The meeting of the representatives of urban co-operative banks of Karnataka in Bangalore last week to chalk out a strategy to oppose the imposition of the 33 per cent Income Tax on profits on the co-operative banks in the country last year decided to send telegrams to the Prime Minister and the Finance Minister reiterating their demand for the IT abolition. | |
| A petition signed by 15,000 people has already been handed over to the Prime Minister to scrap the Income Tax in the last budget on February 14. Dr Manmohan Singh had promised to speak to the Finance Minister. |
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| According to the Forum of Urban Co-operative Banks Convener C V Kumar, the meeting also decided to meet the MPs of Karnataka and urge them to take up the issue in Parliament in the budget session. |
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| It was also decided to intensify the campaign through handbills to the members of the co-operative banks and the public. Kumar demanded that the concessions given under 80CC of the IT Act to commercial bank deposits be extended to all the co-operative banks also in the ensuing budget and remove the discrimination done to co-ops. |
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| "The IT yield from around 2,100 co-op banks in the country will be just around Rs 300-400 crore. This is negligible when compared to the IT dues of Rs 1.50 lakh crore, of which Rs 60,000 crore are undisputed. Besides, the 33 per cent imposition takes away a major chunk of the profits. Such a situation would harm the health of even the best co-op banks and make the rest sick," he said. |
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| From Madhavadas Committee in 1977 to Vishwanathan Committee in 2006, all committees have said that co-operative banks should be promoted with concessions. The co-op banks, however strong, are dwarfs as compared to the multinational banks and other financial institutions. They can never match the high-tech services these banks give nor match their financial strength. |
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| The co-ops serve the vast section of poor, middle and salaried class excluded from the financial system and serve basic sectors like milk, agriculture, marketing and banking. They earmark 60 per cent and 15 per cent of their lending to economically weaker sections and minorities. |
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| In fact, with dual control of both the state government and RBI, they are ladn with stringent regulations which need to be liberalised, Kumar said. |
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| With the onset of liberalisation, he said the co-op banks are directly thrown into fierce competition with the big banks and financial institutions. The protected environment no longer exists. When the co-ops need support and encouragement, IT imposition would cripple them. |
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| Explaining the politics of discouraging co-operative institutions, he saw the move to impose IT on co-op banks as a conspiracy to protect the big global banks and financial institutions in the name of globalisation and liberalisation and annihilate the Rs 1,05,000 crore deposit-holding co-ops from the financial scenario of the country. |
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| The co-op representatives will meet again after the budget, to review the situation. |
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