Social media: Marathe raises debate on future of credit co-ops

Link : http://www.indiancooperative.com/from-states/social-media-marathe-raises-debate-on-future-of-credit-co-ops/

Veteran cooperator and former President of Sahakar Bharati Satish Marathe has raised a debate on social media about the future of urban cooperative banks and credit cooperative societies. While several of his friends on Facebook agreed with him, there were some who thought it unrealistic.

Marathe worte “Small Finance Banks ( SFBs) and Payment Banks (PBs) together will open about 3600 Branches in the very first year of operation. Collectively, SFBs and PBs would bring in Rs 7400 crore as capital.

Entry of these new categories of banks will be a big threat to the existing Urban Co-op Banks.

Unless the UCBs quickly refashion their internal working, reduce operating costs, improve productivity, concentrate on capacity building, fully harness technology and particularly make available emerging payment gateways eg IMPs ( Mobile Payment ), e- Wallets, Internet access, etc , there is every chance of UCBs losing a large chunk of their secure and profitable business.

Business of the well run Dist Central Banks and large Credit Co-operative societies will also be affected by the entry of these new banks, particularly SFBs.

It is a wake-up call for the Co-Op Banking Sector.”

Kashinath Ranade, one of Marathe’s friends says “Just see the history some of the known co-op banks that are under moratorium. Some are struggling to remain under RBI’s norms for payment of dividend to share holders and adopting various tactics to remain within RBI’s norms.

Another friend Makarand Khanolkar felt “I honestly think that this is a pseudo threat. Neither the SFBs nor PBs nor Post offices would be able to provide the service a Co-op Bank does. Yes, I do agree that more transparency is required for survival in the Banking Sector.

Agreeing to Marathe’s point of view one of his FB friends wrote” Add to it the proposal of post office getting converted into banks. With their ubiquitous presence in villages, UCB may become an endangered species.”

Banks, insurers to align with global accounting rules from April 1, 2018

Link : http://www.thehindubusinessline.com/economy/roadmap-announced-for-ind-as-implementation-by-banks-insurers/article8123347.ece

Centre announces roadmap for implementing Ind AS in the financial sector

NEW DELHI, JAN 19:  

The Centre has announced the much-awaited roadmap for implementing the Indian Accounting Standards (Ind AS) by banks, insurers and non-banking finance companies (NBFCs).

Ind AS are a set of accounting standards developed by Indian authorities, which converge with the International Financial Reporting Standards (IFRS).

According to the roadmap, scheduled commercial banks (excluding regional rural banks) and insurers, will be required to prepare Ind AS-based financial statements for accounting periods beginning April 1, 2018. This would have to be done with comparatives ending March 31, 2018 or thereafter.

Ind AS would be applicable to both consolidated financial statements. The roadmap would also apply to all-India term-lending refinancing institutions, such as Exim Bank, NACAS, NHB and SIDBI, an official release said.

Urban cooperative banks and regional rural banks are not required to apply Ind AS and can continue to comply with the existing standards for the present, the release added.

The new roadmap is being implemented as a follow-up of the 2015-16 Budget announcement made by Finance Minister Arun Jaitley. Also, the Centre has now stipulated that commercial banks cannot voluntarily adopt Ind AS prior to the roadmap date.

The roadmap also clarifies that holding company, subsidiary, joint venture and associate entities of commercial banks, insurers and NBFCs will also have to comply with the standards.

NBFCs have been asked to prepare Ind AS-based financial statements in two phases.

Under phase I, NBFCs having net worth of ₹500 crore or more would have to prepare the statements for accounting periods beginning April 1, 2018.

Under phase II, NBFCs whose equity and/or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and have net worth less than ₹500 crore should prepare the statements from April 1, 2019.

