Challenges before Co-Operative Movement – Part 2

The assets of UCB’s comprise more than 10% of the total banking sector assets which is the second segment in the Indian banking system. Urban co-operative banks are governed by multiple regulatory authorities like RBI and the State Government. Many of the co-operatives in rural areas are under the influence of the local political leaders. This leads to unethical practices among the cooperatives followed by higher NPA’s. People are not well informed about the objectives of the co-operative movement, rules and regulations of cooperative institutions and its vital role in the society. Unfortunately, no special efforts have been made in this direction. Large number of members are not aware of the existence of bye laws, their rights and duties and the roles of office bearers and management. The decision of the Government to merge smaller banks and to encourage formation of big banks is going to affect the co-operative banks. Urban cooperative banks have to compete with bigger banks. There is lack of expertise in co-operative institutions. There has been a dearth of trained personnel in the co-operative sector. Because of many opportunities in other sector, the new generation do not get attracted to the co-operative sector. There is a need to induce more professionalism in the Board of Management of Urban co-operative Banks.
The technology deployment like Core Banking services are a big challenge for Urban Co-operative Banks. Not only there is a dearth for trained personnel, the high cost of implementation and maintenance of Core Banking Software is a huge burden on small Urban co-operative banks. UCB’s cannot afford to have a separate IT staff to man IT infrastructure in the way larger banks can. Bigger banks have an advantage over UCB’s by giving access to sophisticated products and services through multiple channels like internet banking, mobile banking and a huge network of ATM’s. It is a challenge and an opportunity for the UCB’s to upgrade to a computerized environment so as to focus on more business opportunities and render better customer service. Despite all this, co-operative banks are really helping the poor in becoming self reliant. Though there are challenges, existence and survival of UCB’s is of great importance to the client base of middle and lower income group that they serve and the challenges can be met by adopting professional approach and technological up-gradation It is also necessary that co-operative banks and societies have to take on those forces which are against the co-operative philosophy and join all those who are struggling for the protection of cooperative movement. On this occasion let us dedicate ourselves to create a society free from inequalities and contribute to nation building.