SME Times News Bureau | 23 Aug, 2021
A Reserve Bank constituited panel suggested a "tiered regulatory"
framework on Urban Co-operative Banks (UCBs) to strengthen the sector.
In
its report, the Expert Committee on Primary (Urban) Co-operative Banks,
under the chairmanship former RBI Deputy Governor N.S. Vishwanathan,
said: "The Committee observed that given the heterogeneity in the
sector, a tiered regulatory framework with more than two tiers is
required to balance the spirit of mutuality and co-operation more
prevalent in banks of smaller sizes and those with limited area of
operation vis-a-vis the growth ambitions of the large-sized UCBs to
spread their area of operation and undertake more complex business
activities on par with commercial banks."
"The Committee agreed
that the deposit size can continue to be the basis for categorising
banks into regulatory tiers, as for a normally functioning bank, deposit
size can broadly serve as proxy for capital size and net worth."
Further,
the report pointed out that additional tiers could be created to cater
to the aspirations of the larger UCBs to undertake business akin to that
of SFBs (Small Finance Banks) and UNBs.
