Memorandum

Federation submitted Memoranda on the following issues to Government of India, Reserve Bank of India and NABARD:

Memorandum on Problems of Short and Medium Term Cooperative Credit Sector (1976/ 1977)
Memorandum on Writing off Cooperative Dues announced by the Government of Maharashtra (1980)
Memorandum submitted to late Smt. Indira Gandhi, Honble Prime Minister of India on February 9, 1981 in connection with the writing off Agricultural Dues.
Memorandum on few observations on the various provisions of the Act to establish NABARD, submitted to late Smt. Indira Gandhi, Hon'ble Prime Minister of India on May 31,1982.
Memorandum on problems concerning cooperative credit system in respect of agricultural and rural development, submitted to the Chairman, High Power Committee for solving the problems /difficulties (1982-83)
Memorandum on the problems faced by Cooperative credit structure submitted to Shri Janardhan Poojary, Hon'ble Deputy Minister for Finance, Govt. of India on March 19, 1983.
Memorandum on Banking Laws (Amendment) Bill (1983)
Memorandum on some of the Problems faced by the Cooperative Credit Structure vis-a-vis Reserve Bank of India /National Bank for Agriculture and Rural Development (1983)
Memorandum on issues of Short Term Cooperative Credit Structure relating to the Reserve Bank of India, NABARD, submitted to Shri Vishwanath Pratap Singh, Honb'le Minister for Finance, Government of India on April 7, 1983.
Memorandum on Problems of Agricultural Credit and Rural Development submitted to the Honb'le Prjme Minister of India (1987)
Memorandum on issues concerning Short and Medium Term Cooperative Credit Structure submitted to Senior Expert Group of RBI (1988)
Memorandum on implications of the revision of interest rates on agricultural finance submitted to the Hon'ble Union Finance Minister (1988).
Memorandum on the impact of write off of agricultural loans on cooperative credit structure, submitted to the Hon'ble Union Finance Minister.
Memorandum on the impact of write off of agricultural loans on cooperative credit structure, submitted to the Hon'ble Union Minister for Agriculture.
Memorandum viz. Relief to Farmers -Provision for financial outlay in the Budget 1988-89 and suggestions for other concessions and revisions of policies and procedures, etc. submitted to Hon'ble Union Finance Minister Shri N. D. Tiwari (1988)
Memorandum viz. Relief to Farmers -Provision for financial outlay in the Budget 1989-90 and suggestions for other concessions, submitted to Hon'ble Union Finance Minister Shri S. B. Chavan on January 27, 1989.
Memorandum on Support to Farmers" Need for Provisions for Financial Outlay in the Budget 1990-91 and suggestions for other approprrate measures, submitted to Hon'ble Union Finance M.inister Prof. Madhu Dandavate on February 14, 1990.
Memorandum on the lmplications of Agricultural and Rural Debt Relief Scheme 1990, submitted to Prof. Madhu Dandavate, Hon'ble Union August 27, 1990 at New Delhi.
Memorandum submitted to Shri Yeshwant Sinha Hon'ble Union Finance Minister on January 25, 1991 at New Delhi during the Pre-Budget discussions.
Memorandum on National Cooperative Bank of India (NCBI), submitted to Shri Mohan Dharia, Deputy ChairmCin, Planning Commission on February 7,1991 at New Delhi.
Need for exempting the Cooperative Banks from the scope of the proposed amendment of Section 194A of the Income Tax 1960 (1991)
Need for exemption of Interest Tax @ 3 percent on the gross amount of the interest as proposed in the finance Bill (1991)
NABARD refinance to Cooperative Credit Sector, interest rates on loans, margins of banks etc. (1991)
Need for restoration of democratic set up in the Cooperative Credit Institutions (1991)
Exemption of NAFSCOB from payment of Income Tax (1991 )
Need to withdraw the Scheme of Minimum Involvement imposed by NABARD for sanction of SAO Credit limit (1992).
Need for restoration of Instant Fresh Finance Scheme (1992)
Need for implementation of Model Cooperative Act as recommended by Choudary Brahm Prakash Committee set up by the Planning Commission (1992)
Implications of the new proposal to set up National Rural Bank of India on Short Term Cooperative Credit Institutions (1992)
Need for early settlement of dues under ARDR Scheme, reimbursement of interest loss and the need for inclusion of penal interest in the final claims without reversing the earlier policy (1992/1993)
Need to rationalise the Interest Rate Structure (1992)
Memorandum on a few important problems concerning Cooperative Credit Sector, submitted to the Hon'ble Union Finance Minister on January 4, 1992.
Memorandum on issues relating to Short Term Cooperative Credit Structure has been presented during the Conference of State Ministers for Cooperation convened by Ministry of Agriculture on July 26, 1992 at New Delhi.
Implications of Recommendations of the Tax Reform Committee headed by Prof. Raja J. Chellaiah in relation to Cooperative Societies (1993)
Need for representation on the Board of Directors of NABARD for Cooperative Banks.
Memorandum submitted to Dr. Manmohan Singh, Hon'ble Union Minister for Finance, Government of India on February, 11, 1994 on the following issues:

i) Interest Rate Structure for Seasonal Agricultural Operations: Need for Rationalisation.

ii) Need for providing avenues for Investment of surplus/Ensure larger share to SCBs/DCCBs in National Level Consortium Arrangements.

iii) Need to review the proposal for application of prudential norms to SCBs and DCCBs.

iv) Need to review the existing norms for licencing of SCBs and DCCBs -Grant of Licences.

v) Need to reconsider the recommendation of Tax Reforms Committee.

vi) Early settlement of dues under Agriculture and Rural Debt Relief Scheme -1990.

vii) Need to bring sick units in cooperative sector under BIFR.
Discussion with Shri D. R. Mehta, Deputy Governor, Reserve Bank of India on June 27 1994 on the following issues in addition to the issues presented to Hon'ble Union Finance Minister.

i) Implications of the proposal for a separate apex bank for urban cooperative banks.

ii) Need for providing avenues for Investment of Surpluses/Ensure larger Share of SCBS/DCBS in National Level consortium Arrangements.

iii) Need to issue Revised Guidelines on Remittance Facilities.
Memorandum submitted to Dr. Manmohan Singh, Hon'ble Union Finance Minister on December 11, 1994 at New Delhi during the Pre-Budget discussions covered the following issues:

1 . Need for making provision for financial assistance to short term cooperative credit structure to cleanse their balance sheets.

