RBI to allow urban co-op banks to become small finance banks
07 Jun 2018
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Reserve Bank of India (RBI) has decided to permit urban cooperative banks (UCBs) to transform into small finance banks (SFBs) on a voluntary basis, following recommendation by a High Powered Committee in August 2015.
In a statement on developmental and regulatory policies, the central bank said it has decided to allow voluntary transition of UCBs meeting the prescribed criteria to convert into SFBs.
The committee, chaired by R Gandhi, the then deputy governor of the Reserve Bank, had recommended voluntary conversion of large multi-state UCBs into joint stock companies and other UCBs, which meet certain criteria, into SFBs.
The panel had in 2015, recommended converting UCBs with business size of Rs20,000 crore or more into regular banks in a bid to propel their growth.
The report also suggested that smaller UCBs voluntarily willing to convert to SFBs may be allowed to do so irrespective of the threshold limit, provided they fulfil all the eligibility criteria and selection process prescribed by the RBI and further provided that the small finance banks licensing window is open.
The committee had also unanimously recommends that licences may be issued to “financially sound and well-managed co-operative credit societies” having a minimum track record of five years which satisfy the regulatory prescriptions set by the central bank as licensing conditions.
RBI said that the details of the scheme will be announced separately.
