20 district cooperative banks to be merged with Punjab State Cooperative Bank

The Cooperative department of Punjab has decided to merge 20 District Central Cooperative Banks (DCCBs) with the Punjab State Cooperative Bank (PSCB). The move was triggered after facing a loss of Rs 700 crore.

The 20 DCCBs, having 804 branches across the state, were district-wise independent authorities. With the merger, the DCCBs would now be the branches of the PSCB and function like other commercial banks.

Out of 20 DCCs 11 were in losses. The worst was the DCC Muktsar, the former Chief Minister Parkash Singh Badal’s district, according to Cooperation Minister, Sukhjinder Singh Randhawa. “We were surviving only because of Patiala and Nawanshahar DCCs. Otherwise, we would not even have money to lend credit to the farmers.

The Cooperative banks are considered the backbone of rural credit system. There are around 9 lakh farmers who hold Kisan Credit Cards of the cooperative banks in the state and are dependent on credit in the prevalent cooperative structure. “The merger was the need of the hour to run the system smoothly and ensure that there was enough money for lending.” said Randhawa.

A government statement after the decision that it has been taken in view of RBI guidelines, which mandate that all DCCBs should have a minimum capital adequacy ratio of 9 per cent (CRAR). Although at present the DCCBs are adhering to the required CRAR of 9 per cent (CRAR), there is hardly any space for majority of these DCCBs to enhance their business and to increase their profitability.

The Cabinet also approved a One Time Settlement (OTS) policy to give defaulter companies the last chance to settle their dues with Punjab State Industrial Development Corporation (PSIDC) and Punjab Financial Corporation (PFC).
The government is coming out with OTS Policy-2018 following representations and suggestions from Chamber of Commerce and Industries Association and after marathon discussions with the promoters for rehabilitation and revival of the industries in state.