Union Home and Cooperation Minister Amit Shah has written a letter to Nafcub President Jyotindra Mehta on Friday last week and listing the steps taken by the Ministry to strengthen the urban cooperative banks. In the letter, Shah makes it clear that he and his Ministry are committed to make the sector strong.
Addressed to the NAFCUB through its President Jyotindra Mehta, the letter reads “The country’s 1,514 Urban Cooperative Banks (UCBs) are playing a significant role in cooperative development by meeting urban cooperative credit needs. Multiple issues and difficulties faced by these banks were pending for suitable resolution for long”.
“The National Federation of Urban Cooperative Banks and Credit Societies Limited (NAFCUB) was in constant touch with me requesting quick resolution of such difficulties which restricted their expansion and business performance. I directed the Ministry officers to conduct an in-depth examination of the issues, challenges and difficulties faced by Urban Co-operative Banks”, his letter reads.
Shah further wrote, “A series of Meetings were held at the Secretary level with the senior officers of Department of Financial Services and the Reserve Bank ofIndia. I have had several rounds of discussions with Hon’ble Finance Minister and RBI Governor to sustainably address such issues and difficulties”.
The copy of the letter is with Indian Cooperative. “You may be delighted to know that with our relentless efforts and consultations with stakeholders, the following important steps have been taken by RBI to strengthen the Urban Co-operative Banks”, it reads.
(i) UCBs can now open their new branches up to 10% (maximum 5 Branches) of the total number of branches without prior approval of RBI in addition to the existing provision on opening branches through approval route.
(ii) Board of Directors of UCBs have now been empowered to formulate their own policy for Compromise Settlements/One Time Settlement (OTS) like that of Commercial Banks.
(iii) A Nodal officer has been nominated in RBI for Urban Co-operative Banks for establishing regular communication with the sector.
(iv) UCBs have been allowed an additional period of two years to achieve Priority Sector Lending (PSL) targets.
(v) A time Limit of 90 days has been fixed for appointment/ reappointment/ dismissal of Chairman, Managing Director, CEO, and 30 days fixed for appointment / re-appointment/dismissal of Auditors.
(vi) UCBs have been permitted to provide doorstep-banking services to their customers.
(vii) individual housing loan limits for UCBs have been extended more than two times of the existing permissible limit.
I hope that the above constructive steps will successfully address the issues and difficulties of UCBs and strengthen the operation and governance of UCBs. I am also confident that our efforts will ensure increased efficiency, transparency and viability in UCBs while assuring precious contribution towards cooperative development, Shah thus signs off.