Co-op banks go back to school with NAFSCOB

The National Federation of State Cooperative Banks Ltd (NAFSCOB)’s special drive exclusively for the state cooperative banks (SCBs) and...

The National Federation of State Cooperative Banks Ltd (NAFSCOB)’s special drive exclusively for the state cooperative banks (SCBs) and district central cooperative banks (DCCBs) has gained importance in view of the current developments in the cooperative banking sector.

“The current developments in the cooperative banking sector has made this drive that we had initiated sometime ago, even more important as this helps the us to address issues that these banks may raise in context of the including the ongoing government securities scam,” said NAFSCOB’s executive director, B. Subrahamanyam.

Somaiya for CBI enquiry
into G-Secs scam

MUMBAI: The money lost by co-operative banks in government securities (G-Secs) while dealing with high profile brokerage firm Home Trade Ltd is expected to touch Rs 1,000 crore and as there are 14 different departments, ministries and institutions are investigating the scam, there is a need for transfering this case to Central Bureau of Investigation (CBI) for thorough probe, said Kirit Somaiya, BJP MP and president of the Investors’ Grievances Forum (IGF).

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He also demanded stern action against all the accussed involved in the scam. Somaiya held a meeting in this regard with the chief secretary of Maharashatra V. Ranganathan and discussed the fall out of the scam and also demanded that state chief secretary should hold a joint meeting of the officials of Reserve Bank of India (RBI), National Agriculture Bank for Rural Development (Nabard) and the Securities and Exchange Board of India (Sebi). (ENS)

NAFSCOB had initiated this drive for SCBs and DCCBs to clearly understand the important provisions of the Banking Regulation (BR) Act (1949), the steps taken by these banks towards strict adherence of the provisions of the BR Act. “The Reserve Bank of India (RBI), National Bank for Agriculture and Rural Development (Nabard) and state governments continue to control these banks and interfere in their day-to-day administration. Due to this duality of control, these banks have developed certain weaknesses mostly due to external forces. Our drive is to help these banks overcome these weaknesses. It should however be remembered at this stage that these institutions—that is, SCBs, DCCBs, and primary agricultural credit societies—are entirely different than cooperatives in the long-term credit structure and urban banking sector,” Subrahamanyam said.

NAFSCOB’s training programme also guides SCBs and DCCBs to formulate a specific action plan to comply with the provisions and to identify the stratergies to implement such action plan. NAFSCOB will also educate these banks to help understand the method of calculating erosion of deposits and funds. Keeping in mind the ongoing fiasco NAFSCOB is helping banks to learn from bad experiences of banks who are facing problems and also learn from banks who are successfully adhering to the provisions of the BR Act.

“Representatives of RBI, Nabard, state governments, national level organisations, training institutions are actively associated with this special drive by us,” said Subrahamanyam. “The main underlying reason for the current G-Secs fiasco is the lack of knowledge on the part of cooperative bank for G-Secs trading. G-Secs trading involve many technicalities. Many banks at the district level have recieved not receiced any formal training for G-Secs trading and can easily fall prey to such scams,” he said. NAFSCOB with support from RBI and Nabard will also be issuing guidelines in its workshops on appropriate management of funds by SCBs and DCCBs.