AMALGAMATION OF DISTRICT CENTRAL CO-OPERATIVE BANKS (DCCBS) WITH STATE CO-OP BANKS (STCBS)
- 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).
- 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.