Daijiworld Media Network - Mumbai

Mumbai, Aug 8: Union Home and Cooperation Minister Amit Shah on Saturday said the Reserve Bank of India (RBI) has adopted a supportive approach towards urban cooperative banks (UCBs) in recent years and urged the regulator and the banks to move beyond long-held perceptions to strengthen the sector.

Speaking at the inauguration of the new office building of the National Urban Cooperative Finance and Development Corporation (NUCFDC) at the Bombay Stock Exchange (BSE) here, Shah said UCBs and the RBI should work together with greater confidence and trust.

He said the central bank had responded positively whenever the government and the cooperative banking sector approached it constructively.

Shah highlighted several measures introduced by the RBI for UCBs, including easing norms for branch expansion, permitting doorstep banking services, allowing banks to issue demand drafts and life certificates, and appointing a dedicated nodal officer for the sector.

He also welcomed recent regulatory measures, including higher limits for gold loans and the introduction of one-time settlement provisions for UCBs.

The minister noted that urban cooperative banks currently hold deposits of more than Rs 6 lakh crore.

His remarks came days after RBI Governor Sanjay Malhotra announced progress towards introducing an on-tap licensing framework for urban cooperative banks as part of the central bank's developmental and regulatory policy measures.

Highlighting the business potential of the sector, Shah said small borrowers represent a relatively secure lending segment for cooperative banks.

Recalling his tenure as chairman of a cooperative bank in Gujarat, he said the institution had provided loans of up to Rs 2.5 lakh without collateral and recorded repayment rates of more than 99 per cent, including interest.

Shah also urged UCBs to strengthen their engagement with NUCFDC, the umbrella body for the sector.

Pointing out that only around 690 banks are currently members of NUCFDC, he suggested reducing membership fees to encourage all around 1,400 UCBs across the country to join the organisation.

Shah also announced that NUCFDC's head office would be shifted from New Delhi to Maharashtra.

According to the minister, Maharashtra has 449 urban cooperative banks and, along with Gujarat, Goa and Karnataka, accounts for around 70 per cent of all UCBs in the country.