Center will form an umbrella body to manage cooperative banks in the country | Cooperative banks | Bank of Kerala | urban bank

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Thiruvananthapuram: The central government has launched efforts to consolidate cooperative banks in the country. Within this framework, an umbrella organization was formed at 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. The refinancing now available for agricultural loans through Kerala Bank will also be included in the scheme. In short, the new finance company will appear as the “central bank” of cooperative banks.

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

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

Therefore, the company will function as a central institution that provides financial and non-financial aid to cooperatives, and also as a regulatory body recognized by the Reserve Bank. Rs 100 crore has been allocated as working capital of the new company.

It includes 10 crores of shares which are worth only Rs 10. These shares will be divided between banks and cooperative societies. Even though urban banks have been asked to buy shares, the Kerala Urban Banking Association has yet to recognize this.

Apart from the urban banks, if the cooperative banks were also forced to be part of the new establishment, it would have negative effects in the cooperative systems of the state. It could also call into question the existence of Kerala Bank.

Financial aid

Financial support includes the guarantee of a refinancing facility and capital aid to banks and cooperative societies. At present, Kerala Bank receives a refinancing facility of over Rs 2,500 crore from NABARD. This amount was distributed among the main cooperative banks and agricultural companies through Kerala Bank.

The central agency’s work plan provides for the growth, development and financial stability of cooperatives.

Non-financial support

Apex Co-op Finance Company will provide advanced IT services, secure cybersecurity, ATM facilities, data centers and payment gateways for co-ops and other banks. It will also act as a settlement agency among banks within its limits.

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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