NEW DELHI: After bringing all Urban Co-operative Banks (UCB) under the aegis of the Reserve Bank of India (RBI), the Centre is now working on creating an ‘umbrella organisation’ for UCBs with an initial investment of Rs 300 crore. This organisation will upgrade their technical infrastructure, provide liquidity support and train manpower to improve their efficiency and transparency.
According to the sources in the finance ministry, this umbrella organisation will be along the lines of NABARD (National Bank for Agriculture and Rural Development). “Upgrading UCBs is on top of the agenda. Now, since it is under the direct supervision of the RBI, there will be an umbrella body on the lines of NABARD which will look after capital requirement, upgrade IT infrastructure of UCBs and will streamline and train manpower and improve transparency and governance,” a senior official from the finance ministry told TNIE, adding that this will prevent a situation like the one with the Punjab and Maharashtra Cooperative Bank in the future.
The project has already approved, sources add, and RBI Governor Shaktikanta Das had hinted at the same during his recent address at the 7th SBI Banking & Economics Conclave. “In case of the UCBs, special efforts are being made to move towards a risk-based and pro-active supervisory approach to identify weaknesses in their operations early. An early warning system with a stress-testing framework has been formed for timely recognition of weak banks for appropriate action. Formation of an ‘umbrella organization’ has been approved to provide liquidity, capital, IT and capacity building support to UCBs,” Das had said.
The Union Cabinet, on June 24, had given the nod to an ordinance bringing 1,482 urban cooperative banks and 58 multi-state cooperative banks, with over 86 million depositors and Rs 4.84 lakh crore deposit, under the ambit of the RBI.