In a statement issued here recently, Patel pointed out that in absence of compliance with default guarantee by previous governments, co-operative banks had lost interest in exposing funds to long term credit on a simple guarantee against loss. He felt that if the government took some steps to remove this anomaly, the co-operative banking sector could be roped in to improve its advance level which stood at Rs 6,600 crore against the deposit mobilisation of Rs 10,260 crore.

Patel has urged the government to notify the draft amendment of the co-operative legislation to repeal Section 71 of the Co-operatives Act which was finalised by Shanker Singh Vaghela government so that credit restrictions on the co-operative sector are eased. He regretted that funds owned by co-operative banks were subjected to income tax deduction and indiscriminate assessment was being done by the department despite the government's representation to the Finance Ministry against this.

He has reminded the authorities that in the Bangalore District Co-operative Bank Ltd's case, the Supreme Court had held that even statutory income of that bank was exempt from income tax. "But unfortunately the appellate authorities in Gujarat are not taking cognisance of this landmark ruling," said.