While addressing the AGM in New Delhi, NAFCUB President Laxmi Das raised concerns over the limited scope available to existing credit cooperative societies to transform into Urban Cooperative Banks (UCBs) under the draft guidelines recently issued by the Reserve Bank of India (RBI) for ‘on-tap’ licensing of UCBs.
Das said the RBI had not issued new banking licences to cooperative institutions since 2004. While welcoming the RBI’s recent move to provide a pathway for eligible credit cooperatives to enter the banking sector, he said the eligibility criteria proposed in the draft guidelines were highly stringent.
According to Das, only around three credit cooperative societies in the country, with deposits of around Rs 10,000 crore, currently fulfil the requirements prescribed under the draft guidelines.
He noted that it remains to be seen whether these societies will actually apply for a UCB licence. Even if they do, meeting the eligibility criteria would not automatically guarantee a banking licence, as the final decision rests with the RBI.
Das thanked the RBI for recognising the need, after a gap since 2004, to create opportunities for cooperative institutions to grow and enter the banking sector. However, he called for the eligibility framework to be made more enabling so that a larger number of financially sound credit cooperatives can qualify.
