United Colours of Benetton video ad features leaders saying things like 'I will build a masjid' and 'I will build a temple', with the camera focused on their mouths.
From Munir’s point of view, a few bumps here and there is par for the course. He isn’t going to drive his dumper truck to its doom. He wants to use it as a weapon.
1. There is a lot of difference between principles and practice and this difference is underscored in case of all cooperative institutions in our country. Basic purpose of promoting cooperatives in banking and other fields is perfectly okay but in actual practice, politicians, ably supported by bureaucrats, seize control of most of the cooperative banks and other cooperative enterprises like Sugar and Milk cooperatives. This is the truth. 2. We are aware of fact that there were liquidity problems and governance issues in case of Punjab & Maharashtra Cooperative (PMC) Bank. These issues have led to restrictions placed by Reserve Bank of India (RBI) as also action by the Maharashtra Police too, which has to arrests of some Board members of PMC Bank. 3. I believe that as regards supervision of cooperative banks, it is unfair to place entire burden on RBI. 4. RBI cannot do much to reduce scope for frauds in cooperative banks as such frauds are a result of ineffective audit and poor supervision done by The Registrar of Cooperative Societies, which is the appropriate authority entrusted with job of supervision of all cooperatives. 5. Further, let us acknowledge that problems faced by customers of PMC Bank are neither new nor could they have been overlooked. In fact, PMC Bank’s problems are similar to those faced by many other cooperative banks in Maharashtra and elsewhere. 6. Is it not true that management control of many cooperative banks is in hands of influential politicians and the subservient bureaucracy? This has been happening for years and it appears that Reserve Bank of India too is helpless. 7. I have made a mention of ineffective annual audit of accounts of most of the cooperative institutions earlier. This deficiency is further aggravated and underscored in case of so-called Multi State Cooperative Banks and Credit Societies whose audits are supervised by the Central Registrar of Cooperative Societies with its headquarters in New Delhi. 8. The mess in PMC Bank is just one example of cooperatives’ mismanagement. It is hoped that it will be the last.
Whether cooperative banking should be retained and if yes, with what modification, is for the government to decide. The depositors who put in good faith and trust their hard earned money in the banking system should not bother themselves with this predicament. It is NOT, I repeat NOT their moral responsibility to keep the cooperative banking structure afloat. Agreed that branches of these banks could be in the vicinity to your residences, they would offer better humanised customer service and rate of interest would higher than what is offered by commercial banks. Yet, the risk is too high. At the most, floating funds equivalent to meet three months’s expenses can be kept with them in savings bank accounts. However, there is no rationale to invest in FDs of these banks. If you do, it would be at your own risk and responsibility. If some accident similar to to what happened in PMC Bank happens, don’t blame anyone else except yourself. This is the moral of the story.
Urban cooperative banks should be allowed to fade away. We simply cannot afford a situation like PMC Bank, which became an extension counter for the Wadhawan family and its assorted businesses, folding up and five or ten thousand crores of middle class depositors’ money going up in smoke. Brings a bad name to the government, possibly for no fault of its. The conventional banking system should be able to meet the needs of citizens.
1. There is a lot of difference between principles and practice and this difference is underscored in case of all cooperative institutions in our country. Basic purpose of promoting cooperatives in banking and other fields is perfectly okay but in actual practice, politicians, ably supported by bureaucrats, seize control of most of the cooperative banks and other cooperative enterprises like Sugar and Milk cooperatives. This is the truth. 2. We are aware of fact that there were liquidity problems and governance issues in case of Punjab & Maharashtra Cooperative (PMC) Bank. These issues have led to restrictions placed by Reserve Bank of India (RBI) as also action by the Maharashtra Police too, which has to arrests of some Board members of PMC Bank. 3. I believe that as regards supervision of cooperative banks, it is unfair to place entire burden on RBI. 4. RBI cannot do much to reduce scope for frauds in cooperative banks as such frauds are a result of ineffective audit and poor supervision done by The Registrar of Cooperative Societies, which is the appropriate authority entrusted with job of supervision of all cooperatives. 5. Further, let us acknowledge that problems faced by customers of PMC Bank are neither new nor could they have been overlooked. In fact, PMC Bank’s problems are similar to those faced by many other cooperative banks in Maharashtra and elsewhere. 6. Is it not true that management control of many cooperative banks is in hands of influential politicians and the subservient bureaucracy? This has been happening for years and it appears that Reserve Bank of India too is helpless. 7. I have made a mention of ineffective annual audit of accounts of most of the cooperative institutions earlier. This deficiency is further aggravated and underscored in case of so-called Multi State Cooperative Banks and Credit Societies whose audits are supervised by the Central Registrar of Cooperative Societies with its headquarters in New Delhi. 8. The mess in PMC Bank is just one example of cooperatives’ mismanagement. It is hoped that it will be the last.
Whether cooperative banking should be retained and if yes, with what modification, is for the government to decide. The depositors who put in good faith and trust their hard earned money in the banking system should not bother themselves with this predicament. It is NOT, I repeat NOT their moral responsibility to keep the cooperative banking structure afloat. Agreed that branches of these banks could be in the vicinity to your residences, they would offer better humanised customer service and rate of interest would higher than what is offered by commercial banks. Yet, the risk is too high. At the most, floating funds equivalent to meet three months’s expenses can be kept with them in savings bank accounts. However, there is no rationale to invest in FDs of these banks. If you do, it would be at your own risk and responsibility. If some accident similar to to what happened in PMC Bank happens, don’t blame anyone else except yourself. This is the moral of the story.
Urban cooperative banks should be allowed to fade away. We simply cannot afford a situation like PMC Bank, which became an extension counter for the Wadhawan family and its assorted businesses, folding up and five or ten thousand crores of middle class depositors’ money going up in smoke. Brings a bad name to the government, possibly for no fault of its. The conventional banking system should be able to meet the needs of citizens.