The same roadmap will apply to unlisted NBFCs having net worth of ₹250 crore or more, but less than ₹500 crore.

srivats.kr@thehindu.co.in

Karimnagar Co-op Urban Bank penalized

http://www.indiancooperative.com/co-op-news-snippets/karimnagar-co-op-urban-bank-penalized/

The Reserve Bank of India has imposed a monetary penalty on The Karimnagar Co-operative Urban Bank Ltd., Karimnagar, Telangana, in exercise of the powers vested in it.

The UCB was found guilty of violation of guidelines and directives of Reserve Bank of India on loans and advances to directors and their relatives.

The Reserve Bank of India had issued a show-cause notice to the bank, in response to which the bank submitted a written reply.

After considering the facts of the case and the bank’s reply in the matter, the Reserve Bank of India came to the conclusion that the violations were substantiated and warranted imposition of penalty.

Urban cooperative banks misused for money laundering

http://articles.economictimes.indiatimes.com/2013-10-30/news/43528981_1_money-laundering-urban-cooperative-banks-new-delhi

NEW DELHI: Urban Cooperative Banks (UCBs), which hold deposits of over Rs two lakh crore, are being misused for money laundering causing alarm to the government.
The matter of misuse of UCBs, over which there is dual control by central or state governments through multi-state cooperative societies or state cooperative societies, was discussed during a a recent meeting of Economic Intelligence Council (EIC), chaired by Finance Minister P Chidambaram.

DA ORDER FOR Kerala State

Download the DA Order from the link below :

https://docs.google.com/file/d/0B0A2MsukKkXheVpYWU1fQzVhRVk/edit?usp=sharing

Saradha scam: 13 co-op banks under RBI scanner

Sumantha Ray Chowdhary wrote in the Hindustan Times (April 26)

The Reserve Bank of India (RBI) is probing the role of 13 cooperative banks in West Bengal where the tainted Saradha Group managed to park funds for conducting illegal transactions. According to RBI sources, these banks include two each in South 24 Parganas, North 24 Parganas, Howrah,

Hooghly, Kolkata and one each in Nadia, East Midnapore and West Midnapore. The RBI is of the opinion that the tainted group was able to open fake accounts either due to a lacklustre approach in verifying credentials of account holders through the know your customer (KYC) system or owing to the direct involvement of a section of bank officials, who are believed to be close to officials of the tainted group.
The apex bank’s regional head office in Kolkata has been instructed to carry out detailed investigation into such fake accounts in urban corporative banks as well as scheduled commercial banks in the state.
“Be it negligence on part of the authorities in verifying credentials of account holders or their proximity to group officials, we are determined to take stringent action against staff members who are found guilty,” said a senior RBI official.
In fact, only on February 25, 2013, urban cooperative banks were cautioned by the RBI to conduct periodic reviews of high-risk customers and also ensure that KYC guidelines are adhered to.
The apex bank also expressed dissatisfaction over the performance of a section of urban cooperative banks.
“There have been instances of urban co-operative banks being used as conduits for money laundering and other unlawful activities primarily due to non-adherence to KYC and other such guidelines, including absence of risk profiling of customers and lack of proper monitoring of transactions,” the circular read.
“Caution was sounded earlier but it did not have any impact on the management or officials of the 13 cooperative banks in West Bengal. So, we will identify the officials responsible and take action,” the RBI official added.
Recently, West Bengal Infrastructure Development Finance Corporation and West Bengal State Cooperative Bank became victims of forgery to the tune of Rs. 120 crore and Rs. 20 crore respectively. In both the cases, fake accounts held in UCO Bank were used to facilitate the fraud.

