A Reserve Bank of India (RBI) panel has recommended conversion of Urban Cooperative Banks (UCBs), which have a revenue of more than Rs 20,000 crore into regular banks.
The recommendation has been made with the objective of allowing UCBs to grow and proliferate further for financial inclusion.
A High Powered Committee report on UCBs headed by RBI Deputy Governor R. Gandhi, has however clarified that the conversion will not be compulsory for large UCBs and they can continue the way they operate currently in terms of balance sheet or asset size.
In order to minimise the systemic risk, the committee has recommended that large UCBs convert themselves into commercial banks.
The panel has further said that smaller UCBs with business size of less than 20,000 crore rupees who willing to convert to Small Finance Banks can apply to the Reserve Bank for conversion.
The RBI has also suggested that licenses may be issued to financially sound and well-managed cooperative credit societies having a minimum track record of five years to operate as UCBs.
The RBI has invited suggestions and comments from public on this report by September 18.