Urban cooperative banks to adopt core banking solutions

Having overcome the turmoil in the cooperative banking sector, urban cooperative banks (UCBs) are all set to adopt the modern technology of core banking solutions (CBS) to expand their reach.

The National Federation of Urban Cooperative Banks and Credit Societies Limited has planned to help relatively weak and smaller UCBs to adopt modern technology and interlinking through the Applications Service Provider (ASP) system which would be economical for such
banks, Federation president H.K. Patil, and chairman of the Gujarat Urban Cooperative Bank Federation Jyotindra Mehta, said.

The core banking solutions system for UCBs will be formally launched by Union Agriculture Minister Sharad Pawar at a two-day ‘Co-op Core 2010' camp to be held here from December 25.

Mr. Patil expressed confidence that UCBs in large numbers would opt for the CBS system, and by the end of the next year, at least 300 UCBs, including about 55 in Gujarat, would implement it for the benefit of their account holders.

At present, there are 1,674 UCBs in India with 6,900 branches, including 112 in Gujarat. Only about 80-90 bigger UCBs have implemented the CBS nationally. In Karnataka, however, almost all UCBs have already implemented the CBS system, Mr. Patil said.

He said the CBS interlinking was expected to double the deposits of UCBs from the present Rs.1.82 lakh crore to about Rs.3.60 lakh crore in the next five years.

The introduction of the CBS system will help modernise UCBs, and their six-crore-odd account holders will have access to state-of-the-art banking, including 48,000-odd ATMs of various banks across the country on par with other national and private banks, Mr. Patil said.

The UCBs also plan to appoint “business correspondents” to reach out to unbanked people, who constitute about 55 per cent of the total population in India.

Mr. Patil said that under the ASP system, the CBS system will be provided at a monthly rental of Rs.12,900 per branch, which is affordable considering that it was costing anything between Rs.35,000 and Rs.70,000 per month earlier. The banks will now be able to focus only on banking without worrying about the technological aspects of CBS, he said.

Replying to questions, Mr. Patil said about 90 UCBs have merged with other banks over the last five years, and 20-30 per cent had closed down.

Mr. Mehta said that however, after the liquidation of the Madhavpura Cooperative Mercantile Bank following the Ketan Parikh scam about a decade ago, the deposits with cooperative banks in Gujarat — which had been around Rs.14,000 crore — had gone up to over Rs.17,000. He said the UCBs in Gujarat had overcome the problems and were moving forward.

courtesy : The Hindu