RBI approves merger of Mehsana Urban co-op bank and Surat Nagrik Sahkari bank

Melvyn Thomas wrote in the Times of India (April 26) :


SURAT : The Reserve Bank of India (RBI) has approved the merger of the Surat Nagrik Shahkari Bank with the Mehsana Urban Cooperative Bank, giving a big succor to the 44000 account holders and depositors in the city.
The account holders and depositors of Surat Nagrik Sahkari bank were on the tenterhooks after the bank was placed under directions by the RBI under section 25(a) of the Banking Regulation Act, 1949 on March 1.
Samir Patchigar, managing director of Surat Nagrik Sahkari Bank said, "We are grateful to the RBI for taking prompt decision on our bank's merger with the Mehsana Urban Cooperative Bank. This will end the 40 long years of Surat Nagrik bank's performance in the city. Now, the depositors and account holders will be catered by the Mehsana Urban bank"


"We were making all our efforts for getting the approval from the RBI regarding the merger of both the cooperative banks. It was only after the NoC was issued by the state registrar of banks that our merger procedure was completed at the earliest" added Patchigar.
Sources said that the Surat Nagrik Cooperative Bank had lost a whopping Rs 25 crore in the Madhavpura bank and Home Trade scams.

RBI may suspend licence of Amanath Bank

The fate of thousands of small-time investors and savings bank account holders is uncertain as the Indian banking regulators started tightening its noose around minority cooperative society Amanath Bank.
Now, the bank is staring a possible suspension of its licence by Reserve Bank of India (RBI) in the face.
Amidst the allegations is Union Minister for Minority Affairs K Rahman Khan, who was one of the founders of the bank, also served as its president when irregularities allegedly took place.
Khan and his associates are alleged to have siphoned off over `110 crore from the bank on the pretext of giving loans to close relatives of the minister. Sources told Express that the bank gave away loans to Khan’s relatives, but they were not recovered.
“Many of them did not pay interest and the board approved closing the loans with a fraction of payment. This resulted in enormous non-performing assets (NPA),” they said. However, Khan admitted that loans were given to his relatives, who defaulted, but he stopped short of taking responsibility for it.
“There are no loans pending from my side. As per co-operative regulations, directors and relatives can take loans... My relatives have taken loans because they are shareholders of the bank and have the right to borrow,” Khan told Express.
“I have not given any concessions, they were given by subsequent boards as part of recovery process. (State Minorities Commission Chairman Anwar) Manpaddy and others are complicating the situation unnecessarily,” he said.
The RBI which is said to have taken note of the ‘dubious’ transactions over a period of time had shut down operations of the bank, allowing only `1,000 transaction per account for a period of six months.
Unaware of this development, small investors and customers are now making frequent trips to the bank to see if they have access to their savings of many years. Sources said the bank had provided insurance of up to `1 lakh and any one with savings more than that amount was likely to be affected if the RBI decided to shut operations.
Amjad Khan, who runs a military equipment store in Shivaji Nagar, says, “We (neighbours) all have invested in the bank and run our families with the interest amount. Now we hear it will be merged and that this crisis is politically motivated, but what about the normal people like us?” The bank’s NPA is said to be around 3 per cent now, but sources said this was fabricated to mislead the RBI and the investors.

news from : www.newindianexpress.com

Shree Ganesh Sahakari Bank under RBI direction

The Reserve Bank of India has placed Shree Ganesh Sahakari Bank Ltd., Nashik, Maharashtra, under Directions. According to the Directions, depositors will be allowed to withdraw a sum not exceeding Rupees one thousand of the total balance held in every savings bank or current account or any other deposit account.
The Urban cooperative Bank will, without prior approval in writing from the Reserve Bank, also not be able to grant or renew any loans and advances, make any investment, incur any liability.
It also cannot enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Directions dated April 01, 2013.
The Directions have been issued from the close of business on April 02, 2013.
The Reserve Bank has, however, clarified, that issue of the Directions by the Reserve Bank should not per se be construed as cancellation of banking licence. Rather, Shree Ganesh Sahakari Bank Ltd. will continue to undertake banking business but with restrictions till its financial position improves.
The Reserve Bank may consider modifications of these Directions depending upon circumstances.

