An internal committee of the Reserve Bank of India has highlighted the weaknesses in cooperative banks and recommended a slew of measures to strengthen the cooperative credit system in the country in a bid to push through financial inclusion.
The committee recommmended that the Reserve Bank of India must set March 2013 as the deadline for cooperative banks to meet the mandated capital adequacy ratio and also strengthen governance in such banks.
The committee also recommended that those cooperative banks unable to meet the capital norms must be merged with other stronger banks.
The committee observed that out of 370 central cooperative banks, 209 would require additional capital totalling R6,500 crore over the next four years to reach 9% mandated capital ratio.
“It is estimated that despite these measures, about 60 CCBs will not become sustainable and would need to be merged with other CCBs,” the committee report said.