The Indian government and RBI are leaving no stone unturned to revitalize cooperative banks. A series of targeted interventions are underway to improve financial health, streamline operations, promote digital access, safeguard deposits, ensure timely credit flow, and enforce sound governance.
Addressing the Upper House of Parliament, MoS Finance Pankaj Chaudhary revealed that RBI, in consultation with the Centre, has mandated priority sector classification for bank loans to NCDC starting January 19, 2026. These loans will support cooperatives in priority areas as per the 2025 Master Directions.
This policy extends to most commercial banks but spares specific categories. Urban co-op banks gain flexibility with unrestricted branch expansion and a raised housing loan cap to 25% of their portfolio from 10% earlier. Directors’ terms are now 10 years under revised Banking Regulation Act provisions, and AePS fees are slashed.
NUCFDC stands as a pivotal support entity for urban co-ops, delivering cutting-edge IT and operational aid. Rural banks benefit from ‘Sahkar Sarathi’ for tech assistance and RBI’s Ombudsman inclusion for grievance redressal.
These reforms come at a crucial time, addressing past vulnerabilities exposed in cooperative banking. By fostering resilience and innovation, they pave the way for sustainable growth, empowering rural and urban economies alike with reliable financial services.