Page 21 - Banking Finance September 2021

CO-OPERATIVE BANK NEWS

High Court's 2013 decision striking of regulation would depend on their ried out in the Banking Regulation Act,
down certain provisions of the 97th scale of deposits and the capital re- 1949, last year, which enables a coop-
constitutional amendment while hold- quirement and regulatory norms would erative bank, subject to RBI approval,
ing that Parliament cannot enact laws get stringent with size. to raise equity capital by way of public
with regard to cooperative societies as issue or private placement."
Tier-1 would comprise banks with de-
it is a state subject.
posits up to Rs 100 crore, tier-2 with
The top court also examined a ques- deposits between Rs 100 crore and Rs Rs 11,500 crore loans for
tion whether the provision denuded 1,000 crore, tier-3 between Rs 1,000 tamilnadu farmers
states of their exclusive power to en- crore and Rs 10,000 crore, and tier-4 Tamil Nadu cooperative minister I
act laws to deal with management of with deposits of over Rs 10,000 crore. Periyasamy said the government had
cooperative societies. The capital adequacy ratio for these set a target to disburse Rs 11,500
Attorney General K K Venugopal, ap- banks would be between 9% and 15%, crore loans to farmers through coop-
while tier-4 banks with deposits over Rs
pearing for the Centre, said the 97th erative banks during this fiscal.
10,000 crore would face the same
Constitution amendment is not direct The government had also plans to in-
or substantial attack on states' powers norms as scheduled commercial banks.
Besides capital, the extent of loans crease the share of cooperative banks'
to enact law with regard to coopera- loan disbursement to farmers from the
tives. they can offer under different catego-
ries, like gold and home loans, would present 9.5% to 22-25% in the next
RBI suggests co-operative depend upon their size five years. He was replying to former
cooperative minister Sellur K Raju's
bank mergers CCB wants to emulate claims during the debate on grants for
An RBI panel has suggested expediting PMC Bank the cooperative department.
creation of an umbrella organisation Periyasamy said the cooperative banks
to enable small urban cooperative The City Co-operative Bank (CCB) has had a farmers' loan share of 15-16% 10
banks (UCBs) to acquire scale by be- decided to take a leaf out of the scam- years ago, when the DMK was in
coming part of a network. hit Punjab and Maharashtra Co-opera- power. It deteriorated under the
tive Bank's book and scout for invest- AIADMK regime, he said.
The panel has also said that the RBI
ment/ equity participation for its re- Periyasamy said cooperative societies
should use the route of mandatory construction.
mergers to resolve problematic coop- had enrolled 2.3 lakh new members
eratives and be neutral to voluntary CCB has floated an Expression of Inter- after the DMK government assumed
mergers. est (EoI) to identify a suitable equity office. It also disbursed Rs 120 crore
investor/ group of investors willing to loans to the new members. He added
The panel has also called for changes take over management control to re- that Rs 80 crore had been extended as
in the Banking Regulation Act empow-
vive the bank and commence regular loans to farmers to take up kuruvai
ering the RBI to declare securities is-
day-to-day operations. cultivation in the delta districts. It was
sued by UCBs as covered under the more than double the amount (Rs 37
Securities Contract Regulation Act to The bank has dangled a carrot in front crore) disbursed during last year
facilitate their listing on stock ex- of prospective investor(s), whereby kuruvai 8/26/2021 Tamil Nadu farmers
changes. These recommendations upon commencement of normal day- to get Rs 11,500 croreloans,he said.
were made by the expert committee to-day operations, it will be open for "The CM has made it clear that new
on primary (urban) cooperative banks the investor(s) to convert it into a members should be given loans," he
under the chairmanship of former RBI Small Finance Bank (SFB). said. He recalled how the DMK govern-
deputy governor N S Vishwanathan. V. T. Gokhale, a lawyer and former ment under M Karunanidhi revived the
The RBI had constituted the panel in investment banker, said: "This is a new
cooperative banks by waiving farmers'
February to address the issues on regu- development coming close on the heels loans to the tune of Rs 7,000 crore. He
lation of cooperatives. of the "in process" restructuring of
faulted the previous AIADMK govern-
The panel has suggested a four-tier PMC Bank. ment for constructing 4,000 godowns,
regulatory structure for UCBs. The level "It is a sequel to the amendments car- but not putting them to use. T

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