A team of consultants has recommended tough reforms, a more focused regulatory regime and the winding up of co-operative banks with a negative net worth to clean up the rural financial institutions.
The report jointly commissioned for the Central Bank and the Asian Development Bank also recommends a stronger regulatory role for the rural financial sector.rn
rnThe ultimate aim of restructuring the Cooperative Rural Development Banks is to privatize them according to the report.rn
rnExperts however say that a lot of work remains to be done before these institutions could be sold to the private sector. rn
rnThe report by Vinstar Consultancy says, a potential crisis is possible in the near future with respect to the ability of co-operative rural banks or CRBs to remain viable due to poor governance, poor management and the lack of competent supervision.rn
rnThe rural banks have public deposits of over Rs. 17 bn.rn
rnThe consultant says though these 307 banks can raise deposits without difficulty,