Performance & Growth Of Urban Cooperative Bank

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Performance & Growth Of Urban Cooperative Bank

Today urban cooperative banks (UCBs) operate in a highly competitive market, on a level playing field with commercial banks. They do so, successfully applying the cooperative principles underlying their business model, owned by members; their primary mission is to offer them the best services, as opposed to maximizing profit for shareholders. It is not fair to treat the UCBs which are catering to the weaker section of the populations on par with MNC Banks, which do not have any social obligations. The UCBs has undergone a lot of changes from its inception. The changes that have taken place in UCBs have been far more significant and more radical than others. The sharp changes in the policy environment of both State and Central Government concerning the operations of the urban banking system have direct and indirect implications for the performance of UCBs.

The performance of the urban cooperative banking segment which was considered one of the robust and fast expanding segments of the banking system in the early nineties has now become one of the weakest with intermittent cases of failures and irregularities. A number of factors such as increasing competition, tightening prudential standards, absence of manpower planning, lack of control of overheads, non-appraisal of loans and multiple control may be responsible for this. The 100 years of existence of UCBs in India clearly shows the resource base of the bank is so strong that it is able to run the business with its own funds and is truly financially independent. But the urban cooperative banking scenario in India today is confronted with a host of issues. These include organizational, managerial, financial and operational issues and unless these problems are solved on a war footing, the very growth of the urban banking sector and integration of the economy will be a distant dream and will only be a wild- goose chase.