CHENNAI: Cooperative banks are not only less efficient, but also more affected by corruption because of the delay in modernising their operations. Village-level money lending agencies and Primary Agricultural Cooperative Credit Societies (PACCS) in particular, have been affected.
Last year's complaints of corruption to the tune of Rs 516 crore in distributing crop loans in Salem and Namakkal districts were largely because banks weren't integrated under a common platform, insiders said. Besides, there was no unified system to authenticate customers' credentials including Aadhaar, land records, and other details.
As per official data, cooperative institutions distributed loans worth Rs 60,000 crore under 17 categories, of which Rs 40,000 crore went towards jewel loans.
Primary-level banks in villages and urban pockets operate either manually or are partially computerised. Due to this, they are forced to depend on multiple platforms, reducing their efficiency. Besides, day-to-day functioning of cooperative banks cannot be monitored as their activities are recorded manually or on computers that are not connected to a common platform.
"Waiving of crop and jewel loans, and other schemes, get delayed because banks aren't integrated under a common software platform," said an official.
The cooperative banking sector has a three-tier structure comprising a state-level apex bank, district-level central banks, and village-level primary agricultural credit societies.
The Tamil Nadu State Apex Cooperative Bank (TNSACB) - a custodian of the cooperative banking structure in the state - and 23 District Central Cooperative Banks (DCCB) have been brought under core banking solutions platforms. However, system upgradation of village-level credit institutions, which began in 2018, is yet to be completed.
Under a Core Banking Solution (CBS) platform, cooperative banks will have unified integrated software with basic facilities such as any-branch banking, online banking (NEFT and RTGS), and access to ATMs on a par with commercial banks, said officials.
"A total of 128 Urban Cooperative Banks (UCBs) are fully computerised and nearing completion of CBS," said an official document released by the department of cooperation recently. The work of computerisation of employees' co-operative thrift and credit societies is also carried out in coordination with the Tamil Nadu Electricity Governance Agency (TNeGA), it added.
The Tamil Nadu Cooperative State Agriculture and Rural Development Bank (TNCSARDB), a long-term credit institution, had been computerised through Total Banking Automation (TBA).
Similarly, works of bringing 4,451 PACCS, Large Area Multi-Purpose Cooperatives Societies (LAMPS), and TNCSARDB are being brought under the CBS platform.
"In 2017-18, the Union government proposed to bring cooperative banks under CBS. The State government decided to join the scheme after it was informed that the project cost would be borne by NABARD, the apex development bank. The complete computerisation is under process," said the document.