Tuesday, March 30, 2010

Bonus for cooperative societies’ employees

Bonus for cooperative societies’ employees

Special Correspondent

CHENNAI: Employees of the Tamilnadu Co-operative Milk Producers’ Federation (Aavin), Arasu Rubber Corporation (ARC) and Tamil Nadu Tea Plantation Corporation (TANTEA) will receive a bonus of 8.33 per cent and ex gratia of 11.67 per cent for 2008-2009.

The government order, issued on Friday, will benefit 6,757 Aavin, 1,806 ARC and 9036 TANTEA employees.

Besides, 160 ARC employees, 358 TANTEA employees and Tamil Nadu Forest Plantation Corporation receive a bonus of 8.33 per cent and ex-gratia of 1.67 per cent for the year 2008-2009. This order will benefit 11,815 employees working in the above said corporations to the extent of Rs.8.25 crore.

The employees of co-operative societies will receive a bonus of 8.33 per cent and ex-gratia of 1.67 per cent. However, employees of profit making co-operative societies will receive a bonus of 8.33 per cent and ex-gratia of 11.67 per cent, subject to a ceiling of Rs.8,400.

The order will benefit about 67,000 employees, according to a press release.

Chewang Norphel
Chewang Norphel, 62, of Leh, Ladakh, makes zings and artificial glaciers.

Norphel says, "I realised that all the problems in the region were related to water. In most areas. It was scarce. In others it was being wasted."

In Ladakh, the annual average rainfall is 50 mm. The only source of water are glaciers, which melt in summer. This water reaches the villages late in the season. The locals manage this water carefully and store it for the year.
Norphel proposes that artificial glaciers be built as a substitute for dams. He believes that dams are an enormous financial burden and they bring about environmental and social hazards. Artificial glaciers are easy to build. First, Norphel channelises glacier water into a depression lying in the shadow area of a mountain, hidden from sunlight. He places half-inch-wide iron pipes at the edge of the depression. As the water keeps collecting in the pipes, it freezes. As more water seeps in, it pushes out the frozen blocks, and in turn, itself gets frozen. This keeps happening in a continuos cycle, and these frozen blocks create a clean, artificial glacier. Norphel has made four such glaciers.

In 1996, a year after retirement, Norphel joined the Leh Nutrition Project, a non-governmental organisation, as project manager for watershed development.

Devendra
Devendra, who is in his 60s, is the president of the Kedar Village Tank Farmers Society in Tamil Nadu. The society was formed in 1989 and there are around 217 members working with it from 13 different communities. The society operates and irrigates an area of approximately 119 hectares. The Centre for Water Resources, Anna University, gave the society Rs 27.6 lakh for research in 1990. After forming the society, they collected Rs 40,000 as seed money and the government also pitched in with a grant of Rs 50,000 for the work. The society designed the structures themselves and constructed a 1.5 km long road all along the canal to maintain it and also to mobilise their vehicles and machines for their fields. This reduced the cost of transportation and the villagers could save 50 per cent of the cost of harvesting. Initially, the society collected money from the villagers. Then the Irrigation Management Training Institute, Trichi, gave them a generous grant, which the society has kept in a fixed deposit and the interest on it is used for maintenance purposes, which comes to about Rs 30,000 a year.

Devendra says, "Before the intervention of the society, small farmers did not get water because big land owners took a long time to irrigate their land. The society intervened and constructed an earthen sub-channel so that the water reaches both the small and big landowners."

Initially, the society did face difficulties. Water channels were being damaged. This was checked by the active cooperation of local people who fixed a fine of Rs 100 for such irresponsible acts.

People reported an increase in the productivity of their lands due to the availability of water even during the drought period. This has drastically changed their economic status.

Hardevsingh B Jadeja

Jadeja, the former head (sarpanch) of the village council of Raj-Samadhiyala village in Rajkot, transformed the socio-economic status of his village by implementing water harvesting projects. He is now the taluka pradhan, looking after 93 villages. A post-graduate in English Literature, he had organised the people in his village to take up 12 watershed management projects. He also initiated the drive to plant trees. Today the village is one of the most prosperous in the area boasting over 3 crores in earnings and cultivating two crops despite the drought situation. The once-water starved village no longer faces drinking water scarcity thanks to his efforts.

For details:
Harshdevsingh B Jadeja
Vill. Raj-Samadhiyala
Dist Rajkot
Ph: 9825075246, 0281-285246

Mansukh Bhai Suvagia, Saurashtra, Gujarat

Concerned over the water level in the region of Saurashtra, which had receeded from 15 m in 1990 to 120-210 metres in 1998, Mansukh Bhai Suvagia, a 37-year-old government servant decided to initiate steps to tackle the problem. With the help of villagers, he launched a Lok Fund scheme and collected more than Rs 1 lakh to build 17 check dams in the area. "These are the cheapest check dams in the whole country," says Suvagia.

