In the wake of PMC Bank episode which shattered the confidence of people on urban cooperative banking sector to a great extent, RBI has brought in a change in its approach of handling the supervision of UCBs, underlined RBI Governor, Shaktikanta Das.
Participating in a seminar on ‘Banking landscape in the 21st century’ RBI Governor Shaktikanta Das said that our approach has shifted from being reactive to proactive so far as the supervision of urban co-op banks are concerned.
Speaking in the Seminar Das recounted various new initiatives launched for better management in the UCBs. They should act as an early warning system for co-operative banks with timely identification of weak banks for appropriate action, Das said.
UCBs will be required to submit CRILC Report on a quarterly basis with effect from December 31, 2019. UCBs should take utmost care about data accuracy and integrity while submitting the information /data on large credit to RBI, said the Governor.
With a view to building a database of large credits extended by primary (urban) co-operative banks (UCBs), it has been decided to bring UCBs with assets of Rs 500 crores and above under the CRILC reporting framework, underlined Das.
RBI Governor also talked about the recent amendment in the Banking Regulation Act bringing UCBs under the total control of RBI. He expressed happiness that more than 90 percent of these banks are now on the core banking solution.
Indian Cooperative earlier reported how the leaders of UCB sector welcomed the move of amending the BR Act. They felt the amendment in the BR Act was the need of the hour as a lot of fraudulent cases, malpractices surfaced in quick succession which created panic in the minds of millions of innocent depositors.
There are about 12% of total credit mobilization of the country is ensured through the cooperative banking network. More than 8.5 crore depositors have deposited several lakh crore in 1,550 cooperative banks.
Thus, these banks have a great role next to commercial banks in assuring adequate and timely money supply in rural and remote areas of the country, they felt.
Cooperative banks have also to brace up for the risks of cyber-attacks by State and non-State actors. Hence, they would need a qualified support team with expert leaders at the functional as well as the board level to ensure adequate reporting by adopting standardized operating procedures.
Though Governor did talk on the need to have BoM for UCBs, several leaders said there is no need for the same as UCBs have come under complete RBI supervision after the amendment.