Fundamentals of UCB -
September 16th, 2010
Priority Sector lending
The UCBs are required to extend 60 per cent of their total advances to priority sector, of which, 25 per cent needs to be deployed to the weaker sections. Information on lending of UCBs towards priority sector and weaker sections as at end-March 2000 was available for 1,467 banks. Of this, 1,266 fulfilled the priority sector target and 990 banks fulfilled the target for lending to weaker sections.
Complaints and Frauds
Between July 1, 2000 and June 30, 2001, 1,476 complaints were received against UCBs. Furthermore, 149 cases of frauds involving Rs. 27 crore were reported. All the complaints and fraud cases were investigated or taken up with the concerned banks and the Registrar of Cooperative Socieities (RCS), wherever required, for necessary action.
NABARD and its Role in Rural Credit
NABARD has been playing a pivotal role in the channelisation of bank credit to the rural sector. NABARD provides refinance and augments resource base of the institutions providing credit to the rural sector.
Extension of Refinance Facilities to Scheduled UCBs.
In response to requests received for extending refinance facilities to UCBs and considering that UCBs are an important segment of the multi-agency banking system, refinance facilities were extended to scheduled UCBs by NABARD for financing both farm and non-farm activities in rural areas.
Licensing and Inspection
Licensing policy for UCBs was revised in August 2000, in consonance with the recommendations of the HPC. The thrust of the new policy is on strong start-up capital, professionalisation of boards of management and corporate governance. The revised EPNs are based on population criterion. According to the new norms, UCBs should have minimum capital of Rs. 4 crore and membership of at least 3,000 if the population of the place where the UCB is being established is more than 10 lakh.
For population between 5-10 lakh, the minimum share capital and membership requirements are Rs. 2 crore and 2,000, respectively. For population between 1-5 lakh the corresponding minimum requirements are Rs. 1 crore and 1,500, respectively. For towns with population less than 1 lakh, the corresponding minimum requirements are Rs. 25 lakh and 500, respectively. The number of licensed UCBs increased from 1,849 to 1,937 between end-March 2000 and end-March 2001.
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