Urban cooperative banks should focus on symmetrical development, adopt modern banking methods: Amit Shah

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The Minister for Cooperation, Amit Shah, argued that urban cooperative banks (UCBs) should focus on symmetrical development and on Thursday asked UCBs to implement key reforms, including hiring young talent and adopting modern banking methods to remain competitive. stay.

Structural changes, strengthening human resources, automating the accounting process, hiring experts to handle excess funds are the other reforms that UCBs must implement in order to compete with nationalized and private banks, he said. By implementing these reforms, UCBs should make themselves more irrelevant in the present day, the minister said, assuring that cooperative banks will not be treated as a “second class citizen”.

“There are 1,534 urban co-operative banks, 54 planned urban co-operative banks, 35 multi-state co-operative banks, 580 multi-state co-operative credit unions, 22 state co-operatives. We have a broad presence, but it is uneven. … We need to work well on the symmetrical development of urban cooperative banks,” Shah said at an event here.

Since cooperative banks are the only banks that lend to the lower echelons of society, it is necessary to establish at least one UCB in every city in the country, he said and led the National Federation of Urban Cooperative Banks and Credit Unions (NAFCUS) to focus on the symmetrical development of UCBs across India.

“Symmetrical expansion will help us stay competitive. Successful banks also need to come forward and contribute to this,” he said. Currently, the role of urban cooperative banks is negligible in the overall banking sector in terms of deposits and prepayments, he added.

The minister claimed that there is huge potential for expansion of UCBs and credit unions, saying that this is because economic activity in urban centers has increased with 40 percent urbanization in the country.

UCBs are necessary for the overall development of the country as they are the only banks that can lend to lower echelons of society. “We have to lift the lower part and make them part of the economic development of the country. This can only be done by cooperatives,” he said.

The role of UCBs is such that loans provided by them have helped some to set up major companies in the country, Shah said, sharing that he knew at least three such top businessmen who got the first Rs 5 lakh loan from urban co-operative banks and that they are now major contributors to the country’s GDP.

Listing key reforms, the minister said UCBs cannot be satisfied with the current growth, with a down payment of Rs 5 lakh and an upfront payment of Rs 3 lakh crore.

“This may seem big, but what is its share of the total banking sector? The share of urban cooperative banks in deposits is only 3.25 percent, while prepayment is 2.69 percent. We need to expand this,” he says.

For the expansion of UCBs, he said that structural changes are needed and that the next generation with banking experience should be hired for better functioning of the banks. The systems need to be modernized, accounting needs to be automated, and accounting alerts need to be added in addition to bringing in young talent. Transparency in recruiting and hiring experts to handle excess funds is necessary, he said.

“Together with the cooperative spirit, we must adopt modern banking methods, only then can we stay in the competition,” he said.

In contrast, while cooperative banks need to improve their reliability, the Reserve Bank of India (RBI) should ease restrictions, he added. Shah also stressed that the government is building a database of cooperatives, establishing a separate university for cooperatives, in addition to drafting a new policy

The minister also congratulated several urban cooperative banks that have existed for 100 years. Minister of State for Cooperation BL Verma, National Federation of Urban Cooperative Banks and Credit Companies (NAFCUB), President Jyotindra Mehta and Minister of Cooperation Gyanesh Kumar attended the event





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