Mamata Banerjee govt to use cooperative societies for shielding villagers from ponzi schemes

The West Bengal government on Wednesday announced a plan to extend banking services through 2,661 cooperative societies, which has 1.5 crore members, in the state in 2018-19 financial year, in a bid to rescue people in the rural areas from ponzi schemes, state cooperation minister Arup Roy said.

Around 21% of the 3,354 gram panchayats in the state have no branches of banks.

The step is significant in the run-up to the Lok Sabha elections since ponzi schemes such as Saradha, Rose Valley, I-Core, Chakra, Tower had vanished with thousands of crores of rupees of million of depositors. These schemes became an embarrassment for the ruling Trinamool Congress since CBI and ED started investigation into these that led to the arrest of several senior MPs, ministers and MLAs.

The minister said that customer service points (CSPs) of the nearest cooperative bank will be opened at the premises of the agriculture cooperative societies that provide crop loans.

Former general manager of nationalised UCO Bank U Sen said the plan has one constraint. “The step will not come under the Reserve Bank radar if the banking services are offered only to members of the cooperative societies. But if the CSPs provide the service to non-members, RBI approval for opening the CSPs will be required,” said Sen.

The minister said while the state planned to make more people members of the cooperative societies, their existing number is more than 1.55 crore. “The banking services from these premises will attract more and more people to become members of the societies,” said Roy.

The cooperative societies are administered and regulated by state cooperation department. The cooperative banks administered by state government are regulated by the RBI.

Roy said that there are two ways of becoming a member of such a cooperative society -- as individuals and as self help groups. The minister also said in the current financial year, state cooperative banks will open 75 new branches that will be located in gram panchayats without any bank.

A senior minister, who did not wish to be named, said that the initiative will come handy in the run-up to the Lok Sabha polls, when the opposition parties will certainly raise the alleged involvement of Trinamool Congress leaders with different chit fund entities.

Sayantan Basu, general secretary of BJP’s West Bengal unit, termed the announcement as a poll gimmick. “This government makes a lot of promises and false promises. But their reflections are hardly felt,” he said.

The cooperative sector in Maharashtra, one of the biggest in the country, has faced allegations of corruption and malpractices even though it has improved farmer’s bargaining power while selling produce and buying inputs for crops. Most of the 13,500 cooperative credit societies in the state enjoy political patronage cutting across the party line.

The interference of the board of directors was such that they were the largest defaulters of lakhs of rupees taken as loans that forced the state government to amend Maharashtra Cooperative Societies Act prohibiting the societies to give loans to the directors and also fixing the liabilities on the personal assets of the directors.

At least 35% cooperative credit societies are making losses with their credit:deposit ratio in bad shape. The cooperation department has appointed administrators on hundreds of cooperative credit societies after complaints from the depositors piled up with the government.