The Hindu Business Line : `Co-op bank policies need periodic review'

SPEAKERS at the inaugural session of the four-day All India Mahila Co-operative Bankers' Summit wanted a review of the policies pertaining to co-operative banks on a periodic basis and evolve new policy framework to tackle the emerging problems in the sector.

Addressing the summit, titled `Breakthrough leadership for mahila urban banks' being organised by the Institute of Co-operative Management (ICM) here on Tuesday, the Chairperson of Indian Bank, Ms Ranjana Kumar, said over 40 per cent of the rural population was still dependent on money lenders for their credit needs despite the existence of co-operative banks.

Citing a recent study conducted by the National Bank for Agriculture and Rural Development (Nabard), Ms Ranjana Kumar, said it was unfortunate that the rural population was still in the clutches of money lenders even decades after the nationalisation of banks and the multi-agency mode adopted for catering to the credit needs of rural poor.

According to her, co-operative banking in the rural segment could not be run on a set pattern and there was need for innovation in product design and service methods.

Apart from changing the banking hours to suit the needs of rural agricultural population, she also advised the bankers to closely monitor the unforeseen tragedies in the personal lives of rural borrowers and reschedule the loans. It not only helped the borrower to effectively tackle his problems, but also helped banks in saving their loan accounts from falling into the category of non-performing assets (NPAs), she said.

Advising the bankers to closely study the bad accounts to ascertain whether they were largely due to the policy framework or mismanagement by the banking staff, Ms Ranjana Kumar asked the co-operative bankers' to evolve new policies on a periodic basis to deal with these problems.

Pointing out that the model of addressing credit and savings needs of rural folk through women groups and self-help groups was highly successful with a recovery rates of up to 98 per cent, Ms Kumar advised the women co-operative bankers to initiate measures towards providing marketing support to the products of these women and self-help groups.

The Chairman of Andhra Pradesh Co-operative Bank (APCOB), Mr T.D. Janardhan Rao, urged the regulators to evolve new methods to address the deficiencies in the co-operative banking sector, while citing the debacle of some urban co-operative banks in Gujarat and Andhra Pradesh. Accusing the Government of neglecting the co-operative banks and extending capital assistance only to the commercial banks and regional rural banks in cleansing their balance sheets, Mr Rao stressed the need for a fresh round of reforms in the co-operative banking sector to provide level playing field.

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`Co-op bank policies need periodic review'