Govt plans tough norms to prevent frauds in co-ops

NEW DELHI: The government is considering stringent norms for co-operatives (including co-operative banks) that includes quarterly disclosures of financial results including data on advances and investments. This will help prevent frauds in the co-operative system.
This was said by new minister of state for finance AV Adsul after assuming office on Tuesday. He also indicated the extension of “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance ‘02� for co-operative banks.
This will be an addendum to the ordinance that was re-promulgated on August 22 by the President. This will empower the co-operative banks to recover their sticky assets.
“The securitisation ordinance was not applicable for co-operatives. But I have talked to finance minister on this issue and the ordinance may cover co-operatives also,� Mr Adsul said. Speaking about regulations of co-operative banks, Mr Adsul said “any financial institution which comes under the Banking Regulation Act should be regulated by the RBI.�
He added that the irregularities in co-operative banks were a result of dual control that the co-operative banks have. Apart from ensuring higher credit flow from co-operatives, Mr Adsul said that the bank credit still does not reach the needy. “The schemes are made for common man and small farmers. But even if it reaches the rural sector, the bank branches don’t ensure they reach the needy.�
Mr Adsul added that banks should take the initiatives of assisting the needy people through self-help groups, which would promote employment. Speaking about insurance, Mr Adsul said there was a need to increase insurance penetration and cover majority of the population. “LIC and GIC have done a commendable job in all these years but more needs to be done,� he said. In the backdrop of droughts, virtually every alternate year, Mr Adsul said “there was a need to bring in more farmers under crop insurance schemes.�
All the schemes that have been announced by banks and insurance companies need to be implemented properly in order to yield the desired results, he added.