Co-op banks should not be divided for political reason: Bakshi

Against the backdrop of the decision to create separate Telangana, Nabard chairman Prakash Bakshi today said that co-operative banks should not be divided for political reasons, as doing so would make "one strong bank become two weak banks."
"Due to the political reasons, the cooperative banks need not be divided as one strong bank will become two weak banks....We would unnecessarily create one more cooperative bank, one more board, one more chairman. Smaller political interests will demand another state cooperative bank. Is it really required?," the National Bank for Agriculture and Rural Development (Nabard) chairman said.
He was speaking at the Golden Jubilee Celebrations of the Andhra Pradesh State Co-operative Bank Ltd (APCOB) here.

"In the banking sector, the bank consolidation has taken place. The country has also consolidated regional rural banks (RRBs), which have been merged into 61 from 196. Besides, talks are also on to consolidate some of the large commercial banks," he said.
Referring to the Telangana issue, Bakshi said, "If the developments happen...The way now it is projected to happen, are we going to allow the banking institutions which are financial entities to be broken down into smaller non-viable entities?"
"Because of certain political developments we keep on dividing the cooperative banks. Shall we allow that to happen here?," Bakshi sought to know from Andhra Pradesh Chief Minister N Kiran Kumar Reddy, who shared the dais with him.

However, in his speech later, Reddy said, "I do not know the answer."
"APCOB has been serving the entire Andhra Pradesh. Because of the political dividing line, why should we say APCOB cannot serve both the states (in proposed Telangana state and Andhra Pradesh). A good financial institution (APCOB) broken into two will become two weak institutions, which is something which should be avoided," Bakshi said.
So far, APCOB was able to meet the requirements of all the partners irrespective of in which village they were located. "But overnight, once a dividing line is put administratively or politically, suddenly a demand appears that if the same APCOB cannot meet the requirements of the farmers," he said.