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L.N. Revathy

Coimbatore, Dec. 3 If increase in deposit level is a true indication of public confidence in an organisation, the Reserve Bank of India’s initiatives at strengthening the urban cooperative banks (UCBs) has started to yield results.

The apex bank, in its report on ‘Trend and progress of banking in India – 2006-07’ released recently, has noted that deposits in the UCBs started to rise from 2005-06 onwards, reversing the declining trend of 2004-05. The deposits increased from Rs 1,14,060 crore in 2005-06 to Rs 1,20,983 crore the following year, compared to the slip from Rs 1,10,256 crore in 2003-04 to Rs 1,05,021 crore in 2004-05.

To strengthen the UCBs, the regulator had proposed a set of initiatives in the Vision Document (prepared by the RBI in 2005) for adoption and for deciding the future set-up of weak and sick banks in each State. It (the RBI) then approached the State Governments for signing MoU to ensure greater convergence of the two agencies entrusted with the regulation and supervision of the UCBs.

Taking the comfort of coordinated supervision/regulation to the States that have signed the MoU, the RBI extended certain business opportunities to the eligible banks including permission to set up currency chest, sell mutual fund products, open new ATMs, relaxed norms for conducting insurance business on non-risk participation basis and conversion of extension counters into branches.

“The focus for the sector now among others is on development of human resources and IT infrastructure,” the report said and noted that 33 mergers had been effected up to the end of October 2007 and 254 UCBs under various stages of liquidation.

More Stories on : Co-operatives | Fixed Deposits | RBI & Other Central Banks

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