Bring in two-tier cooperative sector

Telangana is a trendsetting State proved its maturity in thinking, policy, performance and reforms. It’s unparalleled digital journey led to TSiPASS, T-Hubs, TIHCL, T-Valet, Ma Bhoomi and many a start up securing first rank in EODB. Its growth rates in agriculture and services thus far have put the state on top in the country.

It has set a new trend in governance getting closer to people with decentralising administration through the 31 districts carved out of 10 at the time of formation of the state. It has become a favoured state for investments. The State is firmly put on global radar with the Global Enterprise Summit and World Telugu Conference.  It is aware that the journey is unfinished and many miles to go. The visionary leadership of the Chief Minister saw a potential in cooperative sector if reformed through appropriate legislative interventions.  Here are a few thoughts for his consideration.

Can Cooperative banks be better alternatives?

Cooperative Banking – Hopes on the rise

Banking environment in India structurally has become more dispersed than before with the Small Finance Banks, Payment Banks, Postal Bank emerging on the scene. Mergers and amalgamations in the private and public sector banks and ever increasing NPAs in the commercial banks are threatening the stability of the system. Seemingly strong macro-economic fundamentals notwithstanding, disruptive technologies are also adding fuel to fire. FRDI Bill poses a threat to the security of depositors and leaders’ promises cannot be insurance to what the bill itself holds for the banking clientele. Senior citizens, differently abled citizens, women and several customers of small means feel distanced from the services they were expecting at the hands of the banks.

Basel Committee Core Principles for Effective Financial Inclusion

http://feedproxy.google.com/~r/indiamicrofinance/~3/14sC1YJOl0o/bis-core-principles-supervision-effective-financial-inclusion.html?utm_source=feedburner&utm_medium=email

Bank for International Settlements released a consultative document in December 2015, entitled: “Guidance on the application of the Core principles for effective banking supervision to the regulation and supervision of institutions relevant to financial inclusion” inviting comments before 31^st March 3016. This document meant for effective supervision of the non-banking financial intermediaries is the outcome of a survey Basel Committee on Banking Supervision (BCBS) conducted a range of practice survey in 2013 (ROP) on the regulation and supervision of institutions of relevance to financial inclusion and on financial consumer protection across 59 jurisdictions with 52 respondents.

I have kept the following ground rules in view while reviewing the Draft Document:

Ø  Cost of compliance must be less than the cost of avoidance.

Ø  Regulations and rules must be simple and straight forward inviting easy compliance.

Ø  Multiple regulators impacting on financial inclusion agenda should be able to strengthen and accelerate the implementation.

Ø  Financial Institutions engaged in financial inclusion should be able to deal with it as a portfolio for generating data and information required for proper regulation.

Ø  Instruments, tools and techniques of supervision should be uniform across the nations.

Ø  Financial Inclusion achievements should be subject to social audit as well.