The cooperative banking scene has witnessed a steep decline in financial standards and it explains the RBI laying down stringent rules for checking a bank’s financial health. However, the evolution of the strict norms by the RBI has ruffled the cooperative banking sector’s feathers.
Reduced to basics, the new tough parameters consist in directing the UCBs to maintain a gross non-performing assets ratio of 10 percent as against a net 10 percent in the former times. The banks not conforming to the standard would attract punishment from the RBI.
The associations of the UCBs have expressed their serious reservations about various norms laid down by the RBI and warned the move could cramp the UCBs’ style.
The new norms would also mean capping loans at 70 percent of advances, deposits of 20 top account holders not exceeding 30 percent and the banks having capital adequacy less than 6 percent being put under the RBI’s scanner.