2. Need for providing avenues for investment of surplus resources/ensure larger share to State Cooperative Banks/District Central Cooperative Banks in National Level consortium Arrangements

3. Implications of the proposal for a separate Apex Bank for Urban Cooperative Banks as the proposal is baseless and unjustified.

4. Need to review the existing norms for licencing and also according scheduled status to state and central cooperative banks.

5. Need for exemption of cooperative banks from the income tax on interest earned on investments in Government securities for the purpose of Reserve Fund.

6. Need for total exemption of interest income on Government securities, other Trustee Securities and Debentures.

7. Need to issue revised guidelines on remittance facilities.

8. National Informatics Centre: Need for free technical service to cooperatives.

9. Need for reviving the cooperative credit pilot project in Gujarat and Karnataka states under the assistance of Government of Netherlands.
Memorandum submitted to the Hon'ble Union Finance Minister on October 27, 1995 at New Delhi on "the following issues :

1 ) Adverse implications of Minimum Involvement Norms on the State Cooperative Banks and District Central Cooperative Banks.

2 ) Need to exempt State Cooperative Banks and District Central Cooperative Banks from the provision of Tax Deduction at Source from interest on Term Deposits.
Memorandum forwarded to Reserve Bank of India on the following important issues on April 4, 1996.

Need to review the existing norms for Licencing of State Cooperative Banks and District Central Cooperative Banks.
Need to issue revised guidelines on Remittance Facilities.
Need to address the problem of Heavy Surplus Cash in hand on day-to-day basis by State Cooperative Banks.
Need to consider and accord Scheduled Status to all the State Cooperative Banks and District Central Cooperative Banks.
Need to review the branch Licencing Policy so as to avoid inordinate delay in issuance of Licence.
Need to consider liberally the Applications by State Cooperative Banks for Currency Chest branches.
Need to impress upon the Government of India to exempt State Cooperative Banks and District Central Cooperative Banks from the purview of provision for Tax Deduction at source from interest income on Term Deposits.
Need to impress upon the Government of India for exemption of Cooperative Banks from the Income Tax on Interest Earned on investments in Government Securities for the purpose of Reserve Fund.
Need to impress upon the Government of India for total Exemption of Interest Income on Government Securities, other Trustee Securities and Debentures from the Income Tax.
Need for initiating further concrete steps to assist the State Cooperative Banks to implement the policy of deregulated Interest Rates Structure on Advances to ensure their viability.
Need to impress UpOD the Government of India to make a provision for Financial Assistance to Cleanse the Balance Sheets of the Short Term Cooperative Credit Institutions.
Need for exempting certain concepts and definitions before making the prudential Norms applicable to State Cooperative Banks and District Central Cooperative Banks.
Need for restraining from the policy of financing good Cooperative by Commercial Banks.
Need to curb the tendencies to permit the Cooperative Banks to become Private/Commercia! Banks.
Need to curb the tendencies to form a separate Apex Bank for Urban Banks.

Memorandum forwarded to the Ministry of Agriculture and also Ministry of Finance, Government of India with the following Suggestions in June 1996.

