Co-op banks lag behind in Y2K compliance

The study found central co-operative banks and regional rural banks were the next worst prepared to tackle the crisis with less than 16 per cent of them being compliant. Compliance is being pursued in the rest of the co-operative banks with computerised operations. Nearly all commercial banks are fully prepared forthe year 2000. By March 1999, 96.16 per cent of commercial banks will have ensured that "neither functionality nor performance is affected by dates prior to, during and after 2000," the study said. Those which haven’t (3.84 per cent) are expected to achieve it by June 1999.

The central bank has set March of this year as the deadline for achieving Y2K compliance. It has warned of penal action against those banks and NBFCs which fail to comply within this time frame. Under the provisions of the RBI Act, the central bank can impose cash penalties, higher cash reserve ratio, bar entry to the money market or stop refinance facility. The Y2K status will also be included in the risk factors for loan sanctioning. According to the report, the Y2K compliance efforts of the General Insurance Corporation, Industrial Development Bank of India, Life Insurance Corporation are expected to spill over to 1999. Latest statistics (compiled in November 98) show 41.67 per cent of FIs are Y2K compliant and 16.66 per cent areexpected to achieve by it December 98.

RBI chief GM S R Mittal ruled any major disruption in banks or FIs’ activities due to systems not being Y2K compliant.