R Gandhi committee on urban cooperative banks

Few important recommendations of the report are as follows:

♤ Business Size and Conversion of Multi-State UCBs into joint stock bank: A business size of 20,000 crore or more may be the threshold limit beyond which a UCB may be expected to convert itself into a commercial bank. The conversion need not be de jure compulsory. However, the types of businesses to be undertaken by those choosing not to convert may remain within the limits of plain vanilla products and services and hence, growth will be at a much slower pace. Their expansion in terms of branches, area of operations and business lines may thus be carefully calibrated.

♤ Conversion of UCBs into Small Finance Banks (SFBs): Smaller UCBs with business size of less than 20,000 crore willing to convert to SFBs can apply to the Reserve Bank for conversion provided they fulfil all the eligibility criteria and selection processes prescribed by the Reserve Bank and further provided that the licensing window for SFBs is open.

♤ Issues of fresh licenses: Licenses may be issued to financially sound and well-managed co- operative credit societies having a minimum track record of 5 years which satisfy the regulatory prescriptions set by the Reserve Bank as licensing conditions. For providing banking access in unbanked areas, the Reserve Bank may put in place an appropriate set of incentives for existing banks to open branches there.

♤ Board of Management (BoM) in addition to Board of Directors (BoD): Putting in place a BoM as suggested by the Malegam Committee has to be one of the mandatory licensing conditions for licensing of new UCBs and expansion of existing ones. This recommendation has been accepted by the RBI in 2018.

♤ Depositors as voting members: The depositors ought to have a say on the Boards of UCBs. For this, a majority of the board seats may be reserved for depositors by making suitable provisions in the bye-laws.