The Indian government and the Reserve Bank of India have unveiled a series of measures to fortify cooperative banks. These steps target financial health, governance, and digital inclusion. They also aim to enhance deposit security and credit availability.
Minister of State for Finance Pankaj Chaudhary detailed these initiatives in the Rajya Sabha. The moves are designed to create a more robust and accessible banking framework. This is a significant push for the cooperative sector.
Urban Cooperative Banks now have permission to open new branches. This supports business expansion and wider customer outreach. Improved access is a key goal of these reforms.
Credit flow is getting a major boost. The permissible housing loan exposure for these banks has been raised to 25 percent. This is a substantial increase from the previous limit of 10 percent.
Governance continuity is also being strengthened. Amendments to the Banking Regulation Act have extended director tenures. The maximum term is now ten years, up from eight.
This allows experienced boards to provide longer-term oversight. Stability in leadership can lead to better strategic planning. It’s a crucial step for sound governance.
Digital inclusion is a central pillar of the new measures. To promote this, the licensing fee for onboarding to the Aadhaar Enabled Payment System has been reduced. This lowers entry barriers for smaller cooperative banks.
Easier access to digital payment infrastructure is vital. It helps bring more citizens into the formal financial fold. This move directly supports financial inclusion goals.
Institutional support has been bolstered through new entities. The National Urban Co-operative Finance and Development Corporation Limited was established. It serves as an umbrella organisation for Urban Cooperative Banks.
This entity provides crucial IT infrastructure and operational support. It is a non-deposit-taking, non-banking financial company. Its role is to strengthen the backend for these banks.
For rural institutions, a Shared Services Entity named Sahakar Sarthi has been created. It delivers common technological services to Rural Cooperative Banks. This improves efficiency and cuts operational costs.
Standardising technology services can be a game-changer. It allows smaller banks to leverage advanced systems. This enhances their competitiveness and service quality.
Customer protection has received a significant upgrade. Rural Cooperative Banks are now under the RBI’s Integrated Ombudsman Scheme. This gives customers access to a unified grievance redressal mechanism.
A single, streamlined process for complaints builds trust. It ensures that depositors and users have a clear path for resolution. This is a win for consumer rights.
Deposit safety remains a cornerstone. The Deposit Insurance and Credit Guarantee Corporation continues to insure deposits. Coverage is up to Rs 5 lakh per depositor per bank, covering both principal and interest.
This insurance provides enhanced confidence to the public. Knowing their money is protected is fundamental. It encourages savings within the cooperative banking system.
A recent announcement further aids credit flow. Loans sanctioned to the National Cooperative Development Corporation for on-lending are now eligible. They can be classified as priority sector lending.
This classification applies to loans sanctioned as of a future date, January 19, 2026. It incentivizes banks to fund the cooperative development ecosystem. This supports the broader cooperative society structure.
The collective impact of these reforms is substantial. They touch on expansion, credit, governance, and technology. Each measure interlinks to build a stronger cooperative banking network.
These steps signal a committed partnership between the government and the regulator. The focus is on creating a resilient and inclusive financial sector. The future for cooperative banks looks more secure and dynamic.