Punjab to merge 20 district coop banks

Punjab will be merging 20 District Central Cooperative Banks (DCCBs) with the Punjab State Cooperative Bank to enhance business. A decision in this regard was taken by state Cooperation Minister Sukhjinder Singh Randhawa at a high-powered meeting.

The move, that is to be ratified by the Cabinet, will help improve the banks’ capital to risk assets ratio (CRAR), as mandated by the Reserve Bank of India (at 9%), thus allowing them to advance loans. The banks had suffered huge losses during demonetisation and thereafter owing to tardy remonetisation.

Most farmers in Punjab are dependent on cooperative banks for loans, which could not be given because of the CRAR issue. The merger of the DCCBs will raise the CRAR to over 12 per cent, which in turn will help the merged bank to enhance business by Rs 8,000 crore. Politically, it will help the ruling Congress wrest control of cooperative banks from the SAD-BJP. Cooperation Minister Randhawa pointed out that Jharkhand had already merged its cooperative banks and Kerala was in the process of doing so.

Cooperative Banking
A Co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank.
Co-operative banks in India are registered under the States Cooperative Societies Act. The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the:- 
Banking Regulations Act 1949
Banking Laws (Co-operative Societies) Act, 1955.
Features of Cooperative Banks:
Customer Owned Entities: Co-operative bank members are both customer and owner of the bank.
Democratic Member Control:Co-operative banks are owned and controlled by the members, who democratically elect a board of directors. Members usually have equal voting rights, according to the cooperative principle of “one person, one vote”.
Profit Allocation: A significant part of the yearly profit, benefits or surplus is usually allocated to constitute reserves and a part of this profit can also be distributed to the co-operative members, with legal and statutory limitations.
Financial Inclusion: They have played a significant role in the financial inclusion of unbanked rural masses.