The Hindu Business Line : `Govt intervention in cooperative banks needed'

REASONABLE restriction of the Government is needed in the functioning of cooperative sector, according to Mr G.R. Krishnadas, Managing Director of Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd.

He was addressing the chief executive officers and presidents of urban cooperative banks (UCBs) at a function organised by the Karnataka State Cooperative Federation, in Mangalore on Monday.

The Government acts as a friend, philosopher and guide in the functioning of the cooperative sector. The restrictions of Reserve Bank of India (RBI) in the affairs of UCBs will help the latter, he said, adding that this should not be considered as the Government intervention in their affairs.

On the grouse of UCBs that they are losing acceptance in society, he said that good service and transparency in their functioning are essential for being accepted. UCBs should pay more attention on their ability and skills to sustain in this competitive environment, he said.

Referring to the Multi-state Cooperative Society Act 2002, he said this Act should have paid attention to the priority sector also. Mr Krishnadas asked the cooperatives to diversify their activities to sustain in the competitive world.

The President of the South Kanara District Central Cooperative Bank, Mr M.N. Rajendra Kumar, who inaugurated the function, said that officials and managements of UCBs should be educated about the 90-day NPA norms prescribed by RBI. Referring to the instances of the collapse of some cooperative institutions in Gujarat, he said political interventions contributed to the increase in NPAs there. Officials should not yield to political compulsions, and cooperative sector should abide by the law in this regard, Mr Kumar said.

Seeking economists' help to solve cooperative sector's problem on increasing interest rates, he said the interest rates paid by the cooperative banks are in the range of 5-6 per cent, a little more than commercial banks. However, post offices pay 8 per cent interest on deposits. Following this, people are depositing their money in post offices than in cooperative banks. A study by economists in this regard may help the cooperative sector, he added.

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