An urban bank is a co-operative banking institution that serves the rural and urban poor. It offers a range of products and services for the needs of the community.
UCBs provide financing to small enterprises, micro-finance loans, and credit to the unorganised sector, including farmers. They have a long-standing history of building trust.
Branches
Urban co-operative banks are the financing bodies for private ventures, industries, self-employment in urban areas and finance for home purchases and education. To operate as urban co-operative banks, primary credit societies (PCSs) that meet specific criteria may apply for a banking license from the Reserve Bank of India (RBI).
The main objective of these cooperative banks is to provide financial assistance to economically weaker sections of society. They are governed by the state’s cooperative societies acts, as well as the Banking Regulation Act of 1949.
They are regulated by the RBI, which establishes capital adequacy, risk management, and lending standards.
A bank’s branch location and number of services are important considerations for consumers when selecting a bank. The percentage of households in large MSAs listing bank location as their top reason for choosing their bank remained relatively stable over 2004-2016. Similarly, the fraction of rural households listing number of services as their top reason for choosing their bank rose 4%.
Deposits
Urban banks offer a variety of banking services to their clients
As a result, it is important for policymakers to understand geographic differences in local demand conditions for banking. This could affect the pass-through of monetary policy to banks in different regions (Adams and Amel, 2011; Drechsler et al., 2017).
Historically, the thrust of urban cooperative banks (UCBs) has been to mobilise savings from middle and low income groups, and purvey credit to their members – many of whom were from weaker sections.
In the past, UCBs have faced several challenges, including failures and frauds, which have compelled the central bank to introduce regulations to strengthen them. On Tuesday, the RBI prescribed a four-tier regulatory structure for UCBs that accepts the recommendations of an expert committee constituted last year.
Loans
Loans at an urban bank are a great way to take care of your financial needs. You can use them for a dream vacation, emergency expenses or alternative repayments.
These banks have been in operation for over a century and their speciality is to cater to people with restricted assets, independently employed persons and small enterprises. They also play an important role in activating stores and promoting little borrower sectors, which includes professionals, retailers, small-scale industries, experts, and so on.
These institutions are governed by the Banking Regulation Act of 1949, as well as the co-operative societies acts of their respective states. The Reserve Bank of India (RBI) lays out guidelines for them, as well as their risk management and loaning norms.
Investments
Whether you have idle savings, a lump sum or even an inheritance from your grandfather or great-grandfather, investing is a smart way to grow wealth. It can provide additional sources of income, fund your retirement or help you get out of a financial crisis.
Urban banks also have a variety of investments for people of all levels of wealth and needs
In recent years, many UCBs have made large investments in distressed realty groups and have had to face scrutiny from the Reserve Bank of India (RBI) in multiple cases. In 2020, the government amended the Banking Regulation Act and gave the RBI more powers to regulate UCBs.
The World Bank’s new Investing in Urban Resilience report estimates that India needs to increase its investment in urban infrastructure by over threefold over the next 15 years, underscoring the need for private commercial financing to fill emerging gaps. The report proposes a range of measures to remove market frictions that cities face in accessing private financing.
