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M S Sriram Indian Institute of Management Ahmedabad

Recommendations of the Task Force on Revival of Co-operative Credit Institutions: Implementation Issues. M S Sriram Indian Institute of Management Ahmedabad. Basic Premises of the Task Force.

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M S Sriram Indian Institute of Management Ahmedabad

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  1. Recommendations of the Task Force on Revival of Co-operative Credit Institutions: Implementation Issues M S Sriram Indian Institute of Management Ahmedabad

  2. Basic Premises of the Task Force • Co-operatives should be self governed, member managed institutions. Their future success or failure should depend on how they manage it. • The state in the past has intervened with the working of co-operatives and therefore morally responsible for the accumulated problems

  3. Broad Areas of Recommendations • Legal reform on lines with the MACS Act • Preparatory work • Truing of Balance Sheets • Capacity building and Training • Computerisation and software • Implementation of the financial package subject to benchmarks

  4. Issues in Implementation • Issue 1: Will the states agree? • Issue of control/supervision • Eligibility norms for getting the financial package • Performance low-balling due to political constituency considerations resulting in an overall low-balling

  5. Issues in Implementation • Issue 2: Is the logistics possible • Different from other institutions that have gone through reforms • Daunting numbers • Manpower for audit, their orientations

  6. Issues in Implementation • Issue 3: What about upper tiers? • DCCBs not eligible for package • SCBs not eligible for package

  7. Issues in Implementation • Issue 4: Will co-operatives be strong after the reform? • Importance of member-stakes • Importance of member-only transactions (or all significant transacting parties made voting members)

  8. Issues in Implementation • Issue 5 Managing Risks • Economy being largely agrarian • Agriculture being vulnerable • Covariance risk being high • Need for unbundling risk coverage

  9. Issues in Implementation • Issue 6: Is the three tier structure necessary? • No, but the task force is silent • Will one of the tiers fade away in the medium run? That is a hope.

  10. Conclusions • State partnership was needed when AIRCS was set up • State withdrawal is important at this moment • However, the state will have to think of providing access to financial services to areas that are not covered by co-operatives through alternative mechanisms

  11. Thankyou www.iimahd.ernet.in/~mssriram mssriram@iimahd.ernet.in 079-26324891

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