The Tamil Nadu government is planning to strengthen cooperative societies and banks in the state by improving their financial liability, rationalising surplus staff and adopting newer technologies. The state, which has been a pioneer in the cooperative movement, has short-term and long-term cooperative credit structures.
The short-term structure consists of the Tamil Nadu State Apex Cooperative Bank at the state level with 45 branches, 23 district central cooperative banks (DCCBs) at the district level with 734 branches and 4,522 primary agricultural cooperative credit societies (PACCS) catering mainly to the rural population, according to the state government's policy note.
The Tamil Nadu State Apex Cooperative Bank, the federation of the DCCBs, raises resources from public deposits. refinance from the National Bank for Agriculture and Rural Development (Nabard) and takes loans from the National Cooperative Development Corporation. It had a share capital of Rs 61.07 crore including the government’s share of Rs. 0.26 crore, reserves to the tune of Rs 718.54 crore and deposits of Rs 4,465.23 crore. The bank earned a net profit of Rs 15.12 crore in 2007–08 and hopes to garner a net profit of Rs 45.92 crore in 2008-09.
An MoU was signed with Nabard to develop an action plan for the central cooperative banks (CCBs) and PACCS to make them profit-making. Major plans include providing any where banking and core banking and setting up ATMs. The process is expected to be completed in 2009-10. Similarly, to gear up the DCCBs, 375 new personnel were inducted in 2008-09 and all the remaining vacancies are expected to be filled in 2009-10.
Common banking software has also been tested across 11 branches, which will be extended to other branches by November 2009.
DCCBs cater to PACCS, other cooperatives such as sugar mills, dairy societies, weaver societies and the public. As on March 31, 2009, net deposits and net outstanding of all the DCCBs stood at Rs 10,317.31 crore and Rs 12,621.62 crore respectively.
The state government's long-term cooperative credit structure consists of the apex bank -- The Tamil Nadu Cooperative State Agriculture and Rural Development Bank (TNCSARDB) -- and 180 primary cooperative agriculture and rural development banks (PCARDBs) at taluk and block levels, providing investment credit to the members for agricultural activities like minor irrigation, horticulture, plantation crops and other allied sectors. Operations of these banks had come to a virtual standstill since 2004 due to lack of refinance.
In 2009–10, TNCSARDB intends to step up its lending operations by mobilising additional resources including refinance from the Nabard. The government has also decided to take steps to revive the 180 PCARDBs by mobilising resources through collection of over dues to the tune of over Rs 160 crore in the non-farm sector and with the amount available under loan waiver schemes.
To attain financial viability in 2009 -10, these banks are going to focus on disbursing more jewel loans besides lending to project-based agriculture and others.
The three important measures which the government is looking at to revive these banks include redeploying excess staff. Cash credit for jewel loan business for all the banks is being sanctioned at lesser rate of interest and the amount due to these PCARDBs on account of waiver, interest relief and one-time settlement schemes is being released, after adjusting their dues.
To computerise the 120 urban cooperative banks (UCBs) and their branches, which provides banking services to the urban and semi-urban population, and to compete with other banks, the state government has signed an MoU with the Reserve Bank of India (RBI). In 2008-09, the UCBs sanctioned loans to the extent of Rs 3,071.32 crore. Their deposits rose by 17 per cent to Rs 3,113.07 crore as on March 31, 2009 from Rs 2655.47 crore a year ago.
