Urban co-op banks flex muscle, want sops from politicians, RBI
Urban cooperative banks in the state are banding together to form a strong lobby and use their clout to get sops from the Centre and state.mumbai Updated: Oct 15, 2010 02:47 IST
Urban cooperative banks in the state are banding together to form a strong lobby and use their clout to get sops from the Centre and state.
In this, they are getting political support from the Nationalist Congress Party (NCP) that is hoping to consolidate its rural power base by building inroads in towns and large urban areas.
At a two-day state-level conference of 551 banks organised at Nashik in November — to be attended by political bigwigs such as Union Finance Minister Pranab Mukherjee, Union Agriculture Minister and NCP chief Sharad Pawar and Chief Minister Ashok Chavan — the banks are expected to press for several concessions from the Reserve Bank of India (RBI), state government and the Centre.
“We want relaxation of out-of-date regulatory mechanisms and income-tax exemption on our profits,” said Vishwas Thakur, the conference’s convenor and president of Nashik Urban Cooperative Bank.
The banks also want sanction for loans to directors and their relatives, sharing of profits with their boards of directors, an increase in the insurance cover offered by the the RBI on bank deposits and raising of the slab of tax deduction on interest from Rs 10,000 to Rs 25,000.
Though many of these banks have been mismanaged, there was substantial growth in their deposits even during the global slowdown. With rapid urbanisation in the state, the banks’ clout has only increased.
This is an opportunity for the NCP, which has been forced by rapid urbanisation to look beyond the rural areas.
NCP MP Supriya Sule, Pawar’s daughter, backed the conference in an attempt to get a foothold in the cooperative sector.
“The conference is an opportunity to discuss banks’ problems with policy makers. The idea is not to protect poorly managed banks, but to encourage those that are doing well,” said Sule.