Well-planned locations and building according to the requirements were the two main reasons for the low cost of construction. Cost was further reduced as the villagers built the dams themselves.

Suvagia's wife Rasila helped him out in his work by mobilising the village women to get involved in the building of the dams. Four dams have been built in the area with the help of local women.

At present, in over 100 villages of the Saurashtra region, money is being raised to build dams. The amount of money collected ranges from Rs 1-5 lakh. Jamka village in Junagadh district is successfully carrying out the work of building check dams. The village is 1,011.7 hectares in area with a population of 3,000 and the area under cultivation is 809.4 hectares. Even though the area has one river and four rivulets, the water supply is inadequate. Moreover, with 1,200 bore wells the water level has gone down to 200 metres in the last 15 years. The villagers started constructing the dams in 1999 and so far, 51 check dams and two ponds have been built to harvest water. As a result, the water situation has improved and the farmers are able to cultivate kharif and rabi crops even during drought conditions. Mansukhbhai projects the profit as around Rs 3 crore in the years of good rainfall. This includes money from agriculture, livestock and trees used for afforestation. "It puts the government in a very bad light," says Suvagia. He is all set to spread the message to the rest of Saurashtra and has already created awareness in about 500 villages. He feels that CSE is doing a good job of spreading the message of self- help to other parts of the country.

Co operative movement in India – A Glimpse“



Co operative movement in India – A Glimpse“

Tapan Kumar Ghosh

After 1991, the age old controlled economy was steered to an open competitive economy in the name of globalization or liberalization. This sudden transition had thrown an all out challenge to the co-operative sector of our country.

Till now there are nearly 5.5 lakh different types of co operative societies in our country with an investment of more than 35 lakh crores of rupees in credit and non credit sectors and with membership capacity of over 23.9 million covering 100 percent villages and more than two third rural households. This means that every 4.5 Indian is a co operative member which is more than in Kenya ( one in five) but less than Canada, Norway, Japan and Honduras ( one in three) ; Germany & USA ( one in four). In New Zealand 40 % and in Singapore 50% population are members of co-operative societies of any form.

History of Co-operative movement in India

History of Indian Co-operative Movement is more than a century old and was basically started against the exploitation of unscrupulous money-lenders to exonerate the farming community from the grip of poverty and indebtedness. The British Government was sincere to improve the conditions of the farming sector, the lifeline of the British economy in India. This had prompted to promote Cooperative Credit Societies in the light of Raiffeisen model credit societies on the basis of recommendation of Sir Fredrick Nicholson. It is, therefore, an appropriate time to discuss the pace of its progress and emerging challenges in the competitive business environment.

India has a unique feature. Unlike developed countries more than 65% of the population is directly or indirectly dependent on agriculture. Though the total land area of India is slightly more than one third area of USA and China, the net irrigated land area is:

Area in sq km ( Y-2003)

Area of Arable land in %

USA

223,850

18.01

CHINA

545,960

14.86

INDIA

558,080

48.83

In spite of such huge population being dependent on agriculture alone, the contribution of this sector to the Gross Domestic Product (GDP) of our country is gradually slipping from more than 50% in 1948-49 to just 18.4 % in the year 2008-09.

Problems faced by the Indian agriculture

1. Farmers are not provided with basic amenities

2. Inefficient distribution system

3 Lack of knowledge and illiteracy among farmers

The present situation of cooperatives reflects both a threat and an opportunity for national economic development:

It is a threat:

Cooperatives have nearly failed in delivering efficient goods and services in our country to reduce the income gap.

It is an opportunity:

The new economic scenario world over after the collapse of Communist economic model in USSR and recent global meltdown of free economy offer excellent opportunities which could be effectively utilized by the cooperatives to establish itself as an alternative model with equality and sustainability.

Functioning of the co operative Societies

Functioning of cooperative societies in various segments such as agricultural credit, agricultural marketing, fertilizer distribution, agro-processing, dairy and sugar industries, by a study has shown that there are some strong and viable cooperatives. But there are also failure in PACS (Primary Agricultural co operative Societies). The co-operative structure has shown the following weaknesses.

Weaknesses:

1. Internal and Structural weakness at primary level.

2. Working of different cooperatives in isolation rather than unified system

3. Over-dependence on government for financial assistance

4. Restrictive provisions of cooperative law.

5. Lack of professional management and lack of adequate infrastructure

6. Lack of capability to withstand competition and of participation of user-members

7. Lack of responsiveness from federal organizations towards the needs of their member organizations

8. Lack of proper policy support resulting to diminishing performance in mismanagement, inefficiency and corruption in the financing of cooperatives.

