report of the working group on improvement of banking services

29
Co-operative Structure
3.5 UTL is having Lakshadweep, Minicoy & Amindiv Islands Co-operative Societies Regulation 1960 and Rules
1961 approved by <strong>the</strong> Government <strong>of</strong> India. Reportedly, UTL has 57 co-operative societies with 68,820
members by <strong>the</strong> end <strong>of</strong> March 2007. There are a few primary agricultural credit societies in <strong>the</strong> island which
are in a moribund state. The islands do not have any district Co-operative bank or a State Co-operative bank.
The island administration had proposed to start a State Co-operative Bank in <strong>the</strong> last UTLBC meeting held in
April 2007. In <strong>the</strong> absence <strong>of</strong> a co-operative structure, refinance support from NABARD at concessional rate <strong>of</strong>
interest is not availed. The Working Group felt that a co-operative structure with State Co-operative Bank at <strong>the</strong>
apex level and PACS at <strong>the</strong> base level may not be viable for <strong>the</strong> present given <strong>the</strong> peculiar features <strong>of</strong> <strong>the</strong> UTL.
However, <strong>the</strong> proposal could perhaps be moved forward after comprehensively considering <strong>the</strong> business
potential, viability and pr<strong>of</strong>itability <strong>of</strong> such a structure once <strong>the</strong> economic development <strong>of</strong> <strong>the</strong> UTL moves
substantially forward. Pending setting up <strong>of</strong> such a structure, <strong>the</strong> PACSs in <strong>the</strong> islands may be linked to <strong>the</strong>
branches <strong>of</strong> <strong>the</strong> commercial banks for ensuring flow <strong>of</strong> concessional credit support from NABARD.
Financial Inclusion
3.6 In early 2006 when RBI advised <strong>the</strong> Convenors <strong>of</strong> SLBC to adopt at least one district in <strong>the</strong>ir respective
States for <strong>the</strong> purpose <strong>of</strong> achieving 100% Financial Inclusion, Syndicate Bank, <strong>the</strong> Convenor <strong>of</strong> UTLBC
identified <strong>the</strong> island <strong>of</strong> Kalpeni for achieving 100% financial inclusion. In <strong>the</strong> UTLBC meeting held on April 25,
2007, Syndicate Bank <strong>report</strong>ed having achieved first phase <strong>of</strong> financial inclusion in this island by opening at
least one bank account in each household. Thus, a beginning was made by completing <strong>the</strong> first phase <strong>of</strong>
financial inclusion in one island in <strong>the</strong> UTL. Subsequently, o<strong>the</strong>r islands were taken for achieving first phase <strong>of</strong>
100% financial inclusion. Household surveys for <strong>the</strong> purpose were conducted by <strong>the</strong> bank staff. Since certain
inhibitions were observed in some people for opening interest-bearing savings bank account, on account <strong>of</strong>
religious reasons, <strong>the</strong> bank decided to allow opening <strong>of</strong> current accounts by individuals, which do not earn any
interest. Syndicate Bank has since <strong>report</strong>ed having completed 100% financial inclusion in all <strong>the</strong> nine islands
after opening about 2300 no-frill accounts and issuing about 90 GCCs. The Group has been informed that a
formal function to mark this achievement would be held by Syndicate Bank shortly.