Money & Banking

Co-operative banks’ body plans protest today to dissuade Mumbai UCB from converting into SFB

K Ram Kumar Mumbai | Updated on January 17, 2020

Seeks to create awareness on preserving the co-operative character of New India Co-operative Bank

Unhappy with Mumbai-based New India Co-operative Bank’s proposed move to convert into a Small Finance Bank (SFB), the Maharashtra Urban Co-operative Banks’ Federation plansto hold a ‘haath jodo andolan’ (protesting with folded hands) at the bank’s special general body meeting on January 18 to appeal to its members to vote against the resolution on conversion.

A majority of the 25 directors of the federation and directors of some of the Mumbai-based Urban Co-operative Banks (UCBs) are expected to converge at the venue of the meeting. Referring to the RBI issuing a circular on ‘voluntary transition of UCBs into SFBs in September 2018, Sayali Bhoir, Secretary and CEO of the federation, wondered why despite the conversion being voluntary only one UCB (Uttar Pradesh-based Shivalik Mercantile Co-operative Bank) has taken firm steps towards conversion.

“The RBI recently issued a draft circular for UCBs on ‘limits on exposure to single and group borrowers/parties and large exposures and revision in priority sector lending targets’ and invited comments from the sector. Now why should a bank jump the gun and seek to convert into an SFB even before the draft circular has become final?” said Bhoir.

To create awareness

So, through the ‘haath jodo andolan’, the federation seeks to create awareness among NICB’s members about the importance of preserving the co-operative character of the bank and providing financial support to the economically weaker sections, unorganised sector, and lower- and middle-income segments.

NICB has sent a notice to its members, informing them that a special general body meeting would be held on January 18, to approve amendment to the bye-laws; to transit NICB into a SFB as per the RBI’s scheme (on voluntary transition of an UCB into a SFB), and to authorise the board of directors to take steps to facilitatethe smooth transition process. Further, the meeting will also identify and approve the promoters as envisaged by the RBI. As on March 31, 2019, the number of regular members of NICB was 14,892 and nominal members was 3,024.

The multi-State UCB began operations in 1968 as the Bombay Labour Co-operative Bank (founded by the late George Fernandes, socialist stalwart, trade unionist and union minister, and Ranjit Bhanu, noted criminal lawyer and trade unionist.

NICB has 31 branches spread across Maharashtra and Gujarat. As of March-end 2019, the bank had deposits and advances aggregating ₹2,644.41 crore (₹2,547.09 crore as of March-end 2018) and ₹1,339.02 crore (₹1,167.73 crore), respectively. It reported a net profit of ₹8.01 crore in FY2019 against ₹7.60 crore in FY2018.

Published on January 17, 2020

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