Revive cooperative movement

At the moment, the sector is systematically mismanaged

Sajad Bazaz
Srinagar, Publish Date: Jan 23 2018 11:40PM | Updated Date: Jan 23 2018 11:40PM
Revive cooperative movement

In the State budget 2018, Dr. Haseeb Drabu, Finance Minister, has proposed a capital infusion of Rs. 255 crore in Anantnag Central Cooperative Bank, Baramulla Central Cooperative Bank, and Jammu Central Cooperative Bank. He has amply made it clear that the government is committed to recapitalize the Cooperative Banks subject to the submission of a comprehensive revival plan by the Department of Cooperatives. The revival plan, according to the finance minister, should include the business plan, the human resource and modernization plans for the cooperative banks.

The revival plan of these cooperative banks is a welcome step, but it would have been a shot in the arm to have a look at the functioning of the cooperative movement in the state and come out with measures to streamline it. If we look at the cooperative sector (including banks operating under this sector) in J&K state, we would find it as one of the worst-managed sectors. It has been systematically mismanaged over a period of several decades. Mostly, it has been the political interference which has marred cooperative institutions and banks in the state. Most of the times, the dual regulatory control of the Reserve Bank of India (RBI) and the Registrar of Cooperatives (RoC) has been exploited as a loophole to play with the health of these institutions.

As we understand, cooperatives are fully voluntary organizations where people assemble in groups for mutual cooperation and self help to derive economic benefits for themselves through common enterprise. It’s platform where individuals as members of a group can improve their living standard and generate economic fortunes. However, it’s paternalism and external assistance through leadership, management and finances which is considered as a step towards more voluntary vibrant and self-reliant cooperatives. These also serve as an effective vehicle for delivery of agriculture inputs and credit to the agriculturists, marketing of their surplus produce, making available consumer goods for maintaining price-line in the far flung areas. Precisely, the main principle of this voluntary movement revolves around economic activities of diverse nature which gainfully generate income for all members of the self help group and at the same time all show concern for their community.

But, when we assess the activities of the cooperative sector in the State, the sector seems far from democratic character. Once upon a time, the cooperative movement was pious in the State. There have been even instances in the past that whenever there was any death in a village, cooperative used to take care of the rituals. Today no one comes forward to join cooperative, as they visualize their bleak future as far as their economic prosperity is concerned.

The story of cooperative banks is pathetic. These banks have diverted from their given role. Miserable recovery mechanism, swelling non performing assets, high cost of management, reckless and faulty loaning have incapacitated these banks.

At the moment, the whole banking sector is in turmoil. Even as it’s landscape stands more diversified with the small finance banks, payment banks and postal bank emerging on the scene, the basic pillars of the industry in terms of giant private and public sector banks are shaking like a jelly threatening the stability of the system owing to alarming increase in non performing assets (NPAs). Besides, the Financial Resolution and Deposit Insurance (FRDI) Bill too is posing a threat to the security of depositors. It’s here cooperative banks – both rural and urban – can provide a safe environment to the customers who are now wary on banking upon the commercial banking system. Notably, the Report of Trends and Progress of Banking in India, released by the Reserve Bank of India (RBI) has recently pointed out a void between the promise and the performance of the rest of the banking players annoying the customers. 

Now, the Finance Minister proposing to recapitalize the cooperative banks in the state indicates shades of a political will to restructure the cooperative sector. A serious thought is needed to ensure revival of cooperative movement as autonomous, self reliant and democratic movement of the people free from vested interests in the State. Emphasis should be on diversification of their business activities as it will help them to come out of crisis and become economically viable. Precisely, the times are changing fast and the Movement will have to build innate strengths and resilience. A strategy needs to be evolved not only to restore the past glory of cooperative movement in Jammu and Kashmir but make it compatible to the movement flourishing in other states like Maharashtra and Gujarat, where cooperative movement has changed the fortunes of the people.

 

(The views are of the author and not that of the institution he works for)

 

 

 

 

 

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