All these weaknesses have to be tackled immediately and efficiently for the survival of cooperative movement.

Cooperative Training-Present Condition

“Cooperative training is not merely a prerequisite but it is a permanent condition of Cooperative activities’ said Vaikunthbhai Mehta, one of the most respected cooperators in our country.”

Cooperative training, initiated in India with the recommendation of Saraiya Committee on Cooperative Planning in 1945, is imparted by little over two hundred training institutions at the government and private sectors. All put together, they annually organize around four thousand training program of different duration and train a little over one lakh of personnel out of nearly 14 million employed by cooperatives in India, thus leaving a wide gap between people employed and trained in the cooperative sector. Besides training inadequately, it has also not been entirely possible for the training structure to achieve the objectives for which it was conceived.

The total membership of the PACS is reported to be around 12 crore. Scheduled Castes and Scheduled Tribes and small farmers each, are reported to account for about 36 per cent to 37 per cent of the PAC membership as per NAFSCOB. Only half the members are borrowers - this proportion being less than average among small and marginal farmers and least among Scheduled Castes.

Even in terms of basic functions, there is a considerable diversity across States. In some regions there are a few pure thrift and credit societies that generate resources only from members and do not have financial transactions, with non-members. In Maharashtra, apart from the regular PACS, there are around 22,000 thrift and credit societies (called path sansthas). In States like Kerala, PACS collect deposits from members, as well as non-members, in a significant way. In Andrah Pradesh SEWA model Mutually aided Thrift and Credit Societies work very efficiently.

According to NAFSCOB estimates, approximately 62 per cent of the PACS in the country are viable, 30 per cent are potentially viable and eight per cent are either dormant, defunct or under liquidation. Here again, there are considerable variations across States.

Conclusion:

If India Vision- 2020 is to make a reality with sustainable growth and social equity keeping in view the importance of primary education, basic health and social harmony, there is no alternative to strengthening Co operative movements and empowerment of Women through Self Help Group (SHG).There is also an urgent need for the second Green Revolution to combat the hunger of 1.2 billion countrymen. Efficient Co operative movement at agriculture sector can not only prevent the flow of migration of rural poor towards towns and cities but can build economic self reliance to uplift another 150 million people at middle income group. In all these endeavor, the short sighted Loan Waiver Schemes for the farmers should be the last option for any Government.

Indian Co-operative Network for Women

Indian Co-operative Network for Women

An Inclusive Micro-loan Process of Working Women’s Forum (India)

Dy. Jaya Arunachalam

President

Indian Co-operative Network for Women

Working Women’s Forum (India)

The Co-operative concept in the west owes its origin to the effort of the great visionary of Europe, Mr. Friedrich Wilhelm Raiffesen from Germany. His innovation of self-help and self-management process among the workers has enhanced their dignity of labour. His lifetime mission was to propagate the concept of common ownership to counter social liequalities. Even after several generations, the ideology of this eminent genius Mr. Raiffesen, continues and is a household name worldwide transcending all kinds of barriers.

A similar situation arose in India that warranted the initiation of co-operative movement at a time when the country was passing through difficult times around freedom struggle i.e. early 20th century. The founding fathers of the nation particularly Shri Vaikunth Mehtaji along with other architects of modern India closely committed themselves to this concept of co-operatives to be the ideal vehicle for social development/viable strategy to adopt social development process to help the exploitated masses after the colonial rule.

Sri. Vaikunth Mehtaji was himself closely associated with this initiation of co-operative ventures around early 20th century. During that time several co-operative ventures slowly gained ground. Also, co-operatives helped to facilitate some kind of social development among rural masses who suffered in poverty/ squalor during the postcolonial time in India.

It is no exaggeration to say, that poverty has direct effect on the abysmal status of poor men/women even today in India. Therefore, the spirit of this co-operation was considered as an innovative instrument in the post colonial days that could do away with all kinds of discrimination such as rich/poor, particularly in rural areas and expected that this will pave way for sound/healthy human development.

Unfortunately the ideology of the visionaries was marred in India as the system slowly gave place to state control and such intervention in co-operatives weakened their progress and became in impediment to the direct community participation in the economic development. This so because the resources that were to be handled by cooperators in rural areas were public money, where literacy level was very low and as such, control is the only way to safeguard people’s resources.

However, in the recent times since the emergence of Worldwide Women’s Movement in 1975 several grassroot women’s initiated towards social change process. So women, too, were able to actively participate in co-operatives, a concept that was almost rare until the 70s in India. Despite being hardworking workforce, poverty affected women more than men bearing the drudgery of work place and home.

