BackRBI sets up committee on urban cooperative banks
Panel to re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the urban cooperative banking sector
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Mumbai: The Reserve Bank of India (RBI) on Friday said it has constituted a committee under the chairmanship of deputy governor R. Gandhi on urban cooperative banks (UCBs).
According to the central bank, the committee will re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the urban cooperative banking sector.
The committee consists of seven other members, including officials from the urban cooperative banking space. It includes M.V. Tanksale from Indian Banks’ Association; Suma Varma, principal chief general manager, department of cooperative banking regulation, RBI; and Joseph Raj, joint legal advisor from the legal department at RBI.
The committee will examine whether it is time to give permits to new UCBs as per the recommendations of the expert committee on licensing of new UCBs set up under the chairmanship of Y.H. Malegam.
The committee will determine the modalities of implementing a suggestion made by the Malegam committee regarding 50% in value of deposits should be held by voting members to assure that confidence regarding proper management is generated among investors. Alternatively the committee may also propose a feasible structure that puts majority voting in the hands of contributors of funds.
The terms of reference of this committee will include which lines of business that commercial banks undertake can be permitted for UCBs and what should be the benchmark in terms of size of business, capital requirement, regulatory regime, etc. In view of the limited legal powers and resolution options, what should be the appropriate size up to which a UCB may be able to grow without undue risk to the system.
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