Alternatively, the provision – for a fee – of guarantees or insurance to banks or their lenders by official funds with the capacity to absorb credit risk could ensure or restore bank access to funding. Of course such solutions are not as easily taken off the shelf as plain vanilla lending. In particular any insurance contract is beset by moral hazard problems.
As there were many unlicensed cooperative banks operating in the country, the Committee on Financial Sector Assessment (CFSA) (Chairman: Dr. Rakesh Mohan) had recommended  BIS central bankers’ speeches  3  that no unlicensed cooperative bank may be allowed to operate in cooperative space beyond 31 March 2012. 19.