Need for Financial Assistance to the tune of about Rs. 6000 crores to cleanse the balance sheets of the short term cooperative credit institutions. This includes accumulated losses, imbalances, provision for bad and doubtful, debts, arrears under ARDR including interest loss, etc.
Need to examine the existing SAO policy of NABARD as the various policy norms have been reported to have come in the way of financing seasonal agricultural operations in availing the adequate refinance from NABARD. Imposition of multiple operational disciplines will in no way help to improve the efficiency of the banks. The operational disciplines of non-overdue cover (NODC) itself is more than enough to achieve the objective of NABARD. Hence, NODC may solely be treated as a dividing factor for the operations on the sanctioned short term credit limit to DCCBs from NABARD. The existing system of Government Guarantee for sanction of SAO limits should be done away with. The guarantee fee at the rate of 1 per cent being levied by Government of India should be waived.
Adherence to the Audit classification for the purpose of sanctioning of credit limits by NABARD inhibits the flow of credit for agricultural purposes. Hence need for re-examination.
The policy of deregulated interest rate structure on both advances and deposits, which has been taken in isolation did not really create a positive impact on the cooperative banks. The intervention and interference of the powers available under the existing Cooperative Societies Act did not allow the cooperative credit institutions to raise the rates of interest on lending which would have given them the adequate margin. Therefore, it 's necessary to initiate measures to impress upon the State Governments not to intervene in the decision making process of the cooperative credit institutions more particularly in exploring the advantages under policy of deregulated interest rate structure.
The concept of Minimum Involvement of own resources in agricultural lending is not in tune with the role of SCBS and DCCBs as refinancing agencies. Therefore, NABARD should do away with the concept of Minimum Involvement based on the criteria of Internal Lendable Resources to motivate the bank to mobilise resources.
Government of India/Reserves Bank of India should continue the National Rural Credit (Long Term operations) Fund during the Ninth Five Year Plan period also.
Government of India should advance NODC loans to DCCBs at an interest rate at par with NABARD refinance rate applicable to SAO borrowings.
It is necessary to set up a Risk Fund for Crop Loan Finance based on percentage of the total crop loan disbursed during the year to be provided in the shape of grant-in-aid by the Government.
NABARD should participate in the Public Distribution System activities of PACS by ensuring refinance facility to DCCBs. Alternatively, the advances for PDS activities should be recokoned for the purpose of Minimum Involvement.
Goverrnment of India, State Governments and NABARD should contribute to the Corpus of 'Deposit Guarantee Fund" under the DepositGuarantee Scheme for PACS and this certainly enables all the States to expedite formulation of Deposit Guarantee Scheme for PACS.
It is suggested to set up a Corpus Fund at the level of Government of India to help, in case of necessity, the farmers of sugar production.
It is suggested that a Comprehensive Crop Loan Insurance Scheme should cover all cash crops including Potatos, Ginger, Cotton and food crops for all areas of State both for kharif and Rabi seasons so that the financing institutions do not have to wait for every year for the details of the crops proposed to be covered under this Scheme. The rate of premium should be the same for all the crops. It is necessary that the DCCBs are associated with working out averages (figures of yield) as also with the crop cutting experiments. Since assessing the damages to the crops of individual farmer is operationally difficult, it is suggested that a village should be taken as a base for assessing the damages to the crops and not tehsil or a block so that the implementation of the Scheme will be more meaningful.
Government of India should expedite the process of amendment of Multi-State Cooperative Societies Act so as to pave way for the State Governments to amend their State Cooperative Societies Act in accordance with the Model Cooperative Act. While doing So, the experiences gained out of the provisions incorporated in the Andhra Pradesh Mutually Aided Cooperative Societies Act may be taken into consideration.
It may be desirable to amalgamate short term and long term cooperative credit structures to reap the economies of scale, improve viability of primaries and fully diversify the operations of cooperative banks.
Government of India should curb the tendencies to convert the cooperative banks into private banks and this amounts to diversion from cooperative philosophy and cooperative principles and also aimed of commercialisation.
It is suggested that a policy may be formulated so as to extend 100 per cent refinance facility to PACS under Farm Mechanisation Programme and also extend higher allocations to cooperative banks.
A Committee may be set up to review and revise the norms for grant of licence for SCBS and DCCBs with a view to grant licences to all of them and help them to build up a better public image and also avail necessary facilities from higher financing agencies.
Policy norms may be amended to accord scheduled status to all the State Cooperative Banks and to select Central Cooperative Banks.
The existing training arrangements have conclusively proved that they are not in a position to cater to the training needs of the personnel working in the cooperative credit institutions. Therefore, the National Federation of State Cooperative Banks may be encouraged with a suitable financial assistance to set up an exclusive training institute to cater to the needs of the personnel working in the short term cooperative credit institutions. Secondly, a Manpower Development Institute to deal exclusively with the personnel of cooperative credit institutions in North-Eastern Region should be set up.
National Federation of State Cooperative Banks has already set up a High Level Review and Action Committee for North-Eastern Region to ensure smooth flow of credit in the region. It is suggested that the efforts of the Federation may be strengthened by extending suitable assistance to the Federation.
There is a need for exemption of cooperative banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund.
Need for total exemption of Interest income on Government Securities, Other Trustee Securities and debentures from the Income Tax.
There is a need to reconsider the proposal for Tax Deduction at Source from Interest Income on Term Deposits with SCBs and DCCBs and exempt the same from the purview of the above provisions as it is felt this provision has lot of adverse implications towards mobilisation of deposits.

Memorandum submitted to the Parliamentary Standing Committee on Agriculture an October 30, 1996 on the following issues :-

In addition to the issues already taken up with Ministry of Agriculture and also Ministry of Finance the following issue has been presented to the above committee.

"The present system of charging variable rates of interest by NABARD on the basis of the percentage borrowing to outstanding should be done away with as it tilts the balance heavily and erodes the profits of the banks. Therefore, it is suggested that NABARD should charge only a fixed rate of interest on SAO advances. However, NABARD very recently issued a circular revising the rates of interest chargeable by NABARD on refinance for the year 1996-97. This upward revision in the refinance rate will have adverse implications on the interest rates to be charged to the ultimate borrower. Infact, small/marginal farmers cannot afford to borrow agricultural credit on higher rates of interest. Cooperative credit institutions, at the same time, cannot afford to lend at lower rates of interest unless other suitable measures are adopted to ensure their viability".

Memorandum sent / addressed to Hon'ble Prime Minister of India Shri H. D. Devegowda on March 26, 1997. on the following issues:

Need for providing adequate financial assistance to cleanse the Balance Sheets of Cooperative Credit Institutions.
Need to re-examine the revised rates of interest on refinance by NABARD to State Cooperative Banks.
Need for exemption of Cooperative Banks for Income Tax on Interest earned on Investment in Government Securities for the purpose of Reserve Fund.
Need for setting up of Manpower Development Institute for North Eastern Region.

Memorandum submitted to Hon'ble Prime Minister Shri I. K. Gujral on April 22, 1997 on the following issues:

Need for providing adequate financial assistance to cleanse the Balance sheets of Cooperative Credit Institutions.
Need to re-examine the revised rates of interest on the refinance by NABARD to State Cooperative Banks.
Need for Setting up at Manpower Development Institute in North Eastern Region.
Need for exemption of Cooperative Banks from Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund.

Memorandum to Hon'ble Prime Minister Shri Atal Behari Vajpayee, Hon'ble Union Finance Minister Shri Yashwant Sinha and Hon'ble Minister of State for Agriculture Shri Sompal on April 7, 1998 on the following issues under the "Measures for strengthening Cooperative Credit Institutions."

Need for providing adequate financial assistance for cleaning the Balance Sheet of Cooperative Credit Institutions as a part of the measures for revamping
Need for re-examining the Time Frame for implementation of Prudential Norms by State and District Central Cooperative Banks.
Need to impress upon the Government of India for exemption of Cooperative Banks From The Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund
Need for removal of the condition of Government Guarantee by NABARD while sanctioning credit limits to State and District Central Cooperative Banks and waiver of Guarantee Fee by Government of India
Need for restoration of democratic set in up the Cooperative Institutions
Need for representation on the Board of Directors of Directors of NABARD for the Cooperative Banks
Need for amendment of restrictive provisions in the Multi-State Cooperative Societies Act, 1984
Need for expediting the formulation National Cooperative Policy

Memorandum submitted to Hon'ble Finance Minister Shri Yashwant Sinha on January 13, 1999 on the following issues:-

Need for providing adequate financial assistance for cleaning the Balance Sheet of Cooperative Credit Institutions as a part of the measures for revamping
Need for exemption of Cooperative Banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund
Need to set up a separate cell for Cooperative Credit & Banking Institutions in Ministry of Finance

A delegation comprising of the members of the Federation , led by Shri Surrendra Patnaik, Chairman, NAFSCOB met the authorised Senior Executives of Reserve Bank of India and submitted a Memorandum on the following issues on March 19, 1999 at Mumbai.

