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RBI, Govt Boost Cooperative Banks with Digital Push & Stronger Rules

The government and RBI have implemented multiple measures to strengthen cooperative banks. These include boosting digital inclusion through new umbrella organizations and technological services. Regulatory changes feature increased housing loan limits, extended director terms, and enhanced deposit insurance. Loans to the NCDC for cooperative societies have also been classified as priority sector lending.

Key Points: RBI & Govt Strengthen Cooperative Banks: Digital, Deposits, Loans

  • Enhanced deposit security up to ₹5 lakh
  • Increased housing loan limits for UCBs
  • Digital inclusion via Sahakar Sarthi & NUCFDC
  • Priority sector status for NCDC loans
2 min read

RBI working with Centre to boost cooperative banks' financial health, digital inclusion: Minister

New measures enhance cooperative banks' financial health, digital inclusion, deposit security, and credit access. Learn about the key regulatory changes.

"These apply to banks other than Regional Rural Banks, Urban Cooperative Banks, Small Finance Banks and Local Area Banks. - Pankaj Chaudhary"

New Delhi, Feb 10

The government and the Reserve Bank of India have taken various measures to strengthen cooperative banks' financial health, governance and digital inclusion, along with enhancing deposit security, credit availability and prudent regulation, the Parliament was informed on Tuesday.

The Central Bank, in consultation with the Centre, announced that loans sanctioned by banks to the National Cooperative Development Corporation (NCDC) from January 19, 2026, for on-lending to cooperative societies are eligible for classification as priority sector lending under the respective categories, said Minister of State for Finance, Pankaj Chaudhary, in the Rajya Sabha.

"These apply to banks other than Regional Rural Banks, Urban Cooperative Banks, Small Finance Banks and Local Area Banks. These loans are for purposes and activities as laid down in the Master Direction on Priority Sector Lending, 2025," the minister further stated.

While Urban Cooperative Banks (UCBs) have been allowed to open new branches, housing loan limits have been increased from 10 per cent to 25 per cent of their total loans and advances for UCBs," Chaudhary said.

Moreover, the Banking Regulation Act has been amended to increase the terms of directors of Cooperative Banks from 8 to 10 years amd licensing fee for onboarding of cooperative banks to Aadhar-enabled Payment System (AePS) has been reduced.

"The National Urban Co-operative Finance and Development Corporation Limited (NUCFDC), which is a non-deposit-taking Non-Banking Financial Company (NBFC), has been set up as an Umbrella Organisation for Urban Cooperative Banks to provide Information Technology (IT) infrastructure and operational support," said the minister.

Notably, 'Sahakar Sarthi' has been established to provide technological services to Rural Cooperative Banks, and Rural Cooperative Banks have been included by RBI in the Integrated Ombudsman Scheme.

Also, the Deposit Insurance and Credit Guarantee Corporation (DICGC) ensures various types of deposits up to Rs 5,00,000 per depositor per bank (including principal and interest) for all cooperative banks, the minister said.

- IANS

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Reader Comments

P
Priyanka N
Good to see focus on digital inclusion with 'Sahakar Sarthi' and reduced AePS fees. Many farmers and small business owners in my village rely on these banks. Hope the IT support from NUCFDC reaches the ground level quickly.
A
Aman W
While the intentions seem good, I hope there is strict monitoring of governance. Extending director terms from 8 to 10 years could lead to complacency or entrenched interests if checks and balances aren't strong. Prudent regulation must be more than just words.
S
Sarah B
The increase in housing loan limits for UCBs from 10% to 25% is a significant move. It should help many middle-class families in tier-2 and tier-3 cities who depend on these local banks for home loans. Practical policy.
V
Vikram M
Including cooperative banks in the Integrated Ombudsman Scheme is a welcome relief for customers. Earlier, grievance redressal was a major headache. Now there's a proper system. Hope people are made aware of how to use it.
K
Kriti O
The priority sector lending classification for loans to NCDC is a smart way to channel funds to the cooperative sector. This should boost credit flow to agriculture and rural development activities. A step in the right direction for Atmanirbhar Bharat.

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