MADISON, Wis.—World Council of Credit Unions (WOCCU) last week welcomed a delegation of 10 CEOs and board chairs from India's cooperative banks as part of the group's tour of North American credit unions and their respective associations. The delegation, all members of India's National Federation of State Cooperative Banks (NAFSCOB), is part of a restructuring program to address non-performing loans and governance issues in rural financial cooperatives. WOCCU has offered to provide technical assistance to the cooperative banks in support of the government's economic reform efforts.
WOCCU was one stop on the two-week tour, which includes visits to the National Federation of Community Development Credit Unions and Lower Eastside People's Federal Credit Union in New York, Credit Union Central of Canada and Credit Union Central of Ontario in Toronto, Community One Federal Credit Union in Las Vegas, and WesCorp and Water & Power Credit Union in Los Angeles. Issues of interest for the group include credit union regulatory efforts, taxation, technology and human resource and management issues, according to Bhima Subrahmanyam, NAFSCOB's managing director.
"We'd especially like to understand your regulatory mechanism and its impact on credit unions," Subrahmanyam said. "Competition and capital adequacy requirements are also of interest. Indian cooperatives haven't been meeting their capital requirements due to poor resources."
India's government, with financial support from the World Bank and Asian Development Bank, is in the process of a US$3.4 billion reform effort and recapitalization of the country's financial cooperative sector. Those efforts are supported by a controversial plan to forgive US$15 billion in non-performing loans to small Indian farmers, an estimated US$8.5 billion of which will go to forgive loans granted by India's cooperative financial institutions.
A difficult situation has been made worse by the fact that India's cooperatives recently lost their tax-exempt status, putting additional pressures on institutions to provide services, Subrahmanyam said. The National Bank for Agricultural and Rural Development is responsible for the reforms and recapitalization, a process in which WOCCU hopes to assist through the influence of NAFSCOB and its member cooperatives.
"We applaud the terrific work that the National Federation of State Cooperative Banks and its members are doing to serve their members," said Pete Crear, WOCCU's president and CEO. "We hope this is the beginning of a closer relationship between our two organizations."
Now more than 100 years old, India's financial cooperative system is the largest in the world in terms of people served. Credit union pioneer Edward A. Filene's visit to India's financial cooperatives in 1906 inspired him to help launch the U.S. credit union movement.
India's current financial cooperative movement consists of a three-tier structure of urban cooperative banks, rural financial cooperatives and credit societies. The rural cooperative tier is further divided into 108,000 primary agricultural cooperatives that meet the needs of 127 million members, including small farmers and traders, and district cooperative banks that serve both individuals and other cooperatives. The country also supports 30 state-level cooperative banks, the group to which NAFSCOB belongs. In total, India's financial cooperatives serve an estimated 267 million to 350 million people.
In addition to presentations from WOCCU staff, the delegation also heard from CUNA & Affiliates, CUNA Mutual Group and Heartland Credit Union, all located in Madison. The National Federation of Urban Cooperative Banks and Credit Societies, India's trade association for urban cooperatives, is an associate member of WOCCU.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.