AMALGAMATION OF DISTRICT CENTRAL CO-OPERATIVE BANKS (DCCBS) WITH STATE CO-OP BANKS (STCBS)
26/05/2021

Tags:

Context:

  • RBI has come out with the guidelines after a few state governments approached it for amalgamation of DCCBs with StCBs as a two-tier Short-term Co-operative Credit Structure (STCCS).

About:

  • Rural cooperative credit institutions have two distinct structures:
  • STCCS mostly provide crop and other working capital loans primarily for a short period to farmers and rural artisans.
  • Long-term cooperative credit structure (LTCCS) institutions focus on providing typically medium to long-term loans for making investments in agriculture, rural industries, and lately housing.
  • Under the Banking Regulation (Amendment) Act, 2020, amalgamations of the above banks have to be sanctioned by the RBI.

Need of amalgamation:

  • To ensure robust rural credit system
  • To allow the bank to function like any other commercial bank.
  • To enable the banks for better human resource management as well as tax management.

RBI will consider proposals for amalgamation if the following conditions are fulfilled:

  • State Government makes a proposal for such amalgamation after fulfilling various conditions.
  • Scheme of amalgamation is approved by the requisite majority of shareholders.
  • Such proposal of the State Government has been examined and recommended by NABARD.
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