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RBI notifies four key measures to strengthen co-operative banks

June 13, 2023

RBI notifies four key measures to strengthen co-operative banks
The Reserve Bank of India (RBI), in collaboration with the Central Government, has introduced four crucial measures to bolster the strength of 1,514 Urban Co-operative Banks (UCBs) in the country. These initiatives were announced following detailed discussions between Union Home Minister and Minister of Cooperation Amit Shah, Finance Minister Nirmala Sitharaman, and RBI Governor, with the objective of achieving Prime Minister Narendra Modi’s vision of ‘Sahakar se Samridhi.’
 
This article highlights the key measures that have been notified by the RBI, which include allowing UCBs to open new branches, facilitating One Time Settlements, extending the deadline to meet priority sector lending targets, and designating a Nodal Officer in the RBI.
 
UCBs now have the opportunity to expand their reach by opening new branches without prior approval from the RBI. They can open up to 10% (maximum of 5 branches) of the total number of branches in the previous financial year within their approved area of operation. However, UCBs must ensure their policies are approved by their respective boards and comply with the Financially Sound and Well Managed (FSWM) norms.
 
In a significant move, UCBs have been granted the authority to offer One Time Settlements (OTS) on par with commercial banks. With the approval of their board, cooperative banks can now provide a process for technical write-off and settlement with borrowers. This development brings UCBs at par with other commercial banks and enables them to streamline their lending practices and recover bad debts more effectively.
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