There is a need for an umbrella organisation for urban cooperative banks (UCBs) to support them in many ways including extending emergency liquidity support, the Reserve Bank of India (RBI) has said.
"The working group is convinced that there is a strong case for a similar (like other countries) umbrella organisation for urban cooperative banks, as also for a an emergency liquidity support facility for banks confronting liquidity problems," said the RBI's report of the working group on umbrella organisation and constitution of revival fund for UCBs.
The banking regulator has been working to promote several institutional mechanisms in the interest of financial stability and this is yet another area where it can play an important role in strengthening urban cooperatives as a part of banking sector reforms, the report said.
Accordingly, the working group has made recommendations for constituting an umbrella body for UCBs as also for an emergency funds facility.
Internationally, cooperative banks, popularly called credit unions, operate in networks and have an entity that provides a wide range of services to them such as fund management, lines of credit, asset management, payment and settlement gateways among others.
