7. Male membership in Mahila Banks
RBI: Since mahila banks were granted licenses on the basis of relaxed entry point norms, it would be in fitness of things if they remain as mahila banks. However, views of leading mahila banks needed to be solicited before RBI could consider such requests. Federations should encourage mahila banks to enroll more and more mahilas as members to create avenues for profitable deployment of funds.

Action Requested:
The request for permission for male members up to a certain percentage with condition that they would not be allowed to contest elections was made on receipt of representations at NAFCUB's seminars on mahila banks and also in its AGMs. If required, RBI may ascertain views of top 10 mahila banks (not the older ones like Bhagini Nivedita Bank which permit male membership) at the earliest and consider Federation's request which is now pending for some years. If RBI takes a view that it would not permit male membership, then many mahila banks who reach Entry Point Norms of a general bank in that centre, may opt to be converted into a general bank. Others, who do not attain the required entry point norms, would be forced to continue as mahila banks and could become unviable on account of their size.

A better alternative to the above scenario is to permit limited male membership so that the predominantly mahila character of these banks are maintained and at the same time, they have a better chance to become viable.

8. Issue regarding treatment of paid-up share capital as core capital

RBI : Formation of a committee

Action Requested:
Early acceptance of the recommendations of the Working Group on exploring alternative avenues for raising capital for urban cooperative banks.

9. Issue of branch licenses/extension counters/ATMs to urban coop. banks

RBI : Approval for opening of branches/extension counters and ATMs would come within RBI's overall stance for the sector and therefore, a level of supervisory comfort was necessary for considering such applications. Review of stance for offsite ATMs/branches could be considered for banks registered in states that have signed MoU

Action Requested:
Extended supervisory discomfort of RBI on this issue is certainly telling upon the growth of the sector. The situation obtaining is clearly becoming counter productive. 50% of the 1850 urban banks are in Grade-I category. Their growth without the prolonged restraint from RBI due to absence of "supervisory comfort" would have been at least 5% more than what they have attained now.

The following relaxations are immediately requested for MoU signed states.

i) Permission to Gr.I & Gr.II scheduled urban cooperative banks to open up to 5 branches/extension counters in a year without prior approval of RBI. Additional branches/extension counters may be opened with the permission of RBI. Permission to open onside and offsite ATMs without prior approval of RBI.

ii) Permission to Gr.I & Gr.II non-scheduled banks to open branches /extension counters and offsite ATMs with prior approval of RBI while onsite ATMs be permitted to be opened without prior approval of RBI.

iii) Wherever prior approval of RBI is required as above, those cases be considered and recommended by TAFCUBs.

10. Insurance Business
RBI : The request of the A.P. & Gujarat Federations to reduce the eligibility criterion of banks to undertake insurance agency business (other than on referral basis) from Rs.50 crores net worth to Rs.25 crores would be looked into

Action Requested
All Grade-I & Grade-II banks with net worth of Rs.10 crores and above may be considered for being permitted to undertake insurance agency business.

Role of all urban banks in promoting micro insurance may also be examined.

11. IT support to urban cooperative banks
RBI : There was a need for urban cooperative banks to collaborate as big urban cooperative banks may support their smaller counterparts in the sector by making accessible their software. RBI would provide necessary support after the feed back from NAFCUB about the demands of the sector was received

Action Requested
NAFCUB is in the process of working out plans for support to smaller banks in consultation with the large scheduled banks, to be put forth for discussion at the SAC meeting.

12. Government Securities
RBI : NAFCUB should make detailed study of types of illiquid securities the cooperative banks are holding and would like to convert and approach RBI with concrete proposal

Action Requested
NAFCUB had collected the information from all the major banks and sent a consolidated position to RBI in its letter No. NF/R-1/2005-06/2580 dated 6th February, 2006. In the meantime, RBI provided relaxations in classification of securities giving relief to banks in their depreciation provision. Since there were no major changes in the yields of G-secs during major part of the year, the issue was not taken up further. However, during the last quarter of 2006-07, the yields have hardened and position of many banks have become difficult. Holding of illiquid securities for a length of time will be a source of problem for the banks in days to come. There was recently some move on the illiquid securities being withdrawn from market against issue of liquid securities. This problem needs to be addressed with an initiative from the RBI.

13. Negotiated Settlement Schemes

RBI : RBI will look into the matter of issuing guidelines for a uniform negotiated settlement scheme based on suggestion from different RCS, to be implemented in the states by the RCS

Action Requested
The sector needs resolution of this issue at the earliest so that the banks are able to clean up their balance sheets. If need be, a working group of two persons each from the sector, RCS and RBI may quickly go into the issue and submit a report in say, 45 days.