RBI constitutes high powered committee on Urban Co-operative Banks
Updated: Jan 31, 2015 11:55:14am
The High Powered Committee will look into what lines of business (that commercial banks undertake) can be permitted for UCBs and what should be the benchmark in terms of size of business, capital requirement, regulatory regime etc, according to a RBI release on Friday.
In view of the limited legal powers and resolution options, it will examine what should be the appropriate size upto which a UCB may be able to grow without undue risk to the system, under the current regulatory framework.
Further, “When enabling legal framework is in place for conversion of a co-operative bank into a joint stock bank, what should be the criteria for allowing voluntary conversion by a UCB; what should be the benchmarks in terms of asset size, capital, etc., for mandatory conversion of UCB to a Joint Stock bank,” the release said.
The Committee will also examine whether the time is opportune to give license to new UCBs as per the recommendations of the Expert Committee on Licensing of New UCBs, (Malegam Committee) and if so the modalities of taking forward the recommendations of Malegam Committee.
Also, it will determine the modalities of implementing the suggestion of the Malegam Committee that 50 per cent in value of deposits should be held by voting members to assure that confidence regarding proper management is generated among investors. Alternatively it will propose a feasible structure that puts majority voting in the hands of contributors of funds. (KNN/ES)