Poor performance of co-op banks worries Modi

PATNA: The Reserve Bank of India (RBI) has given license to conduct banking activities to just two of the 22 cooperative banks operating in the state and, therefore, the banking activities of the remaining 20 cooperative banks, if they have engaged themselves in such activities, would be in contravention of the RBI rules and banking norms.  This transpired at the recent review of the activities of the 22 cooperative banks operating in Bihar conducted by deputy CM Sushil Kumar Modi. The RBI representative present at the meeting informed Modi that only two cooperative banks had been issued license to conduct banking operations in the state.  The RBI representative also said applications of 12 other cooperative banks seeking to do banking activities were under review at the level of the country's central bank. If the 12 cooperative banks fulfilled the criteria required, then they would be issued license, the RBI representative said at the meeting. He added that the performance of seven of the 20 remaining cooperative banks was unsatisfactory and, therefore, they may not be issued license to conduct banking activities in the state. According to the RBI representative, the demand for license by the cooperative bank operating at Siwan was under process.  On the other hand, Modi also expressed unhappiness over the failure of the cooperative banks to provide enough number of Kisan Credit Cards (KCCs) to farmers. He said these banks have provided KCCs to only 42,571 farmers during the 2010-11 financial year against a revised target of 1.60 lakh.  Moreover, the agriculture loan given to farmers holding the KCCs was only Rs 85.95 crore. Modi, in the situation, told the chairmen of the 22 cooperative banks present at the review meeting to activate their respective cooperative banks to extend agriculture loan to farmers. He also told them to meet the target fixed regarding the issuance of KCCs to them in the current financial year for the benefit of farmers.  To streamline the activities of the cooperative banks in tune with the recommendations of the Baidyanathan Commission, Modi told them to appoint chief executive officers of their respective banks fulfilling the already defined criteria and selection process. The CEOs selected should have at least eight year service in banking services besides they must be below 55 years, Modi added.

TOI