News from : www.indiancooperative.com

Gujarat Mercantile Co-op bank penalized

Reserve Bank of India penalized Gujarat Mercantile Co-operative Bank based Ahmedabad in Gujarat a couple of days ago.
The apex bank imposed a monetary penalty of Rupees two lakh on Gujarat Mercantile Co-operative Bank for violation of the Banking Regulation Act, 1949 (AACS). It was also found flouting RBI directives.
The Urban Cooperative Bank failed to comply with RBI’s instructions relating to prohibition of loans and advances to directors/ relatives/related concerns.

RBI has issued Show Cause Notice to the bank in the response to which the bank has submitted a written reply and after considering facts of the case, bank’s reply and personal submission in the matter, RBI came to the conclusion that the violations were sustained and warranted imposition of penalty.

News from : www.indiancooperative.com

District co-op banks told to introduce core banking

PUNE: The National Bank for Agriculture and Rural Development (Nabard) has asked all district central cooperative (DCC) banks to get approvals from their board of directors to introduce practices like the core banking system, which are required to launch RuPay-enabled debit cards.
A Nabard official said, "Initially, all DCC banks will have to implement the core banking system, wherein information of all accounts will be available on the bank's intranet, so that basic transactions can be carried out at any branch. This technology is successfully used in all private and public sector banks in the country. Some urban cooperative banks have also implemented this technology."
Once core banking comes into effect, services such as debit cards, ATM withdrawals and online transactions can be made available to customers. DCC banks, which mostly have farmers as their account-holders, do not provide these services yet.
The Nabard had invited representatives of the 31 DCC banks in the state for a meeting in Pune. The banks were asked to shift to core banking and train their employees in the system. The banks will have to bear the expenses to introduce the new system and these will have to be approved by the respective boards of directors.
Nabard officials said core banking would bring all DCC bank accounts onto a common platform, which already has account details from all private and public sector and urban cooperative banks. This platform is supported by the National Payment Corporation of India with the RuPay technology, which offers flexibility and nationwide accessibility to account holders while withdrawing money or making payments using debit cards.
The RuPay-enabled debit cards promoted for farmers by Nabard will subsequently have national accessibility, making it possible for farmers to withdraw or pay money anywhere in the country. Currently, farmers are forced to carry cash with them. People from urban areas also face similar problems when they travel to remote areas.
Besides RuPay cards, more ATMs will also be set up in rural areas. The Union government has encouraged banks and private players to open ATMs in rural areas, Nabard officials said.

RBI to urban co-operative banks: Grant unsecured loans up to 25 per cent of assests

http://rbidocs.rbi.org.in/rdocs/notification/PDFs/UBD030413PCBCIR.pdf

Tension as RBI does a Cyprus on Amanath Cooperative Bank

The Amanath Cooperative Bank here is once again in the news for wrong reasons as the Reserve Bank of India (RBI) has issued a notice curtailing transactions, which led to incensed customers arguing with bank staff here on Saturday.

According to the RBI directive, the bank can conduct a financial transaction of not more than Rs. 1,000 per account a day. Besides, the bank has been stopped from accepting deposits till further orders.

Chaos on premises

Chaos prevailed as hundreds of customers thronged the bank’s head office in Shivajinagar and roughed up the employees to vent their anger. The employees initially tried to pacify them citing a technical snag but the account holders created a ruckus after they came to know about the RBI directive restricting transactions and blocking deposits.

The Shivajinagar police rushed to the spot and managed to bring some order. Later, police officials convened a meeting with the senior bank executives and the account holders, who were assured that the matter would be resolved by Monday.

“There are thousands of account holders from the minority community who have deposited money in the bank besides having their salary accounts. But right from the inception, the bank has been mired in controversy and we are always worried about our money,” said Mustaq Ahmed, an account holder, who was part of the protest on Saturday.

‘Shocked’

Meanwhile, the bank’s chief executive officer Naseer Ahmed told The Hindu he was shocked by the RBI’s sudden decision.

