co-operative banks in spreading out the banking literacy and reaching out to the grassroots to implement the Jana Dhan programme for bringing Financial Inclusion to the masses is clearly apparent.

Drawing the attention of the Prime Minister on Reserve Bank’s policy issues pertaining to the co-operative banking sector in the country, he said: “Prima facie, with regret I conveyed the ‘untouchable’ approach of the Reserve Bank, based on pure financial and commercial considerations towards the co-operative banking sector. The outlook of the RBI is that the share of the co-operative banking sector in the overall banking sector is merely about 3%. At present out of the 1544 Urban Co-operative Banks (UCBs) in the country, around 897 UCBs have a deposit base of less than Rs 100 crore and 115 UCBs have a deposit base of less than Rs 10 crore.”

“I agree that there should be financial discipline in the banks, but certainly, it would be incorrect to say that such conversion of the co-operative sector into private sector would completely or partially prevent misappropriation of funds, financial irregularities and frauds in the banking sector,” Pawar said.

According to him, as stated by the Reserve Bank, the amount involved in the fraudulent transactions that occurred in nationalised banks is approximately Rs 95,700 crore, out of which the amount involved in State Bank of India alone is Rs 25,400 crore.

“In the financial year 2019-20, an alleged fraud of Rs 4355 crore was identified in PMC bank’s scam while during the first half-year itself a fraud of approximately 95,700 crores was reported in nationalised banks. Therefore, it is not correct to say that misappropriation of a fund or financial irregularities is observed in co-operative banks only. Further, it seems absurd to claim that privatisation of co-operative banks would curb or reduce banking frauds,” he said.