Page 18 - Banking Finance June 2021

CO-OPERATIVE BANK NEWS

Co-Operative Bank

News

RBI issues guidelines for if required, projected business model government concerned. "This is
with clear profitability and proposed unjustified, and it will destroy the rural
amalgamation of district governance model for the cooperative credit institutions in the

central co-op banks with amalgamated bank. The scheme of country causing a lot of problems to
state co-op banks amalgamation has to be approved by the farmers," NCUI President
the requisite majority of shareholders. DileepSanghani said in a statement.
The Reserve Bank said it will consider Also, NABARD has to examine and
amalgamation of District Central Co- recommend the proposal of the state "The notification is uncalled for, and is
operative Banks (DCCBs) with State government. "The proposal for provocative, prompting and
Cooperative Banks (StCBs) subject to amalgamation of DCCBs with the StCB mischievous," he said. During a
various conditions, including that a will be examined by Reserve Bank in national conclave of District
proposal should be made by the state consultation with NABARD and the Cooperative Banks in March, there was
government concerned. The Banking sanction/ approval will be a two-stage vehement opposition to merger of
Regulation (Amendment) Act, 2020 process," the guidelines said. DCCBs with StCBs.
has been notified for the StCBs and
DCCBs with effect from April 1, 2021. Rajasthan government
Amalgamation of such banks need to National Cooperative extends 5% subsidy
be sanctioned by the Reserve Bank Union of Indiaraises
ofIndia. RBI has come out with the scheme for long-term
guidelines after a few state serious concerns over agricultural loans
governments approached it for merger The Rajasthan government has
amalgamation of DCCBs with StCBs as The National Cooperative Union of extended the 5% interest subsidy
a two-tier Short-term Co-operative India (NCUI) raised serious concerns scheme till June 30, 2021, for
Credit Structure (STCCS). As per the over the Reserve Bank's guidelines for repayment of long-term agricultural
guidelines, RBI will consider proposals merging District Central Cooperative loans taken from Primary Cooperative
for amalgamation "when the state Banks (DCCBs) with State Cooperative Bhoomi Vikas Banks. A proposal has
government of the state makes a Banks (StCBs), saying the move will been approved to allocate an
proposal to amalgamate one or more "destroy" the rural cooperative credit additional budget of Rs 9.45 crore for
DCCB/s in the state with the StCB after institutions. On May 24, the Reserve the extended duration of the scheme,
conducting a detailed study of the legal Bank ofIndia (RBI) issued the guidelines an official statement said. Chief
framework". and said it will consider amalgamation Minister Ashok Gehlot has approved
Besides, there should be a an of DCCBs with StCBs subject to various the proposal by the Cooperative
additional capital infusion strategy, conditions, including that a proposal Department under which a five per
assurance regarding financial support should be made by the state cent subsidy on interest given to

18 | 2021 | JUNE | BANKING FINANCE