Reserve Bank of India had appointed committee headed by N. S. Vishwanathan to make suggestions on structure for the urban cooperative banks (UCBs)

• Panel was set up to suggest structure on the basis of deposits, prescribed different capital adequacy as well as regulatory norms for them with respect to their sizes.
• RBI had constituted the Expert Committee on Primary (Urban) Co-operative Banks under the chairmanship of N S Vishwanathan in February 2021

• As per committee, UCBs can be split into four categories

1. Tier-1- with deposits up to Rs 100 crore;
2. Tier-2 with deposits between Rs 100-Rs 1000 crore,
3. Tier-3 with deposits between Rs 1000 crore to Rs 10000 and
4. Tier-4 with deposits more than Rs 10000 crore.

• It suggests that, minimum Capital to Risk-Weighted Assets Ratio (CRAR) for these tiers can vary between 9 per cent to 15 per cent.
• While, for Tier-4 UCBs Basel III prescribed norms can be followed.
• It suggests separate ceilings for loan against gold ornaments, home loans and unsecured loans for different categories of UCBs.
• Supervisory Action Framework (SAF) should follow a twin-indicator approach. It can consider only asset quality and capital measured through NNPA and CRAR, rather than going with triple indicators approach at present.

Panel reports on consolidation of UCBs highlights that, RBI should be largely neutral to voluntary consolidation except where supervisory action is required. RBI should use the route of mandatory merger in to resolve UCBs that are not meeting with prudential requirements. It also suggests that, under Banking Regulation (BR) Act, RBI can come up with the scheme of compulsory amalgamation or reconstruction of UCBs.