NEW DELHI: The N S Vishwanathan-led expert committee set up by the Reserve Bank of India (RBI) to study the functioning of urban cooperative banks (UCBs) and provide a roadmap for strengthening the sector has suggested a four-tier framework on the basis of deposit base and size to regulate the banks.
The eight-member committee has also favoured setting up of the umbrella organisation (UO) to provide UCBs liquidity support and suggested that the National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB) should expedite the process of setting up the proposed entity.
“The UO should be financially strong and be well governed by a professional board and senior management, both of which are fit and proper. As an alternative to mandatory consolidation, the committee prefers smaller banks acquiring scale through the network of the UO, which is one of the successful models of a strong financial cooperative system globally.,” according to the report submitted by the expert panel.