RBI forms expert committee for urban co-operative banks to strengthen sector

The Reserve Bank of India (RBI) on Monday constituted an eight-member expert committee on  Primary (Urban) Co-operative Banks (UCBs) to examine issues and provide a road map for strengthening the sector.

The committee, under the chairmanship of former RBI Deputy Governor N. S. Vishwanathan, will take stock of the regulatory measures taken by the RBI and other authorities in respect of UCBs and assess their impact over the last five years to identify key constraints and enablers in fulfillment of their socio-economic objective.

It will also review the current regulatory approach and recommend suitable measures to strengthen the sector, and suggest effective measures for faster rehabilitation of UCBs and assess the potential for consolidation in the sector.

To "consider the need for differential regulations and examine prospects to allow more leeway in permissible activities for UCBs with a view to enhance their resilience", and drawing up a vision document for a vibrant and resilient urban co-operative banking sector having regards to the "principles of cooperation as well as depositors' interest and systemic issues" will be among the committee's terms of reference, the central bank said in a release.  

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Former NABARD Chairman Harsh Kumar Bhanwala, retired IAS officers N. C. Muniyappa and R. N. Joshi, IIM Bangalore professor M. S. Sriram are among other members of the committee.  Neeraj Nigam, Chief General Manager-in-Charge of the central bank's Department of Regulation, will be the Convenor of the committee.

The committee will submit its report within three months from the date of its first meeting.

Earlier this month,  in its statement on developmental and regulatory policies, released along with the monetary policy statement,  the RBI had said it would set up an expert committee for UCBs "to provide a medium-term road map to strengthen the sector, enable faster rehabilitation/resolution of UCBs, as well as to examine other critical aspects relating to these entities".

It had called for a comprehensive review of regulatory approach towards UCBs as the Banking Regulation (Amendment) Act, 2020  has brought near parity in regulatory and supervisory powers between UCBs and commercial banks.

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