Need to Review the Existing Norms for Licencing of State Cooperative Banks and District Central Cooperative Banks
Need to Issue Revised Guidelines on Remittance Facilities
Need to address the problem of Heavy Surplus Cash in Hand on day-to-day basis by State Cooperative Banks
Need to Consider and Accord Scheduled Status to all the State Cooperative Banks and District Central Cooperative Banks
Need to Review the Branch Licencing Policy so as to avoid inordinate delay in Issuance of Licence
Need to consider liberally the Applications by State Cooperative Banks for Currency Chest Branches
Non- acceptance of Demand Drafts issued by Cooperative Banks.
Need to link Refinance Rate of Interest of SAO Loans with Bank Rate.
Need for reduction Rate of interest on Investment Credit.
Need for re-examining the concept of Minimum Involvement Norms.
Application of Prudential Norms more particularly Capital Adequacy - its implications.
Need for Providing Financial Assistance for Cleansing the Balance Sheets of Cooperative Credit Institutions as a part of the measures for revamping
Need for Removal of the Condition of Government Guarantee by NABARD While Sanctioning Credit Limits to State and District Central Cooperative Banks and Waiver of Guarantee Fee by Government of India
Need to Identify and Provide Avenues for Deployment of Surplus Resources
Need for Exemption of Cooperative Banks from the Income Tax on Interest Earned on Investments in Government Securities for the purpose of Reserve Fund
Need to curb the tendencies to permit the Cooperative Banks to be become Commerical Banks.
Need to curb the tendencies to form a separate Apex Bank for Urban Banks.
Need to initiating further concrete steps to assist the State Cooperative Banks tom implement the Policy of deregulated interest rate structure on advance and Deposits to ensure their viability.
Need for Relaxations in Exposure Norms for Cooperative Banks

A delegation comprising of few Board of Directors representing NAFSCOB and NCARDB Federation met Shri Yashwant Sinha, Hon'ble Union Finance Minster on March 24, 1999 and submitted a Memorandum on the following issues:

Need for Providing Financial Assistance for Cleansing the Balance Sheets of Cooperative Credit Institutions as a part of the measures for revamping
Need for Exemption of Cooperative Banks from the Income Tax on Interest Earned on Investments in Government Securities for the purpose of Reserve Fund
Need for representation of Cooperative Credit Structure on the NABARD Board as per Section 6 (i) C of NABARD Act, 1982.
Need to set up a separate cell for Cooperative Credit & Banking Institutions in Ministry of Finance

Representation of both Short Term and Long Term Cooperative Credit Structure to Hon’ble Union Finance Minister:

Hon’ble Union Minister of Finance while announcing setting up of a ‘Task Force on Recapitalisation Measures to Cooperative Credit Institutions’ impressed upon the need for banks to prepare and submit a feasible action plan to ensure the viability of the Cooperative Credit Institutions (with one time external assistance) and ensure that the existing weaknesses do not recur. The banks may keep the following into view while preparing the action plan.

Suggested Guidelines for preparation of Action Plan by State Cooperative Banks

To develop a clear vision of their future role in the fast changing banking scenario and work in the direction of realising the same with appropriate changes in their business strategies.
To ensure greater responsibility as leaders of cooperative movement and nurture lower tiers.
To shoulder major responsibility for providing credit to agriculture and rural development in respective states.
To make efforts to become strong, vibrant and member-driven institutions which includes measures for better recovery.
To strive to build up a better image for themselves commensurate with their presence in and contribution to the field of agricultural credit.
To examine the adequacy of interest margins at different tiers, due dates for repayments and charging of penal interest on defaults by lower tiers and make necessary changes.
To examine the existing margins of PACS and its adequacy on distribution and inputs sales business.
To examine the establishment cost of PACS and suggest the viable measures.
To consider the feasibility of differential interest rate structure to small and marginal farmers.
To work out the measures for increased credit flow to agriculture.
To evolve strategies to reduce/rectify imbalances with the structure.
To examine the aspects relating to linking of share capital to Borrowings and Need for Payment of Dividends.
To examine the aspects of financing of tenants and share croppers.
To work out strategies for converting Non Performing Assets into Performing Assets, Sub Standard Assets into Good Assets.
To work out the measures to implement the DAP/MOUs in a specific time frame.
To formulate investment policies.
To examine the merits and demerits of caderisation.
To work out measures to introduce professionalisation in the management particularly at the top executive level.
To work out both short term and long term human resource development and management policies.
To work out strategies for training of the personnel at various levels of three tiers.
To develop an appropriate policies for recruitment, promotions and transfers.
To introduce Development Fund for the lower tiers.
To initiate measures for regular inspection.
To ensure timely audit through qualified Chartered Accountants.
To examine the possibilities for exit policy which may include Voluntary Retirement Scheme.
To examine the future role of loss incurring bank branches.
To introduce Kisan Credit Cards for farmers to enable to secure production credit.
To work towards computerisation of all the activities after firming up the views on Common Accounting System, Proforma of Balance Sheet and Profit & Loss Account for the purpose of development a Common Software.
To work out the strategies to ensure amendment of the restrictive provisions in the State and Multi-state Cooperative Societies Acts.
To examine the need for structural changes.

