The leaders of the urban cooperative banking sector have reacted differently to the news of amendment in the Banking Regulation Act bringing UCBs under the total control of RBI. While the large banks such as Saraswat Bank and Cosmos Bank have supported the move, there are many smaller banks which would rather like to wait and watch how the new regime pans out.
We reproduce their reactions here
Saraswat Bank Chairman, Gautam Thakur
Chairman of the top most urban cooperative bank in the country- Gautam Thakur of Saraswat Bank supports the govt move. This will lead to a better management and the standard of governance would certainly improve. The framework of double control did not augur well for the sector. There could be issues related to registration and enrolment with the Central Registrar but the banking operations must be regulated by one and only agency which is RBI in the present case, stated Thakur.
Unitary control may lead to trouble in the beginning but in the course of time this would make the sector robust as only the best of the lot would survive, felt Gautam.
(Based on an interview given on December 6 2019)
Cosmos Bank, Group Chairman, Mukund Abhyankar
It is a welcome step. Dual control was not very helpful especially for multistate UCBs. Full RBI control will be beneficial for us-the multistate UCBs.
The only hitch is that the amendments proposed in the M S Coop Act 2002 have been pending since last many years.
Vamnicom Director Dr K K Tripahty
This amendment in the BR Act was the need of the hour as a lot of fraudulent cases, malpractices surfaced in quick succession which created panic in the minds of millions of innocent depositors. Right now, about 12% of total credit mobilization of the country is ensured through the cooperative banking network. More than 8.5 crore depositors have deposited about ?5 lakh crore in 1,550 cooperative banks.
Thus, these banks have a great role next to commercial banks in assuring adequate and timely money supply in rural and remote areas of the country.
Cooperative banks are increasingly computerizing their system and are under the risks of cyber-attacks by State and non-State actors. Hence, they would need a qualified support team with expert leaders at the functional as well as the board level to ensure adequate reporting by adopting standardized operating procedures. Since Cooperative banks are contributing to Money supply, if they conform to relevant and updated banking standard, they would not only see elimination of loss in their books but also their depositors would bank on them more and would not bother about their hard-earned money so deposited with these banks. This would also help more credit mobilization in the rural areas and ensure adequate capital formation in Indian agriculture.
Uday Joshi, General Secretary, Sah Bharati
Sahakar Bharati highly appreciates the Central Govt for this move. In fact, we were pressing the Govt to amend the BR Act to exercise control over UCBs.
Similarly, we are of the firm opinion that when the BR Act is amended to exercise full control over UCBs, there is no need of BOM (which the UCB sector fiercely opposes).
Pune Urban Co-op Bank Association Chairman, Subhash V Mohite
The details of the amendment are not yet received. I heard that initially they are going to bring multi State Co-op Banks under the control of RBI. But there are so many amendments in the multistate Act still pending before the parliament, which require to be passed for the smooth working of these banks. All amendments should be complimentary to each other otherwise they will create conflicts.
Pune People’s Co-op Bank Chairman, Janardan J Ranadive
There should have been no objection by UCBs to this decision. However, RBI should adopt a practical approach in exercising the powers considering the market situation and industrial recession. The recent circulars issued by RBI on the background of PMC Bank episode are harmful to UCBs. It is difficult to exercise the discipline overnight.
The UCBs should be given some breathing space. The RBI should also ensure that running UCBs effectively should not suffer. The RBI should not press its agenda of conversion into private banks/ small saving banks.
Subhra Jyoti Bharali CEO Industrial Coop Bank
Cooperative is a state subject and multi-state cooperative was a hybrid by design where control was with central Govt. The banking system needs judicial supervision and it is always good if one agency is accountable for regulation and control as it involves public money. Capital being the back bone of any society, it is good to have supervision by a team of well trained officials of a single agency so as to give early signals to avoid any kind of malpractices of public money.