The COVID-19 crisis has led to economic hardship for consumers, businesses and communities across the world. For cooperative banks, the crisis was an opportunity to show their resilience as people-centred financial providers. Subrahmanyam Bhima, President of the International Cooperative Banking Association, a sectoral organisation of the ICA, shared some insights into the sector’s response.
How were cooperative banks impacted by the COVID pandemic?
Subrahmanyam Bhima: Cooperative banks across the globe rendered exemplary services during the pandemic, responding very well to the challenges posed by the spread of COVID-19. The response yielded positive results and kept customers at ease by continuing to provide financial services.
The timely measures taken by governments and regulators helped to curtail and contain the negative impact of COVID-19 on the functioning of cooperative banks. Special efforts initiated by regulators and the banks’ own management teams enabled cooperative banks at all levels to continue their normal business with adequate staff, cash and other facilities.
Recent research by your member the EACB showed that European cooperative banks had strong capital positions, despite the pandemic. Was this mirrored in other regions?
Subrahmanyam Bhima: Almost all members of ICBA have initiated measures to help contain the spread of COVID-19 in their countries. ICBA members, supported by their regulatory authorities, availed the advantages of regulatory measures to continue to carry out banking and lending operations, and offer moratoria on loans, among other things. I would like to mention the excellent contributions of many ICBA members, particularly NAFSCOB, NCUI, NAFCUB, NCDC, TSCA Bank, Karnataka SCB in India, Samabaya Bank in Bangladesh, SANASA Federation in Sri Lanka, KUSCCO in Kenya, MASS-SPECC Coop Development Centre of Philippines, National Cooperative Council of Poland, EACB from Belgium, and DGRV of Germany. Various important measures have been taken at the European level as reported by Confederation Nationale Credit Mutuel in France, one of the members of ICBA. The positive response of ICBA members is a continuous process. They are committed to contribute by all means to contain the spread of COVID-19 pandemic.
Cooperative banks in many countries have consolidated their financial position with available special liquidity financial assistance by national level regulators.
Could the solid financial performance enable cooperative banks to differentiate themselves from shareholder-owned banks?
Subrahmanyam Bhima: The spread of COVID-19 in many countries has impacted the normal functioning of all financial institutions, their customers, borrowers, and agricultural/farming activities. Due to the mandatory shutdown of non-essential businesses and the confinement of people to their homes, the effects of COVID-19 are unevenly distributed among households, workers, businesses, and communities. The role and active participation of cooperative banks at all levels assumed special significance in facilitating changes and reversing the adverse impact of the pandemic. Cooperative banks have strived to keep open their banking channels during the entire lockdown period, while ensuring compliance of health advisories such as social distancing, PPE, and sanitisation, and meeting all regulatory, supervisory and statutory provisions. Their member-owned status, their commitment to serving members, their reasonable financial performance, and their honouring of online operations amply differentiated them from the government-owned banks.
How could regulators further support cooperative banks to ensure they continue to lend to households and businesses?
Subrahmanyam Bhima: Regulators and governments in many countries, including India, extended support by announcing and implementing a number of measures to enable cooperative banks to lend to all categories of customers.
The regulators globally extended support to cooperative banks to carry out their normal functions, including moratorium.
ICBA members responded to the needs of their members and communities while remaining resilient.
The Reserve Bank of India decided to continue with the accommodative stance as long as necessary – at least until the next financial year – to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
Read the full interview with Mr Bhima in the document attached below.