Page 18 - Banking Finance October 2024

to promote cooperative-driven eco-
nomic development, strengthen the
cooperative movement, and extend its
reach to the grassroots. The Secretary
also noted that approximately 65,000
Primary Agricultural Cooperative Soci-
eties (PACS) will be computerized by
Ò»©­ February 2025.

Government Plans 'One
State, One RRB' Policy to

Consolidate Regional Ru-
ral Banks

Finance Minister Urges RRBs to Boost Credit for The Union Ministry of Finance is work-
ing on a new policy to consolidate Re-
MSMEs
gional Rural Banks (RRBs) under the
Union Finance Minister Nirmala Sitharaman has called on regional rural banks "One State, One RRB" framework to
(RRBs) to ensure adequate credit flow to the micro, small, and medium en- improve efficiency and reduce compe-
terprises (MSME) sector. She emphasized the importance of raising aware- tition among sponsoring public sector
ness about government schemes, particularly in aspirational districts, to banks. The plan would reduce the num-
achieve the 'Vikshit Bharat' goal by 2047. Sitharaman's comments came ber of RRBs from the current 43 to
during a review meeting focused on the performance of RRBs in Gujarat, around 30, merging RRBs within a
Maharashtra, Madhya Pradesh, Chhattisgarh, and Rajasthan. The discus- state under a single sponsor bank.
sion highlighted business growth in MSME clusters, financial inclusion, and
the need to upgrade digital technology services in rural areas. This policy aims to enhance the tech-
nological capabilities of RRBs, particu-
larly in mobile banking, and streamline
RBI Cancels Licenses of 78 tions, with 36 UCBs losing their li- operations. The goal is to improve the
censes. Other states affected include
Urban Co-operative Banks Uttar Pradesh, Karnataka, Gujarat, quality of service and support financial
Since 2014 and Rajasthan. inclusion while minimizing competition
among RRBs within the same state.
The Reserve Bank of India (RBI) has The Ministry has yet to provide an of-
cancelled the licenses of 78 Urban Co- New National Cooperative
ficial comment on the timeline for this
operative Banks (UCBs) since 2014, Policy Expected in Next 2- initiative.
with 46% of these banks located in
Maharashtra, according to data pre- 3 Months
sented in Parliament. The cancella- India's new National Cooperative Policy Government May Reduce
tions were due to reasons such as in- is set to be announced within the next Number of RRBs to 30
adequate capital, poor financial perfor- two to three months, according to The Indian government is considering
mance, and potential harm to deposi- Cooperation Secretary Ashish Kumar a policy to reduce the number of Re-
tors' interests. Bhutani. A 47-member committee, led gional Rural Banks (RRBs) from 43 to
by former Union Minister Suresh
In 2024 alone, 10 UCB licenses were around 30. RRBs, established under
revoked, including banks in Prabhu, has prepared a draft policy the RRB Act of 1976 to serve rural ar-
Maharashtra, Karnataka, Uttar that is now in its final stages. eas, are sponsored by public sector
Pradesh, and other states. Over the The new policy is aligned with the vi- banks with capital contributions from
past decade, Maharashtra has seen the sion of "Sahakar se Samriddhi" (pros- the Centre, states, and sponsor banks.
highest number of license cancella- perity through cooperation) and aims Major sponsors include State Bank of

16 | 2024 | OCTOBER | BANKING FINANCE