India is a growth story and if the success of India is a forgone conclusion, urban banks cannot lag behind, said RBI Board member Satish Marathe underlining none of the top 39 mutual funds of USA has taken away even a dime from their investments in India, despite several upheavals at global level including Corona.
Marathe was speaking at a meeting of the heads of several UCBs of Uttar Pradesh in Ghaziabad on Sunday. The talk was organized by Uttar Pradesh Sahakar Bharati and UP Federation of UCBs. Sahakar Bharati’s Narendra Upadhyay and Federation’s R C Verma were the main organizers. Besides Marathe, Sahakar Bharati All India President D N Thakur, head of Banking Cell, Abhay Mate and Mudit Verma, among others were also present.
Representatives of about 20 urban cooperative banks from the total of 59 banks that operate in the state of UP, participated in the event. The event was hosted by Karan Pal, Chairman of Noida commercial Cooperative Bank.
Answering the questions from UCB members, who voiced several issues arising not only form the RBI but also from the state govt, Marathe drew a larger canvas and tried putting things in a perspective.
“Trust me RBI is not anti-UCB as is generally believed amidst us. See what happened in PMC Bank; it was daylight loot. The story of Raghvendra Bank of Karnataka is no different”, said Marathe emphasizing that RBI only wants UCBs to be careful as after all they deal in public money.
Dividing his speech into three parts- integration of UCBs in mainstream, issues before UCBs and road ahead for UCBs, Marathe spoke extempore for close to 45 minutes going into details of each subhead.
Starting from Madhavpura and coming to several other scams including Bombay Stock Exchange episode, Marathe said that it is not so that UCB as such does anything wrong but it is the private sector which uses us for their benefits and we are there sitting like a lame duck, said Marathe cautioning the participants.
The RBI has taken many baby steps to integrate UCBs into the mainstream economy in terms of exposure limit, regulations and many other things. These are necessary as many of us go beyond our risk bearing capacity and offer advances in the sensitive sector, inviting trouble for ourselves in future. As a result, today more than 500 banks are under SAF, 75 under Directions, 300 are C rated and 80 banks are D rated. It means 50% of our sector is weak, revealed Marathe.
We need to do three things urgently to improve, said Marathe, underlining the role of internal governance, following SOPs and concurrence with statutory reports. We should follow a calendar of review every month, SOPs should be on the laptop for any employee to cross check and due considerations for statutory compliance should be given, he stressed.
Marathe touched upon many other issues including weak cyber preparedness and an OTS scheme which is norm-driven for the whole of the country. He also said that RBI is creating a new and dedicated cadre of inspectors to eliminate variations of observation in the same case. RBI has also begun training of Inspectors to standardize the process of inspection of UCBs. SAF is being replaced with PCA, which is the Primary Corrective Action plan, as being followed in commercial banks, said Marathe.
Trust me RBI has no intention to privatize UCBs, as is being rumoured, said Marathe claiming that he has the exposure of working in all sectors of banking- co-operative, PSUs and Private bank and he can say so with confidence.
