Surat co-op banks seek changes in RBI norms

Co-operative banks of Surat have sought changes in certain norms and policies of the Reserve Bank of India, which they believe are discriminatory towards them.

"The gradation norms of co-operative banks are very harsh. On account of this many co-operative banks are not non-viable to that extent and are classified below grade I. These norms need reconsideration on practical basis," the chairman of a co-operative bank told Business Standard.

"The deposits of co-operative banks in Madhavpura Mercantile Co-operative Bank (MMCB) are treated as non-performing assets (NPAs). However, these deposits are guaranteed by the central as well as state governments under the reconstruction scheme, and hence are at par with other securities. The interest of deposits in MMCB should be paid to the needy banks on demand, which would help them in maintaining liquidity," he said.

He also sought extension of the one-time settlement scheme up to March 2005, as there have been good recoveries under the scheme. The chairman of another co-operative bank urged the government to pay attention towards banks affected by the Home Trade scam.

"Several co-operative banks of Gujarat, including Surat, have lost money in the Home Trade scam. The money was paid to the company by the banks for purchasing government securities. Instead of victimising the co-operative banks, the government should take steps to facilitate recovery of the their dues," he said.

He demanded that the government stop discriminating co-operative banks.

"Capital support is provided by the government to needy nationalised banks. The government also provides merger facilities to weak private banks. Co-operative banks are not provided these facilities. The government policies are discriminatory, and should be changed. Co-operative banks should also be provided with soft loans and financial aids in order to tide over their temporary liquidity problems," he said.

He suggested that a leading co-operative bank be identified as a lead bank.

"A leading co-operative bank in a district, having status of a schedule bank, should be appointed and empowered to merge or financially support a weak co-operative bank," he said. Another banker complained of hassles in the Deposit Insurance & Credit Guarantee Corporation (DICGC) claim settlement.

"Repayment of DICGC claims should be unconditional, and without clubbing different accounts, which have the same address. The corporation has delayed the settlement of claims in certain accounts by raising technical issues. The corporation should only be concerned whether the banks have paid the premium of the deposits, and settle the claims of deposits up to Rs 1 lakh, without any hassles," he said.

"The liquidators that have been appointed for the weak co-operative banks of Surat have not been able to pay much attention towards the banks on account of being overburdened. This has ultimately hurt the banks, so when liquidators are appointed, care should be taken to see that they are competent, have banking knowledge, and are not overburdened. The liquidators should work with the aim of reviving the banks by speedy and unbiased recoveries and proper administration," he said.