Coop banks seek better interest rate regime, regulatory enviorn

Umbrella bodies of cooperative banks today met with the Reserve Bank and demanded deregulation of interest rate regime, besides better regulatory environment to work more effectively. The federations that met central bank Deputy Governor Subir Gokarn at the customary pre-policy meeting included the National Federation of Urban Cooperative Banks and Credit Societies, National Federation of State Cooperative Banks, Maharashtra Urban Cooperative Banks Federation, NBFC body Finance Industry Development Council, and Microfinance Institutions Network. The Governor Duvvuri Subbarao could not attend the meeting as he was indisposed. "We have demanded deregulation of the interest regime in the forthcoming annual monetary policy as in the current interest rate scenario we will continue to bleed. Today we are forced to lend at 7 per cent to the farm sector, while we are paying at least 9 per cent to our depositors. This situation just cannot continue," National Federation of State Cooperative Banks managing director B Subramanyam told PTI after the meeting. He further said the federation has demanded a higher interest subvention at around 4.5 per cent from the current 1.5 per cent. Earlier state cooperatives were getting 2 per cent interest subvention to tide over the borrowing-lending rate mismatch. But last year, RBI had brought it down to 1.5 per cent, he explained. The National Federation of Urban Cooperative Banks and Credit Societies president H K Patil said they have requested the apex bank to facilitate setting up of an umbrella body for them for coordination and growth. "Though the VS Das committee has clearly called for this nearly two years ago, the RBI is yet to come back to us with its views on the report," Patil said. The RBI has, however, agreed to expedite its reply, he added.