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Bankers' plea to scrap amended provisions to AP Co-op Act

Our Bureau

RAJAHMUNDRY, July 2

THE urban co-operative banks in Andhra Pradesh would find it extremely difficult, to function in the wake of the amendments effected recently to the AP Co-operatives Act, 1964, and the State Government should immediately scrap the impractical provisions and allow the banks to function freely, the Andhra Pradesh Town and Urban Banks' Association has demanded.

At a seminar on the AP Co-operatives Societies (amendment) Act, 2001, organised by the Aryapuram Urban Co-operative Bank here, a resolution was passed to this effect. Mr. M. Anjaneyulu, President of the association, said the amendments to the Act were ef fected thoughtlessly keeping in mind only the primary agricultural co-operative societies (PACs) and most of the provisions were against the principles of the co-operative movement and were also undemocratic.

The amended Act, he said, took away the right of the managing committees (the board of directors in the case of urban co-op banks) to admit new members and the general body meeting had to be convened for the purpose.

It would be impossible to admit new members in urban banks after the amendment, as the general body meeting had to be conducted every six months and half of the total members would have to be present and vote at the meeting.

He said that earlier a simple majority was enough, with half of the members present at the general body meeting supporting it, to pass any resolution.

He said now if anyone sought to join any urban bank as a member, or obtain a loan, the individual would have to wait six months. Even for gold loans, the absurd provision was applicable, he said.

It would be impossible to amend the bye-laws, or hold elections to the urban banks, if the new provisions were to be adhered to. The Registrar of Co-operatives had also issued a circular recently that the minimum share capital would have to be Rs 300, wh ich was highly impractical, he said.

There were many urban banks in the State with Rs 25 or Rs 50 as the minimum share capital. The urban banks were meant for the lower middle class and the urban poor and such restrictions should not be imposed, he added.

He said that there was also a provision in the amended Act disenfranchising the defaulters and that also should be scrapped. The defaulter should not be allowed to contest the elections in the co-operative bodies but his voting right cannot be taken aw ay, he said.

Mr Anjaneyulu said there were 185 urban co-operative banks in the State, with total deposits amounting to Rs 4,000 crore and the advances Rs 2,500 crore. The State was in the fourth position in the sector, after Maharashtra, Gujarat and Karnataka. There was still more scope for expansion with rapid urbanisation, if the State Government did not meddle with it. The spirit of amended Act was totally against the co-operative movement, he said.

He also said the recent RBI stipulation, bringing down the non-performing asset (NPA) limit in urban co-op banks to 10 per cent, was not well-thought-out. Many banks would not be able to adhere to the strict provisioning norms in view of the peculiaritie s of the Indian rural sector. Though in principle he was not opposed to it, he said, the NPA limit would have to be realistic.

He said the association would challenge almost 80 per cent of the provisions of the amended Act and a writ petition would be filed in the Andhra Pradesh High Court soon. Seminars would also be held by the association in the Telangana and Rayalaseema regi ons to make the co-operators, and the general public, aware of the dangers of the amended Act.