One such innoviative experiment initated is Working Women’s Forum (India) in the year 1978 in the urban slums of Chennai city. Though WWF was initiated as a reverberation of the worldwide women’s movement, it was also a necessity as WWF experienced a similar as WWF experienced a similar situation as Mr. Raiffeisen had gone through generations as WWF was dealing with women workers at the grassroots.

The paragraphs given below will describe how a large number of poor women relegated and depended on what in general is known as informal options of work i.e. accept any work options, suffering in abject poverty and indebtedness. A major component of India’s workforce, the women went through lot of struggles, being unorganized, unskilled/non-technical in nature. Their work is undervalued/underestimated despite these women constitute 89% of India’s workforce.

Left with no permanent employer they continue to be an easy target for exploitation by middle men/whole sale contractors and buyers. The temporary nature of their work results in their invisibility in the statistical terms that often results in their being overlooked by government policies and welfare benefits. Women in this sector shouldered dual burden of contributing to the family income also taking complete responsibility for the home/children.

Economic exploitation/social oppression that women suffered called for a new model of development/intervention based on women innate wisdom/ response to help them. This model existed on the indigenous methodologies utilizing local modes of communication.

The Working Women’s Forum (India) facilitated thus an inclusive and an equitable model based on women centered development. It also rejected a piece meal approach to the problems faced by women and based its services on a holistic perception with gender sensitivity, projected the real portrayal of women’s role as economic producers, home managers and community managers.

WWF facilitates women in extreme poverty, concentrated on an organized platform for them to fight for their rights and entitlements, access to credit, education, healthcare, training/orientation (both for skills and empowerment) towards promoting a social and financial independence among them to enhance social status. We should say WWF matched all the common objectives of millennium development goals of the United Nations. Taking responsibilities to organize these poor women around their own households, markets, communities and neighbourhoods. The Forum initiated its maiden endeavour in the year 1978 with 800 women, now a social movement of 10,90,765 women in three southern states in India spread over 3644 villages and 2256 slums in 14 branches.

The Forum’s success lies in its innovative attempts, as it offered to integrate in the poor women at all levels in its institutional framework, also utilized them as an effective delivery mechanism to reach other poor women extensively, be it in rural poorer segments or in the urban slums. To handle credit transaction and enhance the social/financial independence of poor women WWF promoted a separate wing known as Indian Co-operative Network for Women, as a federally registered co-operative.

ICNW is an inclusive financial process and its main task is to provide low interest loan encouraging poor women entrepreneurship and strengthen their economic roles.

The primary objective were promoting leadership from below, maintain grassroot character of the institution eliminating the domination of elites and help grassroot women not only to occupy important position in the Board but also to be part of decision making process. Such integration of the poor at all levels not only facilitated the outreach but also maximized their participation in total, facilitated democratic functioning of the co-operative and its smooth management. It is this bottom-up approach that has ensured the formulation/ implementation of field oriented credit policies specifically tailor-made to cater to the needs of the poor.

Thus, the success of ICNW experiment proved that the poor are indeed creditworthy and bankable and when provided equal opportunities, they not only managed their enterprises but can create assets for themselves and improve their own quality of lives. By effecting social change process ICNW demonstrated that the co-operative has achieved financial viability, further proving that credit could be used as an effective procursor to social change process. The credit programme of ICNW 5today reaches over 4,81,719 poor entrepreneurs effecting nearly 1696.94 million rupees accomplishing about 98.85% recovery rate in the urban slums/rural areas.

One example of how the programme of WWF/ICNW became of WWF/ ICNW became quite important for the central government, particularly, was that it was called to testify and share the experience of WWF/ICNW. The National Commission for Enterprises in the Unorganised Sector invited the President WWF on 13th March 2006. Since the Commission desired that such experiences would facilitate and strengthen the efforts in policy formulation for a New Social Security Bill that is pending in the Parliament.

Following the presentation, the commission in its letter stated that they were highly impressed by the outstanding work being done by WWF/ICNW and indicated their desire that WWF should join hands with the commission in marking a feasibility study about the weavers, one from the North i.e. Varanasi and another, from the South in Kanchipuram.

Hence, a study was taken up on the comparative trade aspects of Kanchipuram and Varanasi weavers as desired by the commission. In addition to this an exchange programme was organised between the two weavers to learn the successful aspects of trade of the Kanchipuram weavers by the Varanasi weavers. To share their experiences in weaving and observe the gradual progress of Kanchipuram weavers and find out the possibility of its replication in Varanasi, the weavers visited nearly 50 to 100 houses of Kanchipuram weavers. There was an exchange/sharing of information programme of the Varanasi and Kanchipuram weavers. Towards the end of the discussion it was revealed that the Varanasi weavers were eager to revive their trade again and make their venture successful.

