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MUMBAI: An RBI panel has recommended expediting creation of an umbrella organisation to allow small city cooperative banks (UCBs) to amass scale by changing into a part of a community.
The panel has additionally stated that the RBI ought to use the route of obligatory mergers to resolve problematic cooperatives and be impartial to voluntary mergers.
The panel has additionally known as for modifications within the Banking Regulation Act empowering the RBI to declare securities issued by UCBs as coated underneath the Securities Contract Regulation Act to facilitate their itemizing on inventory exchanges.
These suggestions had been made by the professional committee on major (city) cooperative banks underneath the chairmanship of former RBI deputy governor N S Vishwanathan. The RBI had constituted the panel in February to handle the problems on regulation of cooperatives.
The panel has recommended a four-tier regulatory construction for UCBs. The extent of regulation would rely on their scale of deposits and the capital requirement and regulatory norms would get stringent with dimension.
Tier-1 would comprise banks with deposits as much as Rs 100 crore, tier-2 with deposits between Rs 100 crore and Rs 1,000 crore, tier-3 between Rs 1,000 crore and Rs 10,000 crore, and tier-4 with deposits of over Rs 10,000 crore.
The capital adequacy ratio for these banks can be between 9% and 15%, whereas tier-4 banks with deposits over Rs 10,000 crore would face the identical norms as scheduled industrial banks.
Apart from capital, the extent of loans they will supply underneath totally different classes, like gold and residential loans, would depend on their dimension.
The panel has additionally stated that the RBI ought to use the route of obligatory mergers to resolve problematic cooperatives and be impartial to voluntary mergers.
The panel has additionally known as for modifications within the Banking Regulation Act empowering the RBI to declare securities issued by UCBs as coated underneath the Securities Contract Regulation Act to facilitate their itemizing on inventory exchanges.
These suggestions had been made by the professional committee on major (city) cooperative banks underneath the chairmanship of former RBI deputy governor N S Vishwanathan. The RBI had constituted the panel in February to handle the problems on regulation of cooperatives.
The panel has recommended a four-tier regulatory construction for UCBs. The extent of regulation would rely on their scale of deposits and the capital requirement and regulatory norms would get stringent with dimension.
Tier-1 would comprise banks with deposits as much as Rs 100 crore, tier-2 with deposits between Rs 100 crore and Rs 1,000 crore, tier-3 between Rs 1,000 crore and Rs 10,000 crore, and tier-4 with deposits of over Rs 10,000 crore.
The capital adequacy ratio for these banks can be between 9% and 15%, whereas tier-4 banks with deposits over Rs 10,000 crore would face the identical norms as scheduled industrial banks.
Apart from capital, the extent of loans they will supply underneath totally different classes, like gold and residential loans, would depend on their dimension.
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