“How can it take such a decision? Soon after formation of the new committee, we are doing well and have recovered over Rs. 7 crore from defaulters and reduced the non-performing assets (NPAs). We have also set a target of recovering dues of Rs. 20 crore by June this year to achieve our target.”

The RBI, which is monitoring the bank’s financial activities, has not considered this year’s activities before taking such drastic steps, he said. “We have brought it to the notice of Urban Cooperative Bank officials and the Registrar of Cooperative Societies, seeking their help to lift the RBI restriction. A meeting has also been scheduled with RBI officials on Monday and we hope that everything will be normalised.” 

News from : www.thehindu.com

Cosmos Bank bags NAFCUB Award

The fastest growing Multistate Co-operative Scheduled Bank, the Cosmos Co-operative Bank  was awarded as ‘India’s oldest Co-operative Bank’  at Annual General Meeting of ‘National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCUB) in New Delhi.

The Vice Chairman of Cosmos Bank, Mr Krishnakumar Goyal was honored with a trophy by Mr H K Patil, the President of ‘NAFCUB’.

The Cosmos Bank with its history of 106 years of glory was specially honored at this occasion.

Cosmos Bank is the leading Co-operative Bank in Co-operative sector of India with 119 branches and extension counters in 6 states. At present Bank has a total financial set-up of more than Rs. 21,800 cr.

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Courtesy : www.indiancooperative.com

Malegam Report to be implemented soon: RBI

Participating in a Punjab and Maharashtra cooperative bank event in Bombay H R Khan Deputy Governor of the RBI said the apex bank would soon implement the suggestions made by the Malegam Committee on the cooperative banks.

The committee, among other things, has recommended a dual approach of having a board of directors   appoint a board of management to run the cooperative banks and a relaxation of entry norms for the cooperative banks in the areas not yet covered by banking services, the RBI deputy added.

Mr Khan urged the cooperative banks to put in their utmost efforts to expand their business as their growth thus far leaves a lot to be desired. The share of the cooperative banks in banking business has gone down from six percent to a mere two percent, he noted.

However, the RBI deputy governor lauded the cooperative banking sector for improving its assets   quality and accomplishing mergers of weaker links with stronger ones in its chain.

Main recommendations of Malegam Report

UCBs play a useful role and there is need for a greater presence of UCBs in unbanked districts and in centers having population less than 5 lakh. It is necessary to encourage new entrants to open banks and branches in States and Districts which are unbanked or inadequately banked. It is equally necessary to discourage new entrants from opening branches in Districts and population centers which are already adequately banked.

The existing well managed co-operative credit societies meeting certain financial criteria like profits, capital adequacy, NPAs’ proportion etc. should be given priority for granting licenses as urban co-operative banks particularly in unbanked or inadequately banked centers.

Organization Structure of New UCBs

There should be segregation of the ownership of the UCB as a co-operative society from its functioning as a bank. The new organization structure shall consist of a Board of Management in addition to the Board of Directors.

The Board of Directors (BoD) would be elected in accordance with the provisions of the respective Co-operative Societies Acts and would be regulated and controlled by the RCS / CRCS.

The (BoD) will establish a Board of Management (BoM), consisting of persons with professional skills, which shall be entrusted with the responsibility for the control and direction of the affairs of the Bank assisted by a CEO who shall have the responsibility for the management of the Bank.

RBI would have unfettered powers to control and regulate the functioning of the UCB and of its BoM and of the CEO in exactly the same way as it controls and regulates the functioning of the Board of Directors and the Chief Executive in the case of a commercial bank.

It should be made a condition of the license that every new UCB should be required to have a Board of Management (BoM) to be appointed by the Board of Directors (BoD) and a Chief Executive Officer (CEO) to be appointed by the BoM. While the BoD will be responsible for laying down the broad contours of strategy, the BoM will be vested with the mandate to direct and control the day-to-day operations of the UCB within the limits set by the BoD. At least 51 per cent of the members of the BoM should have special knowledge or practical experience in the matters specified in Section 10 A(2) of the B. R. Act, 1949.

