Reserve Bank of India has finally received the recommendations of the Malegam Committee regarding new licenses to be offered to the urban cooperative banks (UCBs).
The recommendations offered by the committee come as a light of hope for cooperative credit societies of Gujarat which may now get a chance to upgrade themselves to cooperative bank stature. It is expected by analysts that as many as 40-50 of these societies from Gujarat may get cooperative bank licenses.
According to Ghanshyambhai Amin, chairman, Cooperative Credit Societies' Federation, "This will restore confidence in the cooperative banking sector. Of the 5200 credit cooperative societies in Gujarat, over 100 are capable to meet entry point norms set up by the panel for becoming a UCB. But at least 40-50 credit societies are likely to become UCBs after the enforcement of the recommendations."
"The deposits with credit societies are not insured, while those with UCBs are insured up to Rs 1 lakh. So more credit societies would try to get a status of UCB to improve their trust-worthiness and bring more customers," he said.
Apart from Gujarat, states like Uttar Pradesh, Bihar and Uttaranchal are also in league for getting their credit societies attain UCB status.
"UP has only 70 UCBs, while Uttaranchal has five. Even Bihar has poor UCB penetration. The new norms would help increase number of UCBs in these states," said Subhash Gupta, chief executive, National Federation of Urban Cooperative Banks and Credit Societies Ltd (NAFCUB).