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Apex co-operative bank plan may be activated

K Ram Kumar

The finance ministry is planning to activate the National Co-operative Bank of India against the backdrop of the crisis in the co-operative banking sector.

This bank is being projected by the National Federation of Urban Co-operative Banks and Credit Societies Ltd as a hub for managing the surplus/deficit finances in the co-operative banking sector in the country.

For operationalising CoBI, which was registered in 1993 under the Multi-State Co-operative Societies Act, an amendment is required to the Banking Regulation Act as it does not define a multi-state co-operative society.

CoBI was set up in the backdrop of the Khusro Committee recommendations which had pointed out there was a systemic gap in the co-operative banking structure, which ends with the state level apex co-operative banks, and the committee felt a need to have an apex level body in this regard.

Funds transfer, drawing arrangements and helping out co-operative banks in distress are the other functions envisaged for CoBI.

"The ministry has asked us to make a presentation on this issue. It has sought to know whether the cost of credit to the lowest tier will go up due to the setting up of one more institutional structure such as CoBI," D Krishna, chief executive, NAFCUB, said.

The ministry also wants to know the role of CoBI in the context of the regulatory/ supervisory/ administrative jurisdictions of the Reserve Bank of India, the National Bank for Agriculture and Rural Development (Nabard), the registrar of state/ central co-operatives, he added.

CoBI has a corpus of Rs 20 million and has Iffco, Kribhco, Nafed, National Co-operative Union of India, various state apex co-operative banks and multi-state co-operative banks as members.

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