##7 banks also increased from 248 as on march 31, 2010 to 684 as on march 31, 2013. incidentally, mergers of as many as 116 ucbs have been effected till date after 2005. 11. against this backdrop, with a view to increasing the coverage of banking services amongst local communities, the malegam committee was set up in 2010 for studying the advisability of granting new urban co - operative banking licences. after elaborate deliberations, the committee recommended that ucbs play a useful role and there is need for a greater presence of ucbs in unbanked districts and in centers having population of less than 5 lakh. it is necessary to encourage new entrants to open banks and branches in states and districts which are unbanked or inadequately banked. it is equally necessary to discourage new entrants from opening branches in districts and population centers which are already adequately banked. further, the committee suggested that the existing wellmanaged co - operative credit societies meeting certain financial criteria should be given priority for granting licenses. the committee ’ s recommendations are under examination by rbi. issues for discussion 12. as we have observed from the trend and pattern of growth in this sector so far, we have left madhavpura long behind and moved ahead by fostering organic and inorganic growth. with higher degree of crar8 and less npas, 9 the system has more or less stabilized, while the process of consolidation is still on. the first question that rises now is what next. where do we go from here? have we reached a plateau where we need to maintain and strengthen the healthy consolidation achieved or should we allow further growth? given the fact that ucbs are an important segment of the banking system, play a vital role in mobilizing deposits and purveying credit to the people of small means thereby enhancing financial inclusion and facilitate payment and settlement, it will only be appropriate to support their growth and proliferation further. 13. that brings us to the second question. if we allow further growth, in what form should that be? it again can be addressed in two ways. we either allow them to grow in the existing set up or ucbs above a certain threshold may assume a new corporate identity. 14. as an implication of this, for large ucbs who have reached certain threshold in the size and complexity of business, enabling their graduation into commercial banks can be thought of, so that their further growth is facilitated. it is important

their high - quality credit portfolios. in fact, in italy, france, germany and netherlands where co - operative banks ’ market share in loans range between 25 % and 45 %, smes represent between 20 % and 50 % of the total client portfolio of co - operative banks. they are able to face the challenges of the new post crisis environment because their business model responds to the present needs and expectations. 19. further, across europe, cooperative banks exceed the minimum legal capital ratio requirement of 8 %, with an average ratio of about 9 %. credit ratings reflect this very well, ranging between aa and aaa for the largest co - operative banking groups in western europe. 20. with their roots in the europe, the rabobank group, dz bank group, credit agricole group, etc have grown in recent decades into an international financial services provider that has activities in the field of banking, asset management, leasing, insurance and real estate. the strong points of the cooperative structure became evident during the financial crises of recent years. they did not have to ask for state aid and were able to keep financial results well up to standard. measured according to tier 1 capital, these groups are the world ’ s largest financial institutions. all rating agencies continue to give them high ratings. 21. their cooperative identity stems back to the early twentieth century. the local member cooperatives continue to be the collective owner of these groups to this day. the groups support the member cooperatives and oversee the subsidiaries and affiliated companies. the members not only benefit from banking and non - banking advantages, they also have the opportunity to join in the discussion and co - decide on the bank ’ s course. local member banks serve millions of retail and wholesale customers with a comprehensive range of financial services. the groups are leaders in nearly all customer and product segments, from youth to start - ups and from mortgages to corporate enterprises. 22. i feel indian cooperative banks can gain from the business matrix of their european counterparts to cope up with the competition and pressure from bigger commercial banks and maximize value creation while not undermining the importance of solid capitalization and high - quality credit portfolio. asian cooperative business models 23. if we look eastward, we observe a considerably large presence of co - operatives in asia pacific also. in asia - pacific alone there were 22, 212 credit unions in 2012 which were more than double of the 10, 051 figure of north america and europe put together. in terms of the bis central bankers