RBI constituted High Powered Committee headed by R Gandhi on Urban Cooperative Banks

The Reserve Bank of India (RBI) on 30 January 2015 constituted a High Powered Committee to re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the Urban Cooperative Banking (UCB) Sector.

The eight-member committee will be chaired by R Gandhi, the Deputy Governor of Reserve Bank of India. It will submit its report within three months from the date of its first meeting.

The composition of the High Powered Committee will be
• R Gandhi, Deputy Governor, Reserve Bank of India - Chairman
• MA Narmawala, Commissioner for Co-operation & Registrar of Cooperative Societies, Gujarat
• MV Tanksale, Chief Executive, Indian Banks’ Association
• Dr. ML Abhyankar, President, National Federation of Urban Co-operative Banks (NAFCUB)
• SK Banerji, Managing Director, Saraswat Cooperative Bank Ltd
• D Krishna, Former Chief Executive, NAFCUB
• Suma Varma, Principal Chief General Manager, DCBR, Reserve Bank of India will be the Member Secretary
• Joseph Raj, Joint Legal Adviser, Legal Department, Reserve Bank of India shall be a permanent invitee

The Terms of Reference of the High Powered Committee
• It will examine the lines of businesses that UCBs may be permitted to undertake and their benchmark in terms of business, capital requirement, regulatory regime and others
• Examine the limited legal powers and resolution options available to know the appropriate size up to which a UCB may be able to grow without undue risk to the system, under the current regulatory framework
• To suggest the criteria (legal framework) for allowing voluntary conversion by a UCB and what should be the benchmarks for mandatory conversion of UCB to a Joint Stock Bank.
• Examine whether the time is opportune to give license to new UCBs as per the recommendations of the Expert Committee on Licensing of New UCBs, (Malegam Committee) and if so the modalities of taking forward the recommendations of Malegam Committee
• To assure that confidence regarding proper management is generated among investors
• To determine the modalities of implementing the suggestion of the Malegam Committee that 50 percent in value of deposits should be held by voting members. Alternatively propose a feasible structure that puts majority voting in the hands of contributors of funds

Background
The Committee was formed in accordance to the recommendation made by the Standing Advisory Committee (SAC) on UCBs in its meeting held on 20 October 2014.

SAC is an advisory body that is periodically convened by the RBI. It is chaired by DG-in-charge of the Department of Cooperative Bank Regulation (DCBR) and has representatives from the co-operative sector, Registrars of Co-operative Societies of select States and IBA as its members.