Small banks in Gujarat could have grown bigger, but they have chosen to remain small to serve the communities in which they exist better, says Jyotindrabhai Mehta, Chairman, Gujarat Urban Cooperative Banks Federation, in an interaction with Sneha Mejari of Elets News Network (ENN).
The Gujarat Urban Cooperative Banks Federation (GUCBF) has a campaign called ‘Proudly Cooperative’. Can you tell us something about its foundation and the idea behind it?
Our federation is made of 226 urban cooperative banks which exist in Gujarat as on today. These banks range from very small with deposits of `2 crore to very big like Kalupur, which has `7-8 thousand crore deposit. Half of the banks under us are unit banks, but these have chosen to be small.
For example, there is a bank called Gandhidham Cooperative Bank in Kutch, which came into existence in 1949. The city of Gandhidham and Adipur itself were founded after 1948 when the refugees from Pakistan settled there. These refugees had left everything back in Pakistan and were starting the life afresh. Bhai Pratap Dialdas, along with few others, started the Bank with no capitals whatsoever, but they had ideas. Today, this Bank has grown in line with the growth of Adipur.
In Jambusar, there is a cooperative bank, which is 110 years old and works for economic empowerment of the people of the town. Similarly, the Rajkot Nagarik Sahakari Bank is now a very big Bank, which we had started with a capital of `849. The capital did not come from the government, but from the locals. So, that is the history of cooperative banks in Gujarat.
We are serving the middle and lower classes of people, and thus, adding to the financial inclusion drive. Cooperative is no capitalism or communism; it’s simple cooperative-ism. ‘One for each and each for all’ is the principal of cooperatives, and that is the foundation of our campaign ‘Proudly Cooperative’.
What has been the contribution of cooperatives in the economy of Gujarat?
There are 226 urban cooperative banks, 18 district cooperative banks and one Gujarat State Cooperative Bank. Apart from these, we have milk producing cooperative societies, consumer cooperatives, cooperative housing societies, etc. So, the concept of cooperatives has been keeping Gujarat’s economy vibrant. A small example of this can be the information given in the advertisement of Amul, wherein they mention that daily 47 lakh women across 15,000 villages collect milk worth `17 crore every day. This is one of the biggest examples of women empowerment implemented so far. If the story of cooperatives were taken away from the history of State, Gujarat would not have been this vibrant.
What is the reason of success of cooperative banks in Gujarat?
There are various reasons for the success of the cooperative movement, but one of the main reasons is integrity of the people of Gujarat and also the entrepreneurship, which flows in the blood of Gujarati people.
How come the size of small banks has remained small?
The small banks have chosen to be small. They would have grown, but they had decided to serve the community in which they exist. We can imagine how the bank in Jambusar could have grown after 110 years. But, the locals had decided to keep it small. Moreover, the banks’ management feels that small is beautiful. The decision taken by banks to cater to the communities have made so many lives better. So, we need to understand that the aim of the bank is to cater to the needs of its people and not just to grow as a big bank.
What can RBI and the government do to better the cooperative banks’ future?
Be it the RBI or any other regulator, they need to understand the language of small people. We need to give more to further expand the concept of cooperative–ism, so that the regulators understand cooperatives better.
What would you like to say about the role of cooperative banks in PMJDY?
PMJDY is a laudable initiative by the Modi Government. Cooperative banks can be a good vehicle to achieve this dream of financial inclusion. Although commercial and nationalised banks can help immensely in fostering the drive, cooperative banks can do rural penetration much better as compared to commercial banks.
How do you think advancements in technology are impacting the banking sector?
Technology facilitates smart banking. So, at the Federation, we have started a specialised centre, which will provide all technological assistance to small banks. The RBI wanted all the small banks to be enabled with Core Banking Solution (CBS). But, at the same time, the expenditure to be incurred by small banks to do this is too much. So, compulsion will not serve the purpose. We are in touch with IDRBT and NPCI, both these have agreed and have come up with proposal to help us with smaller banks to be technology enabled. But, we still need some hand-holding from the RBI. In fact, the RBI in the Gandhi Committee Report has also suggested that there should be some financial support for the small banks. But, technology is a must and I would like to quote Bill Gate that “Banking that we see today will be diminished like dinosaurs tomorrow”.
Cooperative is no capitalism or communism; it’s simple cooperativeism. ‘One for each and each for all’ is the principal of cooperatives, and that is the foundation of ‘Proudly Cooperative’ campaign
How ready are banks to accept the technology advancement?
Banks are ready and as a federation, we are influencing these to get into the technology game. This is the reason we have started CBRD. We are in the process to articulate the system and bring these into technology. We, along with the State’s cooperative banks in Gujarat, are trying to bring a concept of cooperative ATMs, which will help small banks a lot. The project is still under discussion, so I cannot reveal much detail, but we are working towards that.
What is your dream project?
As a federation, we are dreaming to develop a cooperative umbrella, in which it will be easy for smaller banks to work. All the banks must be connected with technology, so that small banks don’t have much of burden. The umbrella works from down to up and from up to down, so the idea is that the bigger banks will help the small banks. As an individual, I very firmly believe in cooperatives and we want to serve to the smaller people, as it changes the lives for better. I would like to conclude by once again quoting Bill Gate, where he says, “Banking is necessary, banks are not.”