Odisha, along with other States, has opposed the move of the NABARD to take away the fiscal handling powers of the Primary Agricultural Cooperative Societies (PACs) and turn them as Business Correspondents of the Central Cooperative Banks (CCBs) and the State Cooperative Banks (SCBs).
Odisha’s Commissioner-cum-Secretary of the Department of Cooperation and chief of management of the Odisha State cooperative Bank (OSCB) Bishnupada Sethi presented a report at a workshop held on Friday in New Delhi favouring the PACs to continue their mandate to receive deposits from their members and make advances to them, who are poor and marginal farmers. Sethi said that as the PACs are member-driven institutions, it is not possible to transfer loans and deposits to the CCBs as per the NABARD guidelines. The PACs are having direct interface with farmers, and the CCBs are not having such attitude or aptitude to have direct interface with the farmers’ families.
A huge amount of imbalance is prevalent between the PACS and the CCBs/ SCBs. If the same stands transferred to the CCB/ SCB, it may not be possible to sustain the onslaught, he argued. And a large number of CCBs may not comply with the minimum requirement of CRAR (at present 7%). On a preliminary examination of the NABARD recommendations, in Odisha, at least two out of the 17 CCBs would fail to comply with Section 11 (1) of the BR Act concerning the minimum capital requirement; the CRAR of five CCBs would be below 4 per cent and of seven CCBs below 7 per cent, he pointed out.
However, Sethi suggested that the PACs become the Business Correspondents of the CCBs and SCBs for mobilisation of loan applications involving higher investment on behalf of the CCBs and SCBs and a cutoff limit be fixed for the purpose. And those institutions may be allowed for mobilisation of deposits from the general public and institutions on behalf of the CCBs and SCBs on commission basis. In order to protect the interest of the depositors of the PACS, a national-level insurance organisation may be set up as was envisaged earlier, advised Sethi.