The RBI in its Report on Trend and Progress of Banking in India for 1999-2000 said, "In particular, primary co-operative banks (PCBs) are required to submit two types of returns-statutory returns and control returns-to the RBI with a view to exercising supervision and control over them. Unfortunately, there is often a serious delay or non-submission of these returns by individual banks, in spite of the stringent penal provisions in existence for non-submission of returns". The Centre and other concerned authorities,including the RBI and the National Bank for Agriculture and Rural Development, are making continuous effort to identify major issues having a bearing on the performance and strength of the co-operative sector.

To facilitate this, a number of expert groups have been appointed to identify issues and problems and suggest measures for ensuring the financial soundness of this sector and to meet the desired objec-tives. Since the submission of the Marathe Committee Report in May 1992, which reviewed the licensing policy of the RBI in regard to new PCBs and related issues, various developments have taken place in the financial sector which had an impact on the PCBs as ell.

In order to make a comprehensive review of the activities and regulatory framework pertaining to PCBs, a high power committee was constituted by RBI under the chairmanship of K Madhava Rao to focus on the issues needed to evolve an objective criteria to determine the need and potential for organising UCBs.

These included a review of the existing entry-point norms and an examination of the relevance of special dispensation for less or least developed areas; to review the existing policy pertaining to branch licensing and areas of operation of UCB; and to consider measures for determining the future step-up of weak and unlicensed banks. Other terms of the of Rao-headed committee include the introduction of capital adequacy norms for UCBs and an examination of the need for conversion of co-operative credit societies into primary co-operative banks as also to suggest necessary legislative amendments to the co-operative societies acts of various states for strengthening the urban banking movement.

The committee submitted its report in November 1999, in which various useful recommendations were made with regard to revision of licensing policy for new PCBs, branch licensing policy, extension of areas of operation, dealing with unlicensed and weak PCBs, application of capital adequacy norms, conversion of co-operative societies intoPCBs and reforms in State co-operative societies acts and multi-state co-operative societies Act.