Members of the BoD can be members of the BOM provided they fulfill the conditions specified. Members of the BoM can be paid such sitting fees as the BOD may decide subject to a ceiling to be specified by RBI. The BoM to follow a Code of Corporate Governance to be specified by RBI.

The CEO shall be responsible for the management of the whole or substantially the whole of the affairs of the UCB but shall be subject to the control and direction of the BoM. The appointment of the CEO shall be subject to the prior approval of RBI.

Audit by a Chartered Accountant to be appointed by the BoM from out of a panel of approved auditors maintained by RBI and subject to rotation after four years.

Umbrella Organization

There should be two separate Umbrella Organizations viz. a national level organization which provides payments and settlement services and other services normally provided by central banks as also liquidity support to its members; and one or more organizations which provide the management, IT, training and other services which the UCB sector needs.

The national level UO should preferably be in the form of a multi-state UCB with membership being restricted to and mandatory for all UCBs other than scheduled UCBs.

Member UCBs should be required to maintain their CRR in the form of deposits with the UO.

The UO should invest its funds only in the form of balances with RBI, deposits with commercial banks or in SLR securities and in no other form.

The UO should offer Repos and Reverse Repos facilities to UCBs in the same manner as RBI offers to commercial banks and at the same rates of interest.  In turn, it should enjoy Repos and Reverse Repos facilities with RBI.

UCBs can avail of Repos facilities only to the extent of their excess SLR holdings.

Until the Payments and Settlements facilities are provided directly to UCBs, the UO will act as a gateway to provide these services for a fee to UCBs. In turn, the UO will be a member of the Payments and Settlement System.

Being a UCB, the UO would have a Board of Management and will be subject to the regulation, supervision and inspection of RBI.

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Courtesy : www.indiancooperative.com

PSU, other banks flock to portal for resolution of NPAs

AHMEDABAD, OCT 3: 

Indian banks and financial institutions, which had cumulative non-performing assets (NPAs) worth about Rs 1.25 lakh crore by March 2012, are seeking help from a dedicated portal for resolution of their NPAs.

Public sector banks such as State Bank of India, Bank of India, Indian Overseas Bank and others including IDBI Bank and Nabard, have started posting their NPA recovery notices on the portal NPAsource.com in the hope of an early resolution, Mr Devendra Jain, Chairman of Atishya Group, which floated the dedicated portal last year, toldBusiness Line here.

Between March 2011 and March 2012, the cumulative NPAs of banks and financial institutions (FIs) in India increased from Rs 94,000 crore to Rs 1.25 lakh crore, he said. Banks and FIs post their advertisements and notices on the portal, for a fee, expecting a global response to their efforts at resolution unlike newspaper advertisements which have a short-time, local exposure. “We also track the developments on these NPAs.”

A month ago, NPAsource.com opened an office in Dubai where it is in talks with some Gulf-based banks as well for utilising the portal’s services to resolve their NPAs and get their corporate clients to consider buying NPA properties in India. The portal plans to go global with its branches in the USA and Europe, besides New Delhi and Bangalore, in the next one year, and would also appoint franchisees across 30 major cities in India.

Jain said with more banks joining the league and sharing more details on their NPAs, the portal expects that these banks could get better value for their NPA resolutions.

NPAsource.com, that offers as an alternative to the banks and FIs to resolve their NPAs through dedicated service, is the third such portal in India, the other two being BankDRT and foreclosureindia.com. The portal offers a one-stop-solution to all stakeholders including lenders, borrowers, investors and facilitators who can access data on a single platform for resolution of NPAs.

