The Government of Tamil Nadu and the Reserve Bank of India have inked a memorandum of association with regard to Urban Co-operative banks (UCBs) in the state.

According to a press release F R Joseph, RBI Regional Director for Tamil Nadu and Pondicherry, will be the Chairman of the task force. The co-chairman post will be held by the Registrar of Cooperative Societies.

To encourage development in the state, RBI would also be assigning the training and computerization needs of UCBs. This is a part of RBI's development role that aims to upgrade these banks human resource skills and technological infrastructure along with improving operational efficiency and quality of management information systems.

The Central Bank has signed similar MoUs with the governments of Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Rajasthan, Uttarkhand, Chattisgarh, Goa, Maharashtra, Assam, NCT of Delhi, Haryana, West Bengal, Tripura, Punjab, Uttar Pradesh, Manipur, Meghalaya, Himachal Pradesh, Kerala and Mizoram.

These moves have enabled coverage of 98.6 percent of UCBs, accounting for 99.2 percent of deposits of the sector.

Rajasthan Cooperative Minister Nathu Singh Gujjar also called upon the Centre to exempt all banks in the cooperative sector from income tax. The exemption has been demanded on basis of banks' working against odds in the priority sector.

Urban Co-operative Banks (UCBs) refer to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. However this distinction does not hold today. These banks were traditionally centered on communities, localities work place groups that essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably. Over the years, primary (urban) cooperative banks have registered a significant growth in number, size and volume of business handled.