Press Information Bureau

Government of India

Ministry of Finance

04-May-2012 16:57 IST

Functioning of Cooperative Banks

The Government of India had set a special Task Force in August 2004 under the Chairmanship of Prof. A. Vaidyanathan, to suggest an implementable action plan for reviving the Short Term Cooperative Credit Structure (STCCS). The main recommendations made by the Task Force inter-alia include:

1. Financial package for STCCS covering accumulated losses and assistance to bring all cooperatives, including PACS to minimum CRAR of 7%.

2. Technical assistance to cover the cost of training and capacity building to improve the financial, management skills and computerization.

3. Legal and Institutional Reforms in the State Cooperative Societies Act.

As a part of the approved package based on the above recommendations, 25 states have signed the Memorandum of Understanding (MoU), which are covered under the Revival Package (RP).

As per the Annual Policy Monetary Statement of RBI 2012-13 released on 17th April 2012, RBI has announced constituting a Working Group to review the functioning of the STCCS, which will undertake an in-depth analysis of the STCCS and examine various alternative with a view to reducing the cost of credit, including feasibility of setting up of a two-tier STCCS as against the existing three-tier structure.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

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SS/GN

Revival of Short Term Cooperative Credit Structure: Working Group to review STCCS functioning and alternatives to reduce cost of credit. The document describes a revival package for the Short Term Cooperative Credit Structure combining financial assistance to remedy accumulated losses and secure a minimum capital adequacy, technical assistance for training and computerisation, and legal and institutional reforms; 25 States have signed MoUs under the package and an RBI Working Group will review STCCS structure and options to reduce the cost of credit.