In one year of its existence, NPAsource.com has generated resolutions worth Rs 1,000 crore and expects to increase it to Rs 5,000 crore in a couple of years, he said. Besides, he said, the portal is also helping in the revival of some enterprises through restructuring of debt etc.

The Gujarat Urban Cooperative Bank Federation (GUCBF), the apex cooperative body for the 244 urban cooperative banks in the state, has recommended to its member banks to use the facilities offered by NPAsource.com to resolve their NPA-related problems, Jain added.

The portal currently has more than 1,000 registered users comprising banks, corporates, chartered accountants’ firms, lawyers, tax consultants and real estate brokers. NPAsource.com has registered NPA properties worth over Rs 13,000 crore in the first year of its operations.

Courtesy : The Hindu Business Line

Peons are managers at Rajasthan co-op bank

Living in the times of recession, 'staff crunch' is a term which one gets to hear pretty often, as offices go for downsizing to save cost. 

However, the Ajmer Urban Co-operative Bank has taken this to another level. Two of its branches located in Kekri and Bijainagar, some 80 km and 65 km from Ajmer, respectively, are being run by peons ever since the managers retired on July 31. 

The group IV employees (peons) in these two branches of the bank, the only two to be located outside the city, double up as cashiers as well as branch managers after the Ajmer Urban Co-operative Bank, set up in 1923, decided not to fill up the posts which had fallen vacant recently. 

Enlarge 

MISMANAGERS? Prem Chand Chauhan (L) and Kailash Chandra Vijayvargiya.

The bank's decision, to a certain respect, was influenced by the fact that the Reserve Bank of India (RBI) had put it on the watch list two years back because of financial irregularities. 

The RBI had also dissolved the bank's board of directors and introduced certain riders on the functioning of the bank. 

However, the RBI did allow the bank to make payments on the fixed deposits upon maturity while it was also allowed to recover outstanding loans from its clients, said Kailash Chandra Vijayvargiya, the peon at the Kekri branch of the bank. 

Vijayvargiya, 43, who took over from Dinesh Gupta, who retired on July 31 as its manager, said ever since, he has been managing the 2,000 savings accounts and around 100 loan accounts with the branch, besides a large number of fixed deposits. 

The total deposits with the branch are over Rs 2 crore, he added. 

Similarly, Prem Chand Chauhan, also a class IV employee, has been managing the affairs of the Bijainagar branch ever since branch manager Babu Lal Marodhia retired on July 31. 

This branch has deposits to the tune of over Rs 1.5 crore. Mukul Kashyap, the managing director of the co-operative bank, conceded the two branches of the bank were being run by peons. 

'We don't have the staff. Those who were working earlier retired over a period of time. If granted permission, the two branches would be closed down,' Kashyap said. 

Joint registrar in the co-operative department, Shakeel Ahmad, said though as per rules peons are not entitled to run branches, in the absence of proper staff there was no alternative left.

Now that the managing director of the bank is not interested in running the two branches, he has been asked to submit a proposal accordingly, he added.

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courtesy : www.dailymail.co.uk

Reserve Bank of India : Working Group on Cloud computing option for small size UCBs

The Reserve Bank of India has today placed on its website, the report of the Working Group on Cloud computing option for small size Urban Co-operative Banks (UCBs). The Working Group comprising senior officers from the Reserve Bank, experts from the software industry and eminent professors from academia was set up in July 2012. The Working Group reviewed the profile of the sector, technological trends in Cloud Computing and use of cloud like solutions within UCBs. Based on the analysis, the Working Group has suggested its approach for Cloud computing option.

The study observed that many Urban Cooperative banks have been providing IT support to other cooperative banks which included sharing of Data Centre and DR sites, Automated Teller Machines and Payment Gateways. Some of these banks were also providing their software solutions as outright sale or fees based ASP model. It was observed that two leading software company had been also offering cloud like services which included core banking as well as many other solutions such as HR solutions, e-mail, storage, etc which the banks could choose. These services were mostly on private cloud like set up.

