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NAFCUB discusses issue of umbrella organization for UCBs

The National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB)convened a meeting of all state level Federations of Urban Cooperative Banks in New Delhi, primarily to elicit views of representatives of the state federations on formation of a national level umbrella organization for urban cooperative banks in the country. In all 31 delegates representing the state federations of urban cooperative banks and credit societies participated in the meeting.


Jyotindra Mehta, president, NAFCUB, explained that the need for the formation of a national level umbrella organization for UCBs was felt as urban cooperative banks are self-reliant and do not have support from the government in case of liquidity crisis whereas all public sector banks get the support from the government in case of need. Further, as a result of the dual control, the process of merger/liquidation of weak/sick banks is very lengthy and cumbersome with the result that the depositors face lot of problems in getting back their hard earned money. However, in the case of commercial banks, the merger process is simple smooth. He said the formation of the umbrella organization and constitution of revival fund for UCBs were conceptualized on the recommendations of working group constituted by RBI, which found it necessary to have such an organization, especially to enhance the confidence of the public in cooperative banks. Mehta said the working group has submitted its report in October 2009 and recommended setting up of a professionally managed national level umbrella organization to provide a range of services to UCBs on the same line as done by umbrella organizations for credit unions in several countries. He also pointed out that the Malegam Committee constituted in 2010 had reviewed the working group’s report and recommended that there should be two separate umbrella organizations – one a national level organization to provide payment and settlement services and other services normally provided by central banks as also liquidity support to its members and two one or more state level organizations or outside agencies to provide management, IT, training and services which the UCBs require. Mehta added that NAFCUB had in the past submitted its views on various aspects related to the formation of the umbrella organization and various meetings with RBI were also held to discuss the issue. However, nothing concrete had happened.

V.S. Das, former executive director, RBI and chairman of the working group to consider formation of the umbrella organization, made a presentation for the participants on the formation of the umbrella organization, its relevance, the roadmap and benefits to the cooperative banking sector.

  1. Krishna, former chief executive, NAFCUB, who was a special invitee at the meeting, explained the various aspects of the formation of the umbrella organization.

After detailed discussions, the meeting felt that the formation of the umbrella organization is very important for the benefit of the sector, especially for providing liquidity support and meeting training needs of the sector. It also felt that umbrella organizations should be formed at the state level by state federations. All the Federations assured their full support to NAFCUB in this regard.

Shekhar Charegaonkar, chairman, Maharashtra State Cooperative Council, was a special invitee at the meeting.

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