Further, WWF’s has a strong Reproductive Health Care programme that keenly concentrates on strengthening the productive role of poor women where these workers face a situation where even some basic healthcare is denied. The programme has built a strong or network of health cadres in slum/ village neighbourghoods who constantly raise the consciousness of the poor women on their reproductive rights and other health matters (including HIV/AIDS).

Crucial to the programme was enhancement of the decision-making power of these women regarding their reproductive rights i.e. with reference to number of children and contraceptive choices. The programme impacted nearly 16,18,842 families (1.5 million) accomplishing 72% couple protection rate in the poorest communities, providing employment to 960 grassroots health cadres spread out to 720 slums and 340 villages. Networking with several insurance companies, WWF has evolved a comprehensive social security programme for its member such as life insurance, health insurance, disability insurance and accident insurance. The initiation of a social security programme for poor women impacted, maternity benefits (upto two children) and insurance cover to over 7,72,891 women for life, disability and health aspects.

Combining with the co-operative effort of ICNW, the parent body i.e. WWF slowly initiated a trade union in the name National Union of Working Women of that facilitates poor women in their struggle to fight for labour, land and housing rights of poor working women/their families. Equally, union’s concern is to fight other human rights issues like female feticides, female infanticides, child prostitution and child labour that affects the poor on daily basis, as all the social evils have close connection to poverty.

The crisis management in WWF is handled with great care. To drive home the point, an example of crisis management handled both internally and externally in WWF/ICNW with regard to the trunami killer wave that hit the Marina coast of Chennai, the eastern coast of Tamil Nadu and fees Coastal areas of Andhra Pradesh on December 26th 2004 where nearly 2000 members of WWF were worst affected in Tamil Nadu and Andhra Pradesh can be cited.

WWF/ICNW quickly volunteered to organize one day counseling, as advocacy workshop, the representatives of the fishing families, who were in trauma and gave them expert advice through oceanography experts and marine engineers, assuring that the tsunami doesn’t come as often but only in 50 to 80 years.

The counseling also facilitated WWF/ICNW for a need assessment for the financial assistance to many of them and provisions towards fishing infrastructure, housing needs, built new houses and repair of the damaged houses, children’s educational need and constructed a fish market for the fishing community in Narsapur.

Programme likes Annual Planning Meetings, problem solving training collective effort of visual material production programmes, dissemination of such informations in small workshops in all the service areas are common phenomenon in WWF annually as a stimulation exercises for the field staff. Such activities helped to maintain solid grassroots character of the organization inspite of the organization’s phenomenal growth for over three decades.

The current liberalization and economic restructuring does not benefit the poor in India as elsewhere, with 41% living below poverty line. WWF a future oriented multi-pronged initiative and a pro-poor strategy helps the Indian poor women to face the onslaught of globalization. As a consolidation process, WWF’s initiative is to transfer this strategy of pro-poor advocacy to other groups through orientation. This is an ongoing process. Large number of groups from India/Foreign universities, researchers, NGO groups, government officials do visit WWF, both for orientation and exposure visits.

The success of WWF/ICNW experiment demonstrates that such financial inclusive process, flexible need based programmes are specially devised effectively with people participation at all levels. Reasonable levels of monitoring both internally and externally with constant checks and balances on the proper utilization of funds and resources are some of the strategies that WWF/ICNW adopted in overcoming inherent inequalities and unleashing women’s productive capacity. This system has not only worked but also infused confidence among the clients, raised the standard of their living, upholding human dignity, helped redistribution of resources towards ensuring social justice and positive social change.

Thus WWF believes in moving along a transitional path between market responses and social demands with an imperative gender focus. This could be achieved if micro finance practitioners or co-operators worldwide follow an inclusive financial process.

AREA CO VERED UNDER THE WORKING WOMEN’S FORUM (INDIA)

No. of Members (Cumulative) 10,90,765

No. of Branches 14

Villages 3,644

Slums 2,256

Social Security Coverage of Women (cumulative) 7,72,891

Reproductive Health Coverage 16,18,842

AS A LEGALLY REGISTERED MICRO FINANCE INSTITUTION ICNW AS ON

Out reach in Credit 4,81,719

Loan Portfolio (Rs.) 1696.94 Million

No. of Loans 14,54,007

Share Capital 70.42 Million

Savings:

Member’s Savings 119.23 Million

Fixed Deposit of Members 48.57 Million

Working Capital 56.53 Million

Outstanding Portfolio 111.54 Million

Financial Self-sufficiency 108%

Operational Self sufficiency 103%

% of women clients 100%

% of Rural Clients 68.09%

% of Urban Clients 31.91%

On Lending Interest Rate 21% on declining balance

Avg. Repayment Period 12 Months

Cumulative Repayment Rate 98.85%

Default Rate 1.15%

URBAN COOPERATIVE BANKS – VIS – A – VIS NORTH EAST INDIA

Dipak Kumar Barthakur

Chairman,Nagarik Samabay Bank Ltd.

