The idea of an umbrella organization for urban cooperative banks is not new; it is at least 12 years old when for the first time a committee headed by N Vishwanathan was formed in 2006 to suggest solutions for the ills plaguing UCBs. Nevertheless, till the last week RBI did not speak about it in public.
“Though it accepted the idea its implementation was hamstrung by reasons best known to the apex bank”, explains NAFCUB President Jyotindra Mehta. “ NAFCUB constituted the committee in 2015 which suggested a road map for the implementation of an umbrella organization that RBI has found doable”, said Mehta.
Tracing the history Mehta said “The Vishwanathan Committee felt the need of having a separate committee to study in depth the idea of an umbrella organization as being used in several Western countries. This led to the constitution of the V S Das Committee in 2009 which undertook several trips to Europe and America finally to zero in on the idea for urban cooperative banks in the country.
The Das Committee, of which Jyotindra Mehta was a member submitted its report to the RBI but RBI got stuck on its implementation. How to implement it was the million dollar question and it is NAFCUB that played a crucial role in finding an answer to the question.
Sensing the predicament of the RBI, Nafcub constituted a committee of its own in 2015 which was headed by V S Das and comprised of P K Arora, D Krishna, D N Thakur and others. The committee brainstormed the issue in several sessions and finally worked out a blue print for the implementation of the idea in practical terms.
“The report was duly submitted to RBI in 2016 and it is this report of NAFCUB which got a mention by RBI in its Monetary Policy statement issued a couple of days ago”, said NAFCUB President.
Speaking on the timeline for setting up the Umbrella by RBI, Mehta said probably RBI would now conduct a survey and invite us (stake-holders) before giving it final shape. “I cannot give you the months but it is in the pipeline without an iota of doubt about it”, he added.
In India different UCBs have different profiles. There are about 45% banks with less than Rs 2 cr deposits; there are unit banks, tier 1 banks, tier 2 banks and finally multi state scheduled banks eager to take on PSUs and multinationals.
The idea of the Umbrella fulfills the principle of co-operation among cooperatives and answers to the needs of ucb of all sizes. If it offers technology for smaller UCBs it offers capital for bigger ones competing with PSUs and multinational banks. “While PSUs are recapitalized by govt from time to time, there was no provision so far for UCBs’ recapitalization”, lamented Mehta.
Interestingly, Das settled in Ahmadabad after his retirement from RBI which coincided with a RBI circular in 2013 allowing Urban Co-op Bank Federations to set up Umbrellas in their respective areas. Seizing the opportunity, Gujarat Urban Co-op Bank Federation (GUCBF) led by Mehta set up the first umbrella in the country and called it CBRDE (Centre of Banking Research and Development Excellence) under the able guidance of the same Das who had mooted the idea. “The Centre has been proactive doing things ever since”, Mehta concluded.