Page 23 - Banking Finance July 2023

Urban co-op banks seek Under bullet repayment, the principal function as branches of The Cosmos Co-
and interest on a loan are paid in lump operative Bank Limited, Pune
increase in gold loan limit
sum by a borrower to a lender at the (Maharashtra) with effect from May
from Rs. 2 lakh to Rs. 5 end of the loan tenure. 29, 2023," RBI's statement noted.
lakh
RBI sanctions merger of Cooperative banks will
Urban cooperative banks (UCBs) have
sought enhancement in the ceiling on Maratha Co-op Bank with soon be able to do com-
loans against gold and gold jewellery
Cosmos Co-op Bank promise settlements,
from Rs. 2 lakh to Rs. 5 lakh under the
bullet payment scheme to meet the RBI has sanctioned the voluntary write-offs on NPAs:
funding requirements of small/mar- Scheme of Amalgamation of Maratha
Shaktikanta Das
ginal borrowers. Sahakari Bank with The Cosmos Co-
Reserve Bank Governor Shaktikanta
operative Bank.
Jyotindra Mehta, President, National
Das said cooperative lenders will soon
Federation of Urban Cooperative Banks The Scheme will come into force with
be able to do technical write-offs and
& Credit Societies (NAFCUB), observed effect from May 29, 2023, RBI said in
execute compromise settlements with
that bullet payment method was per- a statement.
defaulting borrowers. RBI has decided
mitted by the Reserve Bank of India
The central bank had placed Maratha to widen the scope of the framework
(RBI) after persistent requests from
Sahakari Bank, which was founded in for resolution of stressed assets, under
the UCB sector.
1946 and has seven branches in which all the regulated entities includ-
The RBI permitted bullet repayment of
Mumbai, under Directions under Sec- ing cooperative lenders will now be
gold loans up to Rs. 1 lakh to start with
tion 35 of the Banking Regulation Act, able to execute "compromise settle-
(in 2007), which was increased later to
1949, on August 31, 2016. The Direc- ments and technical write-offs" to re-
Rs. 2 lakh in 2014, with the repayment
tions were extended from time to solve non-performing assets, Das said.
being restricted to 12 months. "The
time.
time is ripe now for regulations in this Till now, this avenue for dead asset
regard to be more liberal and support- "The Scheme has been sanctioned in resolutions was available only with
ive to enable banks to face competi- exercise of the powers conferred un- scheduled commercial banks and select
tion," said Mehta. der Sub-Section (4) of Section 44A read non-bank finance companies, Das said,
with Section 56 of the Banking Regu- adding that comprehensive guidelines
UCBs are allowed to extend gold loans
lation Act, 1949. on the same will be released soon.
under bullet repayment and Equated
Monthly Instalment (EMI) repayment "All the branches of Maratha Sahakari It can be noted that the cooperative
routes for 12 months. Bank Ltd., Mumbai (Maharashtra) will lending sector frequently makes head-
BANKING FINANCE | JULY | 2023 | 21