Guwahati, Assam.

India i.e. Bharat can claim the unique distinction of organising the first ever co-operative effort in the history of humanity. The basic principles of “Yangyam” rest on the same. In those days social harmony, mutual co-operation were the distinguishing features of socio economic order of our Society and our ideals were co-operation not competition. The Dharma was the core of social order. There is no doubt that co-operatives have their roots in the society since centuries. Our ancient literatures are also based on full of co-operative philosophy. In Kautilya’s Arthashastra and the verses of Rigveda, this is amply evident. Even to-day those are the vehicles of planned progress. However, co-operatives have been playing balancing role for arresting monopolistic tendencies, exploitations and discouraging redtape due to Government control.

The modern co-operative movement in India started a century ago with the enactment of co-operative societies Act in 1904. Interestingly, legal status was conferred on credit societies keeping in view, in particular, the needs of the agricultural sector. Nevertheless, Sir Iblectson, who piloted the legislation observed :

“We recognize that artisans, employees on small pay and other persons in towns may very properly be admitted to the benefits of our legislation”. Though the modern banking services have come from the west it yet in good old days, even before the “Rishi Manu” the concept of saving was prevalent in our society. A knowledgeable persons kept a percentage of his earnings as deposit with a person of faithful clean, honest and of good character, so that depositor in case of his need can withdraw without any problem. This concept can be termed as the origin of banking system. Slowly the co-operative sector in India keeping the demand of the time has taken up economic activity.

In order to remove the systemic gap within the organizational structure of co-operative credit and banking sector there is the need to make it more responsive and effective to meet the requirements of credit for agriculture and rural development with efforts of the National Co-operative Union of India and with the approval of the Government of India and Reserve Bank of India, a National Level Apex Co-operative Bank namely co-operative Bank of India (COBI) has been set up in the country. The COBI has been incorporated under Multi State Cooperative Societies Act and it has been functioning. Now under the Banking Regulation Act subsequently the Reserve Bank of India changed the licencing procedure in the interest of monitoring and better control of the banking operation.

The co-operative Credit Institutions were also contributing their might to the Banking Sector. There were 1770 Urban Cooperative Banks (UCBs) functioning in the country at March end 2008, out of which 53 UCBs were Scheduled UCBs and 1717 were unscheduled UCBs. The number of Rural Cooperative Institutions at end March 2008 were 98,343 of which Short term Institutions were 97,626 and Long Term Institutions were 717. Of the Short Term Institutions there were 31 State Cooperative Banks or Apex Banks . 371 District Central Cooperative Banks and 97,224 Primary Agricultural Societies (PACS). Of the 717 Long Term Institutions there were 20 State Cooperative Agriculture and Rural Development Banks. In a nutshell, excluding the PACS, the Banking sector as at end March 2008 comprised of 79 Scheduled Commercial Banks,90 Regional Rural Banks 1770 Urban Cooperative Banks, 31 State Cooperative Banks, 371 District Central Cooperative Banks, 20 State Cooperative Agriculture & Rural Development Banks. In addition, there were 4(four) Local Area Banks (LABs) in the country at end March,2008.

COOPERATIVE BANKS

The Urban Cooperative Banks operating in the country numbered 1770 at end March 2008. Of these Banks 1717 were Unscheduled Banks while 53 were Scheduled Cooperative Banks. Of the 53 Scheduled Banks, 25 were Single State Banks while 28 were Multi State Banks. Of the Non Scheduled (1717), 13 were Multi State while 1704 were Single State. Of the 1704 Single State Banks, Tier I (deposits below Rs.100 crore) were 175. Of the Tier I Banks (1529) Unit Banks (single branch) were 874 while Non Unit Banks were 655.

The North East India consists of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura & Sikkim. These are known as the ‘Seven Sisters’. With the inclusion of Sikkim in the North Eastern Council, the region is now known as the ‘Eight Sister’ States. The total land area of the NE region States is 2,63,179 sq.km. and has a population of 388.578 lakh. The NE region is bounded by China & Bhutan in the North West, Bangladesh in the South West and Myanmar in the East. The average population density is 148 sq.km with a lowest density of 13 persons per sq. km. in Arunachal Pradesh & a high of 340 persons in Assam. Details are as under –

State

Area

(sq.km.)

Population

(2001)

No. of Villages

(Nos.)

Household

(lakhs)

Density

(sq.km.)