Subsequently, Hon’ble Union Finance Minister constituted a Task Force to Study the functioning of Cooperative Banks and to Suggest package for their revival/ re-structuring headed by Shri Jagdish Capoor, Deputy Governor, Reserve Bank of India. The delegation of NAFSCOB on invitation had on interaction with members of the Task Force on revival/restructuring package for cooperative banks under the Chairmanship of Shri Jagdish Capoor, Deputy Governor, Reserve Bank of India.

Representations have been made to Government of India, RBI/NABARD on the adverse implications of upward revision of interest rate by 1.5 per cent on short term refinance from NABARD to SCBs/DCCBs and the need for withdrawal of such a revision. However, the representation has not been favourably considered.

A memorandum was submitted to Hon'ble Union Finance Minister Shri Yashwant Sinha on January 10, 2002 on behalf of the entire cooperative credit and banking institutions, and appealed to ensure that the Union Budget for the year 2000-2001 at least address the following certain issues pertaining to cooperative credit and banking institutions with a view to ensure agriculture and rural development and support the developmental of the Government.

Issues:
1. Concrete measures have to be initiated to revamp the cooperative credit and banking institutions by making a provision of about Rs. 6000 crores in the ensuing budget with a view to cleanse the Balance Sheet of these Institutions. In fact, similar steps have been taken to revamp the commercial banks and regional rural banks.
2. While we are taking measures to provide timely and adequate credit to farmers through introduction of Kissan Credit Cards, a sudden increase of interest rates by 1.5 percent on refinance is charged, the ultimate rate of interest to be charged for the farmers will vary from the existing 15.5 to 17 percent per annum which the farmers can not afford to pay. Therefore, the hike in the interest rate on refinance should immediately be withdrawn.
3. A separate Banking Cell in the Ministry of Finance will provide a proper perspective with regard to the role of cooperative credit and banking structure in the financial sector of the country. This Cell will look into the problem of 92194 Primary Agricultural Cooperative Societies (PACS), 29 State Cooperative Banks (SCBs) with a membership base of 997.10 lakhs and a deposit base of Rs. 38289 crores (DCCBs) and Rs. 22201 crores (SCBs) as on March, 1998.
4. Section 6(1) of NABARD Act, 1981 had a provision for appointment of two Directors on the Board of NABARD from the Cooperative Banks. However, this provision has been deliberately ignored while appointing the Directors on the Board of NABARD. Therefore, Hon'ble Union Finance Minister may kindly expedite the appointment of the two Directors on the Board of NABARD in strengthening the Cooperative Credit Structure.
The above memorandum was submitted by the Chairman who was invited for pre-budget consultation in January 10, 2000.

A report of the Working Group on 'Cooperative Credit and Banking Institutions - A Case of Utter Neglect' was widely circulated to all the concerned with a view to impress upon the need for strengthening the Cooperative Credit and Banking Institutions.

A report covers the entire gamut of cooperative credit and banking institutions in the 3 tier cooperative credit structure including role of NABARD and extended appropriate suggestions.

A delegation met the Hon'ble Minister of State of Finance, Govt. of India on January 27, 2000 to seek his intervention for one time budgetary support of financial assistance to cooperative credit and banking institutions.

A memorandum was submitted to Chairman, Parliamentary Standing Committee on Finance & Secretary Economic Affairs on April 10, 2000 at New Delhi.

The following major issues of the policy support relating to cooperative credit structure was presented for urgent kind consideration:

Need for providing adequate financial assistance for cleansing the Balance Sheet of Cooperative Credit Institutions as a part of the measures for revamping.
Need for exemption of Cooperative Banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund.
Need for removal of the condition of Government Guarantee by NABARD while sanctioning credit limits to State and District Central Cooperative Banks and waiver of Guarantee Fee by Government of India.
Need for restoration of democratic set up in the Cooperative Institutions.
Need for representation on the Board of Directors of NABARD for the Cooperative Banks.
Need for amendment of restrictive provision in the Multi-State Cooperative societies Act, 1984.
Need for expediting the Formulation of National Cooperative Policy.
Need to set up a separate cell for Cooperative Credit & Banking Institutions in Ministry of Finance.

A memorandum was submitted to Shri Balasaheb Vikhe Patil, Hon’ble Minister of State for Finance, Govt. of India on January 10, 2001 in the form of few suggestion on the eve of Pre-Budget Consultations with Hon’ble Union Minister

Need to initiate action on the recommendations of Task Force to study the cooperative credit system and suggest measures for its strengthening under the Chairmanship of Shri Jagdish Capoor, Deputy Governor, RBI and a serious dialogue may be initiated to come to a consensus on the remaining 20 recommendations of Task Force with a view to strengthening cooperative credit and banking institutions.
Cooperative Banks are also required to deduct Income Tax at source from the depositors whose interest income on the Term Deposits is more than Rs.10000/- per annum. The cooperative banks more particularly the SCBs and DCCBS may be exempted from the purview of this provision.
Ministry of Finance, Government of India and CBDT should initiate necessary steps so as to ensure removal of anomalies in the existing Income Tax Act/Rules so as to exempt the cooperative credit and banking institutions from payment of the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund. The Judgement of Supreme Court on 24 July 1998 (Commissioner of Income Tax vs Bangalore DCCB) may be referred. Income Tax authorities are disallowing exemption under Section 80(P) even though the cooperative banks are infact entitled to the specific deduction under Section 80(P).
RBI and NABARD should be advised to ensure removal of restrictions for investment of the resources by SCBs and DCCBs so as to deploy them in a remunerative manner.
Ministry of Finance, Government of India may consider setting up of a separate Cell for cooperative credit and banking institutions in the Banking Division of the Union Finance Ministry for better appreciation of their contributions.
Government of India should take immediate steps for amendment of restrictive provisions in the Multi-State Cooperative Societies Act 1994 with a view to pave way for similar amendments in the respective State Cooperative Societies Act. Infact, the Multi-State Cooperative Societies Bill 2000 appears to have been already introduced in the Lok Sabha.
Section 6(1)(c) of NABARD Act 1981 required Government of India to ensure representation of cooperative banks on the Board of Directors of NABARD which was not adhered since a long time. However, an amendment has been brought to this Section which makes it discretionary to the Government of India. Therefore, we request that the earlier provision may be restored and steps may be taken to ensure the representation of the cooperative banks on the Board of Directors of NABARD.

