An interaction program was held at the Telangana State Urban Cooperative Banks Federation on August 14, 2024, featuring Prabhuti Samal, DGM, Department of Supervision (DoS), RBI, Hyderabad. The program saw participation from Chairmen, Directors, CEOs, and senior officers of UCBs across Telangana.
The event aimed to motivate the Chief Functionaries of Urban Cooperative Banks (UCBs) in Telangana, which have shown consistent growth over the years. As of June 30, 2024, the UCBs recorded a total business of Rs 15,569 crores, consisting of Rs 9,489 crores in deposits and Rs 6,080 crores in loans and advances.
This marked an increase in total business by Rs 95 crores compared to March 31, 2024, though the first quarter growth was mixed, with deposits declining by Rs. 65 crores and loans and advances growing by Rs. 160 crores.
In his opening remarks, G Madana Gopala Swamy, Working President of the Telangana Federation, welcomed the participants expressing the desire for UCBs to be included in the State Level Bankers Committee (SLBC) and allowed to participate in MSME financing under government schemes such as MUDRA loans. He also stressed the need for skill development training to be conducted locally. Concerns were also raised about the timeline for opening new branches, with a request for more time to complete premises preparation.
Samak outlined the department’s strategic mission to strengthen UCBs through the SAIDUT approach, which stands for Strategic Approach and Initiative for the Development of UCBs in Telangana.
To achieve this, the department has adopted a framework of four Cs: consolidation, calibrated upgradation, continuous supervision, and capacity building. He noted that three weak UCBs were merged with stronger ones as part of the consolidation effort, while the number of UCBs under the Supervisory Action Framework (SAF) has been reduced from 12 to 5, with plans to bring that number down to zero by the end of the year. Inspections have also increased, with 32 UCBs inspected in the last year, up from 22.
Samal also emphasized the importance of capacity building through regular trainings. He expressed hope that at least one UCB in Telangana would convert into a Small Finance Bank (SFB) and outlined the requirements for this transition.
The performance of UCBs in Telangana was commended, with growth outpacing the national average in several key parameters, including Gross NPA, Net NPA, CRAR, and return on assets. Profit growth for UCBs in the state increased from Rs. 150 crores in 2023 to Rs. 171 crores in 2024.
During the open discussion, members raised issues related to gold loans, MSME financing, and regulatory challenges such as the tenure of directors and nominating professional directors.
Samal addressed these concerns and pointed to the Banking Regulation (Amendment) Act Bill of 2024, currently under consideration in Parliament, as well as RBI directives that are being challenged in court. He advised UCBs to approach the Department of Supervision individually for clarification on specific issues. The meeting concluded with a vote of thanks.
