Responding to the recommendations made by the Expert Committee on UCBs, Sahakar Bharati has demanded that a campaign to set up more and more urban cooperative banks should be launched as soon as possible.
Lamenting the lack of proactive move on the part of the RBI, Sahakar Bharati says that no new UCB has come up in the last 20 years and it is high time RBI should act. In his letter to RBI, Dr Uday Joshi National General Secretary has demanded that the norms for Registration of new UCBs should be announced immediately.
“Norms be announced at the start of Co-op Week, beginning on 14th November. Registration of new UCBs should not be linked to the formation of Umbrella Organization (UO), which may not be formed or may not be functional in the immediate near term”, writes Sahakar Bharati National General Secretary Dr Uday Joshi.
In his letter to the RBI, Joshi points out that the Membership, Activities and Scope of UO be restricted only to cover Financial Co-ops. As a Regulator of the Banking Sector, RBI at all times should remain Regulator for all UCBs, irrespective of Tier classification arrangement. Responsibility of regulation of Tier I & Tier II UCBs should not be transferred to UO, Joshi underlines.
Branches be allowed to be opened in the adjoining Districts, including those of neighbouring States. It need not be restricted to neighbouring Districts of the same State/Union Territory. Such relaxation is particularly necessary for UCBs operating border Districts of different States/Union Territories, argues Joshi.
“Fit & Proper norms for RBI to be satisfied that UCB has a proper Board, CEO and meets Financial Requirements, be decided on the basis of Marks based Objective Guidelines, and such guidelines should be formulated and the same be put in Public Domain. However, RBI should retain for itself 25% marks to make its own independent assessment about an UCB being Fit and Proper’, said Joshi.
Joshi says to facilitate Listing & Trading on recognised Stock Exchanges, RBI should issue Guidelines for including Securities issued by an UCB under Securities Contract Regulation Act. This is now possible as RBI is empowered after the amendment to the Banking Regulation Act 1949. This will help eligible UCBs to raise Capital/Long Term Funds, he added.
Sahakar Bharati letter also comments on the categorisation of UCBs under different Tiers and says that the proposed Tier III should be divided in two parts.
“Regarding RBI guidelines to all UCBs to achieve Priority Sector Lending (PSL) target of 75% of their total ANBC/CEOBSE is too stringent and demanding. Hence, the target of PSL Lending be pegged at 50% maximum”, demands Joshi.
In cases where the Board is superseded, financially strong and well managed UCB should be appointed as Administrator, said Joshi. “The recent amendments to the Banking Regulation Act 1949 stipulate that a Shareholder can remain a Director continuously for a maximum period of 8 years. RBI should modify this provision and allow a Shareholder to remain a Director continuously for 2 Terms of 5 years each”, demands Joshi.