Urban co-op banks should primarily meet credit needs of small biz: RBI
Updated: May 28, 2014 01:42:56pm
“It has been observed that a few Urban Cooperative Banks (UCBs) have been sanctioning high value loans to Public Sector Undertakings (PSUs) by admitting them as nominal members or otherwise,” RBI said in a notification.
As you are aware, UCBs are meant primarily to meet the credit needs of the society by providing loans and advances to low/middle income groups (small borrowers), agriculture and small businesses for furthering the cause of cooperation, it said.
“Grant of high value loans to PSUs is not consistent with the co-operative principles and dilutes the cooperative character of UCBs,” it added.
UCBs are advised, as a matter of principle, generally not to grant large value loans to Public Sector/Government Undertakings, the apex bank said. (KNN/SD)