Decadal Growth

(1991-2001)

Literacy

(%)

Arunachal Pradesh

83743

1097968

4501

2156

13

27.00

54.7

Assam

78438

26655528

26312

49148

340

18.92

64.3

Manipur

22327

2166788

2391

3752

97

24.86

68.9

Meghalaya

22429

2318822

5782

4189

103

30.65

63.3

Mizoram

22081

888573

707

1761

42

28.82

88.5

Nagaland

16579

1990036

1278

3280

120

64.53

67.1

Sikkim

7096

540851

452

1142

76

33.06

69.68

Tripura

10486

3199203

1039

6643

305

16.03

73.4

Total NE

263179

38857769

42462

72071

148

21.61

68.7

All India

3287263

1028610328

638588

1935800

313

21.54

65.4

DISPARITIES IN THE BANKING SECTOR

The total number of branches of SCBs (including RRBs & LABs) increased from 72,752 at end June 2007 to 76518 at end June 2008 registering a growth of 5.2 %. These comprised of 31,127 Rural Branches, 17858 Semi Urban Branches & 27533 Urban & Metropolitan Branches. Nearly half (49.6%) of the total branches of all Bank groups are of nationalized (Public Sector Banks including IDBI Bank Ltd.) followed by SBI Group (19%) and Gramin Banks (RRBs) – 19.3%. New Private Sector Banks had 4.9% share while old private Sector Banks had 5.9% share. The top 100 centres arranged according to the size of deposits accounted for 69.7% of total Bank deposits and 77.8% of Bank Credit (end March 2008).

-3-

The Southern region continued to account for largest percentages of Bank branches followed by Central, Northern, Eastern & Western regions. The share of the North East region remained low at 2.7% at end June 2008.

In the North East region there were 18 urban Cooperative Banks operating at end March 2008. Break up was as follows -

State

No. of UCBs

Total Deposits

Total Advances

Total Districts where UCBs are operating

Assam

9

230

130

6

Manipur

3

140

62

3

Meghalaya

3

60

20

3

Mizoram

1

11

3

1

Tripura

1

10

5

1

Sikkim

1

4

3

1

Total

18

455

233

15

All India

1770

138496

88981

343

% Share

(to All India)

1.02

0.33

0.25

4.37

Of the 18 Banks, 14 were Unit Banks while 4 Banks viz. Industrial Cooperative Bank, Cooperative City Bank, Gauhati Cooperative Urban Bank and Imphal Cooperative Urban Bank had more than 1 Branch operating. The Total number of branches of UCBs operating in the North East were 29.

In Assam, there were 9 UCBs operating at end March 2008 viz. Industrial Cooperative Bank, Gauhati Cooperative Urban Bank, Cooperative City Bank & Nagarik Samabay Bank (all in Guwahati), Nalbari Urban Cooperative Bank, Mangaldai Nagar Samabay Bank, Mohabhoirab Cooperative Urban Bank (Tezpur), Golaghat Cooperative Urban Bank and Kanaklata Mahila Cooperative Urabn Bank (Jorhat).

Of the 18 Urban Cooperative Banks operating in the North East there were 2 women Banks (Mahila Bank) – one at Assam and other at Manipur.

The total deposits of the 31 State Cooperative Banks as at end March 2007 was Rs.48,560 crore while the Advance Portfolio was Rs.47,354 crore. Since the total deposits of Scheduled Commercial Banks were Rs.26,96,936 crore, the deposits of State Cooperative Banks at end March 2007 comprised of just 1.80% of deposits of SCBs. Likewise, the advances of Scheduled commercial Banks being Rs.19,81,236 crore at end March 2007, the advances of State Cooperative Banks comprised of 2.39% of advances of scheduled Commercial Banks.

The deposits of The Assam Cooperative Apex Bank Ltd. as at end March 2007 was Rs.587.21 lakh which comprised of 1.21% of the total deposits of State Cooperative Banks of the country. Likewise, the Advance portfolio of the State Cooperative Bank being Rs.26692.64 lakh, it constituted 0.56% of the advance portfolio of State Cooperative Banks in India.

The Primary Agriculture Credit Societies (PACS) form the base of the short Term Cooperative Credit Structure. In Assam, the PACS are known as G.P.S.S. (Gaon Panchayat Samabay Samitis) in the plains areas while in the hills districts they are known as LAMPS (Large Sized Adivasi Multi Purpose Societies). Select indicators of PACS in the North East as at end March 2007 were as under -

(Rs. In lakh)

State

No. of PACS

No. of Villages covered

No. of Villages per PACS

Working Capital (Rs. In Lakh)

Societies in Profit

Societies in Loss

Average Deposits

No.

Amount

No.

