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RBI plans to set up umbrella organization for UCBs

The urban cooperative banks will get an ‘umbrella organization’ as the plans of the Reserve Bank of India. The organization is intended to help these banks to improve their operational and financial health as per global best practices. RBI said in a statement. a long-term solution to make the UCB sector financially resilient and to enhance the depositors’ confidence is to set up an umbrella organization as prevalent in many countries. The proposed organization is expected to extend liquidity and capital support, as well as create an information and technology infrastructure to enable the UCBs to widen services at a relatively lower cost. It may also offer fund management and other consultancy services. RBI also said another reason for the move is the fact that UCBs lack structure, size, lack of avenues for raising capital funds and their limited area of operation, which the organization would take up. The idea was suggested in 2006 by an RBI working group headed by deputy governor N.S. Vishwanathan on augmenting the capital of urban cooperative banks. RBI has also received a proposal for setting up such a body from the National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB).

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