Amendment Bill: Cooperative Fraternity bursts into jubilation

Cooperative fraternity burst into jubilation on the news of passing of Constitution (111th) Bill, 2009 on Thursday by Lok Sabha. Apart from other things, the fact that forming cooperative has acquired status of Fundamental Rights gave shot in the arms of cooperative leaders.
“It is history in making” quipped Chandra Pal Singh Yadav, President of National Cooperative Union of India, the apex cooperative body in the country. We thank Sharad Pawarji and all

NAFSCUB: RBI’s frequent penalty disturbing

Echoing popular sentiment related to Urban Cooperative Bank,Mr Subhas Gupta Chief Executive of NAFSCUB said that it is a matter of concern for us that Urban Cooperative banks are frequently found faulting on banking norms by Reserve Bank of India.
Readers can recall that RBI , the watchdog of banks on average penalizes a dozen Urban Cooperative banks per month on the issue of flouting of apex Banks’ norms. There are also frequent cases of cheating with depositors and banks going bust.
Gujarat Mercantile Bank or Beed Central Cooperative bank or

RBI cancels licence of Bharat Urban Cooperative Bank

In yet another case of urban cooperative bank going bust RBI has cancelled the licence of Bharat Urban Co-operative Bank based in Solapur of Maharashtra. In a communique RBI said that all efforts to revive it in close consultation with the Government of Maharashtra had failed and the depositors were being inconvenienced by continued uncertainty.
Reserve Bank of India delivered the order cancelling its licence to the bank as on the close of business on November 25, 2011.
The Registrar of Co-operative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. It may be highlighted that on liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rupees One lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under

RBI panel to discuss raising of capital by urban co-op banks

Mumbai, Dec. 13: 

The issue of getting a level-playing field for urban co-operative banks vis-à-vis commercial banks with regard to raising capital and lowering the threshold for statutory investments will be taken up at a meeting of the Reserve Bank of India's standing advisory committee next week.

Currently, growth prospects for the 1,600-odd UCBs are hamstrung due to limited options for raising capital. These banks primarily depend on plough back of profits and borrowers' subscription to share capital at the time of loan disbursement, to shore up their capital.

Though UCBs, which as of March-end 2011 collectively had deposits and advances aggregating Rs 2,12,031 crore and Rs 1,36,341 crore, respectively, have been allowed to issue preference shares and long-term deposits to augment their capital, both these options are not preferred.

Investors' interest

The constraint for UCBs in issuing preference shares is that they can be issued only at face value. Investment in these shares is unattractive as no exit mechanism is available for investors wanting to liquidate them.

In the case of long-term deposits, the RBI's approval is required to pay back depositors even if a bank is financially sound. This is proving

Coop banks in Gujrat state to go on one-day strike

Over 270 urban cooperative banks (UCBs) and district cooperative banks (DCBs) in Gujarat will observe a day's strike on Thursday, December 8, 2011, demanding income tax exemption for the cooperative banks, which was in force till 2006.
Currently, cooperative banks are liable to pay a flat 30 per cent income tax on their earnings. The income tax waiver for cooperative banks, which was in force since independence, was removed in 2006-07 and the amendment to Finance Act, 2006 brought them under the income tax net by the-then congress-led UPA government.
Post amendment, earnings of UCBs, DCCBs and state cooperative banks (SCBs) have become taxable with effect from the financial year 2006-07.
"It is sad that Sonia Gandhi's congress has brought cooperative banks under the income tax net. They (coop banks) were given income tax waiver since Jawaharlal Nehru's regime, but UPA government has imposed income tax on it. All of Gujarat's cooperative banks will remain closed tomorrow as a mark of protest of the income tax," said Dileep Sanghani, minister for agriculture and cooperatives, government of Gujarat, while endorsing the strike call.
Sanghani is also chairman of Amreli District Industrial Cooperative Bank. In a statement issued on Wednesday, Gujarat Urban Cooperative Banks Federation (GUCBF) announced a one-day strike on Thursday. The cooperative federations have been demanding restoration of tax exemption under the Article 80 P of the Income Tax Act.
"Withdrawal of income tax exemption to cooperative banks has proved a major hurdle in the growth of this sector. Several representations have been made in this regard over a period of past five years at the finance minister level, president and ruling as well as opposition parties in the parliament. But no favourable outcome has come so far, hence we have called a strike of cooperative banks in Gujarat," said Jyotindra Mehta, president, GUCBF.
The strike call will be observed by 18 DCBs, 270 UCBs and one state cooperative bank in Gujarat.

Courtesy : The business standard