The Reserve Bank of India (RBI) is considering separating the wheat from the chaff in the co-operative banking sector by hiving off the supervision/inspection of non-scheduled urban co-operative banks (UCBs) to the proposed unified supervisory authority, while retaining its regulatory jurisdiction over the 51 scheduled co-operative banks in the country.
Originally, the RBI had mooted the idea of setting up a new apex supervisory body which can take over the entire inspection/supervisory functions in relation to both scheduled and non-scheduled UCBs.
With scheduled co-operative banks now having to conform to prudential norms, as applicable to commercial banks, the central bank is not averse to the idea of continuing to exercise its supervisory authority over the 51 scheduled UCBs, according to sources familiar with the developments.
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A scheduled bank is one which has deposits in excess of Rs 100 crore and is recognised as such by the RBI to issue bank guarantees.
Sources pointed out that the on-site inspection machinery of the central bank has come under severe strain due to the large number of UCBs - 2,090 as of March-end 2002 - and the move to establish a separate apex supervisory body is aimed at easing the pressure on the RBI