Three-level banking structure to be strengthened
Assistance to be sought from the Union government for recapitalization
JAMMU, 14th February: The high profile merger of 9 cooperative banks in the Union Territory of Jammu and Kashmir has been put on hold on the instructions of the Union Cooperation Ministry headed by Amit Shah and the focus will be now set on their long-awaited strengthening and recapitalization as soon as possible.
In view of the poor financial situation of these 9 cooperative banks, the government of the Union Territory of Jammu and Kashmir decided in the month of February 2020 to merge these banks and accordingly void the Government Decree No. 07-Coop of February 26, 2020 a committee has been set up to carry out the task.
The committee headed by the Registrar Cooperative Societies J&K and made up of representatives of the Finance Department and the Legal Department not holding the rank of Special Secretary, Joint Registrars (Special) Cooperative Societies, representatives of the Reserve Bank of India and NABARD was tasked with exploring the feasibility of the merger. of banks taking into account the financial situation of cooperative banks, assess capital injection needs, human resources problems and physical and financial assets and liabilities.
The committee was further instructed to recommend the modus operandi for the merger of these banks to the Department of Cooperatives within a month. The committee has held various meetings on the subject and even some officers have been delegated to Punjab where such banks have merged in the recent past to study the model.
Subsequently, the matter was discussed in numerous meetings of the Committee of Secretaries headed by the Chief Secretary, Dr. Arun Kumar Mehta, and as a result, different deadlines were set for the committee to complete the task.
“However, the Union Cooperation Ministry headed by Amit Shah has advised the J&K government not to merge these banks and instead focus on strengthening the three-tier structure of the cooperative bank,” officials said. official sources to EXCELSIOR. The three levels are Primary Agricultural Credit Societies at the village level, Central Cooperative Banks at the district level, and State Cooperative Banks at the state level.
Disclosure of this merger of 9 cooperative banks, namely J&K UT Cooperative Agriculture and Rural Development Bank (SCARDB), J&K State Cooperative Bank, Jammu Central Cooperative Bank, Baramulla Central Cooperative Bank, Anantnag Central Cooperative Bank, Jammu Citizen’s Cooperative Bank, Urban Cooperative Bank, Anantnag, Devika Urban Cooperative Bank, Udhampur and Kashmir Mercantile Cooperative Bank, Sopore have been put on hold, sources said, “Now the government will come up with a strategy to breathe new life into these banks through a capital injection.
“An amount of between Rs 600 and Rs 700 crore is needed for a much needed and much delayed recapitalization of these banks and a strategy in this regard will be worked out soon by the government to get these banks out of the financial mess,” the sources said. . , adding that “the J&K Union Territory Government will vigorously pursue the requirement of funds in this regard with the Union Ministry.”
They further stated, “As the Government of India lays emphasis on strengthening the cooperative sector, the J&K government hopes to receive sufficient financial assistance for the recapitalization of these nine cooperative banks.”
“The Union Ministry has already announced that it will focus on computerizing the Primary Agriculture Societies (PACs) and linking them to District Central Cooperative Banks which in turn will be linked to Cooperative Banks of State and the National Bank for Agriculture and Rural Development (NABARD) to establish a homogeneous and transparent financial system for cooperative banks,” they added.
Contacted, a senior Cooperative Department official confirmed that the merger of cooperative banks has been put on hold under the direction of the Union Government and the strategy will now be laid out for their strengthening by taking all possible measures.