Cooperative Banks must invest in IT infrastructure
Keynote address by guest of honour at FCBA 2021. Edited excerpts:
Cooperative banking plays an extremely i mportant role i n contributing to various aspects of the development of the agricultural and rural economy. I would like to also mention the significant contribution during the pandemic. They were reaching to remote areas to provide all types of benefits all over the country. For example, crediting the PM KISAN NIDHI in the accounts of the farmers directly, and a lot of these initiatives by the government of India have been benefitted the people during the lockdown.
The current status of cooperatives represents a great opportunity. Comparing with scheduled commercial banks, there is a need to strengthen the process to improve various aspects of governance. Especially there is a need to improve the technological adoption in these banks.
The national cooperative finance and development cooperation had been initiated a key step in this process i.e., `the umbrella entity’ which provides support to the sector and the functionary within
Sanjeev Kaushik i s Additional Secretary (FS), Department of Financial Services, Ministry of Finance, Government of India. He has had 12-year stint i n global investment banking as Managing Director of Equities at HSBC and as MD of Lehman Brothers in Mumbai. Prior to that, he worked in Capital Markets at Bank of America Securities in London. He completed his MBA in 1999. In the Govt. of Kerala, Sanjeev has served in various capacities including State Principal Secretary for Finance, Chairman & MD of Kerala Financial Corporation, Deputy CEO of Kerala Infrastructure Investment Fund and CEO of Vizhinjam Intl Port. He was the District Collector of Palakkad and also Founding Director who established the national business school, IIM Kozhikode.
itself. In this way, they help to strengthen the IT infrastructure, providing capital, providing liquidity which helps to give further credit to the customers and training of skill development programs. This entity not only brings these capabilities on one platform but through this membership they can improve their functioning.
Credit cooperatives can be efficient tools for financial inclusion by distributing agricultural credit to smallscale farmers and rural producers. For example, Priority Sector Lending targets are already higher which is 40% for agricultural credit as far as scheduled commercials are concerned are actually higher at 75% for regional rural banks. Now the cooperative banks are also expected that 75% of their ANBC the adjusted net bank credit is to be given as credit to priority sector lending. Through this, the farmers of the rural area will get liquidity and a greater amount of loans. Also there is a need to lower the cost of borrowing by cutting down transaction costs.
The current scenario in the banking sector is very competitive. There is a new competitor ie, small finance banks which are growing and prospering. They don’t have the legacy infrastructure but they have the latest technology at their command. So, it has become even more imperative today for the growth and survival of cooperative banks to invest in IT infrastructure. Through this, cooperative banks are able to offer customized digital products and services to the customers. The gap that has emerged between the cooperative banking sector and other banking sectors has to be filled through technological implementation only.
The reforms that were implemented in the public sector banks are
EASE (Enhanced Access and Service Excellence) reforms
to improve the customer friendliness and orientation to the client’s service - for example, 24x7 customer services, doorstep banking through mobile platform. Today it’s all about smart and cleaning banking it can be possible only by adopting the technology. In terms of strengthening the core banking system through linking the pan card and Aadhaar card, banks are able to access the customer’s account and provide them with the best services. For example, banks had provided 205 million women JAN DHAN account holders with `310 billion through direct cash transfers which were a helping handing in the time of the pandemic.
wWith the use of smart banking and technology, banks will have access to data analytics, customer account behaviours. NABARD has launched a pilot Cash Flow Lending in Sewapuri block, Varanasi district. This was in fact, the direction from honourable Prime Minister to ease the banking process for both the banking sector and customers. So, given the important cooperation that are cooperatives banks made towards the agricultural and rural economic development is going to play a key integral role in the policies and implementation of the steps that GOI has been taking. And the cooperative banking sector will be a key partner in this process.