Mumbai : The Reserve Bank has asked urban cooperative banks, which have been facing a steady decline in their market share for over a decade now, to improve their management and governance practices so that customers repose their trust in them and the banks can remain relevant.
Since the fall of the Madhavpura Cooperative Bank scam of 2002, urban cooperative banks (UCBs) have been witnessing a steady fall in their market share, which declined from 6.4 per cent in FY02 to 3.3 per cent in FY17, according to RBI deputy governor NS Vishwanathan.
As of March 2017, there were 1,562 UCBs with deposits of Rs 4,43,468 crore and advances of Rs 2,61,225 crore, accounting for about 3.6 per cent of deposits and 2.9 per cent of advances of the banking sector, he said. On an aggregate basis, deposits grew 13.1 per cent and advances grew 6.6 per cent in FY17. Gross NPAs stood at over 7 per cent and 91 per cent UCBS were reasonably capitalised with a core capital of over 9 per cent under the Basel I norms, he said.
“There is no gainsaying the fact that UCBs need to regain and retain the confidence of their depositors to remain in business,” Vishwanathan told an event organized by the Gujarat Urban Cooperative Banks Federation in Gandhinagar.