Nation Current Affairs 29 Apr 2017 Kerala: Panel for cu ...

Kerala: Panel for curbing politics in agri credit societies

DECCAN CHRONICLE. | R AYYAPAN
Published Apr 29, 2017, 7:05 am IST
Updated Apr 29, 2017, 7:24 am IST
He argued that it was important for PACS to diversify into non-banking activities.
(Representational image)
 (Representational image)

Thiruvananthapuram: The M.S. Sreeram Committee is particular that the autonomy of Primary Agricultural Credit Societies (PACS) is fully protected but also wants political influence in these credit entities curbed. The Committee has not made any changes to the management structure of PACS, letting politicians continue have the upper hand, but it banks on ‘domino effect’ to do the trick.

The strategy is to allow modernisation and the roll out of innovative banking products and services to subtly goad PACS into complying with banking norms. “Say for instance, the apex Kerala Cooperative Bank (KCB) wants its PACS customers to have debit cards that can be used in all PACS. But for such a value addition to happen, PACS customers will have no choice but to comply with KYC norms,” said M.S. Sreeram, the chair of the Expert Committee. He hoped that aberrations like multiple accounts would gradually be a thing of the past, as also the inclination to deposit unaccounted money in primary societies.

 

Prof Sreeram, who did significant work on cooperatives while at Institute of Rural management Anand (IRMA), insisted that the formation of KCB would not affect the decentralised nature of the state’s cooperative sector. “We emphasise in our report that the apex bank should not compete with PACS. Wherever PACS has an interest, KCBank should simply move out,” Prof Sreeram said.

He argued that it was important for PACS to diversify into non-banking activities. “These PACS, by being so confined to a local area, are subject to two kinds of risks, the geographical concentration risk and the risk of portfolio concentration. Anything that happens in the locality or to the local sector a PACS caters to could jeopardise its business. So they need to diversify to stay afloat,” Prof Sreeram said.

 

He said his team had encountered probing questions while meeting stakeholders at the local level. “Many asked us the need for a Kerala Bank when things are working just fine,” Prof Sreeram said. “We told them that we are responding to a future crisis,” he said.

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