Give 70% loan to agriculture: RBI committee to co-op banks
The central cooperative banks should strive to have at least 70 percent of their loan portfolio for agriculture, an RBI panel has said.
Mumbai: The central cooperative banks should strive to have at least 70 percent of their loan portfolio for agriculture, an RBI panel has said.
"The Committee...Recommends that CCB (central cooperative banks) should strive to provide at least 70 percent of their loan portfolio for agriculture.
...If a CCB or StCB (state cooperative bank) consistently under performs and provides less than 15 percent share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank," the Expert Committee on Streamlining Short Term Co-operative Credit Structure said.
The panel expressed concerns that primary agricultural credit cooperative societies (PACS) and CCBs were not performing their role and giving almost 40 percent of their loans for non-agricultural needs.
It also said that "September, 30 2013 be set as deadline for all StCBs and CCBs to be fully operational on CBS and providing RTGS, NEFT, ATM and POS device based services."
Moreover, it recommended March 31, 2013 as a deadline for CCBs and StCBs to mobilise funds internally or externally to achieve 4 percent Capital to Risk (Weighted) Assets Ratio (CRAR).
"...A large number of CCBs and some StCBs do not have adequate capital to meet even the relaxed licensing norm of 4 percent CRAR. The Committee recommends that March, 31 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4 percent CRAR," it said.
To mobilise funds it recommended that coopreative banks be allowed to issue fixed interest bearing deposits of 10 years or more with a lock-in period of five years and to treat such deposits as tier I capital