UCBs must strengthen liquidation process to secure depositors: RBI

Urban cooperative banks (UCBs) should improve the liquidation process in order to protect the interest of depositors, a senior Reserve Bank of India (RBI) official said.

 

During a conference for Registrars of Cooperative Societies in New Delhi on Thursday, RBI’s deputy governor Swaminathan J said while financial indicators for UCBs have improved, there was room for growth in business, asset quality, and liquidity.

 

“He emphasised the need for UCBs to evolve digitally, addressing IT and cybersecurity gaps, and highlighted the importance of improving the liquidation process to protect depositors' interests,” RBI said in a press release.

 

Registrars of cooperative societies from various states participated in the conference which was attended by RBI and central government officials.

 

Another Deputy Governor M Rajeshwar Rao stressed that governance and risk management challenges could hinder effective management and urged stronger collaboration between the Registrar of Co-operative Societies and RBI to enforce governance standards, resolve weak banks, and streamline compliance.

 

He highlighted cooperative banks’ crucial role in financial inclusion, especially in rural areas, by serving marginalised communities.

 

Rabindra Kumar Agarwal, Additional Secretary and CRCS proposed forming a stakeholder team to draft a model bylaws and a framework to support weaker cooperative banks and highlighted the need for training liquidators.

 

Pankaj Kumar Bansal, Additional Secretary acknowledged the RBI’s efforts in strengthening the cooperative sector and emphasised the importance of supporting the umbrella organisation to enhance cooperative banks, particularly in technology, the RBI press release said.