The Reserve Bank of India (RBI) held the 40th meeting of its Standing Advisory Committee at its headquarters in Mumbai on Friday last week, during which representatives of the urban cooperative banking sector raised several regulatory and operational issues and urged their early resolution to ensure the smooth functioning of Urban Cooperative Banks (UCBs).
The meeting, which lasted nearly two and a half hours, was chaired by Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India. Senior RBI officials, including R. Lakshmikanth Rao, Kesavan Ramachandran, Scenta Joy and others, were present.
Representatives from leading UCB federations and major cooperative banks across the country participated in the deliberations. Prominent attendees included NAFCUB Vice-Chairman Milind Kale; Chairman of Gujarat UCBs Federation and NUCFDC Jyotindra Mehta; Maharashtra UCBs Federation Chairman Ajay Barmecha; Andhra Pradesh UCBs Federation Secretary Chalasani Raghvendra Rao; Uttar Bharat UCBs Federation’s R. C. Verma; Saraswat Bank Chairman Gautam Thakur; Kalupur Commercial Cooperative Bank Vice-Chairman Kaushikbhai Patel; DNS Bank Chairman Ganesh Dhargalkar, among others.
Central Registrar of Cooperative Societies (CRCS) Anand Kumar Jha also attended the meeting.
A wide range of issues affecting the urban cooperative banking sector were discussed, including recent Gazette notifications on ineligible directors, directors’ tenure, and the RBI’s draft norms proposing a mandatory three-year cooling-off period for directors.
Raising the issue of deposit insurance, Gujarat Urban Cooperative Banks Federation Chairman Jyotindra Mehta suggested that depositors with balances exceeding Rs 5 lakh be allowed to voluntarily pay an additional premium for enhanced DICGC coverage, describing it as a “win-win” solution.
He also proposed increasing deposit insurance coverage for senior citizens to Rs 15–20 lakh. Mehta thanked the RBI for addressing several long-pending concerns of the UCB sector, particularly the liberalisation of branch authorisation norms and the withdrawal of certain penalty clauses.
Other regulatory and policy matters discussed included licensing of Urban Cooperative Banks, conversion of credit societies into UCBs, headroom capital for branch authorisation, achievement of the minimum 12 per cent CRAR, ceiling on advances to nominal members, tenure of housing loans, capital augmentation through Long-Term Subordinated Bonds (LTSBs), full DICGC coverage of bank deposits, and the need for financial support to UCBs in the North-Eastern region.
Andhra Pradesh Urban Cooperative Banks Federation Secretary Chalasani Raghvendra Rao highlighted the need for rationalisation of DICGC premium rates and enhancement of deposit insurance coverage.
He also expressed concern that restrictions on lending to directors dilute the democratic character of cooperatives and called for a more balanced approach with adequate safeguards. Additionally, he flagged issues related to auditor appointment norms, pointing out the higher compliance burden on smaller UCBs, and urged a coordinated and proportionate regulatory framework.
Participants noted that Deputy Governor Murmu patiently heard all the issues raised and expressed optimism that several of them would be addressed in due course. They described the meeting as constructive, meaningful, and effective in advancing dialogue between the regulator and the urban cooperative banking sector.