A memorandum was submitted to Reserve Bank of India on February 26, 2001 on the following issues which have been raised during the Meeting of CEO’s of SCBs with NABARD on February 24, 2001.

Need to Review the Existing Norms for Licencing of State Cooperative Banks and District Central Cooperative Banks
Need to Issue Revised Guidelines on Remittance Facilities
Need to address the problem of Heavy Surplus Cash in Hand on day-to-day basis by State Cooperative Banks
Need to Consider and Accord Scheduled Status to all the State Cooperative Banks and District Central Cooperative Banks
Need to Review the Branch Licencing Policy so as to avoid inordinate delay in Issuance of Licence
Need to consider liberally the Applications by State Cooperative Banks for Currency Chest Branches
Need for serious examination of non-acceptance of Demand Drafts Issued by Cooperative Banks

Memorandum / Representation on most important issues pertaining to Cooperative Credit and Banking Institutions.

The major issues taken up at the various levels such as Government of India, RBI, NABARD, State Governments etc. are enumerated below :

Need for re-examining the amended provisions of NABARD Act such as Section 2(u), Section 6.1(c), Section 14(1) and Section 28(3).
Need for re-examining the policy of restricting the Urban Cooperative Banks from making their SLR investments with SCB and DCCBs as the institutional capacity of these only potential institutions in the country to handle agricultural credit will drastically come down and Jeopardize their efforts.
Need for Exemption of Compulsory Audit by Chartered Accountants U/S 44 AB specified in Section 288(2) of Income Tax Act 1961in respect of PACS/LAMPS/Primary Societies carrying on Business.
Scheduled State Cooperative Banks - Exemption from provisions of proviso to Sub-Section 91) and Sub-Section1(a) of Section 42 of RBI Act, 1934 Maintenance of CRR.
Need for Exemption of Cooperative Banks from the Income Tax on interest earned on Investments in Governments Securities for the purpose of Reserve Fund Need to Honour Spreme Court Judgement.
Need for serious examination of Non-Acceptance of Demand Draft drawn on Cooperative Banks.
Monetory and Credit Policy for 2001-02. Need for Review.
Rationalisation of Current Account facility with Reserve Bank of India : Not to Accept the Recommendations of the study group to close Current Account facility to non-scheduled SCBs.
Need to expedite implementation of Jagdish Capoor Task Force Recommendations.
Scheduled status to SCBs and DCCBs.
Stepping up general line of Credit support from RBI to NABARD as a part of strategy to meet 25 percent growth in lendings.
Reduction in interest rates of Refinance by NABARD to Cooperative Banks.
Need to review the existing norms of licensing of State Cooperative Banks and District Central Cooperative Banks.
Need to issued revised guidelines on Remittance Facilities.
Need to address the problem of Heavy Surplus Cash in hand on day-to-day basis by State Cooperative Banks.
Need to consider and accord scheduled status to all the State Cooperative Banks.
Need to review the Branch Licensing Policy so as to avoid inordinate delay in issuance of license.
Need to consider liberally the application by State Cooperative Banks for Currency Chest Branches.
Area to be transferred to BR Act.
Suggested roles and responsibilities of RBI/NABARD/RCS / State Governments by the Task Force by Shri Jagdish Capoor.

Chairman and Executive Director, NAFSCOB on their own and also together with Chairman and Executive Director NCARDB Federation represented to the following seeking their appropriate intervention on identified crucial issues pertaining to credit and banking institutions during the year 2001-02:

Hon’ble Chief Ministers of identified States such as Andhra Pradesh (21-08-2001), Haryana (20-08-2001), Orissa (18-08-2001), Punjab 920-08-2001), and Uttar Pradesh (16-08-2001) have appealed to support most of the recommendations of the "Task Force to Study the Cooperative Credit System and Suggest Measures for its Strengthening" headed by Shri Jagdish Capoor, former Deputy Governor, RBI and also to give consent to share the recapitalisation package to cooperatives. These lobbying efforts have been made on the eye of the Chief Ministers Conference convened by Government of India on 25-08-2001 at New Delhi.

Representation has been made to Shri Ajit Singh, Hon’ble Union Minister for Agriculture on August 24, 2001 at New Delhi and the delegation was actively supported by Shri K. Yerran Naidu, M. P. and Convener of Parliamentarians Forum for Cooperatives.

Representation has been made to Shri Balasaheb Vikhe Patil, Hon’ble Union Minister for Finance on August 24, 2001 at New Delhi to seek his support towards revitalization measures to Cooperatives.

Represented to Shri Yeshwant Sinha, Hon’ble Union Finance Minister on August 24, 2001 at New Delhi and it was supported by Shri K. Yerran Naidu, M. P. to impress upon the need for the early recapitalisation to the Cooperative Credit and Banking Institutions.

Representation has been made to Shri Yeshwant Sinha , Hon’ble Union Minister on December 04, 2001 to seek his support and suggest various measures to meet the Government of India’s expectation of 25 percent growth in lending to Agricultural purposes over a period of decade.

Representation has been made to Shri Vepa Kamesam, Deputy Governor, RBI on January 05, 2002 seeking his intervention on the adverse implications of existing Monetary and Credit Policy of the Central Bank.

A detalled Memorandum has been submitted to Shri Yeshwant Sinha Ho’ble Union Finance Minister by Shro Ashok Bandyopadhyay, Chairman, NAFSCOB on January 09, 2002 during the Pre-Budget Consultations. The Memorandum includes suggestions to Strengthen the Agricultural Sector and also Cooperative Credit and Banking Institutions.

Appealed to Shri Atal Behari Vajpayee, Hon’ble Prime Minister of India on January 09, 2002 impressing upon the need to retain Sectoin 80P of the Income Tax Act, 1961.

