Giving a major boost to financial inclusion, the Uttar Pradesh government has decided to strengthen the cooperative sector banking system for better financial inclusion especially in the rural areas.
Under the plan, the state has drawn up a blueprint to open 243 new cooperative banking branches in the current financial year 2023-24 to expand the grassroots network.
The new branches will be launched by 50 District Cooperative Banks (DCB) across the state.
In recent years, the UP cooperative banks have witnessed a remarkable turnaround from large Non Performing Assets (NPA) and a merger proposal to keep them afloat.
According to UP cooperatives minister J P S Rathore, chief minister Yogi Adityanath had underlined for ensuring last mile banking services even in the remotest villages.
At present, there are more than 1,300 branches of different cooperative banks in UP viz. UP Cooperative Bank (UPCB), DCBs and UP Sahkari Gram Vikas Bank (UPSGVB). The DCBs have the maximum branch network numbering 1,266 in the state. UPCB has a network of about 40 branches.
Meanwhile, UPCB chairman Tajvir Singh said the Bank had almost doubled its business size from Rs 12,000 crore in five years to Rs 22,000 crore.
Before the pandemic, the Adityanath government was mulling at a consolidation in the cooperative banking space to merge these entities under the UPCB umbrella.
The government had even formed an expert committee of financial experts and banking professionals to submit a report in this regard. Even as the report on the proposed merger was submitted to the state, the process came to a standstill owing to pandemic.
The panel had recommended a composite action plan for the post merger capital requirements of the UP cooperative banks, deposit mobilisation, staff restructuring etc.
The cooperative banks, which once played a yeoman’s service in the rural hinterland by providing loans to farmers for the rural sector apart from deposit facilities, gradually lost out to the new age banking.
Nonetheless, the process to recapitalise and modernise UP cooperative banks was undertaken to infuse fresh capital in 16 ailing DCBs operating in Faizabad, Shravasti, Allahabad, Sitapur, Hardoi, Azamgarh, Fatehpur, Gorakhpur, Basti, Ballia, Siddharthnagar, Deoria, Sultanpur, Jaunpur, Ghazipur and Bahraich districts.
These 16 DCBs were served notices by the Reserve Bank of India (RBI) for failing to adhere to the financial and licensing norms.