Urban Co-op Banks Need To Focus On Symmetric Development, Adopt Modern Banking Methods: Amit Shah


Cooperation Minister Amit Shah on Thursday urged urban cooperative banks (UCBs) to implement significant reforms, including as recruiting young people and using modern banking practises, in order to stay competitive.

He asserted that UCBs must concentrate on symmetric development.

Other reforms that UCBs must implement in order to compete with nationalised and private banks, according to him, include structural modifications, strengthening of human resources, computerising accounting processes, and recruiting professionals to handle surplus funds.

The minister asserted that by putting these measures into place, UCBs should become even more irrelevant in the present. He also promised that cooperative banks would not be treated like "second-class citizens."

"There are 22 state cooperatives, 580 multi-state cooperative credit societies, 35 multi-state cooperative banks, 54 planned multi-state cooperative banks, and 1,534 urban cooperative banks.

Although our presence is widespread, it is uneven.

At a local gathering, Shah stated, "We need to appropriately concentrate on the symmetric development of urban cooperative banks.

He stated that there was a need to establish at least one UCB in every town in the nation because cooperative banks are the only banks that lend to the lower strata of society.

He also instructed the National Federation of Urban Cooperative Banks and Credit Societies (NAFCUS) to concentrate on the symmetric development of UCBs throughout India.

"Symmetric expansion will enable us to stay in the race. Successful banks ought to step up and help with this, he added. In terms of deposits and advance payments, he continued, the contribution of urban cooperative banks to the overall banking industry is now insignificant.

The Minister asserted that there is enormous room for UCB and cooperative credit society expansion and explained that this is due to the country's 40% urbanisation rate and the growing economic activity in urban centres.

Since they are the only banks that can lend to the underprivileged segments of society, UCBs are essential for the general growth of the nation.

"We must help the underprivileged and include them in the economic growth of the nation. Cooperatives alone can accomplish this, he claimed.

According to Shah, the role of UCBs is such that the loans they have provided have assisted some in establishing significant businesses in the nation.

He mentioned knowing at least three such prominent businessmen who received their first loan of Rs 5 lakh from UCBs and who are now significant contributors to the nation's GDP.

The Minister stated that UCBs, which have a Rs 5 lakh deposit and a Rs 3 lakh crore advance payment, cannot be content with the existing growth while outlining the major reforms.

The size of this may seem significant, but what percentage of the banking industry is it? The deposit share of urban cooperative banks is only 3.25 percent, whereas the advance payment share is 2.69 percent. This needs to be expanded," he stated.

He claimed that structural adjustments are necessary for UCB expansion and that the hiring of the upcoming generation with banking experience will improve bank operations.

In addition to bringing in new people, the systems need to be updated, the accounting should be computerised, and accounting alerts should be implemented.

He claimed that engaging professionals to manage extra finances and being transparent in employment processes are both essential.

Along with a culture of cooperation, he added, "we need to adopt contemporary banking practises; only then will we be able to compete."

He stated that the Reserve Bank of India (RBI) should loosen regulations while cooperative banks should increase their dependability.

Shah also emphasised that in addition to formulating a new policy, the government is creating a cooperative data bank and a separate cooperative university.

Several urban cooperative banks that have operated for 100 years or more were also honoured by the minister.

At the occasion were Secretary of Cooperation Gyanesh Kumar, National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB) President Jyotindra Mehta, and Minister of State for Cooperation B L Verma.


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