The National Federation of Urban Cooperative Banks and Credit Societies (Nafcub), an apex body of these lenders, has opposed the recommendation of a Reserve Bank of India (RBI) panel to convert these bodies with business size of at least Rs 20,000 crore into regular banks.
At a press conference, Nafcub chairman M L Abyankar alleged this would amount to handing over the 100-year-old cooperative movement to private hands.
The RBI panel, chaired by Deputy governor R Gandhi, had said large multi-state urban cooperative banks (MS-UCBs) having presence in more than one state, dealing in foreign exchange and participating in the money market and payment systems, could be systemically important. Hence, “their failure might have a contagion effect and unsettle the UCB sector. The systemic risk could be minimised if the large UCBs convert themselves into commercial banks, as the statutory framework and prudential regulations with respect to commercial banks are more stringent and structured than those for UCBs”.
RBI has placed the panel's report on its website, for feedback.
