New chief promises to revive co-op

S B Sankannavar of Gadag was elected president of Karnataka Central Cooperative Bank while Y N Patil of Kundgol was elected vice-president. He was elected unanimously, thanks to the parleys by leaders of various political parties.

Sankannavar, a BJP leader, has been elected from the urban banks while Patil is from the Village Sahakari Sangha (VSS). The election to the board of directors was held on July 28 in which 20 directors were elected.

After taking over as president of the 92-year-old cooperative institution, the district central cooperative bank (DCC) for Dharwad, Gadag and Haveri districts, Sankannavar said he will work to regain the bank’s past glory.

 

The KCC Bank established in 1916 to cater to the financial needs of the rural areas of the undivided Dharwad district had been the backbone of agriculture finance in the region.

Thanks to gross mismanagement by successive boards of directors in the last two decades the bank ran into trouble with non-performing assets (NPA) shooting up. It was eventually superseded in 2001.

The Nabard refused refinance facility to the KCC Bank, rendering the bank very shaky. The bank had lent huge amounts to institutions without obtaining proper security and that led to the downfall of the bank. The farmers who had suffered as they had to bear the brunt of three successive droughts were denied loans by the KCC Bank.

The failure of KCC Bank besides adversely affecting the agriculture financing in the region, had landed several urban cooperative banks and societies too in a soup. While the farmers who suffered three successive droughts could not repay the loans were blamed for the bank getting into trouble, the real cause was erratic lending by the bank to institutions run by the board of directors.

Following assurance from the chief minister Yeddyurappa during his visit to Dharwad prior to budget session, people had expected a package for KCC Bank in the budget but they are disappointed that there is no mention about KCC Bank in the budget.

While the bank has been able to improve the recoveries from farmers and give fresh loans to them, it has not been able to comply with Section 11 of the Reserve Bank of India Act. Non-compliance of the section could result in RBI cancelling the licence issued to KCC Bank.

The state government has to reimburse Rs 35 crore to the bank to compensate the interest waiver. If the bank manages to get Rs 50.96 crore and comply with Section 11 of RBI Act, it will enter the clearing network and get refinance facility from Nabard. The bank has collected Rs 5 crore as the share amount from people and opened new account.

The Urban Cooperative Banks which have deposits to the tune of Rs 100 crore in KCC Bank have agreed to convert Rs 50 crore as the share amount. The state government had promised to give Rs 10 crore share amount.

Sankannavar and newly-elected directors V S Patil and Gadi said all efforts would be made to get the money required to revive the bank and asserted there was political will to get results unlike in the past.