RBI panel on cooperative banks: 4-tier structure suggested! Committee bats for umbrella body for small cooperative banks

The Reserve Bank of India (RBI) has set up a committee to address the problems related to Urban Cooperative Bank. The committee has submitted its report where it has suggested an umbrella body to help small cooperative banks. The committee made its recommendations on the structure of the urban cooperative banks, deposits, home loan facilities and others.

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Zee Business reporter Anurag Shah reported that RBI's committee has suggested for an umbrella body for boosting the small cooperative banks. According to the report by the RBI's committee, the urban cooperative banks should have 4 tier structures on deposit basis, based on which capital adexi fibres and regulatory rules should be applicable.

The committee urban cooperative banks with deposits of up to Rs 100 crore should be put under tier 1. In the urban cooperative banks where deposits range from Rs 100 to Rs 1000 crore should be put under tier 2. Again, banks with deposits ranging between Rs 1000 to Rs 10,000 crore should be put under tier 3 category. Finally, banks with deposits more than Rs 10,000 crore should be put in tier 4 category.

The RBI committee also recommended that the limit for home loans, gold loans and unsecured loans should be fixed as per the bank category.

The panel set up by RBI said that urban cooperative bank can be considered for merger if it does not meet RBI's conditions. In addition to merging one bank with another, it has also been suggested to acquire small urban cooperative banks by a large organisation.

The general banking rules should be applicable to large urban cooperative banks which includes capital raising and all other conditions. Again, in line with commercial banks, the rest of the urban cooperative banks which are not functioning like the entire banks should be seen as a small finance banks.

Following the draft report by the RBI committee,  there has been a demand for opinion both ways from stakeholders and general public.