ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Build Plants, Grow Clerks

extension of insurance cover to Rs 5,000 per account cannot thus be considered as adding significantly to the risks of the Corporation. The Corporation's business is conducted in two separate accounts termed as General Fund and Deposit Insurance Fund. The Deposit Insurance Fund is credited with the premium collected by the Corporation and the returns out of the investment of surplus funds in this Fund. The General Fund comprises share capital and reserves built up from investments out of share capital. All expenses other than payment of insurance liability are charged to General Fund. As on December 31, 1967 the General Fund showed a surplus of Rs 12.66 lakhs over and above the paid-up capital of Rs 100 lakhs. The Deposit Insurance Fund had resources of Rs 8.59 crores which formed 0.91 per cent of insured depo- sits; with the extension of insurance cover the percentage will come down this year- Government has now initiated legislation to extend deposit insurance to State and Central co-operative banks and to large primary non-agricultural credit societies with net worth exceeding Rs 1 lakh. Insurance of deposits of co-operative banks, while a wholly desirable move, bristles with problems. Regulation of co-operative banking is a jealously guarded power of State Governments and is vested in the Registrars of Co-operatives. But deposit insurance will require that the Deposit Insurance Corporation or the Reserve Bank should have powers of inspection and regulation and even of ordering winding up or amalgamation of these institutions. Thus extension of deposit insurance cover to these bodies (whose deposits arc about Rs 450 crores) will mean State Governments yielding a good bit of their control over co-operatives to the Reserve Bank. This will certainly be beneficial from the national point of view, insofar as it will extend the area of effective monetary control, but will State Governments willingly relinquish their powers in an area of proven possibilities of political patronage ?

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