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RBI sets up expert panel to review urban co-operative banks' regulations

The Indian banking system has witnessed a number of co-operative bank failures in recent years and the panel will examine issues in the sector and provide a roadmap

February 15, 2021 / 03:40 PM IST

The Reserve Bank of India (RBI) on February 15 announced setting up of an expert committee on Primary Urban Co-operative Banks (UCBs) that will review rules to examine the issues in the sector and provide a future roadmap. The eight-member committee is chaired by Deputy Governor NS Vishwanathan.

The Indian banking system has witnessed a number of co-operative bank failures in recent years on account of worsening financials and corporate governance issues. In 2020 alone, the RBI cancelled permits of three co-operative banks and imposed restrictions on a number of banks.

The committee will take stock of the regulatory measures taken by the Reserve Bank and other authorities in respect of UCBs and assess their impact over the last five years to identify key constraints, the RBI said. The RBI had first mentioned the plan to review rules of UCBs during the announcement of the last monetary policy.

The panel will review the current regulations and recommend suitable measures and changes to strengthen the sector, taking into account recent amendments to the Banking Regulation Act, 1949, it said.

Besides, the panel will also suggest effective measures for faster rehabilitation and resolution of UCBs and assess the potential for consolidation in the sector and consider the need for differential regulations, the RBI said.

Finally, it will also draw 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, the RBI said.
Moneycontrol News
first published: Feb 15, 2021 03:37 pm

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