The RBI has allowed urban cooperative banks to issue credit cards thus opening the doors not just for more business but also for an image makeover of these banks, reports Hindu. The move will act as a catalyst for the growth of these traditional banks into the banks of future.
The RBI Governor Raghuram Rajan said it has been decided to allow financially sound and well-managed scheduled UCBs, which are CBS-enabled and having minimum net worth of Rs 100 crore, to issue credit cards.
Sources aware of the Gujarat urban cooperative bank scene say this will boost credit growth of UCBs, from the present 14-15 per cent annually. This is a step for UCBs to further progress on the technology front. Gujarat has about 235 UCBs and 30 lakh members and customers across the State, sources add.
Apart from being a CBS-enabled bank, a UCB also needs to fulfill other criteria such as CRAR not less than 7 per cent, gross NPA less than 7 per cent and net NPA not more than 3 per cent. Also, the UCB should have posted profit for the past three consecutive years, without attracting any penal action from the regulator.
Credit cards would strengthen the brand image and improve the marketing position of UCBs. Advances business will get a boost as most UCBs will charge almost in line with the prevailing credit card providers, a cooperative bank source is quoted as saying.
There are 1,589 UCBs altogether in the country with deposits of over Rs 3.15 lakh crore and advances close to Rs 2 lakh crore.