Marathe meets Sitharaman; seeks more autonomy for UCBs

On the sidelines of the Central Board of Directors meeting of the Reserve Bank of India, Sahakar Bharati founder member Satish Marathe held discussions with Union Finance Minister Nirmala Sitharaman, seeking her backing for further amendments to the Banking Regulation Act. These changes would specifically impact Urban Cooperative Banks (UCBs), District Central Cooperative Banks (DCCBs), and State Cooperative Banks (STCBs).

Talking to the Indian Cooperative, Marathe stressed the necessity for more comprehensive reforms to bolster the operational efficiency and financial stability of these cooperative banks. He highlighted that the cooperative banking sector is instrumental in advancing financial inclusion in rural and semi-urban areas but is currently hampered by outdated regulations.

He urged the Finance Minister to consider amendments that would grant cooperative banks greater autonomy, enhance governance standards, and better equip them to serve their communities. Sitharaman acknowledged Marathe’s concerns and reassured him of the government’s commitment to strengthening the cooperative banking sector.

In a separate statement, Sitharaman addressed the media following her meeting with the Central Board of Directors of the Reserve Bank of India in New Delhi, as reported by AIR. She urged banks to focus on their core functions of mobilizing deposits and lending funds. RBI Governor Shaktikanta Das, who was also present, emphasized that banks have the freedom to set interest rates, noting that these rates for deposits and lending have been deregulated.

The Finance Minister also noted that the Banking Regulations amendments being introduced by the government had been long overdue. She highlighted that these amendments include critical realignments related to the cooperative banking sector.

One of the customer-friendly changes she mentioned is the introduction of nomination provisions, which ensure that customers can easily nominate individuals and that nominees can smoothly claim their rightful entitlements. Another significant amendment involves changes in data reporting requirements. Banks will now be required to submit data for regulatory compliance on the 15th and last day of every month, instead of the second and fourth Fridays.

The meeting took place after the Union Budget 2024-25 and shortly after the Lok Sabha passed the finance bill, which included a few amendments proposed by the government. Union Minister of State for Finance Pankaj Chaudhary also attended the meeting.

In a related development, the Banking Laws (Amendment) Bill 2024 was introduced by Union Minister of State for Finance Pankaj Chaudhary in the Lok Sabha. This bill seeks to amend several key laws, including the Reserve Bank of India Act 1934, the Banking Regulation Act 1949, the State Bank of India Act 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.