RBI cancelled the license of City Cooperative Bank (Maharashtra) and Purvanchal Cooperative Banks (Uttar Pradesh).
- These banks lacked adequate capital and earning prospects and violated and Banking Regulation (BR) Act, 1949.
- On liquidation of these UCBs, every depositor would be entitled to receive deposit insurance claim of up to ₹5,00,000/ as per the Deposit Insurance and Credit Guarantee Corporation Act, 1961.
About UCBs
- Definition: UCBs, though not formally defined, refers to Primary Cooperative Banks located in urban and semi-urban areas.
- They could be either scheduled or non-scheduled.
- Legal status
- Registered as cooperative societies either under the State Cooperative Societies Act of the State concerned or the Multi-State Cooperative Societies Act, of 2002.
- Banking activities are regulating by the RBI under BR Act, 1949
- Lending
- Mandated to achieve priority sector lending target 75% by March 2026.
- Allowed to lend money for agricultural purpose.
Challenges of UCBs
- High gross non-performing assets (GNPA) which was 10.9% till September 2023 (RBI’s Financial Stability report)
- Lack of professional management and acute market competition with Small Finance Banks (SFBs), FinTechs, etc
- Concentrated in few states (mostly in Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu).
Initiatives takes to strengthen UCBs
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