Co-op banks to have Rs 50 lakh fixed capital

An expert committee on Licensing of New Urban Co-operative Banks emphasised the need to encourage new entrants to open banks and branches in States and Districts which are unbanked or inadequately banked. Prescribing entry point capital for new UCBs, the Report said UCBs operating in only one state should have a minimum capital of Rs 50 lakh.  At the same time, UCBs which wishes to operate in more than one State after five years of successful operations must have a minimum capital of Rs 5 crore.

Also, UCBs operating in only one State with 50 per cent or more branches in 'C' and 'D' category population centers should have a minimum capital of Rs one crore, while operating in only one state but without requirement to have branches in ‘C’ and ‘D’ centers there the minimum capital for UCB should be Rs 3 crore.

The Committee also said 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.

In respect of existing co-operative credit societies opting to be converted in to UCBs, the minimum capital required will be as per norms prescribed above or as per RBI’s per branch head room capital prescription, whichever is higher.

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