Urban co-operative banks seek guarantee cover for their MSME borrowers




Urban co-operative banks (UCBs) want their micro, small and medium enterprise (MSME) borrowers to be covered under credit guarantee cover for giving assistance to units hit by Covid-19 pandemic.

The National Federation of Urban Co-operative Banks and Credit Societies Ltd. (NAFCUB), in letter to the union finance minister, said UCBs are important and significant institutions that finance micro and small enterprises. UCBs’ outstanding loans to MSMEs amount to Rs 82,000 crore.





The government provides for guarantees to commercial banks, financial institutions and NBFCs for lending to MSMEs through the National Credit Guarantee Trust Company (NCGTC) and its various funds. However, UCBs are not included in the list of institutions that are eligible for getting guarantees under the GOI schemes.

“It is not fair to keep them away from the benefits being offered by the government, when the UCB sector is regulated by RBI in the same manner as the commercial banks are regulated”, said NFCCUB president Jyotindra Mehta.
ALSO READ: RBI imposes penalties on three banks for non-compliance of norms

UCBs are by and large financially sound. Out of 1540 UCBs, 1199 banks are CAMELS rated A and B, as per RBI, which are the ratings for satisfactorily run banks.

The gross non-performing assets (NPAs) of the UCB sector are 7.1 per cent as against gross NPAs of 9.1 per cent of the scheduled commercial banks(SCBs). Also, net NPAs of UCBs are at 2.6 per cent, while those of SCBs are at 3.7 per cent.

UCBs also have a better provision cover for NPAs. The provisioning coverage ratio (PCR) of UCBs is 66 per cent, while that of SCBs is 61 per cent. UCBs therefore, are well qualified to be included in all the schemes of the government.

ALSO READ: Banks not passing rate cut benefits to borrowers, developers: CREDAI to RBI

Benefits of the new Rs 3 trillion credit guarantee scheme are also not available to UCBs and to the thousands of micro and small enterprises, who are existing customers of the UCBs.

In order to broad-base its support to micro and small enterprises, UCBs should be permitted to apply for being Member Lending Institutions of CGTMSE without any stipulation of size of their liabilities.

The existing micro and small enterprises borrowers of UCBs should be made eligible for emergency support extended to the enterprises under schemes that the government has announced to mitigate the economic hardships on account of the Covid-19 pandemic.

Recent Articles

Coronavirus Live Updates: New Zealand Races to Trace Source of New Outbreak

Mistrust of the president hardened the conviction of some educators that educating in individual was unsafe.In June, because the coronavirus disaster appeared to hit...

Coronavirus | Biological E. inks pacts with Johnson & Johnson, Baylor College of Medicine on vaccine

The vaccine candidate is at present in Part 1/2a medical trials, the Hyderabad-based Organic E. mentioned on Thursday Prescription drugs and organic firm...

Business News | Stock and Share Market News

By Market Capitalisation. Internet Gross sales. Internet Revenue. Complete Belongings. Excise. Different Revenue. Uncooked Supplies. Energy & Gasoline. Worker Price. PBDIT. Curiosity. Tax. EPS. Investments. Sundry Debtors. Money/Financial institution. Stock. Debt. Contingent Liabilities. Display Crit Abrasives Aerospace & Defence Agriculture Air Conditioners Airways Aluminium & Aluminium Merchandise Amusement Parks/Recreation/Membership Aquaculture Auto Ancillaries Auto Ancillaries...

Online ad shows gay couple as father-son in Cartier’s bid to duck China’s censorship

Beijing: French luxurious model Cartier is dealing with on-line mockery in China over a Valentine-themed advert which seems to point out a homosexual...

11 Supposedly Fun Things We’ll Never Do the Same Way Again

Early within the pandemic, Dr. Anthony Fauci, the nation’s high infectious illness professional, stated one thing that grabbed a number of consideration: Handshakes ought...

Related Stories

Leave A Reply

Please enter your comment!
Please enter your name here

Stay on op - Ge the daily news in your inbox