Money & Banking

Nabard chief against splitting cooperative banks

Our Bureau Hyderabad | Updated on August 04, 2013 Published on August 04, 2013

Hitting a half century: N. Kiran Kumar Reddy, Chief Minister; with (from left) Prakash Bakshi, Chairman of Nabard; and K. Veera Reddy, President of APCOB; at the Andhra Pradesh State Co-operative Bank Ltd celebration event in Hyderabad on Sunday . — P.V. Sivakumar

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At a time when commercial banks and Regional Rural Banks are in consolidation mode, splitting a State cooperative bank due to political reasons will make it weak, Prakash Bakshi, Nabard Chairman, said.

Speaking at an event hosted by Andhra Pradesh State Cooperative Bank Ltd (APCOB), he said bank consolidation and merger of Regional Rural Banks are being done to bring their numbers down from 196 to 61. Talks are also on for consolidating some of the large commercial banks.

“Due to political reasons overnight if we put a dividing line administratively or politically, and allow a banking institution to break down into smaller ones, they will become non-viable entities,” he felt.

So far, APCOB, which is serving the entire Andhra Pradesh, was meeting the requirements of all partners irrespective of where they were located.

“If we split the bank which is serving entire Andhra Pradesh, we will create one more cooperative bank, one more board and have one more chairman. A good financial institution broken into two will become weak,” he felt.

“We have seen this in Bihar, Chhattisgarh and Uttar Pradesh. Overnight when another State is created, the state cooperative bank becomes a deemed multi-state cooperative society and goes out of the State Cooperative Societies Act immediately,” he said.


The Multi-State Cooperative Societies (Amendment) Bill 2010 is pending in Parliament. When this amendment takes place, this bank can be put into that category. It will open up the possibility of creating a multi-state cooperative bank, he said.

Bakshi wanted cooperative banks to open more savings accounts under the financial inclusion programme and compete with commercial banks.

APCOB in association with RABO International Advisory Services is seeking to change its credit profile and aims to compete with commercial banks.

APCOB Managing Director V. Giridhar said the bank’s business has touched Rs 12,500 crore in 2013, up from under Rs 24 crore in 1963-64.

A Scheduled State Cooperative Bank, APCOB has 37 branches and operates through 22 affiliated District Cooperative Credit Banks (DCCBs) with their 616 branches. They are in turn linked to 2,748 Primary Agriculture Cooperative Society (PACS) at the village level.

Arun Jain, CEO of Polaris, said, when the bank is celebrating its 50{+t}{+h} anniversary, this is a moment of pride to see the bank go live with Intellect core banking solution. It is accessed by the bank’s 560 branches and 22 head offices of district banks.

Published on August 04, 2013
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