CHENNAI: Co-operative banks are not only less efficient but also more prone to corruption due to lagging in modernizing their operations. Village money lending agencies and primary agricultural credit cooperative societies (PACCS) in particular have been affected.
Last year’s corruption complaints to the tune of Rs 516 crore in agricultural loan distribution in Salem and Namakkal districts were largely due to banks not being integrated under one platform common, insiders said. Also, there was no unified system to authenticate customer credentials including Aadhaar, land records and other details.
According to official data, the cooperative institutions distributed loans worth Rs 60,000 crore under 17 categories, of which Rs 40,000 crore went to jewelry loans.
Tier one banks in villages and urban pockets are either manually operated or partially computerized. Because of this, they are forced to depend on multiple platforms, which reduces their efficiency. Furthermore, the day-to-day running of cooperative banks cannot be monitored because their activities are recorded manually or on computers that are not connected to a common platform.
“The waiver of crop and jewelry loans, and other programs, is being delayed because the banks are not integrated under a common software platform,” an official said.
The cooperative banking sector has a three-tier structure comprising an apex bank at the state level, central banks at the district level, and primary agricultural credit societies at the village level.
The Tamil Nadu State Apex Cooperative Bank (TNSACB) – a custodian of the state’s cooperative banking structure – and 23 District Central Cooperative Banks (DCCB) have been consolidated under core banking solution platforms. However, the modernization of the system of credit institutions at the village level, which started in 2018, is not yet complete.
Under a Core Banking Solution (CBS) platform, cooperative banks will have a unified integrated software with basic facilities such as banking services in all branches, online banking services (NEFT and RTGS ) and access to ATMs on a par with commercial banks, officials said.
“A total of 128 urban cooperative banks (UCBs) are fully computerized and are nearing completion of CBS,” said an official document released recently by the cooperation department. The computerization work of employee savings and credit cooperatives is also being carried out in coordination with the Tamil Nadu Electricity Governance Agency (TNeGA), he added.
The Tamil Nadu State Cooperative Bank for Agriculture and Rural Development (TNCSARDB), a long-term lending institution, had been computerized through Total Banking Automation (TBA).
Similarly, the consolidation work of 4,451 PACCS, Large Area Multi-Purpose Cooperatives Societies (LAMPS) and TNCSARDB is being consolidated under the CBS platform.
“In 2017-2018, the Union government proposed to integrate the cooperative banks under CBS. The state government decided to join the program after being informed that the cost of the project would be borne by NABARD, the umbrella development bank. Full computerization is underway,” the document said.
CHENNAI: Co-operative banks are not only less efficient but also more prone to corruption due to lagging in modernizing their operations. Village money lending agencies and primary agricultural credit cooperative societies (PACCS) in particular have been affected. Last year’s corruption complaints to the tune of Rs 516 crore in agricultural loan distribution in Salem and Namakkal districts were largely due to banks not being integrated under one platform common, insiders said. Also, there was no unified system to authenticate customer credentials including Aadhaar, land records and other details. According to official data, the cooperative institutions distributed loans worth Rs 60,000 crore under 17 categories, of which Rs 40,000 crore went to jewelry loans. Tier one banks in villages and urban pockets are either manually operated or partially computerized. Because of this, they are forced to depend on multiple platforms, which reduces their efficiency. Furthermore, the day-to-day running of cooperative banks cannot be monitored because their activities are recorded manually or on computers that are not connected to a common platform. “The waiver of crop and jewelry loans, and other programs, is being delayed because the banks are not integrated under a common software platform,” an official said. The cooperative banking sector has a three-tier structure comprising an apex bank at the state level, central banks at the district level, and primary agricultural credit societies at the village level. The Tamil Nadu State Apex Cooperative Bank (TNSACB) – a custodian of the state’s cooperative banking structure – and 23 District Central Cooperative Banks (DCCB) have been consolidated under core banking solution platforms. However, the modernization of the system of credit institutions at the village level, which started in 2018, is not yet complete. Under a Core Banking Solution (CBS) platform, cooperative banks will have a unified integrated software with basic facilities such as banking services in all branches, online banking services (NEFT and RTGS ) and access to ATMs on a par with commercial banks, officials said. “A total of 128 urban cooperative banks (UCBs) are fully computerized and are nearing completion of CBS,” said an official document released recently by the cooperation department. The computerization work of employee savings and credit cooperatives is also being carried out in coordination with the Tamil Nadu Electricity Governance Agency (TNeGA), he added. The Tamil Nadu State Cooperative Bank for Agriculture and Rural Development (TNCSARDB), a long-term lending institution, had been computerized through Total Banking Automation (TBA). Similarly, the consolidation work of 4,451 PACCS, Large Multi-Purpose Cooperative Societies (LAMPS) and TNCSARDB is being consolidated under the CBS platform. “In 2017-2018, the Union government proposed to integrate the cooperative banks under CBS. The state government decided to join the program after being informed that the cost of the project would be borne by NABARD, the umbrella development bank. Full computerization is underway,” the document said.
