NAFSCOB DELEGATION / PRESENTATION AT WORLD BANK

 

Shri Bhima Subrahmanyam, Managing Director, NAFSCOB made a   presentation on Financial Cooperatives in India – Achievements, Issues and Recent Initiatives, at the World Bank, Washington D.C. on 26 September 2005. The following attended the presentation:

 

1.                  Shri K.R. Aravindakshan, Chairman, NAFSCOB

2.                  Major Rajbir Singh Ajnala, Chairman, Punjab SCB

3.                  Shri P.S. Sidhu, Managing Director, Punjab SCB

4.                  Shri X. Anil IAS, Managing Director, Kerala SCB

                          

 The following representatives have also attended at the invitation of NAFSCOB:

 

1.                  Shri Bhagwati Prasad, Chief Executive, NCUI

2.                  Shri D. Krishna, Chief Executive, National Federation of Urban Cooperative Banks

3.                  Shri Viswajeet Khanna, Registrar of Cooperative Societies, Punjab

 

The following represented Rabobank and The World Bank in the above meeting:

 

1.             Ms. Connie Bernard, Sector Director for South Asia Agriculture and Rural Development Department (SASAR)

2.                  Mr. Gerard Van Empel, Rabobank

3.                  Mr. Carlos Cuevas, OPD, Advisor, The World Bank

4.                  Mr. Parmesh Shah, Senior Rural Development Specialist (SASAR)

5.                  Ms. Eustacius Betubiza. ECSSD

6.                  Mr. Vijay Kalavakonda, OPD

7.                  Mr. Sandra Broka, ECSSD

8.                  Mr. Xiaolan Wang, EASRD

9.                  Mr. Wafik Grais, FSE

10.              Mr. Ed Cook, ECSSD/SASAR

 

            The event was presided over by Ms. Connie Bernad, Sector Director, the SASAR.  Mr. Carlos Cuevas from the World Bank and Mr. Gerard Van Empel from Rabobank were the commentators to the event.  The presentation briefly covered the present status of Indian financial cooperatives, their achievements, their strengths, weaknesses, issues involved and initiatives to strengthen them.  Mr. Gerard Van Empel from Rabobank was critical about the functioning of Indian cooperatives and the slow pace of reforms and was very forceful in his view that “Reforms First” and “Recapitalisation Next”.  Mr. Carlos commented on the sponsored cooperatives and member driven cooperatives, top down cooperatives and issues of cleansing their balance sheets.

 

            The presentation sought to impress upon the complexities involved in century old cooperatives and a justified re-look into the urgency for recapitalization.  There is a need to appreciate the need to bring them to take off stage by cleansing their balance sheets through recapitalisation before seriously addressing the issue of reforms as a part of Restructuring/Revival/Revitalisation/Rehabilitation.  Therefore “Rehabilitation First” and “Reforms Follow”.  The highlights emerged during the presentation were: weaknesses of Indian Cooperative Banking Institutions, their strengths, potential to reach rural areas, step motherly treatment to cooperatives though they are part of the total financial system, application of prudential norms to cooperatives without recapitalization, application of prudential norms to nationalized banks after recapitalization, issues of poor regulation and supervision.

 

            Also highlighted was the fact that cooperatives accumulated losses to the tune of over Rs.150 billion over a period of 100 years due to external reasons whereas 36 years old Nationalised Banks accumulated over Rs.300 billion due to ‘mismanagement’ and still have very significant NPAs.    Nationalised Banks have been recapitalized and rural cooperatives are yet to be recapitalized in spite of recommendations by various committees.  Now what next?  No doubt, there are problems with cooperative credit and banking institutions i.e. SCBs, DCCBs and PACS.  63 per cent of India is still rural.  Commercial Banks are unwilling players in rural credit and cannot be expected to provide required agricultural credit and uninterruptedly.  Cooperatives are in the field since 100 years and they are willing to purvey rural credit and there is no alternative to them.  They are required.  There is a need to remove certain restrictive policies on them to help to cater to rural areas.

 

            The above presentation has been made possible due to the initiative taken by Ms. Renate Kloeppinger-Todd, Advisor (SASAR) and Mr. Ajai Nair, Consultant (SASAR).

 

             Earlier on 15 September 2005, Shri Subrahmanyam had discussions with    Ms. Marilou Uy, Sector Director, Financial Sector Operations & Policy Department.   Ms. Anjali Kumar, Lead Financial Economist of the World Bank was also present.  The deliberations centred around the need to work out fresh strategies on whether ‘Reforms First’ or “Recapitalisation First” in detail.  Dr. Ramesh Deshpande, former Consultant, World Bank also joined these discussions.