The Pride & the Penchant

It is extraordinary for any institution to complete hundred years of its existence. It is indeed an achievement, more so, for a small cooperative Bank to celebrate its centenary year. The Comptrollers Office Co-operative Bank Ltd., COCB, as it is popularly known deserves a special place in the history of cooperative movement in our country. It is a Bank which was led by such stalwarts like M.N.Krishna Rao and Masti Venkatesh Iyengar. A brief history of co-operative movement in our country Cooperative movement in our country is more than hundred years old. In the nascent part of the 20th century India was already a colony of the British empire. Being a backward agricultural country and exposed to the vagaries of monsoon the rural masses were already in poverty. Along with a feudal setup and subjugation by a powerful empire the crisis exposed the peasants and rural artisans to the rapacious money lenders. It was in this background that attempts to self help and credit needs were made on the principle of one for all and all for one. Under this system every member made his contribution for the welfare of the group and in the process the group came to the help of the individual whenever there was a need. In the initial stages cooperative societies sprouted to help cotton growers, milk
producers, sugarcane growers, weavers and artisans. Gradually they spread to semi urban and urban centers. The movement was a meandering journey and in this long journey the movement could be sustained because of the dedicated work of large numbers of poor people. It was also clear that it required protection and encouragement. The Government initiated and encouraged the co-operative sector immediately after independence and many of these were given shape in the five year plans. The Govt. also appointed various committees i.e Varde committee in 1963, Madhavdas committee in 1979, K.Madhav Rao committee in 1999, A.Vaidyanathan committee in 2005, which clearly suggested for protection of cooperative sector and its expansion. The Cooperative sector both in the rural as well as in the urban centers made promising strides through mobilization of small savings and easy credits and contributed to the national economy. It was during these years that the Government as a policy established public sector industries and financial institutions and Banks. The situation turns Topsy Turvy However, the decades of eighties and nineties saw a fundamental change in the economic policies of the Govts. The open door policies of globalization adopted since 1991 changed the economic landscape of the country itself. The new system envisaged that the country can achieve progress and prosperity through dismantling of regulations and through liberalizing the economy. The policy makers expected that by exposing our economy to the global forces competitive spirit would be injected into the system and in the process efficiency and development will take place for the people. These policies are being aggressively implemented in the industrial, agricultural and financial sectors. Recently it has reached defense sector also. All these policies have a great impact on cooperative sector including Banks. Present Situation In the recent period the votaries of these above policies have been celebrating the “success” of these policies in our country. They are announcing through the print and electronic media the immediate prospect of India becoming a global power house. It is another matter that the reality is that, overwhelming majority of our people have been marginalized in the process of this growth. The policy makers are projecting the data of number of Indian billionaires of global stature, the availability of ultramodern health facilities, availability of global standards in educational institutions as the indicators of the success story. It must be seen that all these are at a cost and beyond the reach of poorest. In this background the financial sector and in particular Public sector banks are pushed into a situation where they have to compete against global banks and also fulfill their social objectives. It is also to be observed that because of the political and bureaucratic vested interests and their hold
on the banks as reflected by the huge level of NPAs, which are also sought to be written off, there is a precarious situation in the financial sector. The policy of disinvestment in financial sector and the attempts to dilute the regulatory institutions including RBI, should be observed in this background. In essence, the message for the cooperative sector and cooperative banks is clear. They have to compete against not only among themselves but also against bigger Indian as well as foreign banks. They have to make profit in this competitive environment while holding on the principles of cooperation. This indeed is the challenge. Co-operative sector strong enough to accept challenges. As narrated earlier the cooperative movement in our country is more than hundred years old. It has passed through years accepting various challenges. The present challenges before the cooperative movement is a part of challenges before Indian Financial sector which in turn is a part of challenges before the vast majority of the poor in our country. Cooperative sector basically represents poorer section of our society and there lies its strength. The collective strength of the poor is greater than that of a few rich. The cooperative movement should therefore mobilize the vast majority of poor and unleash the force to strengthen the movement. Its history provides the optimism to carry forward this task.

The Comptroller’s Office Co-operative Bank Ltd., is celebrating 100 years of its meaningful existence. It is a moment of great pride for all of us. As we commemorate this very special occasion, it is my privilege to greet all our members, customers and the staff and all other connected with this success story. The Co-operative movement started in India in 1904 and is more than 110 years old. Rural indebtedness was a major force for the start of co-operatives in India. Initially these were just to provide credit to farmers in the form of credit societies and gradually some of them converted to Banks. With the formation of RBI in 1935 and the Banking Regulation Act introduced in 1949, co-operatives were given more importance. After Independence the role of co-operatives in rural India was very important in eradication of poverty. Initially the main aim of co-operatives was to get the poor out of the clutches of money lenders. Co-operative institutions are small institutions owned by a small group of members. Co-operative societies mainly cater to the needs of customers from middle, lower middle class and the marginalized segment of the society
who are large in numbers. Co-operative banks have immense potential to give service in rural areas and have delivered results in areas where both the state and private sectors have failed. Because of the nature of the UCB’s it can percolate down to the poorest of the poor. After the economic liberalization in the early 1990;s many private and multinational banks opened their offices in our country. Although these banks did not make any impact in the rural areas in the initial years, in the later years they have posed some challenges to the Urban co-operative Banks. UCB’s are making efforts to reorient their functions according to the market demands. Overall progress of the co-operative movement during the last 100 years is very impressive, co-operatives do not enjoy a level playing field in our country. Government has not provided enough support to the co-operatives, due to which many problems have been faced by them. There are many restrictions on investments to be made by cooperative institutions. Unlike the state owned banks and other private banks, UCB’s don’t have direct access to the equity markets.