Urban cooperative banks need to focus on symmetric development, adopt modern banking methods

Context

Asserting that urban cooperative banks (UCBs) need to focus on symmetric development, Cooperation Minister Amit Shah asked UCBs to undertake key reforms including hiring young talent and adopting modern banking methods in order to remain competitive.

What are Urban Cooperative Banks?

• Urban Cooperative Banks otherwise known as Primary Cooperative Banks are an important component of the financial system because of their asset size and high exposure to depositors. 
• Hence, the RBI and the government were making several efforts to ensure that they are healthy and stable.
• As Per Section 56 of the Banking Regulation Act, 1949, a primary co-operative bank (Urban Co-operative Bank or UCB) means a co-operative society, other than a primary agricultural credit society, whose,

1. 1. Primary or principal business is a transaction of banking business.
   2. Paid-up share capital and reserves of which are not less than one lakh of rupees:

• The UCBs are diverse in terms of their size and operations. 

Regulation and Supervision of UCBs by the RBI

• The RBI, as the central bank, is known for its prudent regulation and supervision of financial institutions including commercial banks, NBFCs, UCBs etc.