...... senior RBI official associated with regulation of UCBs said the prudential norms to regulate these banks were very much in place then. But the apex bank was much liberal. There was a sharp rise in the deposit bases of UCBs and many banks were unable to manage the sudden growth. Some crooks took the advantage of gaps. Taking a leaf from that episode, RBI put freeze on any expansion in activities by UCBs, till they brought their houses in order. It banned opening of new branches. The dual control (UCBs come under the regulatory oversight of RBI and the registrar of cooperative societies) has always hampered effective regulation. RBI formed state-specific task forces to deal issues of UCBs. It identified weak but viable banks and firmed up their revival plans. If that failed, road was open for merger with stronger UCBs. In extreme cases, it could go for liquidation.......
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