Amidst raging verbal duel between the Federal govt and the RBI, cooperators connected with urban co-operative banks have arrived in Mumbai to hold meeting with the latter’s Deputy Governor on issues close to the heart of the sector.
The issue of proposed umbrella organization for more than 1700 urban cooperative banks in the country has gained momentum as almost all the top urban cooperative bank leaders are camping in Mumbai today to meet the Deputy Governor N S Vishwanathan at 3 PM at the RBI’s headquarters.
The delegation comprises of NAFCUB President Jyotindra Mehta, H K Patil, KK Sharma, G Ramamoorthy, Dr M L Abhyankar, Vidyadhar Anaskar, R B Shandilya, among others. Nafcub Chief Executive Subhas Gupta is also part of the visiting team.
The cooperators are meeting the Deputy Governor primarily to push the issue of grant of license to Umbrella Organization which though got in-principle approval but is yet to be notified. RBI’s rather longish procedure of weighing every pros and cons of the proposal is said to be the cause of delay. The proposal is being vetted by RBIs’ Legal Cell and other supervisory depts before it will be sent to the Governor for final approval, said an insider.
Meanwhile, an idea that the proposed Umbrella Organization be registered not as a co-op society but as a Non-Banking Financial Company (NBFC) is gaining strength. “When the main aim of UO is access to capital there is no point insisting on its co-op character”, said Subhas Gupta, CE of Nafcub and an expert of urban banking sector.
High-lighting the merits of NBFC, Sahakar Bharati Patron Satish Marathe said that it can be listed and capital could be raised much easily. Comparing UO with NCDC, Marathe reminded that though NCDC is a corporation yet it gives services exclusively to co-operatives; UO would be something like that, he added.
The Joint MD of NCDC D N Thakur says that with the Umbrella Organization in sight the failing of urban cooperative banks due to lack of capital would be history. It bears recall that NCDC has been part of the team which along with NAFCUB supported the idea of Umbrella Organization since its inception. It has even proposed a paid-up capital of Rs 500 cr for the UO, unconfirmed sources confide.
NAFCUB- the apex body of urban cooperative banks and credit societies has been advocating the idea of setting up an Umbrella Organization (UO) for UCBs for a long time. The idea was first proposed by the Vishwanathan Working Group Report 10 years ago.
Vishwanathan proposed there should be Umbrella organization on the lines of Europe and America which should ensure access to capital markets –a constant handicap of the sector. We need to have professionals in Umbrella Organization,” he added.
It is said that the idea has the support of several big players including Saraswat Bank. It will change image of the sector from being fragmented individual entities most of which are small, to that of being a cohesive group with strong networking and bonding” Jyotindra Mehta, NAFCUB President said to Indian Cooperative.
Other issues the NAFCUB delegation wishes to raise is the delay in branch licensing of UCBs. The process has got delayed for last two years as RBI insists on the constitution of BoM before issuing branch license.