New Delhi: The Central government while giving licenses to private sector banks has also mulled over setting up new urban cooperative banks (UCBs). A committee of RBI has forwarded its proposal suggesting that various categories of the UCBs should be opened with a paid up capital ranging between Rs 50 lakh and Rs 5 crore.  

According to the panel, these banks would have to strictly abide by the RBI norms.

During the 2010-2011 budget presentation, Finance Minister Pranab Mukherjee announced the setting up of UCBs following which the RBI constituted Y H Malegam Committee to seek further suggestions on the same. The Committee on Monday made its report public.

The report supported the opening of UCBs in north eastern states or those states which have less number of banks with a paid up capital of Rs 50 lakh. It further recommended that UCBs, which wish to operate in more than one state after five years of successful operations, should have a paid-up capital of Rs 5 crore.

All the UCBs shall be run by professional managers while abiding by the rules followed by any commercial bank in addition to the norms followed by the Cooperative societies, the report said.

For running the UCBs there would be a Board of Directors (BoD) constituting Board of Managers (BoMs). The new UCB would also have a CEO. The audit of the UCB would be done by the RBI accredited Charted Accountants.

The report stated that the urban co-operative institutions would get priority in getting licences. Besides, those UCBs which already have a paid up capital of Rs 50 crore would get priority for expansion on a national level.

Meanwhile, the panel also suggested that for better functioning and management of the UCBs there should be two umbrella organisations at the national level. All the UCBs would be members of these organisations.

(JPN/ Bureau)