Financials of urban co-operative banks' have been good: RBI Governor

The Reserve Bank of India (RBI)’s Governor Sanjay Malhotra on Wednesday said that the financials of the banking sector, including those of urban co-operative banks, are strong and, in the case of some episodes, the central bank will take due action.

 

During the post-MPC press meet, Malhotra said, “Our banking sector’s financials are good, including that of urban co-operative banks. The CRAR [capital to risk-weighted assets ratio] is more than 15 per cent. They play an important role, and if a sector has been growing 8–9 per cent in the last 20 years, then as a sector it shows strength. There will be some episodes—be it banks, NBFCs or UCBs—and RBI will take whatever action is necessary.”

 

Earlier in February, the RBI had imposed restrictions on the New India Co-operative Bank and a case was registered by the Mumbai police against the lender’s former general manager for allegedly siphoning off Rs 122 crore.

 

Malhotra also said that at the system level, co-operative banks, NBFCs, and banks are all safe, secure, and robust. The system is also resilient. “Let’s keep in mind it's a very large system, there are a large number of players. There are about 10,000 NBFCs, there are about 1,500 co-operative banks... In the last 8–9 years, some 70 co-operative banks out of 1,500—so it's very small. These things will happen. Our effort is to minimise the impact. We have to ensure through various means that these events happen less frequently, and for that we have various tools—regulations, supervision.”