Loans disbursed by Indore district’s leading urban cooperative banks and credit societies are not more than 50% of their total deposits or assets. They invest more in other financial institutions, data accessed by Hindustan Times show.
No in-depth study is available on how much money is blocked as deposits in the credit cooperative sector or how the money generated in this business contributes to local economy. But experts say the money needs to circulate for local economies to thrive.
“Money has to be put to work by giving loans and earning interest on them. This is how business runs. About 70% of deposits accepted from members should be lent as loan and 30% should be invested,” Indore Paraspar Sahkari Bank Ltd director Shashikant S Gadkari said. But this doesn’t seem to be happening.
Established in 1974, Indore Cloth Market Cooperative Bank has 14,862 members of whom 1,800 have taken loans. Loans advanced to members constitute 39.93% of its total assets that stand at Rs 13711.54 lakh. About 1,200 members do regular transaction with the bank.
Founded in 1909, Indore Paraspar Sahkari Bank Ltd has 15,000 members of whom 4,500 have take loans. Of Rs 171 crore projected as deposits, it has disbursed loan of Rs 79.85 crore. Its investment as on May 16, 2016, was Rs 106 crore.
“But this is not the case with our bank alone, this is happening across the banking spectrum,” bank CEO Satyendra Natu said.
Set up in 1959, Dak Taar Karmchari cooperative credit society has 9,664 members who are either postal or BSNL employees. Of them, 4,200 members took loans worth `45 crore in the past four years. The society’s turnover is Rs 184 crore.
Nanda Nagar Sakh Sahkari Maryadit, one of the state’s largest cooperative credit society with 25,507 members, had 6,378 borrowers till the previous fiscal. It has assets worth Rs 51.56 crore.
A senior state co-operatives department official said co-operative credit bodies avoid giving loans for fear of defaults.
“Their management wants to play safe and avoid reaching out to the masses to know their financial needs. Commercial banks, non-banking finance companies, self-help groups are also giving loans in the same area where co-operatives operate. This means there is ample scope to give loans to the needy,” he said.
Cooperatives are not meant for business, profit: Expert
Dr Ganesh Kawadia, Head of Indore School of Economics, said in a market-driven economy, government creates means to fulfill its responsibilities towards deprived sections. Cooperative sector is one of the means. He said cooperatives are not meant for doing business or earning profit as government should compensate for losses. This sector’s performance should be assessed on the basis of how much it helps deprived sections towards their economic betterment, Dr Kawadia added.
Cooperatives need branding: Minister
MP cooperatives minister Gopal Bhargav said multi state urban cooperative banks do banking under the banking regulation act, which is a central legislation. State government is not a partner in them. Therefore, it is not possible to impose any conditions on them.
He said the sector needs branding. We have a tie-up with MP State Co-operatives Bank for an image makeover of the cooperative credit sector in the state. We’ve created an e-portal on which all relevant information related to the cooperative department and cooperative societies is available, he added.