RBI asks government to amend co-operative bank laws

In a move to bring urban co-operative banks into the mainstream, the Reserve Bank of India (RBI) has recommended the gove-rnment amend the laws to allow grant of a commercial bank licence to these entities Stock Market Trading Tips

RBI had set up a committee chaired by one of its deputy governors, R Gandhi, on the urban cooperative bank (UCB) system. The panel has suggested the law be so amended as to allow these to exit from the ambit of the Multi State Co-operative Societies Act and come under the Companies Act. All new banks in the private sector are governed by the latter law.

At present, the Banking Regulation Act that governs commercial banks does not apply fully on cooperative banks. As a result, all RBI norms are not applicable to these entities Himanshu Tiwari Astrologer

Today, the Companies Act allows an entity to become a bank but that provision is not there in the laws that govern co-op banks. We have recommended to the government to accordingly amend the laws," Gandhi told Business Standard.

He added that UCBs were now functioning well and the sector as a whole had stabilised. "UCBs have gone through various ups and downs. The latest problem they had was in early 2000. We had to tighten the regulations and supervision. Now, they have reached a good position. Gross non-performing assets are around five per cent (of the total) and net NPAs are three per cent," he said Financial Astrology

These asset quality ratios are almost in line with the overall banking system numbers. Provisioning coverage ratio of UCBs improved significantly to 59.7 per cent as of March-end from 52.4 per cent in end-September 2014. "The number of negative net worth banks are constantly coming down," Gandhi added.
According to latest RBI data, the capital adequacy ratio of UCBs at March-end was 12.6 per cent, as compared to the regulatory requirement of nine per cent. Only five such banks have a CAR below nine per cent.

The move to grant commercial banking licences to UCBs comes as the central bank has decided to issue niche bank licences — as opposed to universal bank licences — and has invited applicants in the payments bank and small finance bank segment Indian stock market astrology prediction

One issue that had been a hurdle for UCBs to become commercial banks was their governance practices. "They still have some issues (here). This is being accepted by bringing in the concept of a board for management, as was recommended by the YH Malegam committee. We have also insisted for professional directors on the board," Gandhi said.

Adding: “Here and there, some bad apples are there. But the system as a whole, they have consolidated. Now, it is time for them to grow Share Market Astrology