A Short Note On Urban Co-operative Bank

Co-operative banks are financial elements laid out on a co-operative premise and having a place with their individuals. The clients of a co-operatives bank are additionally its proprietors. These banks in India are separated into two classes – urban banks and rural.

The primary co-operative banks located in urban and semi-urban areas are known as an Urban co-operative bank or UCB. Until 1996, these banks were simply allowed to loan cash for purposes other than agricultural purposes. This differentiation is presently not legitimate today. Customarily, these banks were focused on networks, areas, and work environment gatherings. They fundamentally gave advances to little borrowers and organizations. Their extent of activities has extended essentially from that point forward.

What is an Urban Co-operative bank?

Urban co-operative banks allude to the primary co-operative banks in semi-urban and urban regions. These financing bodies are basically for private ventures, enterprises, and finance for home buys and education. To operate as an Urban co-operative bank, urban Primary credit societies (PCSs) that meet specific criteria can apply to the RBI for obtaining a banking license. 

UCBs are registered and governed by the Banking Regulation Act of 1949 as well as the respective state’s co-operative societies acts. Hence, UCBs are dependent upon dual regulatory control. The RBI somewhat directs urban banks. The RBI represents their financial tasks, which lays out capital adequacy, risk management, and loaning norms.

In case of an emergency, their administration and goals are administered by the Registrar of Co-operative Societies, who works for either the state or the central government. UCBs with reserves of more than Rs. 50 crore are likewise allowed to work in more than one state, depending upon specific circumstances. In addition, they have specific privileges and commitments since they are covered by the RBI Act, 1934 (2nd Schedule) – rights to acquire refinance and credits from the RBI and commitments, for example, keeping up with cash reserves, submitting returns to the RBI, etc. The Shivalik Mercantile Co-operative Bank Limited is the first UCB to be conceded ‘in-principle’ authorization by the Reserve Bank of India to change over into a Small Finance Bank (SFB).

Historical Perspective of UCBs

• The urban co-operative bank movement originated in India in the late nineteenth century. In India, these societies were established due to the success of the co-operative movement in Germany and Britain. 
• The co-operative societies were founded in India on the principles of mutual aid, open membership, and democratic decision-making. 
• In 1889, Anyonya Sahakari Mandali was founded in the princely state of Baroda. It was the first known mutual aid society in India and was established under the leadership of Vithal Laxman. 
• The early stages included the development of urban co-operative credit societies formed based on community, these community based societies were established to meet the demands of consumption-oriented credit
• The salary earner’s societies popularized this movement significantly by helping labor and middle class people
• The co-operative Credit Societies Act, passed in 1904, propelled the movement even more and in October 1904, in Canjeevaram (now Kanjivaram), the first urban co-operative credit society was founded
• On January 23, 1906, Vithaldas Thackersey and Lallubhai Samaldas established one of the most prominent early credit societies- the Bombay Urban Co-operative Credit Society
• In 1912, the Cooperative Credit Societies Act of 1904 was amended to permit the formation of non-credit societies
• Formed in 1915, the Maclagan Committee was assigned to review the performance of Cooperative Credit Societies and find and suggest ways to improve their working

Significance of Urban banks

1. An urban co-operative bank is fundamentally confined to finance specialist co-ops that have been in operation for over a century. Their specialty is taking care of the lower working class and individuals with restricted assets, as well as independently employed and small businesses. 
2. These banks assume a significant part in activating stores and supporting the little borrower area, which incorporates limited scope ventures, experts, retailers, etc.
3. These banks are also playing a crucial role in providing assistance to people in rural areas. 
4. Over the years, trust has been built in the UCBs. Therefore, these models can be easily replicated.

Conclusion

From the day of its start till today, the primary co-operative bank, Urban Co-Operative bank, has been developed to a surprising extent. The popularizing movement of UCBs has been accepted across the country to prepare investment funds from the center and low-pay urban gatherings and to give credit to their individuals, a considerable lot of whom had a place with the weaker segments.