Cooperation Minister Amit Shah on Saturday launched the National Urban Cooperative Finance and Development Corporation (NUCFDC) and asked the umbrella body to set up one urban cooperative bank in each town.
NUCFDC has received the RBI approval to function as a non-banking finance company and a self-regulatory organisation for the urban cooperative banking sector
Cooperation Minister Amit Shah on Saturday launched the National Urban Cooperative Finance and Development Corporation (NUCFDC) and asked the umbrella body to set up one urban cooperative bank in each town.
He also said urban cooperative banks should upgrade themselves to provide ATM facility, credit/debit cards, clearing system, maintain SLR (statutory liquidity ratio) limit and refinancing.
NUCFDC has received the RBI approval to function as a non-banking finance company and a self-regulatory organisation for the urban cooperative banking sector.
After launching NUCFDC, Shah said, "After 20 years, NUCFDC has been established. This is the need of the hour. I am happy the RBI has given approval for this."
The minister said he felt the absence of an umbrella organisation when he had an opportunity to work with National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB) when there was a crisis in Gujarat.
Some urban cooperative banks would not have suffered losses if there was NUCFDC, he added.
Shah mentioned that there were several deliberations and even reports, including from the Vishwanathan Committee emphasised the need of an umbrella body for urban cooperative banks.
"I am confident there will be multi-fold growth in the urban cooperative banking sector with the setting up of NUCFDC," he added.
Highlighting the wider role of NUCFDC, Shah said urban cooperative banks have been operating in India for a long time, but could not grow rapidly even though they can play a key role in the country's economic growth, he said.
For urban cooperative banks to grow and survive, they should upgrade themselves and follow the RBI guidelines. The main objective of NUCFDC should be to help urban cooperative banks adhere to the Banking Regulations Act and bring professionalism in their work, the minister said.
Like other commercial banks, Shah said urban cooperative banks should provide ATM facility, credit/debit cards, clearing system, maintain SLR (statutory liquidity ratio) limit and refinancing.
"I believe for small banks, NUCFDC is a 'suraksha kavach' (safety net)," he said.
There are more than 1,500 urban cooperative banks with 11,000 branches and a deposit of Rs 5 lakh crore across the country, he added.
The minister said NUCFDC should achieve its target paid up capital within a year and not depend on others. National Cooperative Development Corporation (NCDC) has committed Rs 200 crore in it.
"I want the paid-up capital is met by urban cooperative banks. Then only the RBI will have confidence in such banks," he said.
Shah also gave away certificates to five major share contributors in NUCFDC, including NCDC, Saraswat Cooperative Bank, and SVC Cooperative Bank Ltd.
Speaking on the occasion, NUCFDC Chairman Jyotindra Mehta said after a long wait, the unfinished task of the urban cooperative banking sector has been completed today.
The umbrella model for banks has been operational in the US and Europe successfully. However, it took 20 years to set up in India, he said.
Minister of State for Cooperation B L Verma, Minister of State for Finance Bhagwat Kishanrao Karad, Cooperation Secretary Ashish Bhutani, and National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB) Chairman Laxmi Das were also present at the event.