Page 18 - Banking Finance February 2024

Co-Operative Bank

News

Bulk deposit limit en- said in its Report on Trend and Progress Shah pointed out that even farmers
of Banking in India 2022-23. who are members of primary agricul-
hanced to Rs. 1 crore for
This suggests a high degree of ture cooperative credit societies (PACS)
large UCBs interconnectedness of SFBs with co-op- that are, in turn, the members of dis-
The Reserve Bank of India (RBI) has erative banks, with the possibility of trict cooperative banks, have their sav-
decided to enhance the bulk deposit any shock to the latter sector spilling ings accounts with public sector banks
limit for large urban co-operative over to the former, it added. or private banks, thus depriving coop-
banks (UCBs) to Rs. 1 crore and above Out of SFBs' total deposits of Rs erative banks of deposits.
from the current Rs. 15 lakh and 1,91,372 crore as at March-end 2023, "Ultimately, money from the coopera-
above. term deposits accounted for 67.53 per tive institutes goes to SBI and private
cent, with the balance being ac- banks. Due to this, cooperative banks
Specifically, the new bulk deposit limit
applies to UCBs in the Tier 3 (with de- counted for by CASA deposits. do not have enough deposits while
posits more than Rs. 1,000 crore and With deposit growth slowing down the private banks and State Bank of
up to Rs. 10,000 crore) and Tier 4 during the year (FY23), SFBs resorted India throw their rule book at us (when
(with deposits more than Rs. 10,000 to higher borrowings to fuel credit we approach them for finance)," he
crore) categories. growth. On balance, their credit-de- said.
posit ratio remained flat at around 92 Shah also announced that the Gujarat
per cent, higher than SCBs (scheduled
RBI flags high interconn- State Cooperative (GSC) Bank, under
commercial banks). an initiative of the Central govern-
ectedness of SFBs with co- ment, has undertaken a pilot project
Shah: Co-operatives
operative banks in Banaskantha and Panchmahal dis-
should open accounts in tricts to persuade cooperative insti-
RBI has flagged the interconnec-
tedness of small finance banks (SFBs) cooperative banks tutes to have their bank accounts only
with co-operative banks via the bulk Union Minister for Home and Coopera- with cooperative banks.
deposit route. tion, Amit Shah, urged cooperative in- The pilot project has produced tremen-

"SFBs serve a critical role in delivering stitutes to open their bank accounts dous results, Shah stressed. The coop-
credit to under-banked segments. How- only with cooperative banks to prevent erative banks in the districts achieved
ever, many SFBs have low current ac- deposits from the sector flowing to 82 per cent of their Kisan Credit Card
count and savings account (CASA) depos- nationalised banks and private com- (KCC) target, 100 per cent of the mi-
its and a greater reliance on bulk term mercial banks. This, he said, would cro ATMs installation target, and 159
deposits, often acquired at higher rates, enhance the capacity of cooperative per cent of the target set to open new
especially from co-operative banks," RBI banks to meet credit requirements. bank accounts.

16 | 2024 | FEBRUARY | BANKING FINANCE