By allowing urban cooperative banks (UCBs) to issue credit cards, the Reserve Bank of India has opened the doors not just for more business but also for an image makeover of these banks. The approval is seen as a push to these traditional banks to emerge as NextGen banks. In the Monetary Policy announcement, RBI Governor Raghuram Rajan said, “With a view to enlarging the scope of urban co-operative banks for expanding their business, it has been decided to allow financially sound and well-managed (FSWM) scheduled UCBs, which are CBS-enabled and having minimum net worth of ₹100 crore, to issue credit cards.”
The move is set to boost credit growth of UCBs, from the present 14-15 per cent annually. Jyotindra Mehta, Chairman, Gujarat Urban Co–operative Banks Federation, said: “This is a welcome decision. This will put us on par with NextGen banks, which offer a variety of services. This is a step for UCBs to further progress on the technology front.” Gujarat has about 235 UCBs with deposits of over ₹29 lakh from 30 lakh members and customers across the State.
Apart from being a CBS-enabled bank, a UCB also needs to fulfil other criteria such as CRAR not less than 7 per cent, gross NPA less than 7 per cent and net NPA not more than 3 per cent. Also, the UCB should have posted profit for the past three consecutive years, without attracting any penal action from the regulator. Subhash Gupta, Chief Executive, National Federation of Urban Cooperative Banks and Credit Societies, said: “Credit cards would strengthen the brand image and improve the marketing position of UCBs. Advances business will get a boost as most UCBs will charge almost in line with the prevailing credit card providers.”
As on March 31, 2014, there were a total 1,589 UCBs in the country with deposits of over ₹3.15 lakh crore and advances close to ₹2 lakh crore.
No comments:
Post a Comment