Urban cooperative banks may soon see an overhaul in regulations, management

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The newly-formed Ministry of Co-operation is likely to consider a new licensing regime for urban co-operative banks (UCBs), according to a report in the Business Standard.

A board of management (BoM) for UCBs with deposits of over Rs 100 crore is also on the cards along with the framing of modalities for a national umbrella organisation.

“These issues are expected to be taken up by the MoC, North Block, and the RBI after the monsoon session of Parliament concludes,” the report said quoting a top regulatory official.

The number of UCBs has come down to 1,539 now, from 1,926 in 2003-04.

The expert panel on primary cooperative banks, headed by former RBI deputy governor N S Vishwanathan, is also expected to submit its report within a fortnight. Its mandate includes a review of the current regulatory and supervisory approach.

Amendments to the Banking Regulation Act, 1949 (BR Act, 1949) has empowered the Reserve Bank of India (RBI) to regulate UCBs.

Its regulatory and supervisory powers over UCBs are now on a par with scheduled commercial banks, as per the report.

“The BoM would have specialists drawn from accountancy, agriculture and rural economy, banking, cooperation, economics, finance, law, small-scale industry, and information technology,” the RBI’s notification of December 31, 2019, had said.

There is, however, a view that at a time when the mainstream banks find it tough to find first-rate directors, it is felt that a BoM for UCBs, in addition to their board of directors needs a review as it could be a “needless duplication”.