Cooperative Banks: The Reserve Bank of India has notified four major measures with the aim of strengthening 1 thousand 514 urban cooperative banks. Under this, two more years have been given to meet the priority sector loan target. This information has been given by the Ministry of Cooperatives.
In a statement issued by the ministry, it has been said that four important initiatives have been taken to strengthen 1,514 urban cooperative banks (UCBs) in the country. Detailed discussions have been held with Union Home Minister and Cooperative Minister Amit Shah, Finance Minister Nirmala Sitharaman and Governor of Reserve Bank of India.
Permission to open maximum five branches
After this meeting RBI has notified these important measures to strengthen Urban Cooperative Banks. The ministry has listed four measures notified by the RBI. Under this, now urban cooperative banks can open up to 10 percent of the number of branches in the previous financial year i.e. maximum 5 new branches without prior permission of RBI.
What else was allowed in the RBI notification
Urban co-operative banks will have to get board approved for the policy and comply with the Financially Sound and Well Managed (FSWM) norms. UCBs can also do one time settlement like commercial banks. The central bank has notified a framework governing this aspect for all regulated entities including UCBs.
Two years time for loan settlement
Now co-operative banks can do technical write-off as well as settlement with borrowers through board approved policies. RBI has decided to extend the deadline for UCBs to achieve the Priority Sector Lending (PSL) target by two years i.e. till March 31, 2026. Excess deposits, if any, after meeting the PSL shortfall during FY 2022-23 will also be returned to the UCBs.
what the ministry said
The ministry said in its statement that unlike commercial banks, which have branches in rural areas as well, they are facing difficulties in this matter. RBI has also recently notified a nodal officer. These initiatives will further strengthen the UCB.
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