The Hindu Business Line : Maharashtra UCBs plan one-day strike against RBI's vision document

URBAN co-operative banks (UCBs) in Maharashtra are planning a one day-strike on April 25 to protest against the Reserve Bank of India's (RBI) proposals on streamlining the working of UCBs.

The RBI had issued a draft vision document on UCBs recently.

Maharashtra Urban Co-operative Banks' Federation Ltd, which called for the strike, said that around 3,300 employees working in UCBs from Maharashtra will participate in the token strike.

Mr K.D. Vora, Chairman of the Federation and Chairman of Kapol Co-operative Bank Ltd, told newspersons that the Federation will also stage a protest march from Azad Maidan to the RBI headquarters.

Out of 656 UCBs in Maharashtra, 544 are members of the Federation. The average daily turnover of UCBs in the State is around Rs 6,600 crore.

Mr Vora said that certain norms in RBI's `Vision Document' are a threat to the very existence of UCBs.

These are norms dealing with the classification and gradation of UCBs, reduction in the period of impairment of loans from 180 days to 90 days, dividend policy and liquidation, and other emergency support to UCBs by the RBI.

The Vision Document proposes that banks with deposit of less than Rs 50 crore be classified as Tier-I banks and those with deposit of more than Rs 50 crore as Tier-II banks. All regulations of commercial banks will be applicable to Tier-II banks.

Mr Vora said, "This broad classification has no rationale because a UCB operating in a village is very different from a UCB operating in a district or a city. Also, a UCB cannot be compared to a commercial bank as the kind of customers and the nature of business is different."

Mr S. Lohiya, Director of the Federation, said: "We want the period for impairment of loans to remain at 180 days as most of our borrowers are small farmers, who may not be able to repay the loan on time due to reasons like drought, etc. This will reflect in a sharp rise in the NPAs of UCBs."

The Vision Document also prescribes grading UCBs depending on their performance.

Mr Arvind Deshpande, Chief Executive and Secretary of the Federation, said: "As per this norm, even if a UCB falls short of capital adequacy ratio by 1 per cent, it will lose the grade and will not allowed to declare dividend."

Giving dividends to shareholders is one way UCBs can raise their credibility, he added.

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Maharashtra UCBs plan one-day strike against RBI's vision document