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Hyderabad , Oct. 15

THE National Federation for Co-operative Urban Banks and Credit Societies (NAFCUB) and the Andhra Pradesh State Co-operative Urban Banks Federation (APSCUBF) have warned of disastrous consequences to UCBs if the Banking Regulation (Amendment) and Miscellaneous Provisions Bill 2003 is passed in its current form as it is expected to confer substantial powers to the Reserve Bank of India (RBI) on the managements issues of urban co-operative banks (UCBs).

Addressing a workshop on `Implications and consequences of Banking Regulation (Amendment) & Miscellaneous Provisions Bill 2003' here on Tuesday, the NAFCUB Chief Executive, Mr D. Krishna, said the proposed move to scrap Section 56 of the Banking Regulation Act would undo all the concessions that were extended to co-operative banks over a long period.

The APSCUBF Chairman, Mr G. Rama Moorthy, stressed the need for a clear-cut division of functions between the RBI and the Co-operative Department. ``Though the Bill is aimed to cut the role of the Registrar with regard to banking related functions, unfortunately it ingresses into the management issues,'' he said.

Further, Mr Moorthy said there was a need to protect the co-operative character of UCBs and at the same time urged the Government to ensure that the Co-operative Department would not encroach upon the banking related functions of UCBs.

The Banking Ombudsman, RBI Hyderabad region, Mr P.R. Gopala Rao, said all the banks should follow the rules of the game whether it was a co-operative bank, private bank or a public sector bank. On passing the proposed bill, all the co-operative banks would be influenced to step up their performance and look like commercial banks. He hoped that the UCBs would come out of the problems soon.

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