Make performance of PACS the topmost criterion for DCCBs & SCBs

Hanumanthagowda Krishnegowda Patil - popularly called H.K. Patil - is an acknowledged leader of the cooperative banking movement in India. The apex cooperative banking organization, NAFCUB, has for the first time created a position, ‘Chairman Emeritus’, specifically for him in recognition of his contributions to the cooperative banking sector. He is also a former minister and an MLA from Karnataka. Patil responds to a series of questions from Banking Frontiers:

H.K. Patil argues that it is of little or no use to have higher tiers in the cooperative banking structure if PACS languish without help and effective hand holding

Mehul Dani: You being Chairman Emeritus of NAFCUB, what major initiatives are you suggesting for revamping the cooperative banking sector in India?

H.K. Patil: I may have to touch upon both rural and urban cooperative banking sectors which have their own distinct issues. As regards initiating crucial steps for the betterment of cooperatives, I may state that the High Power Committee constituted by the Government of India in 2005-06, of which I was a member, made very important recommendations which were incorporated in the 97th Constitutional Amendment. An extremely important clause of the amendment was the introduction of the concept of ‘active membership’ and making it a necessary condition for a person to exercise all rights of being a member.

Some of the other major initiatives are:

Rural Cooperative Credit

I have always been a votary for making primary agricultural credit societies, or PACS, as the focal point of the rural cooperative credit system. Rural cooperative banking system was initially evolved around agriculture and farmers. It is a 3-tier structure with the 95,000 PACS at the core of the system, supported by 33 state cooperative banks and 363 district central cooperative banks in what is known as short term credit structure. We also have Rural Development Cooperative Banks at state and district levels which are not full-fledged banks and have not made much impact as such due to their constraints.