Page 22 - Banking Finance July 2020

CO-OPERATIVE BANK NEWS

CO-OPERATIVE BANK

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Urban, multi-State coop- last year. In September, the RBI was ministry, this umbrella organisation will
forced to supercede the PMC Bank's be along the lines of NABARD (National
erative banks to come un- board and impose strict restrictions. Bank for Agriculture and Rural Develop-
der RBI supervision "I am very sure when this announce- ment). "Upgrading UCBs is on top of the

To ensure that depositors are pro- ment was made, people have wel- agenda. Now, since it is under the di-
tected, the Centre has decided to bring comed it, and depositors will get pro- rect supervision of the RBI, there will be
all urban and multi-State cooperative tection and benefit out of it," Mr. an umbrella body on the lines of
banks under the direct supervision of Javadekar said, regarding the ordi- NABARD which will look after capital
the Reserve Bank of India (RBI). The nance approved by Cabinet. requirement, upgrade IT infrastructure
Union Cabinet approved an ordinance The Cabinet also approved a scheme of UCBs and will streamline and train
to this effect at its meeting on Wednes- manpower and improve transparency
to provide interest subvention of 2% for
day. and governance," a senior official from
a 12-month period to small borrowers the finance ministry told TNIE, adding
"In a landmark decision, the urban co- with loans up to Rs. 50,000 under the that this will prevent a situation like the
operatives and multi-State cooperative Shishu category of the Pradhan Mantri one with the Punjab and Maharashtra
banks, which are 1,540 in number and Mudra Yojana. This relief had been Cooperative Bank in the future.
have a depositor base of 8.6 crore, who announced as part of the
have saved Rs. 4.84 lakh crore, a huge Aatmanirbhar Bharat package last The project has already approved,
amount. They have been brought under month. sources add, and RBI Governor
RBI supervision process, which is appli- Shaktikanta Das had hinted at the
cable to scheduled banks. Depositors will Nabard-like agency likely same during his recent address at the
get more security because of today's 7th SBI Banking & Economics Con-
decision," Information and Broadcasting for UCBs soon clave. "In case of the UCBs, special
Minister Prakash Javadekar told journal- After bringing all Urban Co-operative efforts are being made to move to-
ists after the meeting. Banks (UCB) under the aegis of the wards a risk-based and pro-active su-
Reserve Bank of India (RBI), the Cen- pervisory approach to identify weak-
Currently, these banks come under nesses in their operations early. An
dual regulation of the RBI and the tre is now working on creating an 'um-
brella organisation' for UCBs with an early warning system with a stress-
Registrar of Co-operative Societies. testing framework has been formed for
The move to bring these urban and initial investment of Rs 300 crore. This timely recognition of weak banks for
multi-State co-op banks under the su- organisation will upgrade their techni- appropriate action. Formation of an
pervision of the RBI comes after sev- cal infrastructure, provide liquidity sup- 'umbrella organization' has been ap-
eral instances of fraud and serious fi- port and train manpower to improve
their efficiency and transparency. proved to provide liquidity, capital, IT
nancial irregularities, including the and capacity building support to
major scam at the Punjab and According to the sources in the finance UCBs," Das had said.
Maharashtra Co-operative (PMC) Bank

22 | 2020 | JULY | BANKING FINANCE