Urban cooperative banks should focus on symmetric development and adopt modern banking methods: Shah

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Saying that urban cooperative banks (UCBs) should focus on symmetric development, Cooperation Minister Amit Shah on Thursday urged UCBs to undertake key reforms, including hiring young talent and adopting banking methods modern to remain competitive.

Structural changes, strengthening of human resources, computerization of the accounting process and hiring of experts to manage surplus funds are the other reforms that UCBs need to undertake to compete with nationalized and private banks, he said. declared.

By implementing these reforms, UCBs should make themselves less relevant at present, the minister said and assured that cooperative banks will not be treated as “second class citizens”.

”There are 1,534 city cooperative banks, 54 planned city cooperative banks, 35 multi-state cooperative banks, 580 multi-state cooperative credit societies and 22 state cooperatives. We have a large presence but it is uneven. … We have to work properly on the symmetric development of urban cooperative banks,” Shah said at an event here.

Since cooperative banks are the only banks that lend to the lower strata of society, it is necessary to establish at least one UCB in every city in the country, he said and headed the National Federation of Urban Cooperative Banks and credit companies (NAFCUS) to focus on symmetric development of UCBs across India.

”The symmetrical expansion will help us stay competitive. Successful banks should also come forward and contribute to this,” he said.

Currently, the role of urban cooperative banks is negligible in the overall banking sector in terms of deposit and prepayment, he added.

Stating that there are huge opportunities for the expansion of UCBs and cooperative credit societies, the minister said this is because there is increased economic activity in urban centers with 40% urbanization in the country.

UCBs are necessary for the overall development of the country because they are the only banks that can lend to the lower strata of society. ”We must upgrade the slums and integrate them into the economic development of the country. This can be done by cooperatives alone,” he said.

Such is the role of UCBs that the loans they provide have helped some to set up big businesses in the country, Shah said and shared that he knows at least three such great businessmen who got their first loan of Rs 5 lakh from urban cooperative banks and they are now major contributors to the country’s GDP.

Listing the key reforms, the minister said UCB cannot be satisfied with the current growth, with a deposit of Rs 5 lakh crore and an advance payment of Rs 3 lakh crore.

”It may seem huge, but what is its share in the total banking sector? The share of urban cooperative banks in deposit is only 3.25%, while in advance payment it is 2.69%. We need to expand that,” he said.

For the expansion of UCBs, he said structural changes are needed and the next generation with banking experience should be hired for better functioning of banks. Systems must be modernized, accounting must be computerized and accounting alerts must be put in place in addition to infusing young talent.

Transparency in recruiting and hiring experts to manage surplus funds is needed, he said.

“Along with the cooperative spirit, we need to embrace modern banking methods, only then can we stay competitive,” he said.

While cooperative banks need to improve their reliability, the Reserve Bank of India (RBI) should on the other hand ease the restrictions, he added.

Shah also pointed out that the government is building a database on cooperatives, creating a separate university for cooperatives, in addition to developing a new policy.

The Minister also congratulated several urban cooperative banks which have completed 100 years of operation.

State Minister for Cooperation B.L. Verma, National Federation of Cooperative Banks and Urban Credit Societies (NAFCUB) Chairman Jyotindra Mehta and Secretary for Cooperation Gyanesh Kumar attended the event .

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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