Urban Cooperative Banks: Significance and Challenges

Challenges

• Capital Restriction: In India, UCBs are not allowed to pay their shareholders a dividend of more than 15%. This restriction may make it more difficult for them to obtain financing when they need it, particularly in hard times.
• Difficulty in Raising Capital: UCBs' choices for raising capital are more constrained than those of commercial banks. They can only expand their membership or request that current members purchase additional shares. This reliance on members for capital infusion can be problematic because members might not have the resources or motivation to provide substantial sums of new money.
• Lack of Diversification: Small UCBs ....