In yet another big move for the urban cooperative banks, the Government of India has allowed Tier 3 and Tier 4 urban cooperative banks to be included in Schedule II of the RBI Act 1934 and get ‘Scheduled’ status.
The big news was broken by NAFCUB President Jyotindra Mehta Friday afternoon. An elated Mehta said “Now more UCBs will get Scheduled Status”. It was a demand which was pending for long, he added thanking the Union Cooperation Minister Amit Shah for his proactive initiatives.
Interestingly, Deputy Secretary Kumar Ram Krishna of the Union Ministry of Cooperation released a letter to this effect on Friday after the meeting with the NAFCUB President Jyotindra Mehta at his office.
The letter has been written to MDs and CEOs of UCBs, State Cooperative Banks, District Central Cooperative Banks and others. It is titled, “Grant of Scheduled Status to Urban Cooperative Banks”.
The letter reads, “This is to kindly inform that in order to realize the vision of ‘Sahakar-se- Samriddhi’ envisaged by the Hon’ble Prime Minister, several important initiatives have been taken under the leadership of the Hon’ble Union Minister of Home & Cooperation by the newly formed Ministry of Cooperation in the Government of India”.
“In order to further strengthen the Urban Cooperative Banks, the Government of India has allowed licensed Tier 3 and Tier 4 Primary (Urban) Co-operative Banks, fulfilling the criteria stipulated for Financially Sound and Well Managed Urban Co- operative Banks by the Reserve Bank of India, subject to maintenance of minimum deposits required for categorization as a Tier 3 Urban Co-operative Banks for two consecutive years, to be eligible to be included in Schedule II of the Reserve Bank of India Act 1934 and get ‘Scheduled’ status”, it further reads.
The tier 3 UCBs are those which are having deposits more than Rs 1000 crore and up to Rs 10, 000 crore whereas Tier 4 – UCBs are those with deposits more than Rs 10,000 crore. At present, there are 84 UCBs in tier 3 and tier 4 categories. 52 UCBs are already scheduled.
It bears recalling that after Ahmedabad-based Madhavpura Mercantile Cooperative Bank scam, Reserve Bank of India stopped granting the license to UCBs to open branches as well as granting ‘Scheduled’ status. But after the formation of the Union Ministry of Cooperation things have changed and the pending issues related to UCBs are being resolved.
It also bears recalling that Pune based Vishweshwar Sahakari Bank, Mumbai based Model Cooperative Bank, Uttarakhand based Kurmanchal Sahakari Bank, Pune People’s Cooperative Bank, among others, had earlier desired to get the ‘Scheduled Status’.
Earlier, the urban cooperative banking sector demanded the Ministry of Cooperation to grant Scheduled Status to the UCBs having deposits of more than Rs 500 crore, which could have covered 200 UCBs.
One can read the letter for more clarity by clicking the following link-
Even some bankers don’t know what is the status of a SCHEDULED BANK and advantages when compared to non- scheduled bank. Is it in
any way connected to DICGC cover. If the financial position of a scheduled bank has become worse, whether RBI comes to its rescue and protect the interest of the customers.
These points may be clarified by RBI. Some banks display on the BANK’s name in brackets.
SCHEDULED BANK UNDER Schedule II of RBI act , which gives impression that it is under the protection of RBI.