The existence of cooperative banks must be preserved, writes Sharad Pawar to Prime Minister Modi

Sharad Pawar addresses the media | Suraj Singh Bisht | The photo of the print file

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Bombay: NCP chief Sharad Pawar wrote to Prime Minister Narendra Modi, saying that the “existence” of cooperative banks and their “cooperative character” must be protected.

The former Union minister also sought to demystify the idea that cooperative banks are doing worse than other banks, or that converting them into private entities would put an end to fraud or irregularities.

Pawar posted the August 15 letter on his Twitter account on Tuesday evening. The letter referred to Modi’s Independence Day speech.

“You (Modi) said that the cooperative banks are placed under the supervision of the Reserve Bank from the point of view of protecting the interests of the middle class. “

“I salute and appreciate the goal,” he said.

“However, at the same time, I honestly believe that the existence of cooperative banks and their ‘cooperative’ character must be preserved,” said Pawar.

The cooperative banking sector has been the backbone of the rural economy, he said.

Due to its extensive branch network, the Reserve Bank (RBI) is unable to conduct an annual inspection of all urban cooperative banks (UCBs) in the country, he said.

Therefore, the central bank has tried to convert UCBs into private banks since 1993, but has failed, Pawar said.

“Sir, although I agree with you that there should be financial discipline in the banks, but it would certainly be incorrect to say that such a conversion of the cooperative sector to the private sector would totally or partially prevent them. embezzlement, financial irregularities and fraud in the banking sector, ”the letter said.

In fiscal year 2019-2020, according to RBI, public and private sector banks reported 3,766 and 2,010 frauds, while cooperative banks reported only 181 frauds, he said.

The amount involved in fraud in public sector banks was Rs 64,509.90 crore or 90.20% of the total amount involved in fraud during the year, while that in private sector banks was Rs 5,515.10 crore or 7.69 percent, he said.

“During the 2019-2020 financial year, an alleged fraud of Rs 4,355 crore was identified in the PMC Bank scam, while in the first half of the year itself a fraud of around Rs 95,700 crore has been reported in nationalized banks, ”Pawar said.

“Therefore, it is not correct to say that embezzlement or financial irregularities are only observed in cooperative banks,” he said.

The RBI often alleges that cooperative banks suffer from a lack of professionalism, Pawar noted.

However, according to the RBI’s own data, the gross and net NPA percentages of commercial banks are 9.68 percent and 5.31 percent; on the other hand, the gross and net NPA percentages of UCBs are 7.51 percent and 2.53 percent, he said.

Of the 1,544 UCBs, only 70 are in the “D” category, Pawar said, adding that therefore, “it is ridiculous to say that there is no professionalism in cooperative banks”.

He also said that what happened at the Punjab and Maharashtra Cooperative Bank (PMC) was “fraud” and not “commercial bankruptcy of cooperative banks”.

“I therefore urge you to please consider the matter personally and do justice to the cooperative banking sector …” Pawar said in the letter.

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