The 1,603 primary cooperative banks (PCBs) that at present function as the fulcrum of the cooperative movement in the State with a deposit base of around Rs.60,000 crore will soon be stripped of the authority to conduct banking operations.
National Bank for Agriculture and Rural Development (NABARD) executive director V. Ramakrishna Rao issued a circular to the presidents and managing directors of all State cooperative banks, including the Kerala State Cooperative Bank (KSCB), on July 22 directing them to transfer the deposits mobilised by the PCBs to the District Cooperative Banks or the KSCB itself, thus taking away their authority for agriculture lending and accepting deposits. The assets of the PCBs arisen out of lending operations as well as the related liabilities will be transferred to the district banks.
The PCBs will have to do other agriculture-related services such as marketing of agriculture inputs, hiring, and maintenance of agricultural tools and equipment, agri-clinics, procurement of farmers’ produce, and other non-financial services. They will become facilitation centres for issuing Kisan Credit Cards to the farmers for securing loans.
The circular has been issued on the basis of the recommendations of the Prakash Bakshi committee constituted by the Reserve Bank of India (RBI) to streamline the functioning of credit cooperatives.
The circular says the PCBs will function as business correspondents of the district and State cooperative banks.
The share capital mobilised by them by way of share-linked capital of the loans will get transferred to the books of the district and State Cooperative banks. They will function as independent entities out of their own fund and earn income or service charges for rendering the services listed out by NABARD. In essence, the PCBs will continue as an organisation set up the under the State Cooperative Societies Act.
There will be a thorough change in their business orientation and sharing of responsibilities between the district and State cooperative banks.