Urban cooperative banks (UCBs) which are financially strong have a moment to rejoice with banking regulator, Reserve Bank of India permitting them to set up branches without prior approval from the regulator. This decision may however come as an alarm for the weaker banks.

The recent times have witnessed quite a number of UCBs being given weak stature by the apex bank. These banks have been restricted to carry out transactions more than Rs 1000 per account.

With RBI proposing to remove capping of 10% as the maximum number of branches allowable to be opened by UCBs in a year, they will be able to spread their branch network much faster which is a cause of worry for the weaker counterparts.

Also, the central bank has proposed that these UCBs should expand themselved all across their state of registration.

"Earlier the cooperative banks from other state used to acquire weak banks because of branch network, which used to help shareholders and employees of the weak banks," said one of the directors of Gujarat Urban Cooperative Banks' Federation. So now if they are allowed to expand themselves and also the 10% capping is removed then why should they bear the burden of financially weak banks.