RBI sees more M&As in urban co-op banks

Stressing greater financial prudence and transparency on the part of urban cooperative banks (UCBs) in the country, the Reserve Bank of India (RBI) said the process of consolidation in the UCB sector would continue.

"There have been some mergers and amalgamations (M&As) in the UCB banking sector in the last few years, which have strengthened these institutions and revived the confidence of depositors," RBI Executive Director V S Das said.

In the last two years, almost 40 weak and commercially unviable UCBs have been merged across the country, especially in Gujarat and Maharashtra, where larger and financially stronger UCBs have taken over their smaller and ailing peers. Uttar Pradesh is yet to see such a development.

However, the general health of UCBs in UP is reasonably good as the state has almost 60 such financially sound institutions. One of the UCBs, Indian Mercantile Bank, is also a scheduled entity. Meanwhile, the UP government today signed an MoU with RBI to ensure better monitoring and control over the functioning of the UCBs in the state.

Uttar Pradesh has become the 16th state in the country to firm such an agreement with the banking regulator. The matter was pending before the state government for the last two years.

A state-level task force will be constituted to undertake audit of these banks.