Reserve Bank of India to fund urban cooperative banks’ tech upgrades
The Reserve Bank of India (RBI), the country’s central bank and regulator, has set up a scheme to provide financial assistance to urban cooperative banks (UCBs) for the implementation of core banking solutions.
In its First Bi-monthly Monetary Policy Statement-2016-17, the RBI will offer assistance and technology support through the Institute for Development and Research in Banking Technology (IDRBT) to those UCBs that have partially implemented a core banking system or are yet to implement one.
The plan is to standardise the banking systems; and in consultation with IDRBT, the scheme would be implemented by IDRBT and Indian Financial Technology and Allied Services (IFTAS), a subsidiary of IDRBT.
Suma Varma, the central bank’s principal chief general manager, says the initial set up cost of IND 400,000 ($6,044) will be paid by the RBI to IFTAS. Thereafter, the recurring cost of IND 15,000 ($226) per branch per month will be borne by the UCBs.
The bank will reimburse the cost of migration on “successful completion of preliminary study and data validation”.
UCBs which are under directions imposed under Section 35A of Banking Regulation Act, 1949 (AACS – as applicable to cooperative societies) will not be eligible.
(Section 35A is invoked by the RBI to prevent activities “detrimental to the interest of the depositors” and to secure proper management of the bank.)