Union minister Amit Shah told a gathering of urban cooperative bank executives on Saturday that the Reserve Bank of India deserves a fresh look, arguing the relationship has moved well past whatever friction defined it in the past.
Speaking at the inauguration of the National Urban Cooperative Finance and Development Corporation’s new office at the BSE, attended by representatives from over 1,400 UCBs.
“I know of your experience till now. RBI looks at you from a particular viewpoint, and UCBs also look at RBI from a different viewpoint. But we have to come out of it,” Shah said.
Drawing on five years in the cooperatives portfolio, he added. “My five years’ experience as the Union Cooperatives Minister suggests that whenever we have put a step forward with confidence, RBI has proactively helped us.”
A List Of Regulatory Relaxations
Among the concessions Shah credited to the central bank were relaxed norms around opening new branches and the introduction of doorstep banking for UCB customers. He also pointed to the ability now given to these lenders to issue demand drafts and life certificates, along with the appointment of a nodal officer devoted solely to handling UCB-related matters, a sector that together holds more than Rs 6 lakh crore in deposits.
Separately, he welcomed the recent decision to raise gold loan limits and permit one-time settlements for the sector. RBI Governor Sanjay Malhotra had flagged a related move earlier in the week, announcing in Wednesday’s bi-monthly policy statement that on-tap licensing for UCBs would resume, ending a freeze that had run for roughly two decades following past governance lapses at cooperative lenders often perceived to be under the influence of local political figures.
Small Borrowers Are The Safest Bet, Shah Says
Turning to lending itself, Shah argued that no borrower segment carries less risk for a bank than the small borrower, drawing on his own past as chairman of a Gujarat-based UCB. He recalled the bank rolling out unsecured loans of up to Rs 2.5 lakh despite internal scepticism from management, a scheme that ended up seeing repayment, including interest, cross 99%, with total lending under it doubling since.
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NUCFDC To Shift Base To Maharashtra
Shah also revealed that NUCFDC, which functions as the sector’s umbrella organisation, will relocate its headquarters from New Delhi to Maharashtra, a state home to 449 UCBs, with Maharashtra, Gujarat, Goa and Karnataka together accounting for 70% of all such lenders nationwide.
Noting that NUCFDC currently counts just 690 members despite the sector’s much larger base, he pushed the organisation to cut membership fees and work toward bringing all 1,400 UCBs on board, pointing to benefits such as technical support, compliance assistance and cybersecurity services, including a newly launched security operations centre meant to strengthen depositor confidence.
Pointing to the growth of Amul from a cooperative venture into a brand now generating Rs 1.25 lakh crore in turnover, Shah said that as India works toward becoming a developed nation, UCBs would have a key role to play by supporting sole proprietors and entrepreneurs across the economy.
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