RBI today allowed Urban Cooperative Bank to take up the structure and functioning as that of a small finance bank. This clearance by the central bank will allow these local banks to expand their market while providing greater access to bank branches.
In its post policy regulatory and development announcement, the central bank said, "The High Powered Committee on Urban Cooperative Banks (UCB), chaired by Shri R. Gandhi, the then Deputy Governor of Reserve Bank, had, inter alia, recommended the voluntary conversion of large Multi -State UCBs into Joint Stock Companies and other UCBs which meet certain criteria into Small Finance Banks (SFBs). Taking these recommendations into consideration, it has been decided to allow voluntary transition of UCBs meeting the prescribed criteria into SFBs. The detailed scheme will be announced separately," RBi said in its post policy developmental and regulatory announcements.