DCCBs On Digitization Spree

- Ravi

Cooperative banks in India are as old as commercial banks and their peculiarity is that they have presence in the remotest parts of the country where commercial banks hesitate to enter and that they maintain personal level relations with customers, who prefer to have a ‘touch and feel’ when they do banking. These banks have a 3-tier structure, and according to the National Federation of State Cooperative Bank (NAFSCOB), there are 363 DCCBs, which function as a crucial link between the 32 State Cooperative Banks and some 92,000 PACS. The functioning of these entities is linked as the DCCBs depend on SCBs for funding while the PACS rely on DCCBs. The urban cooperative banks, or UCBs, however, are not part of this structure.

In their effort to fulfil their crucial role and in order to be in consonance with the prevailing systems and processes in banking in the country, DCCBs have been making efforts to induct technology in their operations. In a significant effort, all of them have completed CBS implementation and most of them are now in the process of adopting digitization so that they can offer services like internet banking, mobile banking, instant fund transfer and eCommerce. However, many of them are facing resource constraints to take up digitization in a big way. They also do not have the management bandwidth to implement services like internet banking and mobile banking solutions. As such, they expect that NABARD should make funds available for digitization in the same way it did for implementation of CBS in these banks.

In fact, it is already late for these banks to be in the reckoning by adopting technology and management transformation. If they lag behind any more it is serious trouble for them especially when disruptors are on the scene like the payments banks and small finance banks and newgen fintechs which fulfil several of the usual banking needs of the public in a more efficient manner using technology.