RBI Governor meets UCB leaders; brainstorms on sector’s growth

The RBI Governor Shaktikanta Das held a meeting with the representatives of National Federation of Urban Co-operative Banks and Credit Societies Limited (NAFCUB), select Federations of UCBs from various States and the CEOs of select UCBs.

RBI Central Board Director Satish Marathe, Nafcub President Jyotindra Mehta, Maharashtra UCBs Federation Chairman Ajay Barmecha, Karnataka UCBs federation Senior Director Rudre Gowda, Tamil Nadu UCBs Federation President T S Sarathy, Uttar Bharat UCBs Federation Chairman R C Verma, TJSB Sahakari Bank MD Sunil Sathe, Guntur Cooperative Urban Bank Govindraju Sadanand, Mann Deshi Mahila Sahakari Bank CEO Rekha Kulkarni and others attended the meeting.

From the RBI side, the meeting was attended by M Rajeshwar Rao, Deputy Governor, Executive Directors S C Murmu, Saurav Sinha, Jayant Kumar Dash, Neeraj Nigam along with a few senior officials of the apex bank.

Two major outcomes of the meeting include–RBI will nominate a senior officer who will be the single point of contact for all issues related to UCBs and the Standing Advisory Committee (SAC) meetings will henceforth be held once in six months instead of once in a year.

In his remarks the Governor acknowledged the important role played by UCBs in furthering financial inclusion and supporting economic growth by providing banking services at the grassroots level. He further stated that RBI is committed to having a strong, robust and resilient UCB sector and for that there is a need for all the stakeholders to work together in the spirit of cooperation.

Das advised UCBs and their federations to strengthen governance and risk management, adopt appropriate business strategies and explore suitable technology solutions to enable themselves to sustain and grow their business and serve their customers, keeping in mind the interest of the depositors.

Talking to Indian Cooperative correspondent Nafcub President Jyotindra Mehta said, “It was a fruitful meeting and many issues pertaining to the cooperative sector were discussed. The issues included, Priority Sector Lending- to bring it to 40 percent, Tafcub role should be redesigned, giving more opportunities to the cooperative sector, rebuilding sick banks, offering one-time settlement scheme for cooperative banks, giving new branch licenses for UCBs and many other issues were brought up for discussion”.

During the meeting, it was decided that the Standing Advisory Committee (SAC) meetings would henceforth be held once in six months instead of once in a year. It was also decided that RBI will nominate a senior officer who will be the single point of contact for all issues related to UCBs and a formal interaction with the designated senior officer would be held quarterly.

Perhaps, it was the first meeting of its kind in which co-operators connected with the Cooperative Banking Sector interacted with RBI top brass for around three hours. It is worth a particular mention that Sahakar Bharati and Nafcub had mainly been instrumental in getting the RBI governor to meet the representatives of the co-op banking sector.

The other issues, which were, came up for discussions, included linkage of government schemes with the cooperative banks, increasing the bullet payment limit of gold loans in respect of Urban Cooperative Banks, no media coverage on the penalties on co-operative banks, to revisit the circular on provisioning on interbank exposure and valuation of Preventials Non-Convertible preference shares in context to PMC Bank and others.

The policy level issues were also raised by the participants before the RBI governor Shaktikanta Das which includes, RBI should create a vision document for cooperative banking sector, comprehensive review of credit related guidelines for UCBs particularly, housing, gold loan, PSL etc, standardize bye-laws for the UCBs in context to Banking Regulation (Amendment) Act, 2020 and others.