The Working Group has recommended caution while adopting cloud computing solutions by the Urban Cooperative banks till such time that all issues related to its standards and technology management processes are understood and resolved. In cases where such innovative solutions are already adopted, the Working Group has recommended that the issues identified in this report may be examined on the lines indicated in the report to ensure adequacy of risk mitigation measures and to address concern regarding data security and data privacy in the multi-tenancy environment. Finally the Working Group has identified the need for further study in the area of Cloud Governance, Cloud Audit, Cloud Management and Cloud Security Technology.

R. R. Sinha

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Courtesy : www.4-traders.com

RBI to take up deposit-to-equity proposals by UCBs

MUMBAI, SEPT 26: 

The Reserve Bank of India will consider financial restructuring proposals of stressed urban co-operative banks (UCBs) involving conversion of deposits into equity or debt instruments.

This move comes as financially stronger banks are unwilling to acquire weak UCBs, where the deposit erosion is large. In such situations, restructuring of the liabilities (deposits) of the weak UCB may be a viable proposition, said the RBI

The conversion of deposits will be considered even if the lenders’ networth (equity plus reserves) does not become positive post-conversion, said a central bank circular.

However, the conversion of deposits will be subject to the consent of depositors, including small depositors, the Reserve Bank of India (RBI) said in a notification.

Earlier, the RBI did not permit conversion into equity in the case of small depositors, i.e. depositor having deposit up to Rupees one lakh.

NET WORTH

Further, it had stipulated that the proportion of deposits converted into equity / debt instruments should be such that the net worth of the bank after reconstruction turns positive.

According to Jyotindra Mehta, Chairman, Gujarat Urban Co-operative Banks’ Federation. “Once deposits get converted into equity, a weak UCB’s liability will go down and its networth will increase. This move will help in its revival.”

Depositors, especially above Rs one lakh, may stand to gain from restructuring compared to what they would be entitled to receive from the Deposit Insurance Credit Guarantee Corporation in case of liquidation of the bank.

The RBI said the clause in the earlier notification whereby a portion of the deposit of individual depositors above Rs one lakh may be converted into equity holds good.

INSTITUTIONAL DEPOSITORS

Likewise, a portion of the deposits of the institutional depositors may be converted into Innovative Perpetual Debt Instrument (IPDI), which is eligible for inclusion as Tier I capital.

The total amount raised by a bank through IPDIs cannot exceed 15 per cent of its core capital. These are perpetual instruments with no maturity. The interest payable to the investors is either at a fixed rate or at a floating rate referenced to a market determined rupee interest benchmark rate.

IPDIs come only with call option, which can be exercised by the bank after 10 years.

Courtesy : The Hindu Business Line

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More news on the subject :

http://articles.economictimes.indiatimes.com/2012-09-26/news/34101906_1_ipdi-urban-co-operative-banks-depositors

http://www.moneylife.in/article/rbi-to-consider-financial-restructuring-proposals-of-ucbs/28699.html

Rajasthan: Two of the Urban Co-Op banks penalized

The Reserve Bank of India has imposed a monetary penalty on the Rajlaxmi Mahila Urban Co-operative Bank Limited based in Jaipur.

The urban cooperative Bank was found violating the RBI directives on unsecured advances, IRAC norms and OBC charges.

The apex Bank had issued a Show Cause Notice to the bank in response to which the latter submitted a written reply.

After considering the facts of the case, the bank’s reply and also personal submissions in the matter, RBI came to the conclusion that the violation was substantiated and warranted imposition of penalty. Accordingly, it penalized the bank.

Similarly RBI has also imposed a monetary penalty on Rajasthan Urban Co-operative Bank Limited for violating the RBI directives on individual and group exposure ceiling, IRAC norms and window-dressing.

After thorough investigation of the matter, RBI came to the conclusion that the bank deserves penalty.

Courtesy : www.indiancooperative.com