The Hindu Business Line : Co-operative banks

This refers to the report “RBI considering merger proposals of 14 urban cooperative banks,” (Business Line, December 30). The banks in the cooperative sector, regional rural banks and rural and semi-urban branches of public sector commercial banks collectively have been a neglected lot since beginning of the financial sector reforms. In the changing scenario, this category of institutions should be restructured, involving all stake-holders, and should not be left to decay and perish.

The waning importance of money-lenders and many of the non-banking financial institutions, which have shifted their attention to more lucrative areas (such as real estate, gold and jewellery, consumer products) has created a vacuum in the rural financial infrastructure and we cannot afford the trend of weakening the banks operating in this sector.

Before it is too late, the State and Central governments, the RBI and Nabard should take a serious look at the situation and take remedial measures.

M. G. Warrier Thiruvananthapuram

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