Opening Cooperative bank no more easy

It used to be easy to open a cooperative bank with as little capital as Rs 15 lakh. But no more so. RBI is coming up with new guidelines in which minimum capital requirement for cooperative bank would be revised to Rs 3 crore from earlier Rs 15 lakh.

The Reserve Bank said the minimum capital requirements for cooperative banks will soon go up to as much as Rs 3 crore from the present Rs 15 lakh.

“Depending on the location and area…We are coming up (with the guidelines for cooperative banks). There will be liberal norms for setting up a bank in backward areas and slightly tougher norms in the banked areas,” RBI executive director S Karuppasamy told reporters.

He said under the existing norms, a cooperative bank can be set up with a minimum capital of Rs 15 lakh, which will now be increased to Rs 50 lakh for banks in the backward areas and Rs 3 crore for urban areas which already have banking infrastructure.

About the timeline for new guidelines, Karuppasamy said, “We are in the final stage… Will come out with it shortly.”

Cooperative banks have a strong presence in Maharashtra, which is home to the biggest of the banks in the sector, while other states such as Tamil Nadu, Karnataka and Gujarat also have strong co-op sector.

The new guidelines will also include a provision under which well-managed cooperative credit societies can turn into co-operative banks, Karuppasamy said.

“Well-managed credit societies and financially sound credit societies will be converted into co-operative banks provided they satisfy certain norms on capital adequacy, NPAs, technology adoption etc,” he said.

Karuppasamy, who oversees cooperative banks at the Mint Road, said the yesterday’s RBI notification for gold loan companies capping the maximum amount to be lent against gold is not applicable to co-operative banks as of now.

The cooperative banks, which are also present in the gold-lending space, are well regulated and all the ceilings are put in place by registrar of co-operatives, he said.

However, if necessary, the central bank can come out with an order extending the cap to cooperative banks as well.

Karuppasamy was speaking after unveiling new logo of city-based Greater Bombay Cooperative Bank as a part of its diamond jubilee celebrations.
-PTI