The National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCUB) expects the Umbrella Organization (UO) for Urban Co-operative Banks (UCBs) to soon approach the Reserve Bank of India for registration as a non-banking finance company.
Though financial commitments from UCBs and National Co-operative Development Corporation (NCDC) for the minimum capital of ₹300 crore for starting the UO, which has been christened the National Urban Co-operative Finance and Development Corporation (NUCFDC), are in place, to begin with, for registration as an NBFC only ₹10 crore is required, according to Jyotindra Mehta, President, NAFCUB.
Mehta said co-operative entities such as IFFCO and multilateral institutions could be the other investors in NUCFDC so that no entity holds more than 20 per cent stake.
RBI had accorded regulatory approval to NAFCUB in June 2019 for formation of an UO for the UCB sector. The approval inter-alia permits UCBs to subscribe to capital of the UO on a voluntary basis.
The UO, apart from extending liquidity and capital support to its member UCBs, is expected to set up Information and Technology (IT) infrastructure for shared use of members to enable them to widen their range of services in the wake of advances in information and communication technology at a relatively lower cost. The UO can also offer fund management and other consultancy services.