The Reserve Bank of India has recommended the formation of a state-level task force on co-operative urban banks to improve the quality of governance and to provide an exit path for weak banks.TAFCUB will have RBI, regional director, Registrar of Co-operative Societies of that state, an official of RBI’s Urban Banks Department (UBD), in-charge of UBD of the concerned Regional Office of RBI as well as a representative each from the national level task force of the urban co-operative banks (UCBs) and the state federation of the UCBs, in each of the five states with high concentration of UCBs.The regional director of RBI and RCS of the concerned state could be the Chairman and co-chairman of TAFCUB, respectively. The central bank made these recommendations in a draft vision document for co-op banks here on Friday.It said each TAFCUB could identify the weak but viable (non-scheduled) UCBs and frame a time-bound programme for revival. ‘‘It would identify the nature and extent of funds required to be infused, the changes in management where necessary and suggest periodical milestones to be achieved,’’ it said.‘‘UCBs which are not found viable by the TAFCUB, could be required to exit from banking business either through merger with strong banks, or through voluntary conversion into a cooperative society by paying off the non-member deposits and withdrawing from the payment system. If there is no other viable option they could even be taken into liquidation by the Registrar,’’ it added.The central bank plans to take proposals of merger among cooperative banks when the networth of the acquired bank is positive and the acquirer bank assures to protect entire deposits of the acquired bank. Likewise, it would also take similar proposals when the net-worth of acquired bank would be negative and the acquirer bank could protect deposits of all the depositors of the acquired bank.RBI said as per State Cooperative Societies Act and the Banking Regulation Act 1949, it was not empowered to take action against the management of an UCB.