Memorandum Submitted by Chairman NAFSCOB to Shri Anant Gite, Hon’ble Minister of State for Finance on the following issues pertaining to Short Term Cooperative Credit Structure on August 07, 2002 at New Delhi.

Monetary and Credit Policy for 2002-2003. Need for Review
Need for Exemption of Compulsory Audit by Chartered Accountants u/s 44 AB specified in Section 288(2) of Income Tax Act 1961. In respect of PACS/LAMPS/Primary Societies carrying on Business.
Need for Exemption of Cooperative Banks from the Income Tax on Interest Earned on Investments in Government Securities for the purpose of Reserve Fund. Need to honour Supreme Court Judgement.
Need for serious examination of non-acceptance of Demand Drafts drawn on Cooperative Banks
Rationalisation of Current Account Facility with Reserve Bank of India
Need to issue revised guidelines on Remittance Facilities
Need to address the problem of heavy surplus cash in hand on day-to-day basis by State Cooperative Banks
Assistance to Cooperative Banks towards Insurance Premium for the farmers under Kisan Credit Cards
Need for expediting the implementation of Capoor Task Force Recommendations
Need for formulating Institutional Protection System for the Cooperative Banks
Need for a separate National Level Audit Federation for the Cooperatives
Need for clear demarcation of Roles of the Regulatory Authority
Stepping up General Line of Credit Support from RBI to NABARD as a part of the strategy to meet 25 per cent growth in lendings

Memorandum Submitted by Chairman NAFSCOB to Shri Anandrao V. Adsul, Hon’ble Minister of State for Finance on the following issues pertaining to Short Term Cooperative Credit Structure on November 25, 2002 at New Delhi.

Monetary and Credit Policy for 2002-2003 - Need for Review
Need for Exemption of Compulsory Audit by Chartered Accountants u/s 44 AB specified in Section 288(2) of Income Tax Act 1961 - In respect of PACS/LAMPS/Primary Societies carrying on Business.
Need for Exemption of Cooperative Banks from the Income Tax on Interest Earned on Investments in Government Securities for the purpose of Reserve Fund - Need to honour Supreme Court Judgement.
Need for serious examination of non-acceptance of Demand Drafts drawn on Cooperative Banks
Rationalisation of Current Account Facility with Reserve Bank of India
Need to issue revised guidelines on Remittance Facilities
Need to address the problem of heavy surplus cash in hand on day-to-day basis by State Cooperative Banks
Assistance to Cooperative Banks towards Insurance Premium for the farmers under Kisan Credit Cards
Need for expediting the implementation of Capoor Task Force Recommendations
Need for formulating Institutional Protection System for the Cooperative Banks
Need for a separate National Level Audit Federation for the Cooperatives
Need for clear demarcation of Roles of the Regulatory Authority
Stepping up General Line of Credit Support from RBI to NABARD as a part of the strategy to meet 25 per cent growth in lendings

Memorandum on "Urgent Measures for Strengthening Cooperative Credit and Banking Institutions" was submitted to Shri Atal Behari Vajpayee, Hon’ble Prime Minister of India, Shri Jaswant Singh, Hon’ble Union Finance Minister of India and Shri Anandrao V. Adsul, Hon’ble Minister of State for Finance, Government of India on the following three most important and crucial issues confronting the Cooperative Credit and Banking Institutions, for kind consideration on vide our letter No. D.O./NAFSCOB/I-93/2002-03/995 dated 01-01-2003:

Impact of Waiver of Interest on Kharif Loans on Cooperative Credit and Banking Institutions
Need for expediting the implementation of Capoor Task Force Recommendations to strengthen the Cooperative Credit and Banking Institutions
Need to retain Section 80P of Income Tax Act 1961

Memorandum was submitted to Shri Jaswant Singh, Hon’ble Union Finance Minister of India on the following Six most important issues with Suggetions/Views on the eve of Union Budget for the year 2003-04 vide our letter No. D.O./NAFSCOB/P-66(iii)/2002-03/ dated 11-01-2003:

Impact of Waiver of Interest on Kharif Loans on Cooperative Credit and Banking Institutions.
Need for expediting the implementation of Capoor Task Force recommendations to strengthen the Cooperative Credit and Banking Institutions
Need to retain Section 80p of Income Tax Act, 1961
Need for exemption of compulsory Audit by Chartered Accountants U/S 44 AB specified in Section 288(2) of Income Tax Act 1961 - in respect of PACS/LAMPs/Primary Societies Carrying on business.
Need for Exemption of Cooperative Banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund- need to honour Supreme Court Judgement.
Deduction of Tax At Source from interest on time deposits with Banks - Section 194A of the Income Tax Act, 1961

Memorandum was submitted to Shri Jaswant Singh, Hon’ble Union Finance Minister of India on the following Six most important issues with Suggetions/Views on the eve of Union Budget for the year 2003-04 vide our letter No. D.O./NAFSCOB/P-66(iii)/2002-03/ dated 11-01-2003

Impact of Waiver of Interest on Kharif Loans on Cooperative Credit and Banking Institutions
Need for expediting the implementation of Capoor Task Force recommendations to strengthen the Cooperative Credit and Banking Institutions
Need to retain Section 80p of Income Tax Act, 1961
Need for exemption of compulsory Audit by Chartered Accountants U/S 44 AB specified in Section 288(2) of Income Tax Act 1961 - in respect of PACS/LAMPs/Primary Societies Carrying on business
Need for Exemption of Cooperative Banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund- need to honour Supreme Court Judgement
Deduction of Tax At Source from interest on time deposits with Banks - Section 194A of the Income Tax Act, 1961

Appealed on April 5, 2003 and also on July 14, 2003 to Hon'ble Jaswant Singh for his intervention on the following.:

To implement proposals made in the Union Budget 2002-03 towards recapitalisation support to cooperative credit and Banking Institutions with enhanced commitment from Government of India
To expedite the reimbursement of assured financing support towards first years deferred liability of interest on kharif loans as a one time measure to farmers affected in the drought hit states.
To arrange for a National Consultation on "Credit Cooperatives" on most urgent basis to realise and appreciate the objectives and contributions of credit cooperatives for the economic development of the country with a view to relook into the Union Budget proposals.

