Notwithstanding the
Constitutional impropriety in the wake of the 97th Constitutional
Amendment Act 2012 that should take effect from February 14 2013 in the States,
Andhra Pradesh in the name of democracy, forgotten for two and half years,
conducted the Elections to the Cooperative Societies in the State.
All the
newly enrolled members were voters to the extent of 100 percent while the
active members, that is, those who availed services from the cooperative
societies for which they were members, who constituted around 40% muted the
queue at the election booths. The candidates report having spent lakhs of
rupees to win the election and are eager to run up to the Chairman and Board
positions to recover their expenses.
A day after the
elections one District Collector, a functional Registrar of Cooperative
Societies, made an anguished public announcement that the applications for gas
and public distribution would not be accepted if they bear the account numbers
of the cooperative banks! The Government any way does not allow deposits of
public institutions to be kept with the Cooperative Banks – urban or rural!
This is the trust that the Government has in the system to which it
enthusiastically conducted the Elections. The Government feels that these
institutions are fragile and have weak governance. Democracy makes it weak in
governance?
Public memory lives
short – the debacle of Charminar Cooperative Bank, Prudential Cooperative Bank,
and a few more in the State and elsewhere alerted the financial regulator to
put in a strong coordinated mechanism to revive the Urban Cooperative Banks
through the Task Force on Cooperative Urban Banks. While there is no such
mechanism for the District Central Cooperative Banks, with lackadaisical
implementation of Vaidyanathan Committee recommendations that called for
professionalization in all the States, the non-professional Chairpersons now
elected would like to make a fast buck in credit sanctions and releases for the
large number of vulnerable farmers, small business owners, weavers, and
artisans apart from the greedy real estate builders. Most of those elected keep
their own deposits with the commercial banks, both of their own and of their
families!! These trusted ‘public servants’ have to revive the trust in the
cooperative banking.
Over and above this,
the DCCBs are today licensed by the RBI unlike in the past and this would
require strict conformance to statutory ratios, liquidity norms, a strong
relationship with the Apex Bank and credit and financial discipline. They can
no longer indulge in the luxury of postponing their annual closing in their
books to window dress their recoveries. The RBI after a few warnings and
punishments to the errand would not hesitate closing down such banks. Even the
Maharashtra State Cooperative Bank today is in trouble for getting its license.
Government does not trust cooperatives but conducts elections for political mileage:
The Chairpersons of the
Commercial Banks, with private and local area banks being no exception, are
selected following certain due diligence and fit and proper criteria to hold
such positions. In the case of DCCBs, now licensed, the Chairpersons are
elected through the ballot.
If the Chairpersons of these cooperative banks were
to be transparent and knowledgeable, they should be on the roll-call of the
Bank. It is desirable to put them on monthly salary and defined perks with
certain boundaries of personal expenses. This would make them accountable to
the institution. None of them shall have any personal security guards at the
expense of the Bank. They should be trained to read the Bank’s Books of
accounts and balance sheets. They should submit their statement of election expenses;
should declare their personal and family assets and liabilities in a sealed
cover to the CEO of the Bank. . They should take oath before assuming their
position as Chairman regarding a well defined code of conduct to be prescribed
by the RBI.
Public money has proved
a bane at the hands of a political executive, in most cooperative institutions
and institutional mechanisms should be put in place to prevent abuse of power
and resources.
(The Author is also Member, RBI Expert Committee on Short Term Cooperative Credit
Restructuring; can be reached at yerramr@gmail.com)
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