Delhi based Kangra Cooperative Bank raised a few points for the consideration of RBI’s Standing Advisory Committee (SAC) for Urban Cooperative Banks.
It bears recalling that the Reserve Bank of India has decided to hold the 35th meeting of the Standing Advisory Committee for Urban Cooperative Banks on 6th January 2023 at Mumbai. The meeting will be chaired by M Rajeshwar Rao Deputy Governor, RBI.
The objective of the meeting is to have stakeholders’ discussions on issues of regulation that have sectoral significance.
We are reproducing a few points raised by Kangra Cooperative Bank:
1. UCBs have limited lending venues due to limited expertise and business risk taking capacity/ infrastructure. Housing finance remains one of the core sectors for UCBs lending. Hence, it is proposed that the exposure limit for Housing Finance be increased from 10% to 15% of total assets (ANBC), instead of 10+5. Further, 30% of this can be reserved for PSL.
2. There is wide variation in property rates in Metropolitan areas/ Towns and other centers, a separate limit of amount for Metropolitan areas/ Towns and other centers is recommended.
3. It is a welcome step to consider Net NPA of 3% for FSWBM. But our suggestion is that it may be either 3% net or 7% gross.
4. As per procedure, UCBs makes members and also opens deposit accounts of non-members. As per guidelines, periodic re-KYC of members as well as non-member customers is to be done as per the risk category. While for all new accounts it is being implemented in letter and spirit. But for all old accounts it has been experienced that some members/ customers have shifted to their native places / other places without informing the bank and the bank does not have their contact number/mobile numbers or email/postal addresses and even efforts to contact them for re-KYC fail.
There are no operations also in such accounts. UCBs may be permitted to exclude these accounts from the total number of accounts/members for KYC compliance %age purpose as these accounts will be debit freezed and no debit operation shall be allowed without completing the re-KYC.
5. In Metropolitan areas, financing to the industrial / agriculture avenues are almost negligible. Industrial activities are generally banned in Metro areas due to increasing pollution. It is therefore requested that for Metro based UCBs, PSL be kept at 50% of ANBC for March 31, 2024.
