Draft Final Report of the Task Force on Revival of Cooperative Credit Institutions

1. Task Force to study the functioning of Cooperative Credit System and Suggest Measures for its Strengthening (Capoor Committee, 1999)
2. Expert Committee on Rural Credit (Vyas Committee, 2001)
3. Joint Committee on Revitalisation Support to Cooperative Credit Structure (Vikhe Patil Committee, 2001).

1.08 Apart from relying on the findings of the earlier committees, the Task Force also collected substantial statistical data on the coverage and financial aspects of cooperative credit institutions from published and readily available sources. It also analysed these data to highlight differences across and within States in performance indicators and trends therein. The Task Force also sought to collect information on selected aspects of their governance, through the regional and district offices of the National Bank for Agriculture and Rural Development (NABARD).

1.09 The Task Force also had extensive discussions with senior officials of State Cooperation Departments, managers and chief executives of cooperative credit societies, leading cooperators with deep involvement and experience in the cooperative movement, representatives of trade unions of employees of cooperatives, apart from academics and non government organizations (NGOs) well versed on cooperative credit.

1.10 These consultations were held to ascertain their perceptions and views on the current status of cooperatives, including issues relating to governance and management, the role of the State Governments and the extent of their intrusion or otherwise, into the affairs of the cooperatives. The Task Force invited their views on factors that have impeded cooperatives from becoming autonomous and member driven institutions, and the strategy for their revival and revitalization. During the eight meetings held in different parts of the country, the Task Force was able to exchange views with about 150 cooperators, academics officials etc., from as many as 23 States. A number of organisations also sent in written memoranda.

1.11 A sub-group of the Task Force headed by Shri U. C. Sarangi, also visited several states for more detailed interactions. The sub-group had the benefit of discussion with officials, cooperators and cooperative bankers. At the third meeting of the Task Force, it was felt that the revival strategy needed to be premised on a strong legal and regulatory framework. Accordingly, a sub-group was constituted under Shri Rama Reddy to suggest amendments deemed appropriate in the Banking Regulation Act, State Cooperative Societies Acts, and Mutually Aided Cooperative Societies Act, which would create a legal environment enabling cooperatives to function as autonomous and member driven institutions.

1.12 The inputs from this sub group and a special consultation with officials and non-officials with first hand knowledge of cooperative law, its administration and problems in changing the law, have been invaluable to the Task Force in clarifying its understanding of the issues involved, and in helping to formulate its recommendations.

1.13 The Task Force records its appreciation and thanks to the cooperative credit institutions across the States, the Reserve Bank of India (RBI), NABARD, NAFSCOB, and various State Governments and the numerous individuals and organisations which personally participated in the consultation meetings and those who gave their views in written memoranda. (Names of persons from different States who interacted with the Task Force as well as those who sent written memoranda are given in Annexure III).

1.14 The Task Force also met Dr Y. V. Reddy, Governor, Reserve Bank of India, Smt. Ranjana Kumar, Chairperson, NABARD, and Shri V Leeladhar, Deputy Governor, Reserve Bank of India, to discuss various aspects of the task assigned to it. The Task Force benefited much from these interactions and is grateful to them for giving liberally of their time.