Punjab to merge 20 district coop banks

Ruchika M Khanna
Tribune News Service
Chandigarh, October 26

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Punjab will be merging 20 District Central Cooperative Banks (DCCBs) with the Punjab State Cooperative Bank to enhance business. A decision in this regard was taken by state Cooperation Minister Sukhjinder Singh Randhawa at a high-powered meeting here on Thursday. 

The move, that is to be ratified by the Cabinet, will help improve the banks’ capital to risk assets ratio (CRAR), as mandated by the Reserve Bank of India (at 9%), thus allowing them to advance loans. The banks had suffered huge losses during demonetisation and thereafter owing to tardy remonetisation. 

Most farmers in Punjab are dependent on cooperative banks for loans, which could not be given because of the CRAR issue. The merger of the DCCBs will raise the CRAR to over 12 per cent, which in turn will help the merged bank to enhance business by Rs 8,000 crore. Politically, it will help the ruling Congress wrest control of cooperative banks from the SAD-BJP. Cooperation Minister Randhawa pointed out that Jharkhand had already merged its cooperative banks and Kerala was in the process of doing so. “We had the option of either financing the banks with Rs 400 crore or merging these with the apex cooperative bank. Since the state does not have the requisite resources, we decided to merge the DCCBs,” he explained.

“We have chalked out a plan to make the merged entity a profitable bank. We intend starting a life insurance policy. Major government accounts will be shifted to cooperative banks gradually,” he added.  The DCCBs cater to seven lakh farmers in Punjab and have a total business (advances) of Rs 10,000 crore. Over the years, lowering bank margins impacted their fiscal health, said officials.