A Memorandum was submitted to Parliamentary Standing Committee on Agriculture on measures for strengthening cooperative credit and Banking Institutions with the following major issues on May 24, 2003 during its meeting at Mumbai.

Impact of waiver of interest on Kharif Loans on Cooperative Credit and Banking Institutions.
Need for expediting the implementation of Capoor Task Force Recommendations to strengthen the Cooperative Credit and Banking Institutions.
Implications of Union Budget for the year 2003-04 on Credit Cooperatives.
Need for exemption of Compulsory Audit by Chartered Accountants U/S 44 AB specified in Section 288(2) of Income Tax Act 1961- in respect of PACS/LAMPS/Primary Societies carrying on business.
Need for exemption of Cooperative Banks from the Income Tax on interest earned on investments in Government Securities for the purpose of Reserve Fund -Need to honour Supreme Court Judgement.
Deduction of Tax at Source from interest on time deposits with Banks Section 194A of the Income Tax Act 1961. Need to reexamine.
Rationalisation of Current Account Facility with Reserve Bank of India
Stepping up General Line of Credit Support from REI to NABARD as a part of the Strategy to meet 25 per cent Growth in Lendings.
Scheduled Status to SCB and DCCBs

A Memorandum was submitted to Shri Rajnath Singh, Hon'ble Union Minister for. Agriculture on Measures for strengthening cooperative credit and Banking Institutions with the following four major issues on July 23, 2003 at New Delhi

Interest Rates on S. T. SAO refinance and Delayering.
Need for expediting the implementation of Capoor Task Force Recommendations to strengthen the Cooperative Credit and Banking Institutions.
Union Budget for the year 2003-04 on Credit Cooperatives.
Impact of waiver of interest on Kharif loans on Cooperative Credit and Banking Institutions.

A Memorandum was submitted to Shri Vepa Kamesam, Dy. Governor, RBI and coordinator NABARD in the form of a working paper on "Lending Agricultural Credit at Nine percent -A view point of Agricultural Cooperative Credit Institutions" on July 25, 2003 with a view to appreciate the need for ensuring the viability of short term cooperative credit institutions.

A delegation representing NAFSCOB met Shri Vepa Kamesam, Deputy Governor, Reserve Bank of India and submitted the memorandum on six issues related to short term cooperative credit institutions on September 18, 2003 at RBI, Mumbai.

Need for serious examination of Non-Acceptance Demand Drafts drawn on Cooperative Banks.
Rationalisation of Current Account Facility with Reserve Bank of India.
Scheduled Status to SCBs and DCCBs.
Need to Issue Revised Guidelines on Remittance Facilities
Need to address the problem of heavy surplus Cash in Hand on Day-to-day basis by State Cooperative Banks.
Stepping up General Line of Credit Support from RBI to NABARD as a part of the Strategy to meet 25 per cent Growth in Lendings.
Feasibility of lending Agricultural Credit at 9 percent.
Direct Refinancing by NABARD to DCCBs : Implications.
Implications of the proposal of Banking Regulation (Amendment) and Miscellaneous Provisions Bill, 2003.
Waiver of Interest on Kharif loans in drought affected states :Implications

A Memorandum was submitted to Parliamentary Standing Committee on finance on the Banking Regulation (Amendment) & Miscellaneol!'S Provisions Bill 2003 -Views and suggestions on October 3, 2003.

Joint Memorandum submitted to Shri N. Janardhan Reddy, Chairman, Parliamentary Committee on Finance Government of India by NCUI, NAFSCOB, NCARDB Federation, NAFUCB and COBI on the Banking Regulation (Amendment) & Miscellaneous Provisions gill 2003 on November 14, 2003.

Appealed to Shri Atal Bihari Vajpayee, Prime Minister of India, Shri Jaswant Singh, Honble Union Finance Minister and Shri Rajnath Singh, Hon'ble Union Minister for Agriculture on January 16, 2004 in connection with the recapitalisation support to cooperatives from out of Rs. 50,000 crore Fund proposed to be setup at the level of NABARD. Appealed to ensure that the above fund is utilised for the following proposals:

One time assistance to Cooperative Credit and Banking Institutions in the form of recapitalisation to help them to cleanse their balance sheets {Rs. 15,000 crore).
To work out strategies to ensure recomp1iance of Section 11(1) of B.R. Act 1949 by the SCBs / DCCBs.
Enhancement of concessional refinance for agricultural credit through cooperatives to the extent of 75 to 85 percent of their total requirement

A Memorandum was submitted to Hon'ble Finance Minister, Govt. of India on June 4, 2004 at New Delhi, during pre-budget consultation with Agricultural Experts and Agriculturists. In addition to making broad suggestions with regard to the credit support agriculture sector, it was impressed upon the urgent need for taking strong measures to allow Cooperative Credit and Banking Institutions to become self-reliant, efficiently managed and vibrant enterprises.

Appealed on June 29, 2004 to Dr. Manmohan Singh, Hon’ble Prime Minister of India, Shri P. Chidambaram, Hon’ble Union Finance Minister and Shri Sharad Pawar, Hon’ble Union Minister for Agriculture on the following issues:

Need for recapitalisation support.
Increased quantum of Refinance with lower rate of interest.
Need to enhance GLC support to Rs.35,000 crores at a lower rate of interest.
Banking Regulation (Amendment) & Miscellaneous provisions Bill 2003: Adverse Implications.

A Memorandum 'Issues for Discussion with Reserve Bank of India', containing important issues concerning the Short Term Cooperative Credit and Banking Sector was submitted by a delegation of Chairmen and Chief Executives of identified State Cooperative Banks to Mrs. Usha Thorat, Dy. Governor (RPCD), Reserve Bank of India at Mumbai on January 5, 2006. The delegation was headed by Shri K. R. Aravindakshan, Chairman, NAFSCOB.