Though, through policy initiatives, co-operative banks have been permitted to raise capital through some innovative instruments, not many banks have been successful in augmenting capital by using these instruments.
A counterview in regard to the impact of Basel II framework on co-operative banks is that with a view to reducing regulatory costs, the standardised approach would spur credit off take of co-operative banks to higher-rated enterprises. Most of the customers of co-operative banking system, however, fall within the category of small, unrated enterprises, for which the risk weight is 100 per cent.