UCBs blame RBI for killing sector

Maharashtra Urban Co-operative Banks’ Federation Ltd (MUCBF) has blamed the Reserve Bank of India (RBI) for giving backdoor entry to large corporate players and kill the urban cooperative banks (UCBs). Vidyadhar V Anaskar, Chairman of MUCBF stated that the regulator is painting all co-operative banks in a bad light.

Keeping the RBI circular in mind, Anaskar, who headed a press briefing in the city, stated, “The new norm is to kill the existing urban co-operative banks and giving them to corporates that do not understand rural India.” The Reserve Bank of India (RBI) has proposed that the single and group borrower limits of UCBs should be brought down. The notification has also suggested that half the loans given should not be of more than Rs 25 lakh. This regulator norms were suggested in the aftermath of Punjab and Maharashtra Cooperative Bank crisis.

Recently, RBI granted inprinciple approval to Uttar Pradesh-based Shivalik Mercantile Co-operative Bank Ltd to convert to a small finance bank (SFB), which has not gone well with MUCBF.

“RBI is short staffed. So, RBI is finding it difficult to regulate fragmented UCBs. We suggest that RBI should allow NABARD to regulate us as they can do a better job.” NABARD supervises State Cooperative Banks (StCBs), District Cooperative Central Banks (DCCBs), and Regional Rural Banks (RRBs) and conducts statutory inspections of these bank

He stated that NABARD understands UCBs better than RBI. “We do not want RBI or the state or central government to regulate us.” When quizzed if they need a new regulator to regulate UCBs, Sayali Bhoir, Secretary and Chief Executive Officer, MUCBF, stated, “It would be difficult to have one at this stage.” Adding to that, Anaskar said, “The only way to have a new regulator quickly without any menace would be appointing NABARD as our regulator.”

Other than regulating and supervising, RBI is also responsible for development of UCBs. “But today, RBI instead of taking the role of development seriously, it is trying to end the sector by its new suggested norms.” Anaskar went on to add that since 2003 RBI has not given licence to even one UCBs.