Credit societies get more power to recover dues
Co-operative societies will now have same powers as co-op banks to tackle defaults; can hire recovery agents.
By Girish Kuber, TNN |
MUMBAI: Co-operative credit societies in the state can now recover their dues more efficiently. In a significant move, the Maharashtra government has brought such societies on a par with the urban co-operative banks. The decision will help these societies recover over Rs 5,500 crore from defaulters.
Regarded as the cradle of the co-operative movement, Maharashtra has a widespread network of as many as 28,000 co-operative societies having a total deposit size of Rs 35,000 crore. These small man’s banks have lent over Rs 26,000 crore, of which around Rs 5,500 crore have been locked with defaulters.
This well-knit credit system was besieged with a serious problem, which barred its staff from working as recovery officers like other bank officials do.
“This was serious anomaly affecting life and survival of these co-operative credit societies for long. Now that the government has made necessary changes, these bodies can breathe easy,” said Satish Marathe of Sahakar Bharati, who was actively pursuing the issue with the government.
This step was necessary since the Reserve Bank of India (RBI) had started applying stricter norms, especially about non-performing assets (NPAs), for these societies. “These societies were struggling with their hands tied,” Mr Marathe added.
According to a senior official from the state’s co-operative ministry, the long-pending issue has been resolved and the government has issued the necessary notification recently. “This empowers co-operative societies to designate their employees as special recovery officers under Section 156 of the Maharashtra Co-operative Societies Act,” he said.
Unlike private-sector banks — in news recently for adopting controversial measures to recover dues — the co-operative institutions in the state have well laid-out procedure on how to recover outstandings.
It allows these bodies to involve defaulters in the recovery process by appointing him custodian of an attached property. The credit societies, however, were out of its purview till now. “The recent amendment gives the defaulter more room to clear dues at any stage,” Mr Marathe, former head of Jankalyan Co-operative Bank, a leading urban co-operative body, said.
The state’s decision also has a political dimension. Noted social worker Anna Hazare had threatened to launch a state-wide agitation against the state government’s ‘apathy’ towards co-operative credit societies. Mr Hazare has been demanding more operational freedom for co-operative credit societies.
Regarded as the cradle of the co-operative movement, Maharashtra has a widespread network of as many as 28,000 co-operative societies having a total deposit size of Rs 35,000 crore. These small man’s banks have lent over Rs 26,000 crore, of which around Rs 5,500 crore have been locked with defaulters.
This well-knit credit system was besieged with a serious problem, which barred its staff from working as recovery officers like other bank officials do.
“This was serious anomaly affecting life and survival of these co-operative credit societies for long. Now that the government has made necessary changes, these bodies can breathe easy,” said Satish Marathe of Sahakar Bharati, who was actively pursuing the issue with the government.
This step was necessary since the Reserve Bank of India (RBI) had started applying stricter norms, especially about non-performing assets (NPAs), for these societies. “These societies were struggling with their hands tied,” Mr Marathe added.
According to a senior official from the state’s co-operative ministry, the long-pending issue has been resolved and the government has issued the necessary notification recently. “This empowers co-operative societies to designate their employees as special recovery officers under Section 156 of the Maharashtra Co-operative Societies Act,” he said.
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Unlike private-sector banks — in news recently for adopting controversial measures to recover dues — the co-operative institutions in the state have well laid-out procedure on how to recover outstandings.
It allows these bodies to involve defaulters in the recovery process by appointing him custodian of an attached property. The credit societies, however, were out of its purview till now. “The recent amendment gives the defaulter more room to clear dues at any stage,” Mr Marathe, former head of Jankalyan Co-operative Bank, a leading urban co-operative body, said.
The state’s decision also has a political dimension. Noted social worker Anna Hazare had threatened to launch a state-wide agitation against the state government’s ‘apathy’ towards co-operative credit societies. Mr Hazare has been demanding more operational freedom for co-operative credit societies.
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