Microfinance Focus, September 14, 2011: The Reserve Bank of India’s expert committee on Licensing of New Urban Co-operative Banks has recommended that the existing well managed co-operative credit societies should be given priority for granting licenses as urban co-operative banks (UCBs) particularly in unbanked or inadequately banked centers.

Chaired by Y.H. Malegam, the committee is of the opinion that 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 committee said.

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.