N.S. Vishwanathan Panel on Urban Cooperative Banks

N.S. Vishwanathan Panel on Urban Cooperative Banks

Recently, the Reserve Bank of India (RBI) has released the NS Vishwanathan Committee report on Primary Urban Cooperative Banks (UCBs).

  • Taking advantage of the amendments to the provisions of the Banking Regulation Act, 1949, applicable to co-operative societies, the committee was constituted to examine issues and provide a framework for strengthening the co-operative sector.

Key Recommendations

Regulatory Framework: A four-tier structure has been suggested for Urban Co-operative Banks (UCBs) based on deposits. Also, depending on their size, various capital adequacy and regulatory parameters have been prescribed for them.

The committee has suggested that the Capital to Risk-Weighted Assets Ratio (CRAR) for them may vary from 9 per cent to 15 per cent. For Tier-4 UCBs, the norms set by Basel will continue to apply.

Umbrella Organization for Small Urban Co-operative Banks: This will enable them to build a network for their expansion.

The Supervisory Action Framework (SAF) should follow a dual indicator approach Net Non-performing Assets Ratio: NNPA (CRAR).

  • The objective of the SAF should be to find a time bound solution to the financial stress of a bank.
  • Recommendation on resolution of UCBs: RBI may frame a scheme for mandatory amalgamation or reconstruction for UCBs on the lines of banking companies under the Banking Regulation Act.
  • Urban co-operative banks should be included as eligible banks under government schemes like MUDRA (MUDRA), Interest Subvention Scheme etc.

Source – PIB

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