Urban co-operative banks (UCBs) are reluctant to convert into small finance banks (SFBs) due to operational changes and potential loss of control. Only one UCB has applied for conversion since the RBI issued guidelines in 2018. Requirements include a minimum capital of Rs 50 crore and compliance with SFB licensing guidelines. Concerns arise over losing control to investors post-conversion. Despite the voluntary transition scheme, most UCBs prefer to maintain their status quo. The recent ordinance bringing UCBs under direct RBI supervision also impacts their decision.
Urban Co-operative Banks Hesitant to Convert to Small Finance Banks
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