Center to form an apex body to run Co-operative Banks in the country, Co-operative Banks, Kerala Bank, City Bank, Apex Co-op Finance and Development Bank

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Paravat Biju


City banks, cooperative banks operating under state laws, cooperative credit societies, multi-state cooperative banks controlled by central laws will become the part of Apex Co-op Finance Company.

Thiruvananthapuram: The central government has started efforts to bring the nation’s cooperative banks under one umbrella. Under this, an apex body was formed at the national level and it was registered as a company named Apex Co-op Finance and Development.

The government plans to channel financial aid from central agencies, including NABARD, through the new company. Refinancing now available for agricultural loans through Kerala Bank will also be included in the scheme. In short, the new financial corporation will emerge as the “central bank” of cooperative banks.

City banks, cooperative banks operating under state laws, cooperative credit societies, multi-state cooperative banks controlled by central laws will become the part of Apex Co-op Finance Company. However, at the initial stage, the new company will be incorporated as an umbrella organization for city banks.

In the memorandum of association of Apex Co-op Finance Company, it is stated that the company aims to provide financial and non-financial support to cooperative banks.

Therefore, the society will operate as a central institution that provides financial and non-financial support to cooperatives, and also as a regulator recognized by the Reserve Bank. Rs 100 crores has been allocated as working capital for the new company.

It comprises 10 crores of shares which are worth Rs 10 only. These shares will be distributed among the banks and cooperative societies. Even though city banks have been invited to procure shares, the Kerala City Banks Association has yet to acknowledge it.

Apart from the city banks, if the cooperative banks were also forced to be part of the new establishment, it would lead to adverse effects in the cooperative systems of the state. It may also call into question the existence of Kerala Bank.

The financial support includes the guarantee of a refinancing facility and capital grants to banks and cooperative societies. Currently, Kerala Bank is receiving a refinancing facility of over Rs 2,500 crore from NABARD. This amount was distributed among the main cooperative banks and agricultural societies through the Kerala Bank.

The work plan of the central agency stipulates to return growth, development and financial stability to the cooperatives.

Apex Co-op Finance Company will provide advanced IT services, secure cybersecurity, set up ATMs, data centers and payment gateways for cooperatives and other banks. It will also act as a settlement agency with banks within its limit.

The company will also provide training to employees in risk management, mutual funds, insurance consulting, management consulting and human resources consulting.

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