Amount

Arunachal

Pradesh

31

3649

118

1636

20

25

6

8

Assam

809

23422

29

7533

309

7639

419

9909

0.63

Manipur

186

-

-

45904

-

-

108

201

34.95

Meghalaya

184

3761

20

1797

51

47

128

512

0.45

Mizoram

175

660

4

175

59

70

4

10

0.09

Nagaland

1719

969

1

11246

-

-

-

-

3.73

Sikkim

166

166

1

146

56

6

37

4

-

Tripura

270

1900

3

8970

120

84

148

59

0.12

Total

3540

33527

9

77407

615

7871

850

10703

3.83

All India

97224

637102

7

7995869

33983

74895

48078

240174

120.82

Thus the total deposits of PACS being Rs.23484 crore, their deposits constituted 0.87% of the total deposits of Scheduled Commercial Banks at end March 2007.

The various indicators for the NER which are commonly used for Banking development, show that despite improvement in various parameters the level of financial outreach for the NER is low. As per report of the Usha Tharat Committee on Financial Sector Plan for the North East Credit to Net State Domestic Product ranges from 9 in Nagaland to 40.9 in Meghalaya against an all India average of 62. There are 59 Bank Accounts (Current A/c & Savings A/c per 100 adults in the country but the corresponding figure for the NE is only 37.3 as against 39.1 in Assam. Credit accounts per 100 adult population is 5.9 in Assam (NE 6.7) against an all India average of 13.3 per capita Credit in Assam is Rs.2261 (NE Rs.2407) against an all India figure of Rs.10474.

Because of the uncertainty in the financial sector pertaining to the Urban Co-operative Bank, there was total stalemate of growth and development of Urban Co-operative Banks in North East Region.

Taking a view on the crisis faced by the Urban Co-operative Banking Sector time and again the Reserve Bank, in the annual policy for the year 2004-05, announced its decision to stop granting fresh licenses for formation of new UCBs. This was followed up with a decision not to grant any fresh branch license as well. It was made clear that this was necessitated pending a comprehensive review of the legislative and regulatory framework governing the sector. It was in this background that a decision was taken to draft a vision document for the sector to outline a framework that would facilitate the strengthening of the sector and enable it play the assigned role of providing credit to the economically weaker sections.

Vision Document for UCBs

The Reserve Bank eventually formulated a draft vision document placed it in the public domain in March,2005 and finalized it thereafter, with the following objectives.

(i) To rationalize the existing regulatory and supervisory approach keeping in view the heterogeneous character of entities in the sector.

(ii) To facilitate a focused and continuous system of supervision through enhanced use of technology.

(iii) To enhance professionalism and improve t he quality of governance in UCBs by providing training for skill up-gradation as also by including large depositors in the decision making process/management of banks.

(iv) To put in place a mechanism that addresses the problems of dual control, given the present legal framework, and the time consuming process in bringing requisite legislative changes.

(v) To put in place a consultative arrangement for identifying weak but potentially viable entities in the sector and provide a framework for their being nurtured back to health including, if necessary, through a process of consolidation.

(vi) To identify the unviable entities in the sector and provide an exit path for such entities.

MOU with State Governments and Constitution of TAFCUBs

In pursuance of the proposals in the draft vision document State Governments having a large number of UCBs were approached for signing memorandum of understanding (MOU). Some of these State Governments have since signed MOUs. The memorandum, in fact, provides the basis for the constitution of Task Force for Urban Co-operative Banks (TAFCUB) in each State, which is the forum of the consultative decision making process. The TAFCUB has, apart from the representatives of the RBI and the State Government, those of the UCBs sector as well. The MOU also provides for professionalizing the audit and the Reserve Bank’s role in improving IT and HR levels in the UCBs.

Recent Developments

As envisaged in the Vision Document, Reserve Bank approached States having large network of UCBs for signing Memorandum of Understanding (MOU) to ensure greater coordination between RBI and State Government to supervision and regulation of the UCBs.

Government of Assam has signed a MOU in the year 2007 and thereafter things started moving. Most of the existing Banks approached Reserve Bank of India for allowing to open branches in their particular territory. This is a positive sign and we see a ray of hope for the growth of the Urban Co-operative Banks.

Here we must also mention the great role played by Sahakar Bharati for the development of Urban Co-operative Banks in our country.

The main factors that impede banking and financial development in the NE are topography of the region, sparse settlements of population, infrastructural bottlenecks such as transport, communication & power, low level of commercialization, lack of entrepreneurship, law and order situation, land tenure system (specially in the hill area), low network of branches, lack of simple customized and flexible financial products to suit the local populace, poor loan recovery, lack of awareness of banking services and communication bottlenecks with mainland India.

* In preparing this article datas are taken from available Banking bulletins of NSBL.