Report of the High Powered Committee on Urban Co-operative Banks (UCBs)

UCB reports the Empowered Committee

Ques: High Powered Committee on Urban Co-operative Banks (UCBs) constituted by-

a. Reserve Bank of India
b. Finance Ministry
c. NITI Aayog
d. Home Ministry

Ans: a

Related facts:

  • 20 August, 2015 the Reserve Bank of India (RBI) constituted a High Powered Committee under chairmanship of R Gandhi, Deputy Governor of RBI.
  • Committee constituted to re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the Urban Cooperative Banking Sector.
  • It may be recalled that on January 30, 2015, the Reserve Bank had announced the constitution of a High Powered Committee (HPC) under the Chairmanship of Shri R. Gandhi, Deputy Governor, Reserve Bank of India.
  • The important recommendations made by the HPC are briefly as under:
  • Business size of 20,000 crore or more may be the threshold limit beyond which a UCB may be expected to convert itself into a commercial bank.
  • Smaller UCBs with business size of less than 20,000 crore willing to convert to SFBs can apply to the Reserve Bank for conversion provided they fulfill all the eligibility criteria and selection processes prescribed by the Reserve Bank and further provided that the licensing window for SFBs is open.
  • Licenses may be issued to financially sound and well-managed co-operative credit societies having a minimum track record of 5 years which satisfy the regulatory prescriptions set by the Reserve Bank as licensing conditions.
  • Putting in place a Board of Management (BoM) as suggested by the Malegam Committee has to be one of the mandatory licensing conditions for licensing of new UCBs and expansion of existing ones.
  • The new Entry Point Norms (EPNs) may be as under:
    1. To operate as a Multi-State Urban Co-operative Bank- 100 crore
    2. To operate beyond two districts and as a State level UCB – 50 crore
    3. To operate as District level UCB (up to 2 districts) – 25 crore
    4. In case of conversion of co-operative credit societies in unbanked areas and in the north-east, suitable relaxation may be made by the Reserve Bank.
  • The depositors ought to have a say on the Boards of UCBs.

 Reference:

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=34765

https://rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=822

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